Intro to Business Chapter 8

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

Chain of command

Benchmarking

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

Advantages of departmentalization

1. Employees can develop skills in depth and progress within a department as they master more skills. 2. The company can achieve economies of scale by centralizing all the resources it needs and locate various experts in that area. 3. Employees can coordinate work within the function and top management can easily direct and control various departments' activities.

Disadvantages of decentralized authority

1. less efficiency 2. complex distribution system 3. less top-management control 4. weakened corporate image

Advantages of decentralized authority

1.) Better adaptation to customer wants 2.) More empowerment of workers 3.) Faster decision making 4.) Higher morale

What are four major choices in structuring organizations?

1.) Centralization versus decentralization 2.) Breadth of span of control 3.) Tall versus flat organizational structures 4.) Type of departmentalization

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; rather they tend to become narrow specialists. 5.) Department members may engage in groupthink (they think alike) and may need input from outside to become more creative.

Advantages of centralized authority

1.) Greater top-management control 2.) More efficiency 3.) Simpler distribution system 4.) Stronger brand/corporate image

Advantages of the matrix structure?

1.) It gives managers flexibility in assigning people to projects. 2.) It encourages interorganizational cooperation and teamwork. 3.) It can produce creative solutions to product development problems. 4.) It makes efficient use of organizational resources.

Disadvantages of the matrix structure?

1.) It's costly and complex. 2.) It can confuse employees about where their loyalty belongs, with the project manager or their functional unit. 3.) It requires good interpersonal skills as well as cooperative employees and managers to avoid communication problems. 4.) It may be only a temporary solution to a long-term problem.

Weber emphasized...

1.) Job descriptions 2.) Written rules, decision guidelines, and detailed records. 3.) Consistent procedures, regulations, and policies. 4.) Staffing and promotion based on qualifications.

Disadvantages of centralized authority

1.) Less responsiveness to customers 2.) Less empowerment to customers 3.) Interorganizational conflict 4.) Lower morale away from headquarters

What are the two major organizational models

1.) Line organizations 2.) Line-and-staff organizations

Four ways to structure an organization

1.) Line organizations 2.) Line-and-staff organizations 3.) Matrix-style organizations 4.) Cross-functional self-managed teams

What are the key alternatives to the major organizational models?

1.) Matrix organization 2.) Cross-functional self-managed teams

Companies that are the most successful in adapting to change have these common traits:

1.) They listen to customers. 2.) They have inspirational managers who drive new ideas throughout the organizations 3.) They often have had a close call with going out of business.

Henri introduced which priniciples?

1.) Unity of command. Each employee is to report to one, and only one boss. 2.) Hierarchy of authority. 3.) Division of Labor. 4.) Subordination of individual interests to the general interest. The goals of the team are more important than the goals of the individual workers. 5.) Authority. Managers have the right to give orders and the power to enforce obedience. 6.) Degree of centralization. The amount of decision-making power vested in top management should vary by circumstances. 7.) Clear communication channels 8.) Order. Material and people should be placed and maintained in the proper location. 9.) Equity. A manager should treat employees and peer with respect and justice. 10.) Esprit de corps. A spirit of pride and loyalty should be created among people in the firm.

What did Max Weber promote?

Max Weber promoted the pyramid-shaped organizational structure that became popular in large firms.

Self-managed

Mean that they are empowered to make decisions without management approval.

What are the major concepts involved in interfirm communication?

Networking uses communications technology and other means to link organizations and allow them to work together on common objectives. A virtual corporation is a networked organization of replaceable firms that join and leave as needed.

A visual device that shows relationships among people and divides the organization's work; it shows who is accountable for the completion of specific work and who reports to whom.

Organizational chart

Restructuring

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

Principles of organization

Structuring the business, making an appropriate division of labor using job specialization and departmentalization, establishing procedures, and assigning authority are tasks found in most firms

An organizational structure in which the pyramidal organization chart would be quite tall because of the various levels of management.

Tall Organizational Structure

Henri Fayol introduced...

The idea that each worker should report to only one manager and that manager, in turn, should have the right to give orders for others to follow and the power to enforce them.

Span of control

The optimum number of subordinates a manager supervised or should supervise.

Real time

The perfect moment or the actual time in which something takes place.

Networking

The process of establishing and maintaining contacts with key managers in one's own organization and other organizations and using those contacts to weave strong relationships that serve as informal development systems.

Formal organization

The structure that details lines of responsibility, authority, and position; that is, the structure shown on organization charts.

Informal organization

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

Core competencies

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

Staff personnel have authority to advise line personnel and influence their decisions, but they can't make policy changes themselves.

True

True of False: Large organizations use flat structures to try to match the friendliness of small firms whose workers often know customers by name

True

True or False: A line organization does not have any specialists who provide managerial support.

True

True or False: Benchmarking also has a more directly competitive purpose.

True

True or False: Both line and line-and-staff organizational structures do well with stable environments and slow product development.

True

True or False: Line organizations may be unable to handle complex decisions relating to thousands of products and tons or paperwork.

True

True or False: Line personnel have formal authority to make policy decisions.

True

True or False: Staff personnel strengthen the line positions and are like well-paid consultants on the organization's payroll.

True

True or false: The informal organization's nerve center is the grapevine.

True

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

Virtual corporation

Organizational (corporate) culture

Widely shared values within an organization that provide unity and cooperation to achieve common goals.

Digital natives

Young people who have grown up using the internet and social networking

Who was Henri Fayol...

an economic theoretician

Max Weber was in favor of...

bureaucracy

Reliance on rules is called

bureaucracy

Max Weber believed employees should have less...

decision making.

The process of setting up individual departments to do specialized tasks is called...

departmentalization

Organizing or structuring begins with...

determining what work needs to be done and then dividing up the tasks among the team.

Dividing tasks into smaller jobs is called...

job specialization

Dividing up tasks into smaller jobs is called...

job specialization.

Max Weber put great trust in...

managers

Max Weber felt companies would do well if employees simply did what...

they were told.

Who was Max Weber?

A German sociologist and economist.

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.

Where was the matrix structure developed?

Aerospace industry

Matrix organization

An organization in which 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.

inverted organization

An organization that has contact people at the top and the chief executive officer at the bottom of the organization chart.

Line organization

An organization that has direct two-way lines of responsibility, authority, and communication running from the top to the bottom of the organization, with all people reporting to only one supervisor.

An organizational structure that has few layers of management and a broad span of control.

Flat Organizational Structure

Cross-functional self-managed teams

Groups of employees from different departments who work together on a long-term basis.

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

Centralized authority

The dividing of organizational functions into separate units.

Departmentalization

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

Decentralized authority

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.

Economies of scale

Staff personnel

Employees who advise and assist line personnel in meeting their goals.

Line personnel

Employees who are part of the chain of command that is responsible for achieving organizational goals