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RSM100Y1 (431)
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Chapter 7

RSM 100 - Chapter 7 - Summary Notes

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Department
Rotman Commerce
Course
RSM100Y1
Professor
John Oesch
Semester
Fall

Description
RSM 100Y – Chapter 7: Organizing the Business Enterprise Organizational Structure Specifies the jobs to be done within a business and how the relate to each other Determinants of Organizational Structure Main Factors: Firm’s mission, purpose and strategy Others: Size of firm, technology and changes in environment Structure is built based on Specialization and Departmentalization Chain of Command Reporting Relationship within a business, as well as flow of power Specialization Finding what jobs need to be done and who is best to do them.  Each job has further internal specializations; Division of Labour Specialization and Growth In smaller organizations, one person may do everything, but as it grows this changes  Larger firms needs more employees with more detailed specialization  Benefits to specialization are efficiency and ease of learning  Disadvantages of spec. are monotony/boredom, and lack of motivation Departmentalization Functional Departmentalization Based on function within the firm (I.e. Marketing, Accounting, HR, Sales… etc) Customer Departmentalization Grouped based on customer needs and wants making service more effective Product Departmentalization Division based on different products sold within a product line (Soap vs. Detergent) Geographic Departmentalization Based on geographic region in which the firm operates in (Toronto, Chicago… etc) Process Departmentalization Vertically divided (Collecting raw materials, refining, producing, selling… etc) Decision Making Hierarchy Step 1: Assigning Tasks – Determine who makes decisions Step 2: Performing Tasks – Implementing Decisions that have been made Step 3: Distributing Authority – Centralized vs. Decentralized Assigning Tasks Responsibility – Duty to Perform a Task Authority – Power to make the decisions necessary to complete a task Performing Tasks Delegation – Manager assigns a task to a subordinate Accountability – Falls on subordinate who must complete the task Fears of Delegation Task is delegated, but not enough authority is given – PROBLEM! One must consider: - Nature of what needs to be done - Match the job with the skills of the subordinate - Make sure they understand what they need to achieve - Make sure they have the time and skills to do it Troubles of Delegation include: - Employees cannot do things as good as they can - Something will go wrong - Lack of time to plan things out properly - Sense of being out of the loop regarding trends and products because of work - Fear that the subordinate doesn’t know how to do a job - Fear that the employee will show up the manager - Control-freakism - Lack of ability to delegate…. Really? Is he fucking retarded? Distributing Authority Centralized Authority Top management retains the right to make decisions and must approve lower-level management decisions throughout the entire firm to maintain STANDARDIZATON. Decentralized Authority As a company gets larger, centralized authority gets crazy. Decision making power is delegated to lower levels of management across the company. This allows a company to be very RESPONSIVE TO CHANGES IN THEIR LOCAL ENVIRONMENT. Tall vs. Flat Structures Span of Control: Number of people managed by one Manager  Depends on Managers Skills, employees’ skills and tasks to be performed Flat Structure: Few Layers of Management with Decentralized Management  Wide Span of Control Tall Structure: Many Layers of Management with Centralized Management  Narrow Span of Contro
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