Management Chapter 10

Factors that influence of Centralization vs Decentralization

- Great change and uncertainty in the environment are usually associated with decentralization. Allows for more rapid, on the spot decisions. - The amount of centralization or decentralization should fit the firm's strategy. - In times of crisis or risk of company failure, authority may be centralized at the top.

Factors for a large span of management

- Work performed by subordinates is stable and routine - Subordinates perform similar work tasks. - Subordinates are concentrated in a single location - Subordinates are highly trained and need little direction. - Rules and procedures defining task activities are available - Support systems and personnel are available for the manager -Little time is required in nonsupervisory activities - Manager's personal preferences and styles favor a large span.

Departmentalization

-Functional structure: activities are grouped together by common function from the bottom to the top of the organization. -Matrix approach: combines functional and divisional chains of command simultaneously, in the same part of the organization. Improves horizontal coordination. Two-boss employees

Advantages and Disadvantages of the Functional structure

Advantages: - Grouping employees by common task permits economies of scale and efficient resource use. - Enhances the development of in-depth skills because people work on a variety of related problems and are associated with other experts within their department. Disadvantages: -Barriers exist across departments. Due to distinct departments, communication and coordination across functions are often poor, causing a slow response to environmental changes. -Decisions involving more than one department are more difficult.

Advantages and Disadvantages of Virtual Networks

Advantages: -Can draw on expertise worldwide - Highly flexible and responsive -Reduced overhead costs Disadvantages: -Lack of control; weak boundaries - Greater demands on managers - Weaker employee loyalty.

Advantages and Disadvantages of the Matrix Approach

Advantages: -Highly effective in a complex, rapidly changing environment in which the organization must be flexible, innovative and adaptable. - Efficient use of human resources because specialists can be transferred from one division to another. Disadvantages: - Confusion and frustration caused by the dual chain of command. -High conflict between two sides of the matrix because it pits divisional against functional goals. - Time lost to meetings and discussions devoted to resolving this conflict. (too much time spend coordinating rather than acting)

Advantages and Disadvantages of Teams

Advantages: -Reduced barriers among departments, increased compromise - Shorter response time, quicker decisions - Better morale, enthusiasm from employee involvement Disadvantages: -Dual loyalties and conflict - Time and resources spent on meetings -Unplanned decentralizatoin

Principle of Unity of Command

Any subordinate should report only to one superior on a given item.

Structure follows Strategy

Business performance is strongly influenced by how well the company's structure is aligned with its strategic intent and the needs of the environment. - Managers must pick strategies and structures that are congruent.

Centralization vs Decentralization

Centralization: Decision authority is located near the top of the organization. Decentralization: Decision authority is pushed downward to lower organization levels.

Line Authority

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

Exemption Principle

Recurring or repetitive decisions ought to be handled in a routine manner by lower level managers. And only unusual matters should be passed on and handled by upper level managers

Staff authority

Staff authority is narrower than line authority, and includes the right to advise, recommend, and counsel in the staff specialists' area of expertise.

Span of Management (Span of control)

the number of employees reporting to a supervisor. This characteristic of structure determines how closely a supervisor can monitor subordinates. The bigger the span of management, the looser control is over subordinates