Business 12 Chapter 8 Structuring Organizations for Today's Challenges

Virtual Corporation

- A temporary networked organization made up of replaceable firms that join and leave as needed.

Departmentalization

- Divides organizations into separate units.

Why Do Organization's Change

- More global competition - Declining economy - Faster technological change - Pressure to protect the environment - Consumer Expectations

Organizational or Corporate Culture

- The widely shared values within an organization that foster unity and cooperation to achieve common goals.

Line Personnel

- Workers responsible for directly achieving organizational goals, and include production, distribution and marketing employees -They have authority to make policy decisions

Advantages of Departmentalization

1) Employees develop skills and progress within a department as they master skills. 2) The company can achieve economies of scale. 3) Employees can coordinate work within the function and top management can easily direct activities.

Economies of Scale

Companies can reduce their production costs by purchasing raw materials in bulk.

Staff Personnel

Employees who advise and assist line personnel in meeting their goals, and include marketing research, legal advising, IT and human resource employees.

Matrix Organization

Specialists from different parts of the organization work together temporarily on specific projects, but still remain part of a line-and-staff structure. • Emphasis is on product development, creativity, special projects, communication and teamwork.

Networking

Using communications technology to link organizations and allow them to work together.

Disadvantages of Departmentalization

1) Departments may not communicate well. 2) Employees may identify with their department's goals rather than the organization's. 3) The company's response to external changes may be slow. 4) People may not be trained to take different managerial responsibilities, instead they become specialists. 5) Department members may engage in groupthink and may need outside input.

Four Ways to Structure an Organization

1. Line Organizations 2. Line-and-Staff Organizations 3. Matrix-Style Organizations 4. Cross-Functional SelfManaged Teams

Hierarchy

A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down.

Inverted Organization

An organization that has contact people at the top and the CEO at the bottom of the organizational chart.

Bureaucracy

An organization with many layers of managers who set rules and regulations and oversee all decisions. - They can annoy customers - Can take weeks or months to have information passed down to lower-level employees.

Benchmarking

Compares an organization's practices, processes and products against the world's best.

Formal Organization

Details lines of responsibility, authority and position.

Cross-Functional Self-Managed Teams

Groups of employees from different departments who work together on a long-term basis. • A way to fix the problem of matrix-style teams is to establish long-term teams. • Empower teams to work closely with suppliers, customers and others to figure out how to create better products. - Works best when voice of customer is heard

Line Organization

Has direct two-way lines of responsibility, authority and communication running from the top to the bottom. Everyone reports to one supervisor.

Flat Organizational Structure

Owner/Manager | (x6 people)

Typical Organization Chart

President | | | Manag.A MB MC (Production) (Marketing) (Finance) First Line Sup.(x3)FirstLS(x.3) FLS(x3)

Restructuring

Redesigning an organization so it can more effectively and efficiently serve its customers.

Core Competencies

The functions anorganization can do as well as or better than any other organization in the world.

Chain of Command

The line of authority that moves from the top of the hierarchy to the lowest level.

Span of Control

The optimal number of subordinates a manager supervises or should supervise.

Real Time

The present moment or actual time in which something takes place.

Informal Organization

The system of relationships that develop spontaneously as employees meet and form relationships. - Helps foster camaraderie and teamwork among employees.

Transparency

When a company is so open to other companies that electronic information is shared as if the companies were one.

Centralized Authority

When decision-making is concentrated at the top level of management.

Decentralized Authority

When decision-making is delegated to lower-level managers and employees more familiar with local conditions than headquarters is.

Digital Natives

Young people who have grown up using the Internet and social networking.

Important Conditions for Small Teams

• Clear purpose • Clear goals • Correct skills • Mutual accountability • Shift roles when appropriate

How to Structure an Organization

• Create a division of labor • Set up teams or departments • Allocate resources • Assign tasks • Establish procedures • Adjust to new realities

Examples of Informal Group Norms

• Do your job but don't produce more than the rest of your group. • Don't tell off-color jokes or use profanity. • Everyone is to be clean and organized at the workstation. • Respect and help your fellow group members. • Drinking is done off the job - NEVER at work.

Organization's Based on Weber's Principle

• Employees just need to do what they're told. He also emphasized: - Job descriptions - Written rules, decision guidelines and detailed records - Consistent procedures, regulations and policies - Staffing and promotion based on qualifications

Disadvantages of the Matrix Style

• It's costly and complex. • Employees may be confused about where their loyalty belongs. • Good interpersonal skills and cooperative employees are a must. • It's a temporary solution to a possible long-term problem. • Teams are not permanent.

Advantages of the Matrix Style

• Managers have flexibility in assigning people to projects. • Interorganizational cooperation and teamwork is encouraged. • Creative solutions to product development problems are produced. • Efficient use of organizational resources.

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• Most companies are no longer self-sufficient; they're part of a global business network.

Organizations Based on Fayol's Principle

• Organizations in which employees have no more than one boss; lines of authority are clear. • Rigid organizations that often don't respond to customers quickly