RSM100Y1 Chapter Notes - Chapter 7: Departmentalization, Division Of Labour, Detergent

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26 Sep 2011

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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
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
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
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