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RSM100Y1 (431)
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Chapter 7

Chapter 7 - Organizing the Business Enterprise

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University of Toronto St. George
Rotman Commerce
John Oesch

Organizing the Business EnterpriseOrganizational StructureWhat is Organizational StructureOrganizational Structure is the specification of jobs to be done within a business and how those jobs relate to one anotherChief among the elements that create organizational structure are the organizations purpose mission and strategyOther factors are size technology and changes in environmental circumstancesThe Chain of CommandMany businesses prepare organization charts that illustrate the companys structure and show employees where they fit into the firms operationsThe solid lines that connect the boxes in an organization chart represent the chain of commandThe Building Blocks of Organizational StructureSpecialization Determining who will do whatDepartmentalization Determining how people performing certain tasks can best be grouped togetherSpecializationJob specialization is the process of identifying the specific jobs that need to be done and designating the people who will perform themEach business has only one main job to make money for example this job is then broken into smaller components which are then assigned to individuals or groupsSpecialization and GrowthJob specialization is a natural part of organizational growthOn the positive side it can lead to jobs being easier to learn them being performed more efficiently and it is easier to replace peopleOn the negative side job specialization if carried too far creates jobs that are too narrowly defined are boring and give less satisfaction to people which will make them lose sight of how they contribute to the organization DepartmentalizationDepartmentalization is the grouping of jobs into logical units that will work togetherThis process allows the business to treat each department as a profit centre a unit that is responsible for its own profits and lossesThis treatment allows the company to focus on profitable industries and expand or curtail promotions in certain areasTypes of Departmentalization
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