Chapter 8 BUS 100
Economies of scale - Companies can reduce their production costs by purchasing raw materials in bulk
Hiearchy - A system in which one person is at the top of an organization and there is a ranked or sequential ordering from the top down
Chain of command - The line of authority that moves from the top of the hierarchy to the lowest level
Organizational chart - A visual device that shows relationships among people and divides the organization’s work; it shows who reports to whom.
Beureacracy - An organization with many layers of managers who set rules and regulations and oversee all decisions
(slide 12 fayols principles of Organization
slide 14 max weber and organizational theory)
What do the terms division of labor and job specialization mean?
Division of labor is dividing tasks among workers to complete a job. Job specialization is dividing tasks into smaller jobs.
What are the principles of management outlined by Fayol?
Fayol’s principles of management are: Unity of command, Hierarchy of authority, Divison of labor, Subordination of individual interests to the general interest, Authority, Degree of centralization, Clear communication channels, Order, Equity, Esprit de corps.
What did Weber add to the principles of Fayol?
Weber added: Job descriptions, Written rules, decision guidelines, and detailed records, consistent procedures, regulations, and policies, staffing and promotion based on qualifications
slide 20) Centralized authority - When decision-making authority is maintained at the top level of management at the company’s headquarters
Decentralized authority - When decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be
slide 21) disadvantages and advantages of centralized versus centralized authority.
Span of control the optimum number of subordinates a manager supervises or should supervise
Tall organization structure - an organizational structure in which the pyramidel organization chart would be quite tall because of the various levels of management
Flat organization structure - an organizational structure that has fewer layers of management and a broad span of control
slide 26) disadvantages and advantages of a narrow vs broad span of control
→ the flatter the organization, the broader the span of control
Departmentalization - the dividing of organizational functions into separate units
slide 28 & 29) advantages and disadvantages of departmentalization
Why are organizations becoming flatter?
Over the last 25 years businesses have adopted flatter organizations with fewer layers of management and a broader span of control in order to quickly respond to customer demands. A flatter organization gives lower-level employees the authority and responsibility to make decisions directly affecting customers.
What are some reasons for having a narrow span of control in an organization?
Span of control refers to the number of subordinates a manager supervises. Generally, the span of control narrows at higher levels of the organization because work becomes less standardized and managers need more face-to-face communication.
What are the advantages and disadvantages of departmentalization?
The advantages of departmentalization include: may reduce costs, since employees should be more efficient; employees can develop skills in depth and progress within a department as they master more skills; the company can achieve economies of scale by centralizing all the resources it needs and locating various experts in that particular area; employees can coordinate work within the function; and top management can easily direct and control various departments’ activities.
The disadvantages of departmentalization include: communication is inhibited; employees may identify with their department’s goals rather than the organization’s; the company’s response may be slowed; employees tend to be narrow specialists; and department members may engage in groupthink and may need input from the outside to become more competitive
What are the various ways a firm can departmentalize?
an organization can elect to departmentalize in the following ways: customer group, product, functional, geographic, process, and hybrid.
Four ways to structure and organization
Line organizations, line-and-staff organizations, matrix-style organizations, cross-functional self-managed teams
slide 38&39) line organization
slide 40) line personnel and staff person
slide 42) matrix organization
slide 44&45) advantages and disadvantages of matrix-style organizations
slide 46) Cross-functional self-managed teams - Groups of employees from different departments who work together on a long-term basis
slide 49) Building successful teams
What is the difference between line and staff personnel?
Line personnel are responsible for directly achieving organizational goals. Line personnel include production workers, distribution people, and marketing personnel. Staff personnel advise and assist line personnel in meeting their goals.
What management principle does a matrix-style organization challenge?
The flexibility inherent in the matrix-style organization directly challenge the rigid line and line-and-staff organization structures
What’s the main difference between a matrix-style organization’s structure and the use of cross-functional teams?
The main difference between matrix-style organization and cross-functional teams is that cross-functional teams tend to be long-lived as compared to the temporary and fluid nature of teams in a matrix-style organization
Networking - Using communications technology and other means to link organizations and allow them to work together on common objectives
Virtual corporation - A temporary networked organization made up of replaceable firms that join and leave as needed.
Benchmarking - Compares an organization’s practices, processes, and products against the world’s best: if a company can’t do as well as the best, they can try to outsource the function
Core competencies - Those functions that the organization can do as well as or better than any other organization in the world
slide 56) Jobs that are often outsourced
Digital natives - Young people who have grown up using the internet and social networking
Restructuring - Redesigning an organization so that it can more effectively and efficiently serve its customers
Inverted organization - An organization that has contact people at the top and the CEO at the bottom of the organization chart. The manager’s job is to assist and support fortline people, not boss them around.
slide 62) organizational or corporate culture
slide 63) formal organization
slide 64) informal organization
What is an inverted organization?
Some service-oriented organizations have elected to turn the traditional organizational structure upside down. An inverted organization has employees who come into contact with customers at the top of the organization and the chief executive officer at the bottom. A manager’s job is to assist and support frontline people, not tell them what to do.
Why do organizations outsource functions?
In the past, organizations have often tried to do all functions themselves, maintaining departments for each function, including: accounting, finance, marketing, and production. If an organization is not able to efficiently perform the function themselves they will outsource the function. Outsourcing is the process of assigning various functions, such as accounting, production, security, maintenance, and legal work, to an outside firm. The goal is to retain the functions that the organization considers its core competencies.
What is organizational culture?
Organizational or corporate culture is the widely shared values within an organization that create unity and cooperation. Usually, the culture of an organization is passed to employees via stories, traditions, and myths.