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