Chapter 7

transparency

A company that is so open to other companies that electronic information is shared as if the companies were one

outsourcing

A local furniture company launched a website to boost national sales. However, it could not ship the orders efficiently so it started using FedEx and UPS

restructuring

Changing a supply line to make it more efficient and a better use of resources would exhibit involves redesigning an organization so that it can be more effective and efficient

economies of scale

Companies can reduce their production costs by purchasing raw materials in bulk. thus, the average cost of goods decreases as production levels rise. ex GM and Ford

Max Weber's principles of organization resembled Fayol's. In addition, Weber emphasized these:

Consistent procedures, regulations, and policies Job descriptions Written rules, decision guidelines, and detailed records Staffing and promotion based on qualifications

core competency

EX. Ford's core competency is the manufacture and marketing of automobiles and trucks. Nike's strength is in designing and marketing athletic shoes and Apple's is in marketing innovative electronics. These are examples of each company's:

matrix

If an organization temporarily borrows its specialists from different functional areas to accomplish a common project

The principles of bureaucracy which brought consistent application of rules and procedures to organizations were proposed by

Max Weber

real time

The present moment or the actual time in which something takes place

formal organization

The structure that details lines of responsibility, authority, and position that represents different types of organizational design

line organization

The type of organization that has direct two-way lines of responsibility, authority, and communication from the top down, with everyone reporting to one supervisor direct lines of: communication responsibility authority

virtual corporation

Today, you can take classes online and have live discussion boards from your own home. This type of interaction is similar to that experienced within a temporary A temporary networked organization made up of replaceable firms that join and leave as needed

networking

Using communications technology and other means to link organizations and allow them to work together on common objectives

hierarchy

a system or organization in which people or groups are ranked one above the other according to status or authority.

cross functional self-managed teams are used in organizations to

break down barriers between functional departments Groups of employees from different departments who work together on a long-term basis and are empowered to make decisions without management approval A cross-functional team that is working on the development of a new prosthetic device for amputees should include: product designers parts suppliers for medical devices amputees who will use it

structuring an organzation

devising a division of labor setting up teams or departments to do specific tasks assigning responsibility and authority to people includes allocating resources such as funds for various departments, assigning specific tasks, and establishing procedures for accomplishing the organizational objectives

allocating resources

funds equipment personnel

four organizational designs

line, line and staff, matrix, and cross-functional teams

advantage of a flat organizational structure

lower level employees have authority to respond more quickly to customer needs

Fayol's Principles of Organization

materials and people should be placed and maintained in the proper location Unity of command- each worker reports to one boss Hierarchy of authority- all workers know who to report to Division of labor-divided into areas of specialization Subordination of individual interests to the general interest Authority-Managers have the right to give orders and the power to enforce obedience Degree of centralization- decision making power in top management should vary by circumstances Clear communication channels-all workers should be able to reach each other quickly and easily Order- materials and people should be placed and maintained in the proper location Equity- a manager should treat employees and peers with respect and justice Esprit de corps-spirit of pride and loyalty should be created among people in the firm

expand span of control because

organizations save by reducing the number of middle managers the workforce is better educated at all levels

division of labor

organizing or structuring begins with determining what work needs to be done, and then dividing up the tasks among workers. Ex lawn mowing - mowing edging trimming

departmentalization

process of setting up individual departments to do specialized tasks

Flat Organizational Structure

respond to customer demands faster because its lower-level employees have authority and responsibility for making decisions

line managers

responsible for directly achieving organizational goals, and include production workers, distribution people, and marketing personnel authority to: adjust to changing conditions issue orders enforce discipline

hybrid structures

sales department has geographic departments, production is by function, and marketing is by customer groups Firms may use a combination of departmentalization techniques to create this

Important decisions to be made while designing an organization include:

span of control degree of centralization departmentalization

mass production process

works well for companies that use economies of scale