powerpoint presentation by charlie cook the university of west alabama business essentials ronald j....

PowerPoint Presentation by Charlie CookThe University of West Alabama

Business Business EssentialsEssentials

Ronald J. Ronald J.

EbertEbertRicky W. Ricky W.

GriffinGriffin

Business Business EssentialsEssentials

Ronald J. Ronald J.

EbertEbertRicky W. Ricky W.

GriffinGriffin

The Business of ManagingThe Business of ManagingThe Business of ManagingThe Business of Managing2222

6e6e

© 2007 Prentice Hall, Inc. All rights reserved.

ORGANIZING THE BUSINESS

6

© 2007 Prentice Hall, Inc. All rights reserved. 6–2

L E A R N I N G O B J E C T I V E SL E A R N I N G O B J E C T I V E S

After reading this chapter, you should be able to:After reading this chapter, you should be able to:

1.1. Discuss the factors that influence a firm’s Discuss the factors that influence a firm’s organizational structure.organizational structure.

2.2. Explain specialization and departmentalization as two Explain specialization and departmentalization as two of the building blocks of organizational structure.of the building blocks of organizational structure.

3.3. Describe centralization and decentralization, Describe centralization and decentralization, delegation, and authority as the key ingredients in delegation, and authority as the key ingredients in establishing the decision-making hierarchy.establishing the decision-making hierarchy.


L E A R N I N G O B J E C T I V E S (cont’d)L E A R N I N G O B J E C T I V E S (cont’d)

After reading this chapter, you should be able to:After reading this chapter, you should be able to:

4.4. Explain the differences among functional, divisional, Explain the differences among functional, divisional, matrix, and international organizational structures and matrix, and international organizational structures and describe the most popular new forms of organizational describe the most popular new forms of organizational design.design.

5.5. Describe the informal organization and discuss Describe the informal organization and discuss intrapreneuring.intrapreneuring.


What’s in It for Me?What’s in It for Me?

By understanding the material in this chapter, By understanding the material in this chapter, you’ll also be prepared to:you’ll also be prepared to: Understand your “place” in the organization that Understand your “place” in the organization that

employs youemploys you Be better equipped to create the optimal structure Be better equipped to create the optimal structure

for your own organization as a boss or ownerfor your own organization as a boss or owner


What Is Organizational Structure?What Is Organizational Structure?

Organizational StructureOrganizational Structure The specification of the jobs to be done within an The specification of the jobs to be done within an

organization and the ways in which those jobs relate organization and the ways in which those jobs relate to one anotherto one another

Organization ChartsOrganization Charts Clarify structure and to show employees where they Clarify structure and to show employees where they

fit into a firm’s operationsfit into a firm’s operations Show the chain of command, or reporting Show the chain of command, or reporting

relationships, within a companyrelationships, within a company


FIGURE 6.1FIGURE 6.1 The Organization ChartThe Organization ChartFIGURE 6.1FIGURE 6.1 The Organization ChartThe Organization Chart


Determinants of Determinants of Organizational StructureOrganizational Structure

External EnvironmentExternal Environment

Internal EnvironmentInternal Environment

SizeSize

StrategyStrategy

MissionMission

Organizational structure is usually quite fluid!


The Building Blocks of The Building Blocks of Organizational StructureOrganizational Structure

SpecializationSpecialization Division of work: job specializationDivision of work: job specialization

DepartmentalizationDepartmentalization Product, process, functional, customer, or Product, process, functional, customer, or

geographicgeographic

Establishment of a decision making hierarchyEstablishment of a decision making hierarchy Distributing authority:Distributing authority:

Delegation: assigning tasksDelegation: assigning tasks Centralization: upper management retains authorityCentralization: upper management retains authority Decentralization: lower-level managers make decisionsDecentralization: lower-level managers make decisions


FIGURE 6.2FIGURE 6.2 Multiple Forms of DepartmentalizationMultiple Forms of DepartmentalizationFIGURE 6.2FIGURE 6.2 Multiple Forms of DepartmentalizationMultiple Forms of Departmentalization

Functional Departmentalization

GeographicalDepartmentalization

ProductDepartmentalization


Establishing the Decision-Establishing the Decision-Making HierarchyMaking Hierarchy

Centralized OrganizationCentralized Organization

Decentralized OrganizationDecentralized Organization

Lower-level managers hold Lower-level managers hold significant decision-making significant decision-making authorityauthority

Top managers hold most Top managers hold most decision-making authoritydecision-making authority


Tall and Flat OrganizationsTall and Flat Organizations

Flat Organizational StructureFlat Organizational Structure Common in decentralized organizationsCommon in decentralized organizations Fewer layers of managementFewer layers of management Rapid communicationRapid communication Wide spans of control Wide spans of control

Tall Organizational StructureTall Organizational Structure Common in centralized organizations Common in centralized organizations Multiple layers of managementMultiple layers of management Slower communicationSlower communication Narrower spans of controlNarrower spans of control


The Delegation ProcessThe Delegation Process

DelegationDelegation The process through which a manager allocates The process through which a manager allocates

work to subordinateswork to subordinates

Delegation Entails:Delegation Entails: Assignment of Assignment of responsibilityresponsibility—t—the duty to perform he duty to perform

an assigned taskan assigned task Granting of Granting of authorityauthority—the power to make decisions —the power to make decisions

necessary to complete the tasknecessary to complete the task Creation of Creation of accountabilityaccountability—the obligation of —the obligation of

employees to successfully complete the taskemployees to successfully complete the task


Why Managers Won’t DelegateWhy Managers Won’t Delegate

The fear that subordinates don’t really know The fear that subordinates don’t really know how to do the jobhow to do the job

The desire to keep as much control as possible The desire to keep as much control as possible over how things are doneover how things are done

The fear that a subordinate might “show the The fear that a subordinate might “show the manager up” in front of others by doing a manager up” in front of others by doing a superb jobsuperb job

A simple lack of ability as to how to effectively A simple lack of ability as to how to effectively delegate to othersdelegate to others


Forms of AuthorityForms of Authority

Line AuthorityLine Authority The type of operational authority that flows up and The type of operational authority that flows up and

down the chain of commanddown the chain of command

Staff AuthorityStaff Authority Authority based on special expertise and usually Authority based on special expertise and usually

involves counseling and advising line managersinvolves counseling and advising line managers

Committee and Team AuthorityCommittee and Team Authority Authority granted to committees or work teams that Authority granted to committees or work teams that

play central roles in the firm’s daily operationsplay central roles in the firm’s daily operations


FIGURE 6.4FIGURE 6.4 Line and Staff OrganizationLine and Staff OrganizationFIGURE 6.4FIGURE 6.4 Line and Staff OrganizationLine and Staff Organization


Forms of Organizational StructureForms of Organizational Structure

Functional StructureFunctional Structure Form of business organization in which authority is Form of business organization in which authority is

determined by the relationships between group determined by the relationships between group functions and activitiesfunctions and activities

Used by most small to medium-sized firms Used by most small to medium-sized firms structured around basic business functions structured around basic business functions (marketing, operations, finance)(marketing, operations, finance)

Advantages:Advantages: Specialization and smoother internal coordinationSpecialization and smoother internal coordination

Disadvantages:Disadvantages: Centralization, poor cross-functional coordination, and lack Centralization, poor cross-functional coordination, and lack

of accountabilityof accountability


FIGURE 6.5FIGURE 6.5 Functional StructureFunctional StructureFIGURE 6.5FIGURE 6.5 Functional StructureFunctional Structure


Forms of Organizational Structure Forms of Organizational Structure (cont’d)(cont’d)

Divisional StructureDivisional Structure Based on departmentalization by product with each Based on departmentalization by product with each

division managed as a separate enterprisedivision managed as a separate enterprise Organizations using this approach are typically

structured around several divisions—departments that resemble separate businesses in that they produce and market their own products

Advantages:Advantages: Increased product-focus and internal coordinationIncreased product-focus and internal coordination

Disadvantages:Disadvantages: Duplication of efforts and competition between divisionsDuplication of efforts and competition between divisions


FIGURE 6.6FIGURE 6.6 Divisional StructureDivisional StructureFIGURE 6.6FIGURE 6.6 Divisional StructureDivisional Structure



Matrix StructureMatrix Structure Organized along two dimensions, instead of just Organized along two dimensions, instead of just

one, by combining, for example, functional and one, by combining, for example, functional and divisional structuresdivisional structures

Advantages:Advantages: Highly flexible, focused on single problem, access to Highly flexible, focused on single problem, access to

resources and expertiseresources and expertise

Disadvantages:Disadvantages: Loss of command and control, lack of accountability, Loss of command and control, lack of accountability,

impermanent existenceimpermanent existence


FIGURE 6.7FIGURE 6.7 Matrix Organization at Martha Stewart’s Matrix Organization at Martha Stewart’s Omnimedia Inc.Omnimedia Inc.

FIGURE 6.7FIGURE 6.7 Matrix Organization at Martha Stewart’s Matrix Organization at Martha Stewart’s Omnimedia Inc.Omnimedia Inc.



International StructuresInternational Structures Developed in response to the need to manufacture,

purchase, and sell in global markets Department, division, or geographicDepartment, division, or geographic

Global StructureGlobal Structure Acquiring resources (including capital), producing Acquiring resources (including capital), producing

goods and services, engaging in research and goods and services, engaging in research and development, and selling products in whatever local development, and selling products in whatever local market is appropriate, without any consideration of market is appropriate, without any consideration of national boundariesnational boundaries


FIGURE 6.8FIGURE 6.8 International Division StructureInternational Division StructureFIGURE 6.8FIGURE 6.8 International Division StructureInternational Division Structure


Organizational Design Organizational Design for the 21st Centuryfor the 21st Century

Team OrganizationTeam Organization Relies almost exclusively on project-type teams, with Relies almost exclusively on project-type teams, with

little or no underlying functional hierarchylittle or no underlying functional hierarchy

Virtual OrganizationVirtual Organization Has little or no formal structure, few permanent Has little or no formal structure, few permanent

employees, a very small staff, and a modest employees, a very small staff, and a modest administrative facilityadministrative facility

Learning OrganizationLearning Organization Integrates continuous improvement and employee Integrates continuous improvement and employee

learning and development while transforming itself to learning and development while transforming itself to respond to changing demands and needsrespond to changing demands and needs


FIGURE 6.9FIGURE 6.9 The Virtual OrganizationThe Virtual OrganizationFIGURE 6.9FIGURE 6.9 The Virtual OrganizationThe Virtual Organization


Informal OrganizationInformal Organization

Informal OrganizationInformal Organization Everyday social interactions among employees that Everyday social interactions among employees that

transcend formal jobs and job interrelationshipstranscend formal jobs and job interrelationships Advantages:Advantages:

May reinforce the formal organizationMay reinforce the formal organization

Disadvantages:Disadvantages: Can reinforce office politics that put the interests of Can reinforce office politics that put the interests of

individuals ahead of those of the firmindividuals ahead of those of the firm May communicate distorted or inaccurate informationMay communicate distorted or inaccurate information


Informal Organization (cont’d)Informal Organization (cont’d)

Informal GroupsInformal Groups Groups of people who decide to interact among Groups of people who decide to interact among

themselves, sometimes about businessthemselves, sometimes about business

Organizational GrapevineOrganizational Grapevine The informal communication network that runs The informal communication network that runs

throughout the organizationthroughout the organization

IntrapreneuringIntrapreneuring Creating and maintaining the innovation and Creating and maintaining the innovation and

flexibility of a small-business environment within the flexibility of a small-business environment within the confines of a large, bureaucratic structureconfines of a large, bureaucratic structure


K E Y T E R M SK E Y T E R M S

accountability accountability

authority authority

centralized organization centralized organization

chain of command chain of command

committee and team authority committee and team authority

customer departmentalization customer departmentalization

decentralized organization decentralized organization

delegation delegation

departmentalization departmentalization

division division

divisional structure divisional structure

flat organizational structure flat organizational structure

functional departmentalization functional departmentalization

functional structure functional structure

geographic departmentalization geographic departmentalization

grapevine grapevine

informal organization informal organization

international organizational international organizational structures structures

intrapreneuring intrapreneuring

job specialization job specialization

line authority line authority

line department line department

matrix structure matrix structure

organization chart organization chart

organizational structure organizational structure

process departmentalization process departmentalization

product departmentalization product departmentalization


K E Y T E R M S (cont’d)K E Y T E R M S (cont’d)

profit center profit center

responsibility responsibility

span of control span of control

staff authority staff authority

staff members staff members

tall organizational structure tall organizational structure

work teamwork team

powerpoint presentation by charlie cook the university of west alabama business essentials ronald j....

Documents

prentice hall

task slide

firms organizational

decisions slide

organization chart slide

optimal structure

owner slide

organization charts