Management Chapter 7

Functional structure disadvantage

*because people are separated into distinct departments communication and coordination across functions are often poor, causing the slow response to environmental changes *decisions involving more than one department may pile up at the top of the organization and be delayed

Team Approach advantage

*breaks down barriers across departments and improves coordination and cooperation *team members know one anothers problems and compromise rather than blindly pursing their own goals *enables the organization to adapt more quickly to customer request and environmental changes and speed decisions making because decisions need not go to the top of hierarchy for approval *morale boost - typically enthusiastic about their involvement in bigger projects rather than narrow departmental tasks *

Divisional Structure Advantages

*by dividing employees and resources along divisional lines the organization will be flexible and responsive to change because each unit is small and tuned to the environment *by having employees working on single product line the concern for customer needs is high *coordination across functional departments is better because employees are grouped together in single location and committed to one product line *great coordination exist within division

Team Approach disadvantages

*conflict and dual loyalties *team may make different work demands on members than do their department managers and members in more than one team must resolve conflict *large amount of time devoted to meetings which increases coordintion time *lose production efficiency *may cause too much decentralization *senior department managers who made decisions might feel left out when team moves ahead *often dont see big picture and make decision good for group but bad for firm

Matrix disadvantages

*confusion and frustration from dual reporting relationships *high level of conflct because it pits divisional against functional goals in a domestic structure or product line versus country goals in a global structure *rivalry between 2 sides can be difficult for 2 boss employees to manage *time lost to meetings and discussions devoted to resolving the conflict *more discussion than action - takes away from work activities

Divisional Structure Disadvantages

*coordination across divisions is poor *problems happen when autonomous divisions go in opposite directions *duplication of resources and high cost of running seperate divisions *loses efficiency and economies of scale *small size of departments within each division may result in lack or technical specialization expertise and training

Disadvantages of too much specialization

*employees are isolated and do one boring job *creates separation and hinders the coordination that is essential for organizations to be effective

Matrix Advantages

*highly effective in a complex rapidly changing environment in which the organization needs to be flexible innovative and adaptable *conflict and frequent meetings generated by the matrix allow new issues to be raised and resolved *efficient use of HR because specialists can be transferred from one division to another

Virtual network disadvantage

*lack of hands on control *each partner acts in own self interest *weak and ambiguous boundaries create higher uncertianty and greater demands on managers *customer service and loyalty can suffer *

Functional Structure Advantages

*large functionally based departments enhance the development of in-depth skills because people work on a variety of related problems and are associated with other experts in their department *because chain of command converges at the top this is a way to centralize decision making and provide unified direction from top managers

as organizations grow and evolve two things happen

*new positions and department are added to deal with factors in external environment or with new strategic needs *senior maangers have to find ways to tie all these departments together

List the 5 approaches to structural design

*vertical *divisional *matrix *team based *virtual network

Functional hierarchy of authority runs ____ and divisional hierarchy runs ___

*vertically *horizontally

Authority is distinguished by 3 characteristics:

1) vested in position 2) flows down hierarchy 3) Accepted by subordinates.

As a result of dual structure some employees report to

2 supervisors simultaneously

Collaboration

A joint effort between people from two or more departments to produce outcomes that meet a common goal or shared purpose and that are typically greater than what any of the individuals or departments could achieve working alone

small batch production

A type of manufacturing technology that involves the production of goods in batches of one or a few products designed to customer specification.

Reengineering

The radical redesign of business processes to achieve dramatic improvements in cost, quality, service, and speed.

An organic horizontal approach is needed for

a differentiation strategy and when the organization needs flexibility to cope with an uncertain environment

Virtual network structure in an organization may be viewed as a central hub surrounded by

a network of outside specialists sometimes spread all over the world

when work specialization is expensive employees specialize in

a single task

vertical hierarchy is need to organize a large number of people effectively to

accomplish complex tasks within a coherent framework *without it people wouldn't know what to do

Vertical Functional Approach

activities are grouped together by common function from bottom to the top of the organization

Staff departments have a _____ relationship with line department

advisory

Work specialization

aka division of labor *degree o which organizational tasks are subdivided into individual jobs

Accountability is the mechanism through which authority and responsibility are brought into

alignment

Each permanent team brings together employees from

all functional areas focused on a specific task or project such as supply and logistics

Staff departments

all those that provide specialized skills in support of line departments

acceptance theory of authority

argues that a manager has authority only if subordinates choose to accept his or her commands *if subordinates refuse to obey because the order is outside their zone of acceptance. a managers authority disappears

example of work specialization

assembly line workers

Unique feature of matrix structure is that is has dual lines of

authority

Responsibility is the flip side of

authority coin

Team approach gives managers a way to delegate

authority push responsibility to lower levels and be more flexible and responsive in a complex and competitive global environment

Chain of command illustrates what?

authority structure of the organization

In times of crisis or risk of company failure authority may be ____ at the top

centralized

Matrix structure supports a formal

chain of command for both functional (vertical) and divisional (horizontal) relationships

the five approaches all rely on what?

chain of command to define departmental groupings and reporting relationships along the hierarchy

frequent use of cross functional teams is for

change products such as new product or service innovation

service technology

characterized by intangible outputs and direct contact between employees and customers

mass production

characterized by long production runs to manufacture a large volume of products with the same specifications

Scalar Principle

clearly defined line of authority in the organization that includes all employees

Matrix Approach

combines aspects of both functional and divisional structures simultaneously, in the same part of the organization

Staff authority is a ____ relationship

communication *staff specialist advise managers in technical areas

horizontal structure provides

coordination across departments

A mechanistic, vertical structure is appropriate for

cost leadership strategy which occurs in a stable environment

Greater change and uncertainty in the environment are usually associated with ____

decentralization

In a divisional structure differences among R&D marketing and manufacturing etc. would be resolved at the divisional level rather than by the president. Divisional structure encourages ____

decentralization

In the US and Canada the trend has been moving towards greater ____ of organizations

decentralization

Centralization

decision authority is located near the top of the organization

Decentralization

decision authority is pushed downward to all levels

another important concept related to authority is

delegation

Another fundamental characteristic of organization structure is ___

departmentalization

Divisional Structure

departments are grouped together based on similar organizational outputs

functional structure groups positions into

departments based on similar skills expertise work activities and resource use ex: accounting, HR

Organizing refers to

deployment of organizational resources to achieve strategic goals

2 strategies firm can adopt are

differentiation and cost leadership

When managers have responsibility for task outcomes but little authority the job is

difficult *rely on persuasion and luck

authority and responsibility for different tasks should be

distinct

In a geographic based structure all functions in a specific country report to the same

division manager

Responsibility is the

duty to perform the task or activity as assigned

When a huge organization produces products for different markets, the divisional structure work because

each division is an autonomous business

Unity of command

each employee is held accountable to only one supervisor

The basic difference among structures is the way in which

employees are departmentalized and to whom they report

cross functional teams

employees from about the same hierarchical level, but from different work areas, who come together to accomplish a task

Networked computer system and collaborative software allow organization to

exchange data and info. so rapidly and smoothly that a connected network of suppliers manufacturers etc. can look and act as one seamless company

Functional departments include

finance marketing etc. *centralized and operate as own vertical units *support horizontal divisions

Average span of control is used to determine whether structure is ___ or ___

flat or tall

Virtual network approach advantages

flexibility and competitiveness on a global scale *lets them shift resources and respond quickly

service technologies tend to have more

flexible horizontal structure

small bath and continuous process technologies are associated with a

flexible horizontal structure

Organization structure is defined as

framework in which the organization defined how tasks are divided, resources are deployed, and departments are coordinated

the focus of reengineering is on horizontal workflow rather than

function, leads to a shift away from strong vertical structure to one emphasizing stronger horizontal coordination *vertical hierarchy is flattened with only a few executives left in support functions

Matrix: 2 lines of authority are

geographic and product

alternative for assigning divisional responsibility is to group company activities by ___ or ___

geographic region customer group

Functional Structure: The major departments under the presidents are

groupings of similar expertise and resources *each concerned with the organization as a whole

Permanent Teams

groups of employees who are organized in a way similar to a formal department

Flat structure

have a wide span and fewer levels

Centralization or Decentralization pertain to what?

hierarchal level at which decisions are made

Delegating decisions to lower levels can be what?

highly motivating and improve speed, flexibility, and creativity

Span of management determines

how closely a supervisor can monitor subordinates

Matrix structure evolved as a way to

improve horizontal coordination and information sharing

Within a divisional structure separate divisions can be organized with responsibility for

individual products, services, product groups, major program etc.

continuous process production

involves mechanization of the entire workflow and nonstop production, such as in chemical plants or petroleum refineries

Without coordination a company

left hand will not act in concert with the right causing problem and conflict

virtual network approach is the leanest of all organizations because

little supervision is required * only 2 or 3 levels of hierarchy

geographic or consumer: the structure focuses company activities on

local market conditions

Primary difference between divisional and functional structures is that in a divisional structure the chain of command from each function converges

lower in the hierarchy

Permanent Teams: authority is pushed to

lower levels and front line employees are often given the freedom to make decisions and take action on their own *team members may share or rotate team leadership

Most organizations encourage managers to delegate authority to

lowest possible level to provide maximum flexibility to meet customer needs and adapt to shifts in the environment

Staff Authority

narrower and includes the right to advise recommend and counsel in the staffs specialists' area of expertise

differentiation strategy

organization attempts to develop innovative products uniqe to the market

cost leadership strategy

organization strives for internal efficiency

Authority is vested in

organizational positions, not people *managers have authority because of the positions they hold and other people in the same positions would have the same authority

Managers in every organization face the question about how to do what?

organize for maximum efficiency and effectiveness

Functional Structure: People in a department primarily communicate with

others in the same department to coordinate work and and accomplish tasks or implement decisions that are passed down the hierarchy

Tall Structure

overall narrow span and more hierarchical levels

Top Leader

oversees both the product and the functional chains of command and is responsible for the entire matrix

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Line Authority

people in management positions have formal authority to direct and control immediate subordinates

Accountability

people with authority and responsibility are subject to reporting and justifying task outcomes to those above them in the chain of command

Line departments

perform tasks that reflect the organization's primary goal and mission

project manager

person responsible for coordinating activities of several departments for the completion of a specific project

Delegation

process that managers use to transfer authority and responsibility to positions below them in the hierarchy

geographic or consumer: competitive advantage may come from the

production or sale of a product or service adapted to a given country or region

Although vertical functional structure is effective in stable environments it does not

provide horizontal coordination that is needed for rapid change

companies shift to a horizontal approach through

reengineering

relational coordination

refers to frequent horizontal coordination and communication carried out through ongoing relationships of shared goals, shared knowledge, and mutual respect

technical complexity

refers to the degree to which complex machinery is involved in the production process to the exclusion of people

Coordination

refers to the managerial task of adjusting and synchronizing the diverse activities among different individuals and departments

Permanent teams: emphasis is on horizontal communication and information because

representatives from all functions are coordinating their work adn skills to complete a specific task

When managers can't delegate they undermine what?

role of their subordinates and prevent people from doing jobs effectively

Functional Structure: What governs the duties of each employee?

rules and procedures

In a divisional structure divisions are created. as

self contained units with separate functional departments for each division *seperate R&D for each division (each focus on single product line or customer segment)

Many organizations are moving away from

specialization

Divisional: Decision making is pushed down freeing the president and those on top for

strategic planning

amount of centralization or decentralization should fit the firms ___

strategy

having too many hierarchal levels and narrow spans of control is a common ___ ___ for organization

structural problem

Authority is accepted by

subordinates *authority flows from top down, subordinates comply because they believe the managers have a legitimate right to issue orders

Most widespread trend in departmentalization has been implementation fo

team concept

2 innovative approaches are the use of what 2 structures?

teams and virtual networks *emerged to meet changing organizational needs in a turbulent global environment

Manufacturing technologies differ in terms of ___ ___

technical complexity

task force is a

temporary team or committee designed to solve problem involving several departments *team members represent their departments and share info to coordinate

Departmentalization

the basis for grouping individual positions into departments and departments into the total organization

Team based structure

the entire organization is made up of horizontal teams that coordinate their work and work directly with customers to accomplish the organization's goals

Virtual Network Structure

the firm subcontracts most of its major functions to separate companies and coordinate their activities from a small organization at headquarters

Authority is

the formal and legitimate right of a manager to make decisions, issue orders, and allocate resources to achieve organizationally desired outcomes

Span of management

the number of employees reporting to a supervisor

Coordination is required regardless of whether

the organization has a functional divisional or team structure

Matrix Boss

the product or functional boss, who is responsible for one side of the matrix

2 boss employees

those who report to 2 supervisors simultaneously, must resolve conflicting demands from matrix bosses *must work with senior managers to reach joint decisions *need excellent realtion skills

mass production is appropriate for

tighter vertical structure

If there is a problem on two sides of the matrix it will be sent to

top leader

Vertical structure provides

traditional control within functional departments

reason for growing use of teams and networks Is that many managers recognize limits of

traditional vertical organization structures in a fast shifting environment

When managers have authority exceeding responsibility they may become

tyrants *using authority to achieve frivolous outcomes

Chain of Command

unbroken line of authority that links all employees in an organizatino and shows who reports to whom

The chain of command is associated with what two underlying principles?

unity of command scalar principle

Functional Structure: information flows up and down the

vertical hierarchy *and the chain of command converges at the top of the organization

Authority flows down the

vertical hierarchy *positions at the top of the hierarchy are vested with more formal authority than positions at the bottom

Organization chart

visual representation of an organizations structure

idea behind networks is that a company can concentrate on

what it does best and contract out other activities to companies with distinctive competence in those specific areas which enables a company to do more with less

Characteristics of vertical organization structure include what?

work specialization chain of command span of management, centralization, decentralization