AG ECON Chapter 9

What are the disadvantages of organizing by geographic area?

Disadvantages: reduces central management's control over the unit and lose some operational efficiencies.

Giving critical tasks prominence and allowing them to function without restriction-

Don't unduly hinder or restrict critical processes. They always have priority.

Organizing by geographic area-

Each business unit handles the sales in that area.

What are the four principles of organization design?

1. Keep the organizational structure simple. 2. Give critical tasks prominence and allow them to function without restriction. 3. Minimize support staff 4. Keep work units small

Organizing by product-

A business unit is created for each product that essentially operates from the business.

What is a centralized organizational structure?

A structure that relies heavily on top-down decision making.

What are the advantages and disadvantages of organizing by product?

Advantages: Can respond quickly to changes and specialize Disadvantages: lose some operational efficiencies and central administration gives up some control

Keeping work units small-

Allows members to feel like part of a team and see their impact on the projects.

Organizing by business function-

Basic business functions (sales, accounting, HR, inventory) all done in one location

What are three ways to organize?

By business function, product, and geographic area.

What is the disadvantage of organizing by business function?

Can limit the firms ability to make quick or unique changes.

What is centralized management best used in?

Companies that prioritize their manufacturing strategy and reducing operating costs.

What is decentralized organization structure best used in?

Companies who want to respond quickly when confronting regionally differentiated customer needs or change products based on individual markets.

Keeping the organizational structure small-

Have as few layers as possible to get the job done. Simple lets everyone know their role.

What is decentralized organization structure?

Involves dispersing decision-making powers among multiple employees or departmental teams.

What are line activities?

Line positions in the company are those that have the responsibility and authority for achieving the major goals of the corporation. (directly involved in daily operations of a business by selling or producing a product or service)

What is the first step in organization?

Start by identifying critical tasks that need to happen for success. (Critical tasks are activities that must be done well if the business is going to achieve its purpose and objectives.)

Minimizing support staff-

Support staff are important, but they may not directly contribute to profits Many times, businesses will contract these functions out (HR, legal, accounting)

T/F Organization is an essential part of turning your plans into a profitable business.

True

What are staff activities?

The primary purpose of staff positions in most companies is to provide assistance and specialized advice and expertise to colleagues in line positions. (HR, maintenance, legal, accounting, and public relations)

Why is organization so important?

We need a structure that can help us reach our planned goals.