Management Fundamentals - Organizing Function & Systematic Decision Making

Decision making

a process of choosing a course of action after evaluating available information and weighing the costs and benefits of alternative actions and their consequences

-structured way to find answers to problems -saves time -can save money

What are the benefits of decision making?

Systematic, planning

a rational and _________ decision making process helps managers arrive at the best course of action during and after the _______ process

-Define the decision to be made -Gather information -Choose best alternative -Act on the decision -Evaluate the solution

What are the steps of decision making?

To formulate a clear idea of the issue (should not be broad)

Why must you define the decision in decision making?

Information is necessary to make a sound decision

Why must you gather information in the decision making process?

To compare and see if it will be one or a combination of solutions

Why must you choose the best alternative in the decisions making process?

To implement the solution

Why must you act on the decision in decision making?

To see if the solution is working by or if a new course of action is needed

Why must you evaluate the solution?

Contingency plan

a backup plan that outlines alternative courses of action to take if other plan is not productive

1. SWOT

2. PEST

3. Cost benefit analysis

4. Marginal Analysis

5. Trade offs and Opportunity Costs

What are some decision making tools?

Cost-Benefit Anaylsis

Which decision making tool is this? -method of weighing costs against the benefits of an action, purchase, financial decision. -Benefits must be greater than or equal to the costs

Marginal Analysis

Which decision making tool is this? -measures the added benefit versus the added cost of one more unit of a product

Marginal Benefit, Marginal Cost, and Law of Marginal Utility

What are the three terms that fall under Marginal Analysis?

Marginal Benefit

Measures the potential gains of producing more products because the profit margin is higher

Marginal cost

Change in total cost of producing one additional unit

Law of Marginal Utility

Marginal benefit of each additional unit used tends to decrease as quantity used increases

Trade off

The choice that is given up when the business makes one choice over another

Opportunity cost

Value (relative worth of item) of the option given up

Organizing

-Coordination of activities and resources needed to accomplish a plan -assigning tasks and granting authority to employees to make decisions

Organizing

These are benefits of the __________ function

1. identifies where power exists in the organization

2. Establishes who has authority and responsibility

3. Creates structure

4. Clarifies job tasks for each employee

Organizing

____________ creates the structure and ways of working together to help managers and employees achieve the organizational strategies and turn planning into reality

1. specialization

2. Departmentalization.

3. Chain of command

4. Span of control

What are the four organizational designs?

Specialization

-A focus on the production of specific products so that a greater degree of efficiency is gained

Specialization

What enables workers to become efficient in their roles?

Division of labor

The specialization of individuals who perform specific tasks

True

True or false, under specialization employees become faster and more accurate which leads to increased productivity and profits

False, most business do

True or false? Most business do not require employees to be specialists at a specific task

Accountants, marketing managers, customer service representatives

Give some examples of specialists

Departmentalization

The process of creating groups where meme era work together to accomplish the goals of an organization

Functional Departments, Product Departments, Geographical Departments, and Customer Departments

What are the departments in departmentalization?

Functional departments

Which department consists of employees with common job tasks?

Marketing department

What is an example of functional departments?

Product deparments

Which department operates as a small business unit within the organization, operates as its own independent business?

Product Departments

Which department includes all functional areas required to create a good or service?

Geographical Departments

Which department is organized by location?

Customer department

Which department is organized by types of customers?

Customer Department

Which department services a specific customer - governments, businesses, consumers

Customer Departments

Which department helps team focus on meeting specific needs of each type of customer?

Chain of command

Which organizational design defines direct reports in a business?

Chain of Command

Which organizational design has the authority structure in a company from the highest to the lowest levels?

Line of Authority

What is another name for chain of command?

Chain of command

Which organizational design helps clarify employee power and protocol for flow of information?

Unity of command

States that each employee reports to one manager, that manager then reports to the next level of management and so on

Direct reports

Who are the employees who report to a manager

Chain of Command

Which organizational design includes unity of command?

Chain of Command

In which organizational design do employees know from whom to take direction when given a task?

Centralized organization and decentralized organization

What two types of organizations are in chain of command?

Centralized organization

-all authority within a business is with senior management -decision made at the top and pushed down to each level in the organization

-clear chain of command -focused company vision -quick implementation of decisions

What are the advantages of a centralized organization?

-dictatorial form of leadership -less employee creativity

What are the disadvantages of a centralized organization?

Decentralized organization

-authority is given to each manager of a department

-Middle and Supervisory managers have decision making power -Manager can make decision without senior management approval -Manager can keep business moving with little to no delays -Senior management can focus on overall company strategies

What are the advantages of a decentralized organization?

-Senior management can feel a loss of control of the organization

What are the disadvantages of a decentralized organization?

1. line

2. Line-and-staff

3. Matrix

4. Team

What are the four types of organization structures found in chain of command?

Line structure

Which structure is this? -authority flows from top to bottom from manager to employee -common in functional department

Manager has control and can make decisions for the department

What is the advantage of line structure?

Lack of communication with other departments

What is the disadvantage of line structure?

Line and staff structure

Which organization structure is this? -had a line managers who had authority and a staff authority position who provides expertise and advises the line manager

Don't need to hire outside consultants for expert advice

What is the advantage of line and staff structure?

Line manager and staff authority may have conflicting opinions on decision making

What is the disadvantage of line and staff structure?

Matrix structure

Which organizational structure is this? -employees from different functional groups come together to complete a project with a defined start and end date -employees report to the functional team manager and a manager of the temporary team

Matrix structure

Which organizational structure are project managers common at?

Project manager

Individual in charge of the temporary team and develops and executes the project plan

Matrix

In which organizational structure does the team disband and revert to its original structure once the project is completed?

Large projects are completed quickly and efficiently

What is the advantage of matrix structure?

Employees report to regular manager in addition to reporting to the project manager - can create conflict

What is the disadvantage of matrix structure?

Team structure

What organizational structure is that two or more people come together to achieve a common goal?

Team structure

What organizational structure is it that members share responsibility and collaborate with decisions

Team Structure

In what organizational structure does each team have a leader whom each member reports to

True

True or false? In the team structure, the team leader is more of a facilitator

Senior

In organizational structure, the team makes its own decisions instead of waiting on ______ management approval

Reduces some hierarchy that is in other structures

What is the advantage of team structure?

Span of control

Which organizational design is this? -number of employees who report to a manager -also called span of management

Narrow

In the _______ span of control, manager directs a few employees

4-6

In most organizations with narrow span of control, how many direct reports are there?

Narrow span of control

Which span of control is effective for supervisory managers?

Day to day activities

In a narrow span of control, managers can interact more frequently with the employees that perform ___________

Many

In the wide span of control, manger directs _____ employees

Senior and Middle level

Wide span of control is effective for which level managers?

Regular check-ins; strategic interactions

Wide span of control managers have supervisory managers who do not need day to day supervision, but instead ____________ and _____ interactions.