Chapter 7

Geographical departmentalization.

This form organizes units by geographical regions within a country or, for a multinational company, by region throughout the world.

vision

ability to perceive marketplace needs and what an organization must do to satisfy them. A company's vision must be focused and yet flexible enough to adapt to changes in the business environment.

directing

guiding and motivating employees to accomplish organizational objectives. Directing might include training (or retraining), setting up schedules, delegating certain tasks, and monitoring progress.

delegation

managerial process of assigning work to employees.

Product departmentalization

. This approach organizes work units based on the goods and services a company offers. This approach organizes work units based on the goods and services a company offers.

Why is it important for a top executive to set high ethical standards?

High ethical standards often result in a stable workforce, job satisfaction, and customer loyalty.

What is management?

Management is the process of achieving organizational objectives through people and other resources. The manager's job is to combine human and technical resources in the best way possible to achieve the company's goals.

Skills Needed for Managerial Success

Managers at every level in the management hierarchy must exercise three basic types of skills: technical, human, and conceptual.

decentralization

decision makeup based at lower levels of the organization.

centralization

decision making based at the top of the management hierarchy.

top management

managers at the highest level of the management pyramid who devote most of their time to developing long-range plans for their organizations. Top managers include such positions as chief executive officer (CEO), chief financial officer (CFO), and executive vice president. Top managers devote most of their time to developing long-range plans for their organizations. They make decisions such as whether to introduce new products, purchase other companies, or enter new geographical markets. Top managers set a direction for their organization and inspire the company's executives and employees to achieve their vision for the company's future.

span of management

number of subordinates a manager can supervise effectively. These employees are often referred to as direct reports. First-line managers have wider spans of management, monitoring the work of many employees. The span of management varies depending on many factors, including the type of work performed and employees' training. In recent years, a growing trend has brought wider spans of control, as companies have reduced their layers of management to flatten their organizational structures, in the process increasing the decision-making responsibility they give employees.

committee organization

organizational structure that places authority and responsibility jointly in the hands of a group of individuals rather than a single manager. This model typically appears as part of a regular line-and-staff structure.

management

process of achieving organizational objectives through people and other resources. A company's management usually has three levels: top, middle, and supervisory.

planning

process of anticipating future events and conditions and determining courses of action for achieving organizational objectives. Effective planning helps a business focus its vision, avoid costly mistakes, and seize opportunities. Planning should be flexible and responsive to changes in the business environment, and should involve managers from all levels of the organization.

organizing

process of blending human and material resources through a formal structure of tasks and authority; arranging work, dividing tasks among employees, and coordinating them to ensure implementation of plans and accomplishment of objectives. Organizing involves classifying and dividing work into manageable units with a logical structure. Managers staff the organization with the best possible employees for each job.

A line organization,

the oldest and simplest organization structure, establishes a direct flow of authority from the chief executive to employees. The line organization defines a simple, clear chain of command—a hierarchy of managers and workers.

Which of a company's characteristics does a SWOT analysis compare?

A SWOT analysis determines a company's strengths, weaknesses, opportunities, and threats relative to its competitors.

What is meant by a vision for the company?

A vision serves as the target for a company's actions, helping direct the company toward opportunities and differentiating it from its competitors.

How do managers use objectives?

Objectives set guideposts by which managers define the organization's desired performance in such areas as new-product development, sales, customer service, and employee satisfaction.

What are the five major forms of departmentalization?

Product departmentalization organizes units by the different goods and services a company offers. Geographical departmentalization organizes units by geographical regions. Customer departmentalization organizes units by different types of customers. Functional departmentalization organizes units by business activities such as finance, marketing, human resources, and production. Process departmentalization organizes units by the steps or work processes it takes to complete production or provide a service.

SWOT analysis

SWOT is an acronym for strengths, weaknesses, opportunities, and threats. By systematically evaluating all four of these factors, a firm can then develop the best strategies for gaining a competitive advantage.

Functional departmentalization.

Some companies organize work units according to business functions such as finance, marketing, human resources, and production. An advertising agency may create departments for creative staffers (say, copywriters), media buyers, and account executives.

Process departmentalization.

Some goods and services require multiple work processes to complete their production. For instance, a textile manufacturer may set up separate departments for cotton ginning (separating cotton fibers from their seeds), spinning, weaving, dyeing, and finishing.

Technical skills

Technical skills are the manager's ability to understand and use the techniques, knowledge, tools, and equipment of a specific discipline or department. Technical skills are especially important for first-line managers and become less important at higher levels of the management hierarchy.

What is the relationship between the manager's planning and controlling functions?

The basic purpose of controlling is to assess the success of the planning function. Controlling also provides feedback for future rounds of planning.

Types of Organization Structures

The four basic types of organization structures are line, line-and-staff, committee, and matrix. While some companies do follow one type of structure, most use a combination.

How do the jobs of top managers, middle managers, and supervisory managers differ?

Top managers develop long-range plans, set a direction for their organization, and inspire all employees to achieve the company's vision. Middle managers focus on specific operations, products, or customers. They develop procedures to implement the company's strategic plans. Supervisory managers interact directly with nonmanagerial employees who produce and sell the company's goods and services. They are responsible for implementing the plans developed by middle managers and motivating workers to accomplish daily, weekly, and monthly goals.

matrix structure

links employees from different parts of the organization to work together on specific projects

competitive differentiation

unique combination of organizational abilities, products, and approaches that sets a company apart from competitors in the minds of customers

mission statement

written explanation of an organization's business intentions and aims. It is an enduring statement of a company's purpose, possibly highlighting the scope of operations, the market it seeks to serve, and the ways it will attempt to set itself apart from competitors. A mission statement guides the actions of employees and publicizes the company's reasons for existence.

Customer departmentalization.

A company that offers a variety of goods and services targeted at different types of customers might structure itself based on customer departmentalization. Management of Procter & Gamble's wide array of products is divided among four business units:

A line-and-staff organization

combines the direct flow of authority of a line organization with staff departments that support the line departments. Line departments participate directly in decisions that affect the core operations of the organization. Staff departments lend specialized technical support.

Conceptual skills

determine a manager's ability to see the organization as a unified whole and to understand how each part of the overall organization interacts with other parts. These skills involve an ability to understand abstract relationships, interpret information, develop ideas, and creatively solve problems. Conceptual skills are especially important for top-level managers, who must develop long-range plans for the future direction of their organization.

supervisory management

first-line management; includes positions such as supervisor, line manager, and group leader; responsible for assigning non-managerial employees to specific jobs and evaluating their performance every day. Managers at this first level of the hierarchy work directly with the employees who produce and sell the company's goods and services. They are responsible for implementing middle managers' plans by motivating workers to accomplish daily, weekly, and monthly goals.

controlling

function of evaluating an organization's performance against its objectives. The four basic steps in controlling are to establish performance standards, monitor actual performance, compare actual performance with established standards, and make corrections if necessary.

objectives

guideposts by which managers define the organization's desired performance in such areas as new-product development, sales, customer service, growth, environmental and social responsibility, and employee satisfaction.

Human skills

include the ability to communicate, build rapport, collaborate, motivate, and lead employees to meet organizational goals through individual and team assignments. It would be challenging for a manager to succeed with others both inside and outside of the organization without the ability to get a point across, create a compelling presentation to support goals, and get buy-in for ideas that inspire others to achieve results. Effectively communicating using e-mail text messaging, voicemail, videoconferencing—and even face-to-face—is crucial in today's business environment. Human skills might also include emotional intelligence, the ability to understand and manage one's own emotions, along with the emotions of others.

strategic planning

process of determining the primary objectives of an organization and then acting and allocating resources to achieve those objectives. Strategic planning has formed the basis of many fundamental management decisions. Successful strategic planners typically follow the six steps : defining a mission, assessing the organization's competitive position, setting organizational objectives, creating strategies for competitive differentiation, implementing the strategy, and evaluating the results and refining the plan.

departmentalization

process of dividing work activities into units within the organization.

middle management

second tier in the management pyramid that focuses on specific operations within the organizations. includes positions such as general managers, plant managers, division managers, and unit managers. Middle managers' attention focuses on specific operations, products, or customer groups within an organization. They are responsible for developing detailed plans and procedures to implement the company's strategic plans. If top management decided to broaden the distribution of a product, a sales manager would be responsible for determining the number of sales personnel required. Middle managers are responsible for targeting the products and customers who are the source of the sales and profit growth expected by their CEOs. To achieve these goals, middle managers might budget money for product development, identify new uses for existing products, and improve the ways they train and motivate salespeople. Because they are more familiar with day-to-day operations than CEOs, middle managers often come up with new ways to increase sales or solve company problems.

chain of command

set of relationships that indicates who directs which activities and who reports to whom. With a clear chain of command, everyone knows who is in charge and decisions can be made quickly. This structure is particularly effective in a crisis situation. But a line organization has its drawbacks. Each manager has complete responsibility for a range of activities; in a medium-size or large organization, however, this person can't possibly be expert in all of them. In a small organization such as a local hair salon or a dentist's office, a line organization is probably the most efficient way to run the business.

organization

structured group of people working together to achieve common goals. An organization features three key elements: human interaction, goal-directed activities, and structure. The organizing process, much of which is led by managers, should result in an overall structure that permits interactions among individuals and departments needed to achieve company goals. The steps involved in the organizing process are: Managers first determine the specific activities needed to implement plans and achieve goals. Next, they group these work activities into a logical structure. Then they assign work to specific employees and give the people the resources they need to complete it. Managers coordinate the work of different groups and employees within the company. Finally, they evaluate the results of the organizing process to ensure effective and efficient progress toward planned goals. Evaluation sometimes results in changes to the way work is organized.