Business Management - Exam 2

Job Specialization

The process of focusing work on a specific set of tasks or roles so that employees develop expertise in a particular area.

Job Rotation

A practice where employees move between different jobs while the jobs themselves stay the same; mainly used for training purposes, but generally not very effective for improving performance.

Job Enlargement

Increases the number of tasks an employee performs to make work more varied; however, it often leads to higher training costs, union demands for higher pay, and work may still remain boring.

Job Enrichment

Involves increasing a worker’s tasks and level of control over their work; requires analyzing jobs beforehand to ensure enrichment efforts are effective.

Functional Structure

An organizational design that groups similar functions or specialties together (e.g., marketing, finance, production).
Advantages: Managers have a narrower scope, experts work together, and department coordination is easier.
Disadvantages: The organization may be less responsive and employees may become too narrowly focused.

Product Structure

An organizational design that groups employees by product line (e.g., IKEA’s living room furniture vs. kitchen furniture divisions).
Advantages: Allows for integration of activities related to each product, fast and effective decision-making, and clear accountability for results.
Disadvantages: Can lead to a focus on individual products over the overall company, inefficient resource allocation, and higher overhead costs.

Customer Structure

An organizational design that groups employees based on customer types or segments (e.g., banks organizing by lending, deposits, and investments).
Advantages: Promotes strong customer focus and ensures the organization is attuned to specific customer needs.
Disadvantages: Can result in duplication of resources and high administrative overhead.

Geographical Struc

An organizational design that groups employees based on geographic areas or regions (e.g., sales territories).
Advantages: Enables better communication and faster response to local needs.
Disadvantages: Leads to higher overhead costs and may cause groups to become “territorial.”

Chain of Command

The line of authority within an organization that defines who reports to whom; it helps ensure clear communication, accountability, and orderly decision-making.

unity of command

A management principle stating that each employee should report to only one supervisor, ensuring clear direction, reduced confusion, and stronger accountability.

Scalar Principle

The concept that there should be a clear, unbroken line of authority from the top of the organization to the lowest level, ensuring orderly communication and decision-making.

executive span of control

between 3 and 6

operational span of control

up to 30

tall organization

An organizational structure with many layers of management and a narrow span of control, resulting in closer supervision but slower decision-making.

flat organization

An organizational structure with few management layers and a wide span of control, promoting faster decision-making and greater employee autonomy, but potentially less supervision.

Delegation

he process where a manager assigns part of their workload to others

Centralized Companies

Companies where decision-making is concentrated at the top.
Examples: McDonald's, Walmart

Decentralized Companies

Companies where decision-making is spread out to lower levels.
Examples: GE, Procter & Gamble, IBM

coordination

parts of the business must work together

Pooled Interdependence

Units work independently, and their results are “stapled together” at the end.

Sequential Interdependence

Output of one unit becomes the input for the next unit in the process.

Reciprocal Interdependence

Activities flow both ways between units; each depends on the other continuously.
Examples:

• Hotel: reservations ↔ front desk ↔ housekeeping

• Product development ↔ marketing

Bureaucratic Model

Organizational design based on a formal system of authority, emphasizing rules, hierarchy, and expertise.

Theory: Max Weber

Key Features:

1. Distinct divisions of labor, staffed with experts

2. Consistent set of rules for uniform performance

3. Hierarchy of positions and clear chain of command

4. Managers act impersonally

5. Employment and advancement based on technical expertise (protects against arbitrary firing)

Examples: Government agencies, universities

Situational View

Organizational design should fit the practical conditions and technology used in the company.

• Small-batch / Unit: Custom products (Brooks Brothers, Kinko’s) → Flexible, decentralized (System 4)

• Mass / Large-batch: Standardized products (Ford, Whirlpool) → Mechanistic, centralized (System 1)

• Continuous-process: Highly automated (Shell, Dow) → Flexible, adaptive (System 4)

Mechanistic Organizations

Bureaucratic, rigid structures for stable environments.
Features: Well-defined rules and procedures
Example: State Farm

Organic Organizations

Flexible, adaptive structures for unstable environments.
Features:

• Differentiation: number of subunits

• Integration: level of cooperation between units
  Examples: Motorola, Limited Brands

Organization Life Cycle

The stages an organization goes through from its creation to decline.

Typical Stages:

1. Startup / Entrepreneurial: New, informal structure, focus on survival.

2. Growth: Expanding markets, more formal processes.

3. Maturity: Stable, formalized, efficiency-focused.

4. Decline / Renewal: Decreased performance; may restructure or fail.

Defenders

Tall, centralized, functional structure; focus on efficiency and stability.

Prospectors

Flat, decentralized structure; focus on innovation and exploring new opportunities.

Differentiators

Structure built around what makes the product/service unique; flexible to support differentiation.

Cost Leadership

Centralized, functional structure; focus on efficiency and minimizing costs.

Functional (U-form)

Organized by job or function (like marketing, finance, HR). Works best for small or single-product companies.
Memory Hint: Uniform jobs → each person has a clear role.

Examples: Abercrombie & Fitch, WD-40

Conglomerate (H-form)

Big company made of unrelated businesses. Each unit runs independently.
Memory Hint: Holding company → holds many unrelated businesses.

Divisional (M-form)

Organized by product, region, or market. Each division is like a mini-company with its own functions.
Memory Hint: Multiple mini-companies inside one big company.

Radical change

Large, fundamental change that significantly alters the organization.

Incremental change

Small, gradual adjustments within existing systems.

Uncertainty

Fear of the unknown and how change will affect people.

Threatened self-interest

Feeling that change will harm personal goals or advantages.

Different perceptions

People see the same change in different ways, causing disagreement.

Feelings of loss

Emotional reaction to losing familiar routines, roles, or status.

Areas of change – Organization

Adjustments to structure, roles, or culture.

Areas of change – Technology

Adoption of new tools, systems, or equipment.

Areas of change – Attitudes

Shifts in mindset, values, or motivation.

Areas of change – Processes

Changes to workflows, procedures, or operations.

Organizational Development (OD)

Planned efforts to improve effectiveness; example: LU initiatives.

Product/process change over life cycle

Products and processes evolve from introduction to decline.

HR (Human Capital)

Employees seen as valuable organizational resources.

EEO (Equal Employment Opportunity)

Laws preventing workplace discrimination.

ADA (Americans with Disabilities Act)

Law protecting employees with disabilities.

Whistleblower protection

Safeguards for employees reporting illegal or unethical practices.

Staff planning – Forecast demand

Predicting future workforce needs.

Staff planning – Succession planning

Preparing employees to fill key positions in the future.

Staff planning – Recruiting process

Steps to attract and hire new employees.

Staff planning – Interview process

Evaluating candidates through structured meetings.

Performance appraisal – Rating/ranking

Assessing employee performance with scores or rankings.

Performance appraisal – 360-degree

Feedback from supervisors, peers, subordinates, and sometimes clients.

Performance appraisal – Start/stop/continue

Feedback method: what to start, stop, or continue doing.

Performance feedback

Communicating appraisal results to employees for improvement.

PIP (Performance Improvement Plan)

Plan to help underperforming employees improve before termination.

Wages/Salary

Monetary compensation for work performed.

Flex benefits

Employee benefits program allowing choice of options.

Benchmarking

Comparing practices and performance against industry standards.

Labor relations – Collective bargaining

Negotiation between management and unions on working conditions.

Labor relations – Union tactics

Strategies used by unions to influence agreements (e.g., strikes).

Labor relations – Management tactics

Strategies used by management to influence negotiations.

Knowledge workers

Employees whose main contribution is knowledge, expertise, or information.

Temp workers

Employees hired for a limited time.

Part-time workers

Employees working fewer hours than full-time staff