Business Ch 7 & 8

The organization structure must be _____ to changes in the market

adapted ~Introducing change into an organization is one of the toughest challenges for managers

Management involves:

Carrying out the leadership's vision

What are the leadership styles?

1) Autocratic 2) Participative (Democratic) 3) Free-Rein

Control function

Critical to the management system because it provides feedback that lets managers adjust to any deviations from plans

What are the four functions of management?

1) Planning 2) Organizing 3) Leading 4) Controlling POLC

Two major organization theorists

1) Henri Fayol: administration industrielle et generale in France 1919 2) Max Weber: the theory of social and economic organizations in Germany about the same time

What is a key criterion for measuring success?

Customer satisfaction

Vision

An encompassing explanation of why the organization exists and where it is headed More than a goal

Decentralized Authority

An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be

Organizational change always causes some _____

resistance

The system's weak link is _______

setting standards

Organization Chart

~A visual device that shows the relationship among people and divides the organization's work ~Shows who is accountable for the completion of specific work and who reports to whom

Potential external opportunities

~Ability to serve additional customer groups ~Expand product lines ~Ability to transfer skills/technology to new products ~Falling trade barriers in attractive foreign markers ~Complacency among rival firms ~Ability to grow due to increases in market demand

Flat Organization Structure

~An organization structure that has few layers of management and a broad span of control ~More responsive to customer demands because of empowerment ~The flatter organizations became, the larger the span of control became

Inverted Organization

~An organization that has contact people at the top and the CEO at the bottom ~There are few layers of management, and their job is to assist and support frontline people ~Frontline people now have to be better educated, better trained, and better paid than in the past

Advantages of Matrix Organizations

~Flexibility in assigning people to projects ~Encourage interorganizational cooperation and teamwork ~Can give more creative solutions to problems ~More efficient use of organizational resources

Today's leaders are...

Younger, more progressive Growing numbers of women Fewer from elite universities

In order to measure results against standards, the standards must be _____, _______, and _____

Specific, attainable, and measurable

Objectives

Specific, short-term statements detailing how to achieve the organizational goals

Saying ___ has led to happier employees and greater profits for companies

Thank You (the most basic human relation skill)

To get the right kind of people, the firm has to offer the right kind of ___

incentives

In more progressive organizations, everyone shares ______, giving everyone power

information

Bureaucracy

~An organization with many layers of managers who set rules and regulations and oversee all decisions ~Decision making may take too long to satisfy customers ~To make customers happy, firms are utilizing empowerment

Decision Making

~Choosing among two or more alternatives; finding the best alternative ~All management functions involve decision making

Participative (Democratic) Leadership

~Consists of managers and employees working together to make decisions ~Research shows that employee participation may not increase effectiveness, but it does usually increase job satisfaction ~Apple, IBM, AT&T, and most smaller firms use this

Disadvantages of Matrix Organizations

~Costly and complex ~Create confusion in employee loyalties ~Require good interpersonal skills and cooperative employees and managers ~May only be a temporary solution to a long-term problem ~Project teams are not permanent and there is little chance for cross-functional learning

Knowledge Management

~Finding the right information, keeping the information in a readily accessible place, and making the information known to everyone in the firm ~1st step is to decide what knowledge is most important ~Tries to prevent duplicating info gathering every time a decision is made ~Key to success is learning how to process info and turn it into knowledge that everyone can use

Organizing the business

~First step is organizing (or structuring), deciding what work needs to be done and then dividing up tasks (division of labor) ~Job Specialization: dividing tasks into smaller jobs ~As business grows, entrepreneur hires more workers and needs to organize them into teams ~Departmentalization: process of setting up departments to do specialized tasks ~Assign authority and responsibility to people so you can control the process

A person can be a good manager and not a good _____

leader

Goals

Broad, long-term accomplishments an organization wishes to attain

Businessweek magazine survey found that workers prefer working in ____

teams

What happened after the introduction of mass production?

Business organizations grew complex and difficult to manage

Ways to departmentalize

By... ~product ~function ~customer group ~geographic location ~process

Benchmarking

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

Leaders must lead by ___ , not just by ____

Doing Saying

What are the two systems that all organizations have?

Formal & Informal ~No organization can operate effectively without both types ~Formal can be slow and bureaucratic, while Informal can generate creative solutions ~Informal is too unstructured and emotional for decision making, while Formal provides guidelines and lines of authority ~Successful managers work with the informal organization and use it to the organization's advantage

Empowerment

Giving employees the authority and responsibility to respond quickly to customer requests

Enabling

Giving workers the education and tools they need to make decisions

External Customers

Includes dealers, who buy products to sell to others, and ultimate customers (or end users), who buy products for their own personal use

Internal Customers

Individuals and units within the firm that receive services from other individuals and units

Planning is a ____; it tends to follow a ____ pattern

Process Continuous

How to answer: What is the situation now?

SWOT Analysis: Analyze the organization's Strengths, Weaknesses, Opportunities, and Threats

Chain of Command

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

Grapevine

The nerve center of the informal organization

Core Competencies

Those functions that the organization can do as well or better than any other organization in the world

Cross-Functional Self-Managed Teams

~Groups of employees from different departments who work together on a long-term basis ~Usually the teams are empowered to make decisions on their own without seeking the approval of management ~Self-managed teams reduce the barriers between design, engineering, marketing, and other functions ~Cross-functional teams work best when leadership is shared and customers' input is included ~Some go beyond organizational boundaries to include customers, suppliers, and distributors ~Some share info across national boundaries and may be encouraged by the gov

Digital Natives

~Individuals who grew up with the internet ~Companies must retrain older workers in the new technologies

Restructuring

~Redesigning an organization so that it can more effectively and efficiently serve its customers ~A few organizations have turned the traditional organizational structure upside down

Matrix Organization

~Specialists from different parts of the organization are brought together to work on specific projects, but still remain part of a line-and-staff structure ~Developed in the aerospace industry ~Now used in banking, management consulting firms, ad agencies, and school systems

How to answer: How can we get to our goal from here?

~Strategic planning ~Tactical planning ~Operational planning ~Contingency planning

Top Management

~The highest level of management, consisting of the president and other key company executives who develop strategic plans ~Includes CEO, COO, CFO, and CIO

Transparency Organizations

~The internet links organizations so closely that each can see what the others are doing in real time ~Real time: the present moment or the actual time in which something takes place

Formal Organization

~The structure that details lines of responsibility, authority, and position ~The structure that appears on the organization chart

Informal Organization

~The system that develops spontaneously as employees meet and form cliques, relationships, and lines of authority outside the formal organization ~The human side of the organization that does not appear on any organization chart

Organizational (or Corporate) Culture

~The widely shared values within an organization that provide unity and cooperation to achieve common goals ~Reflected in stories, traditions, and myths ~Can be negative, as with an organization in which no one cares about quality ~The very best organizations have cultures that emphasize service to customers ~The key to productive culture is mutual trust

Transparency & Virtual Corporations

~Transparency: a concept that describes a company being so open to other companies working with it that the once-solid barriers between them become see-through, and electronic info is shared as if the companies were one ~Two companies can work together as closely as two departments once did

Networking

~Using communications technology and other means to link organizations and allow them to work together on common objectives

Staffing

A management function that includes hiring, motivating, and retaining the best people available to accomplish the company's objectives

Rational Decision-Making Model

A series of steps managers often follow to make logical, intelligent, and well-founded decisions

Both Line and Line-And-Staff Organizations can become ______

inflexible ~Both structures work will in organizations with relatively unchanging environments and slow product development ~Now, high-growth industries dominate the economy

Techniques for problem solving

1) Brainstorming: coming up with as many solutions to a problem as possible in a short period of time with no censoring of ideas 2) PMI: listing all the PLUSES, MINUSES, and IMPLICATIONS

Leaders must do the following:

1) Communicate a vision and rally others around that vision 2) Establish corporate values 3) Promote corporate ethics 4) Embrace change 5) Stress accountability and responsibility

Leadership involves:

1) Creating and communicating vision for others to follow 2) Establishing corporate values and ethics 3) Transforming the way the organization does business in other to improve its effectiveness and efficiency

Steps in Decision Making

1) Define the situation 2) Describe and collect needed information 3) Develop alternatives 4) Develop agreement among those involved 5) Decide which alternative is best 6) Do what is indicated (begin implementation) 7) Determine whether the decision was a good one and follow up

Structuring an Organization consists of:

1) Devising a division of labor 2) Setting up teams or departments to do specific tasks 3) Assigning responsibility and authority to people

Six Sins of Staffing

1) Don't hire someone because someone else says so 2) Don't get caught up in applicants' appearances 3) Don't give someone the wrong job 4) Don't forget about feedback 5) Don't give promotions just because "it's time" 6) Don't cheat your employees

Five Steps of Controlling

1) Establish clear standards 2) Monitor and record performance 3) Compare results against standards 4) Communicate results 5) If needed, take corrective action Feedback-- providing positive feedback for work well done Are standards realistic? Then back to step 1

Whom should a manager thank?

1) Interns: doing lots of work for little money, they are the future of the company and industry 2) Lawyers: many do pro bono work, even for nonprofit companies 3) The little people: mailroom, repair, and cleaning staff keep the office running day-to-day

Four Ways to structure an organization

1) Line 2) Line-and-Staff 3) Matrix-Style 4) Cross-Functional Self-Managed Teams

Managers must have 3 categories of skills:

1) Technical skills: ability to perform tasks in specific discipline or department 2) Human Relation Skills: communication and motivation; enable managers to work through and with people 3) Conceptual Skills: ability to picture the organization as a whole and the relationships among its various parts

A well-designed mission statement should address:

1) The organization's self-concept 2) Company philosophy 3) Long-term survival 4) Customer needs 5) Social responsibility 6) The nature of the product or service

What are the levels of management?

1) Top management: president, VP 2) Middle Management: plant managers, division heads, branch managers 3) Supervisory (First-Line) Management: supervisors, foremen, department heads, section leaders 4) Nonsupervisory: employees

Fayol's Principles

1) Unity of Command (each worker is to report to only one boss) 2) Hierarchy of Authority (one should know to whom to report) 3) Division of Labor (functions should be divided into areas of specialization) 4) Subordination of Individual Interests to the General Interests (goals of the organization should be considered more important than personal goals 5) Authority (managers should give orders and expect them to be carried out) 6) Degree of Centralization (the amount of decision-making power vested in top management should vary by circumstances) 7) Clear Communication Channels 8) Order (materials and people should be placed in the proper location) 9) Equity (a manager should treat employees and peers with respect and justice 10) Esprit De Corps (a spirit of pride and loyalty should be created)

Planning answers several fundamental questions:

1) What is the situation now and where do we want to go? 2) How can we get there from here?

Hierarchy

A system in which one person is at the top of the organization and there is a ranked or sequential ordering from the top down of managers who are responsible to that person

Centralized Authority

An organizing structure in which decision-making authority is maintained at the top level of management at the company's headquarters

Mission statement

An outline of the fundamental purposes of the organization

Leadership is actually a ____ with varying amounts of ____ participation

Continuum Employee

What do customers today want?

High-quality products with fast, friendly service and all at low cost

Bureaucracy

Reliance on rules

Managers often ____ empowerment because they are ____ to give up power

Resist Reluctant

What does planning involve?

Setting the organizational vision, goals and objectives

Transparency

The presentation of the company's facts and figures in a way that is clear and apparent to all stakeholders

Management

The process used to accomplish organizational goals through planning, organizing, leading and controlling people and other organizational resources PLANNING, ORGANIZING, LEADING, CONTROLLING

Centralization or Decentralization??

Today's rapidly changing markets tend to favor decentralization and delegation of authority

CEO, COO, CFO, CIO

~CEO (Chief Executive Officer): responsible for all top-level decisions in the firm ~COO (Chief Operating Officer): responsible for putting changes into effect ~CFO (Chief Financial Officer): responsible for obtaining funds, planning budgets, collecting funds... ~CIO or CKO (Chief Information Officer): responsible for getting the right info to managers so they can make good decisions; more important than ever

Potential internal strengths

~Core competencies in key areas ~An acknowledged market leader ~Well-conceived functional area strategies ~Proven management ~Cost advantages ~Better advertising campaigns

Leading

~Creating a vision for the organization and guiding, training, coaching, and motivating others to work effectively to achieve the organization's goals and objectives in a timely manner ~Must empower employees, giving them as much freedom as possible (rather than directing) ~Leadership still needed to keep employees focused on right tasks at the right time

Disadvantages of departmentalization

~Departments may not communicate well ~Employees identify with the department rather than the total organization ~Response to external change is slow ~Employees may not be trained in different management responsibilities and become narrow specialists ~People in the same department tend to think alike and need outside input to become creative

Which leadership style is best?

~Depends on the goals and values of the firm, who is being led, and in what situations ~Can use a variety of leadership styles

Economies of Scale

~Describes the situation in which companies can reduce their production costs if they can purchase raw materials in bulk ~The average cost of goods goes down as production levels increase

Departmentalization

~Dividing organizational functions into separate units ~Traditional way is by function ~Functional Structure: the grouping of workers into departments based on similar skills, expertise, or resource use

Potential external threats

~Entry of lower-cost foreign competitors ~Rising sales of substitute products ~Slower market growth ~Costly regulatory requirements ~Vulnerability to recession and business cycles ~Changing buyer needs and tastes

Skills needed at various levels of management

~First-Line Managers need fewer conceptual skills, and more technical and human relations skills ~Top managers need fewer technical skills, and more human relations and conceptual skills ~All need the same amount of human relations skills

Line Organizations

~Has direct two-way lines of responsibility, authority, and communication running from the top to the bottom ~Everyone reports to one supervisor ~Ex: military & small businesses ~No departments ~Line managers issue orders, enforce discipline and adjust the organization to changes

Advantages of Line-And-Staff Organization

~Have access to expert advice ~Staff positions strengthen the line personnel

Disadvantages of line organization in large companies

~Too inflexible ~Few specialists to advise line employees ~Lines of communication too long ~Unable to handle complex decisions

Line-And-Staff Organizations

~Have both line and staff personnel ~Line Personnel: employees who are part of the chain of command that is responsible for achieving organizational goals ~Staff Personnel: employees who advise and assist line personnel in meeting their goals ~Line personnel have formal authority to make policy decisions, while staff have the authority to only advise line personnel

Planning

~Includes anticipating trends and determining the best strategies and tactics to achieve organizational goals and objectives ~The trend today is to have planning teams monitor the environment ~The KEY management functions because the other functions depend on having a good plan

Organizing

~Includes designing the structure of the organization and creating conditions and systems in which everyone and everything work together to achieve the organization's goals and objectives ~Designed around pleasing the customer at a profit ~Must remain flexible and adaptable to respond to customer's changing needs

Supervisory Management

~Includes managers who are directly responsible for supervising workers and evaluating their daily performance ~Also known as first-line managers

Controlling

~Involves establishing clear standards to determine whether or not an organization is progressing toward its goals and objectives, rewarding people for doing a good job, and taking corrective action if they are not

Directing

~Involves giving assignments, explaining routines, clarifying policies, and providing feedback on performance ~For traditional organizations

Autocratic Leadership

~Involves making managerial decisions without consulting others ~Effective in emergencies and when dealing with unskilled workers

Free-Rein Leadership

~Involves managers setting objectives and employees being relatively free to do whatever it takes to accomplish those objectives ~Often successful when dealing with engineers or other professionals

Progressive Leaders

~Less likely to give specific instructions to employees ~They empower employees to make decisions on their own

How to ease pressure on workers

~Manage output instead of hours ~Train workers to be ready for a more complex corporate structure ~Allow lower-level managers to make decisions ~Use technology to foster teamwork ~Shift hiring emphasis to collaboration

Reorganization is for Everyone

~Many companies are reorganizing, especially automakers, homebuilders, and banks ~Adjusting to changing markets is a normal function in a capitalist economy ~The key to success is to remain flexible and to adapt to the changing times

Often changes in organizations is due to evolving business environments such as:

~More global competition ~Declining economy ~Faster technological change ~Pressure to protect the environment

Potential internal weaknesses

~No clear strategic direction ~Obsolete facilities ~Subpar profitability ~Lack of managerial depth and talent ~Weak market image ~Too narrow a product line

Tall Organization Structure

~One in which the pyramidal organization chart would be quite tall because of the various levels of management ~Many layers of management ~Communication is distorted as it flows through these layers ~The cost of all these managers and support people is high ~Organizations moved toward flatter organizations

Strategic Planning

~Process of determining the major goals of the organization and the policies and strategies needed for obtaining and using resources to achieve those goals ~Done by top management ~Policies: broad guidelines for action ~Strategies: determine the best way to use resources ~Decides which customers to serve, when to serve them, what products to sell, and the geographic areas in which to compete ~Changes are fast-- long-range planning is more difficult ~Shorter-term plans allow companies to respond quickly to customer needs

Tactical Planning

~Process of developing detailed, short-term statements about what is to be done, who is to do it, and how it is to be done ~Done by managers at lower levels of organization ~Example is setting annual budgets

Contingency Planning

~Process of preparing alternative courses of action that may be used if the primary plans don't achieve the organization's objectives ~Needs to have alternative plans ready for environmental changes ~Crisis Planning, a part of contingency planning, involves reacting to sudden changes in the environment ~Market-based companies stay flexible, listen to customers, and seize opportunities when they come ~Leaders often set direction, rather than creating detailed strategic plans ~Opportunities must fit into the company's overall goals and objectives

Operational Planning

~Process of setting of work standards and schedules necessary to implement the company's tactical objectives ~Focuses on specific supervisors and individual employees ~The Operational Plan is the department manager's tool for daily operations

Maxx Weber's Principles

~Pyramid-Shaped Organization Structure: put great trusts in managers and felt the less decision making employees had to do, the better; makes sense when dealing with uneducated and untrained workers ~Principles similar to Fayol's with the addition of: 1) job descriptions, 2) written rules, decision guidelines, and detailed records, 3) consistent procedures, regulations, and policies, 4) staffing and promotions based on qualifications ~Believed in bureaucracy, which led to rigid policies and procedures ~Some organizations thrive on this but it hasn't been effective in other places

Middle Management

~The level of management that includes general managers, division managers, and branch and plant managers who are responsible for tactical planning and controlling

Span of Control

~The optimum number of subordinates a manager supervises or should supervise ~At lower levels, a wide span of control is possible ~The appropriate span narrows at higher levels of the organization ~Trend now is to expand span of control to get rid of middle managers ~Span of control can be increased through empowerment and the use of technology

Problem Solving

~The process of solving the everyday problems that occur ~Less formal than the decision-making process and calls for quicker action

Today's managers

~Use organizational resources workers, financial resources, information, and equipment ~Managers must guide, train, support, motivate, and coach employees rather than telling them what to do ~Emphasize teamwork and cooperation rather than discipline and order giving ~Work in teams ~Needs to be a skilled communicator and team player as well as a planner, coordinator, organizer, and supervisor

Advantages of functional departmentalization

~Workers can specialize and work together more effectively ~It may save costs (Efficiency) ~Skills can be developed in depth ~Resources can be centralized to allow for economies of scale ~Good coordination within the function