Chapter 7-9 Management Organizational Structure, and Operations

Managers need to practice getting things done:

Organizational resources (workers, financial resources, information, and equipment

How are managers more collaborative now?

They create drop in centers, team spaces, and open work areas

What these changes mean for you?

• They demand skilled communicator

• Team player (planner, organizer, motivator, and leader

Describe the 4 Function of Management

• Planning = anticipating trends and determining strategies and tactics 

One of the major objectives of organization = to please customers 

• Organizing = designing the structure of the organization and creating conditions and systems (must be flexible to changes like market trends and customer needs) 

• Leading = means creating a vision for the organization and communicating, guiding, training, coaching, and motivating others to achieve goals 

• Controlling = sets clear standards to determine whether an organization is progressing toward its goals 

Management

Process used to accomplish goals through planning, organizing, leading, and controlling people 

In largest firm why do managers no longer tell people exactly what to do?

Knowledge workers and others know how to do their jobs better than the manager does 

Vision

A broad explanation why the organization exists 

Mission Statement

Outlines the organizations purpose

Mission Statement should address: 

• The organization’s self-concept 

• Its philosophy 

• Long term needs 

• Customer needs 

• Social responsibility 

• The nature of its product or service 

Goals

broad long-term accomplishment an organization wishes to attain 

Objectives

specific short-term statements detailing how to achieve the organization’s goals 

Planning follows a pattern (needs to answer fundamental questions) 

1. What is the situation now? What are the success factors affecting the industry? What opportunities exist for meeting people’s needs? What products and customers are most profitable? 

2. How can we get our goal from here? It takes 4 forms: strategic, tactical, operational, and contingency 

SWOT analysis

managers looks at the Strengths and Weaknesses of the firm and the opportunities and threats facing it

What does a company analyze when it does a swot analysis? 

• S = Strengths  

• W = Weaknesses  

• O = Opportunities  

• T = Threats 

Weakness and Strengths internal or external?

Internal (can be fixed)

Opportunities and Threats internal or external?

External (not be controlled)

4 Form of Planning

• Strategic Planning: determine the policies, procedures, strategies, and resources to achieve goals. At this stage company decides who to serve, when to serve, and what products or services to sell 

• Tactic Planning = process of developing detailed short-term statements about what is to be done. (like annual budgets and other activities) 

• Operational Planning = process of setting work standards and schedule necessary to implement tactical objectives (truck parts) 

• Contingency Planning = process of preparing courses of action that firm can use if the 1^st plan don’t work out.

Difference of Strategic Planning and Operational Planning?

Strategic Planning focuses on the organization as whole; Operational Planning focuses on specific people. 

Decision making

choosing among two or more alternatives

Six D’s of Decision Making: 

1. Define the situation 

2. Describe and collect needed information 

3. Develop alternatives 

4. Decide which alternatives is best 

5. Do what is indicated (begin implementation) 

6. Determine whether the decision was a good one, and follow up 

Problem solving

less formal than decision making

PMI

Pluses for a solution in one column, Minuses in another, and Implications in a third 

A managerial pyramid

shows the organization’s levels of management 

Top management

the highest level consists of the president and other key company executives 

Middle Management

includes general managers, division managers, and branch and plant managers 

Supervisory Management

responsible for supervising workers and evaluating their daily performance 

Shows that a manager must have 3 categories of skills 

1. Technical Skills – selling a product or developing software 

2. Human Relations Skills – include communication and motivation 

3. Conceptual Skills – let the manager picture the organization as a whole 

Are these skills equally important at all management levels?

Top managers heavily rely on human relations and conceptual skills. First line supervisors need technical and human relation skills but use conceptual skills less often. Middle managers need a balance of 3

Staffing

hiring the best people available to accomplish company’s objectives

Leaders must therefore:

• Communicate a vision and rally others around that vision. 

• Establish corporate values. Concerns for employees, customers, and the environment. 

• Promote Corporate Ethics. Ethical behaviour includes an unfailing demand for honesty. 

• Embrace change 

• Stress accountability and responsibility 

Note:

Microsoft boss says the “C’ in Ceo stands for culture

Leadership Styles 

1. Autocratic Leadership = making decisions without consulting others (effective when fighting fires) 

2. Participative (democratic) leadership = involves managers and employees working together to make decisions 

3. Free-rein leadership = free to do whatever is appropriate (managers supervise doctors, engineers, professors) 

Directing includes

giving assignments, explaining routines, clarifying policies, and feedback. 

Empowerment

giving authority to make decisions w/o consulting 

Enabling

giving workers education, training, and tools to make decisions 

Knowledge management

finding right info and keeping it in a accessible place

Big data

popular term to describe the vast collection of available information 

Controlling 5 steps 

1. Establishing clear performance standards  

2. Monitoring and recording actual performance or results 

3. Comparing result against plans and standards 

4. Communicating results and deviations to the appropriate employees 

5. Taking corrective action when needed and providing positive feedback for work well done 

For managers to measure results:

tandards must be specific, attainable, and measurable 

External Customers

who buys products to sell to others 

Internal Customers

receive services from other individuals or units 

Difference between a manager and a leader?

A manager organizes while a leader has a vision and inspires others 

What qualities must standards possess to measure performance results?

Standards must be specific, attainable, and measurable 

Organizing begins with?

determining what work needs to be done 

Division of labor

diving tasks 

Job specialization

diving tasks into smaller jobs 

Departmentalization

setting up individuals departments to do taks 

Organization chart

shows relationship among people 

Economies of scale

refers to the fact that companies can reduce their production costs by purchasing in bulk 

Fayol’s principles of Organization: 

• Unity of command: worker is to report to only one boss 

• Hierarchy of authority: All workers should know to whom they report 

• Division of labor: Function divided into production, marketing, and finance 

• Subordination of interest: Workers are to think of themselves as a coordinated team 

• Authority: Managers have the right to give orders and the power to enforce compliance 

• Degree of centralization: Amount of decision making vested in top management 

• Clear communication channels: Should be able to reach others in the organization easily 

• Order: Materials and people should be placed and maintained in the proper location 

• Equity: 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 

Weber’s principles of Organization resembled Fayol’s: 

• Job descriptions 

• Written rules, decision guidelines, and detailed records 

• Consistent procedures, regulations, and policies 

• Staffing and promotion based on qualifications 

UPS

United Parcel Services 

Bureaucracy

term for an organization with many layers of managers

Why do some organizations that follow Weber’s principles are less effective than UPS?

Because they don’t allow employees to respond quickly to new challenges 

What did Weber add to the principles of Fayol?

Concept of Bureaucracy

Hierarchy

system in which one person is at the top of the organization 

Chain of command

line of the authority that moves from the top of hierarchy to the lowest level 

Empowerment

giving employees such authority

When designing organizations, firms must make decisions about several organizational issues: 

1. Centralization versus decentralization: occurs when decision making is concentrated at the top level of management

2. Span of control: describes the optimal number of employees a manager supervises or should supervise (for example 1 supervisor is responsible for 20 workers only) 

3. Tall versus flat organizational structures: organizations getting bigger and bigger, flat organizational with fewer layers of management (few bosses and easy communication) 

4. Departmentalization: divides organizations into separate units (like marketing, production, and accounting) 

What is the trend today for choosing appropriate span of control?

Expand the span of control as organizations adopt empowerment, reduce the number of middle managers, and hire more talented and better educated employees 

Why are organizations becoming flatter?

Companies are eliminating layers of management to reduce costs and make communication and decision-making faster. 

Advantages and Disadvantages of Departmentalization 

Advantages: 

1. Employees can develop skills in depth and progress as they master more skills 

2. Company can achieve economic scales by centralizing all the resources needs in that area 

3. Employees can coordinate work within the function, and top management can easily direct and control various departments activities 

Disadvantages:

1. Departments may not communicate well. Production might be isolated from marketing meaning it does not get feedback. 

2. Employees may identify with their department’s goals rather than the organization’s 

3. The company’s response to external changes may be slow 

4. People may not be trained to take different responsibilities 

5. Department members may engage in groupthink (they think alike) and may need input from outside to become more creative 

Ways to Departmentalize 

Some organizations departmentalize by customer group. Some firms group their units by geographic location because customers tastes vary so greatly by region. So basically, by function, geographic location, and customer group. 

4 ways to structure an Organization 

1. Line Organization = has 2 way lines of responsibility, authority, and communication.  It is the oldest of the organizational structures. 

Example: pizza shop employees report to shift manager then reports to the manager or owner 

2. Line and Staff Organization. 

Line personnel= responsible for directly achieving goals and include workers and marketing personnel. 

Staff Personnel= advise and assist line personnel in meeting their goals like marketing research, legal advising, IT, and human resource management.

3. Matrix Style Organization= specialist from different parts of the organization work together temporarily on specific projects but remain part of a line and staff structure 

Example: project manager can borrow people from different departments to help design and market new product ideas.

4. Cross Functional Self-Managed Teams= groups of employees from different department who work together on a long-term basis 

Self-managed = means that they are empowered to make decisions without management approval 

When does Cross Functional team work best? When the voice of the customer is brought in 

Advantages of Matrix Organization Structure: 

• Gives managers flexibility in assigning people to projects 

• Encourages cooperation and teamwork 

• Produce creative solutions to product development problems 

• Makes efficient use of organization resources 

Disadvantages of Matrix Organizational Structure: 

• Can be costly and complex 

• Confuse employees about where their loyalty belongs with the project 

• Requires good interpersonal skills as well as cooperative employees and managers to avoid communication problems 

• May only be temporary solution to a long-term problem within an organization 

What’s the potential real problem with matrix management?

is that the project teams are not permanent. 

What management principles does a matrix style organization challenge?

Unity of command. In matrix structure employees can report to more than one manager. 

Real time

the present moment or the actual time in which an even takes place

What does modern chart shows?

People in different organizations and indicate how they are networked 

Networked organizations structures tend be flexible because?

A company may work with a design expert from another company then later not need that firm anymore

Virtual corporation

a temporary networked organization made up of replaceable firms that join and leave as needed  

Benchmarking

comparing an organization’s practices, processes, and product against the world’s best (example target may compare itself to walmart) 

Core competencies

those functions that the organization can do as well as or better than any other organization in the world. Example is Nike is great at designing and marketing shoes. Those are its core competencies. 

Companies that are most successful in adapting to change traits are: 

1. They listen to customers 

2. Have more inspirational managers who drive new ideas throughout the organization 

3. They often had a close call with going out of business 

Restructuring

redesigning an organization so that it can more effectively and efficiently serve its customers

Inverted organization

organization that has contact people at the top and the chief executive officer at the bottom of the organization chart 

Organizational (or corporate) culture

shared values within an organization that foster unity to achieve goals. For example, each mcdonalds restaurant has the same feel, look, and atmosphere 

Organizations have 2 Organizational Systems: 

1. Formal Organization = details lines of responsibility, authority, and position 

2. Informal Organization = the system that develops as employees meet and form cliques, relationships, and lines of authority separate from formal organization 

Formal organization its structure shown on organization charts 

Informal organization it’s the human side of the organization that doesn’t show on any organization charts 

Formal organization its structure shown on organization charts 

Informal organization it’s the human side of the organization that doesn’t show on any organization charts 

Formal system is often too slow and bureaucratic and informal organization is often too unstructured and emotional to allow careful decision making on critical matters. 

Formal system is often too slow and bureaucratic and informal organization is often too unstructured and emotional to allow careful decision making on critical matters. 

Why do organizations outsource functions?

To reduce costs and focus on core business activities  

What are key alternatives to the major organizational models?

Matrix organizations assign people to project temporarily. Cross functional self-managed teams have all the benefit of the matrix style and are long term. 

What are the major concepts involved in interfirm communications?

Networking uses communications technology to link organizations. Virtual Corporation is a networked organizations that join and leave firms as needed. Benchmarking compares companies. The company may then outsource to companies that perform its weaker functions more effectively and efficiently. 

Due to advancements in technology,

American factories can work efficiently without human labor 

In 1980 = needed 25 people to work. Now, it takes only 6 people 

In 1980 = needed 25 people to work. Now, it takes only 6 people 

Covid, trade war with China, and Ukrainian war cause disruptions to supply chains in the US and worldwide. 

Covid, trade war with China, and Ukrainian war cause disruptions to supply chains in the US and worldwide. 

What is the “Chips for America”

was established to build up semiconductor research and manufacturing in the United States

What is the problem for making the chip?

The exact nature, speed, and magnitude of the chips needed are unknown 

Production

the creation of finished goods and services using the factor of production (Land, Labor, Capital, Entrepreneurship, and Knowledge) 

Production Management

described the activities that helped firms create goods 

Operations Management

specialized area in management that converts or transform resources. Example: in hotels, operation managements include bed, elevators, and desk. It also includes services like heated pool, gym, fresh flowers. 

How does operations management differ between manufacturing and service sectors? 

Pleasing customers (services) has become the quality standard for companies but knowing customer needs and satisfying them are two different things (manufacturing) 

Easy to remember Manufacturing is making products. Services is providing experience/ help. 

Form utility

value producers add to materials of finished goods and services 
Example bakers can make a cake from basic ingredients

CEO Andrew Grover’s requirement of production: 

1. Build and deliver products in response to the demands of the customer at a scheduled time delivery 

2. Provide quality level 

3. Provide everything at the lowest possible cost 

Process manufacturing

physically and chemically changes materials example boiling physically changes an egg.

Assembly process

puts together components (egg, toast, and coffee) to make a product (breakfast) 

Continuous Process

production that turn out finished goods over time 

Intermittent Process

machine run is short and the machine change to make different products 

What was the idea behind mass production?

Make a large number of a limited variety of products at very low cost