Organizational Structure and Operations Management Key Concepts

Organizational Structure

Specification of the jobs to be done within an organization and the ways in which they relate to one another.

Organization Chart

Diagram depicting a company's structure and showing employees where they fit into operations.

Chain of Command

The reporting relationships within a company; who reports to whom.

Specialization

Determining who will do what jobs within the organization.

Departmentalization

Grouping people and jobs together to improve coordination and performance.

Functional Departmentalization

Dividing an organization according to functions or activities (e.g., marketing, finance, HR).

Product Departmentalization

Dividing an organization according to specific products or services being created.

Process Departmentalization

Dividing an organization based on production processes used to create goods or services.

Customer Departmentalization

Dividing an organization to meet the needs of identifiable customer groups.

Geographic Departmentalization

Dividing an organization according to the areas of the country or world served.

Centralized Organization

Decision-making authority is concentrated at the top of the organization.

Decentralized Organization

Decision-making authority is delegated to lower levels of management.

Span of Control

The number of people directly supervised by one manager.

Delegation

Process of assigning responsibility, granting authority, and creating accountability.

Responsibility

The duty to perform an assigned task.

Authority

The power to make the decisions necessary to complete a task.

Accountability

The obligation to successfully complete assigned tasks.

Line Authority

Authority that flows directly from top to bottom of an organization.

Staff Authority

Authority based on expertise that involves advising line managers.

Committee and Team Authority

Authority granted collectively to groups or teams involved in daily operations.

Functional Structure

Authority determined by relationships between group functions and activities.

Divisional Structure

Structure in which divisions operate as autonomous businesses under a corporate umbrella.

Matrix Structure

Structure created by superimposing one form of structure onto another for flexibility.

Team Organization

Structure relying mostly on project-type teams with little or no hierarchy.

Learning Organization

Structure promoting continuous improvement, adaptability, and lifelong learning.

Virtual Organization

Organization with few permanent employees, relying on outsourcing and temporary work.

Informal Organization

The network of social interactions among employees outside the formal structure.

Informal Groups

Groups that form naturally among employees for social or professional reasons.

Grapevine

Informal communication network within an organization.

Gossip Chain

Informal communication where one person spreads a message to many others.

Cluster Chain

Informal communication where information is shared selectively within small groups.

Intrapreneuring

Encouraging innovation and flexibility within a large organization.

Inventor

Person who conceives a new idea but may lack skills to commercialize it.

Product Champion

Middle manager who supports and promotes an innovation.

Sponsor

High-level manager who secures funding and support for an innovation.

Operations (Production)

Activities involved in making products (goods and services) for customers.

Service Operations

Activities producing intangible and tangible services like education or transportation.

Goods Operations

Activities producing tangible goods such as cars or books.

Operations Process

Methods and technologies used to produce goods or services.

Make-to-Order Operations

Custom-made production (e.g., tailored suit).

Make-to-Stock Operations

Producing standardized products for mass consumption.

Utility

The ability of a product or service to satisfy a customer's want or need.

Form Utility

Value created by transforming resources into finished goods.

Time Utility

Value created by making products available when customers want them.

Place Utility

Value created by making products available where customers want them.

Operations Management

Direction and control of activities that transform resources into finished goods/services.

Low-Contact System

Customer is not part of the service delivery process.

High-Contact System

Customer participates in service delivery.

Operations Capability

Unique strength in production that gives a company a competitive advantage.

Capacity

Maximum potential output an organization can achieve with its resources.

Capacity Planning

Determining how much a company can produce or deliver under normal conditions.

Location Planning

Deciding where production or services will occur based on cost and flexibility.

Layout Planning

Arranging equipment, materials, and personnel for efficient production.

Process Layout

Grouping activities by function (e.g., hospital departments).

Product Layout

Fixed sequence layout used for mass production of identical items.

Assembly Line Layout

Layout in which products move step by step through a plant on conveyor belts.

Fixed-Position Layout

Workers and resources move to the product (e.g., shipbuilding).

Quality

Characteristics of a product or service that satisfy customer needs.

Performance (Quality)

How well a product does what it is supposed to do.

Consistency (Quality)

Sameness of quality from one unit to another.

Methods Planning

Analyzing each production step to eliminate waste and inefficiency.

Improving Process Flows

Documenting and optimizing production steps to increase efficiency.

Improving Customer Service

Streamlining service processes to enhance satisfaction.

Operations Scheduling

Creating timetables to coordinate production tasks and staff.

Master Schedule

Overview of major project milestones and deliverables.

Detailed Schedule

Day-to-day plan of tasks, deadlines, and resources.

Staff Schedule

Identifies who will work, and when.

Project Schedule

Coordinates activities for large projects.

Gantt Chart

Visual timeline showing steps and duration for completing a project.

PERT Chart

Shows sequence of activities, timing, and critical path in a project.

Materials Management

Planning and controlling flow of materials from suppliers to finished products.

Supplier Selection

Choosing suppliers to purchase from.

Purchasing

Acquiring needed materials and services.

Transportation

Moving materials to producers and products to customers.

Warehousing

Storing materials or finished goods for future use or sale.

Inventory Control

Managing and counting materials and products.

Lean Production System

Production system designed to eliminate waste and improve efficiency.

Just-in-Time (JIT) Production

Materials arrive precisely when needed in production.

Quality Control

Ensuring that products meet quality standards.

Six Sigma

Data-driven method for improving quality and reducing defects.

Supply Chain

Flow of information, materials, and services from suppliers to customers.

Supply Chain Management (SCM)

Managing the flow of materials and information through the supply chain.

Outsourcing

Paying external suppliers to perform business processes.

Value Chain

The full set of steps that add value from raw materials to final delivery.

Leadership

The process of motivating, inspiring, and influencing others.

Power

The ability to affect the behavior of others.

Legitimate Power

Power granted through the organizational hierarchy or position.

Reward Power

Power to give or withhold rewards.

Referent Power

Power based on loyalty, identification, or charisma.

Expert Power

Power derived from specialized knowledge or skills.

Coercive Power

Power to force compliance using threats.

Trait Approach to Leadership

Focuses on personal traits (e.g., intelligence, confidence, energy) that make leaders effective.

Behavioral Approach to Leadership

Examines what behaviors distinguish effective leaders.

Situational Approach to Leadership

Suggests the best leadership style depends on the situation.

Path-Goal Theory

Leaders clear the path for employees to reach goals by offering support and removing obstacles.

Directive Leadership

Leader provides clear instructions and expectations.

Supportive Leadership

Leader is friendly and concerned about employees' welfare.

Participative Leadership

Leader seeks input from employees in decision-making.

Decision Tree Approach

Leader determines how much subordinate participation is appropriate for each decision.

Leader-Member Exchange (LMX) Model

Focuses on unique relationships between leaders and individual subordinates ("in-group" and "out-group").