Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.8–1 Introduction to Management Bob Fast Chapter 8 – Fundamentals of Organizing Week.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. 8–1

Introduction to ManagementBob Fast

Chapter 8 – Fundamentals of Organizing

Week 5A October 11

471.11

Fall 2011


Road map for tonight….

• Quiz #2 – Chapters 5, 6, 7, 8

• Review Reading Assessment Guidelines

• Ch 8 – Fundamentals of Organization

• Guest – Don Streuber (President – Bison Transport)

Copyright © 2004 Pearson Education, Inc. All rights reserved. Copyright © 2004 Pearson Education, Inc. All rights reserved. PowerPoint Presentation by Clive Cook and Dale DilamarterPowerPoint Presentation by Clive Cook and Dale Dilamarter

Gary Dessler

Frederick A. Starke

Gary Dessler

Frederick A. Starke

Principles and Practices for Tomorrow’s Leaders

Second Canadian Edition

Principles and Practices for Tomorrow’s Leaders

Second Canadian Edition

Part Three: OrganizingPart Three: Organizing

Management

Fundamentals of OrganizingFundamentals of OrganizingFundamentals of OrganizingFundamentals of Organizing88CHAPTERCHAPTER


Chapter ObjectivesAfter studying this chapter and the case exercises at the end, you should be able to:

1. Develop a workable organization chart for a company.

2. Draw the company’s current organization chart, and list its pros and cons.

3. Describe and draw examples of the basic alternatives for creating departments.

4. Explain why there is a trend away from geographic departmentalization and toward product departmentalization.

5. Show how a company could install a network organization.

6. Reorganize a company’s tasks to make it a horizontal organization.


What Is Organizing?

• OrganizingArranging the activities of the enterprise in such a

way that they systematically contribute to the enterprise’s goals.


Depicting the Organization

• Organization ChartA chart that shows the structure of the organization

including the title of each manager’s position and, by means of connecting lines, who is accountable to whom and who has authority for each area.


Authority and the Chain of Command

• Chain of CommandThe path that a directive and/or answer or request

should take through each level of an organization; also called a scalar chain or the line of authority.

• AuthorityThe person’s legal right or power.


Line and Staff Authority

• Line ManagerA manager who is (1) in charge of essential activities

such as sales and (2) authorized to issue orders to subordinates down the chain of command.

• Staff ManagerA manager without the authority to give orders down

the chain of command (except in his or her own department); generally can only assist and advise line managers in specialized areas such as human resources management.


Line and Staff Authority

• Functional AuthorityStaff managers can issue orders to line managers

within the very narrow limits of the staff manager’s special expertise.


The Informal Organization

• Informal OrganizationThe network of interpersonal relationships and the

informal way of doing things that inevitably develops in organizations.


Departmentalization:Creating Departments

• DepartmentalizationThe process by which the manager groups the

enterprise’s activities together and assigns them to subordinates.


Organizing Departments by Function

• Functional DepartmentalizationGrouping activities around the enterprise’s core

functions such as manufacturing, sales, and finance.


Functional Departmentalization


Organizing Departments by Self-Contained Divisions/Purposes

• Product DepartmentalizationGrouping departments around a firm’s products or

services, or each family of products or services; also referred to as a “divisional” organization.

• Customer DepartmentalizationSelf-contained departments are organized to serve

the needs of specific groups of customers.


Divisional Organization for a Pharmaceuticals Company


Departmentalization by Customer


Organizing Departments by Self-Contained Divisions/Purposes (cont’d)

• Marketing-channel DepartmentalizationDepartments focus on particular marketing channels,

such as drugstores or grocery stores.

• Geographic (Territorial) DepartmentalizationSeparate departments are established for each of the

territories in which the enterprise does business.


Marketing Channel Departmentalization


Creating Matrix Organizations

• Matrix OrganizationAn organization structure in which employees are

permanently attached to one department but also simultaneously have ongoing assignments to project, customer, product, or geographic unit heads.

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved. 8–20 FIGURE 8–7

Matrix Organization Departmentalization


Matrix Organizations

Advantages• Access to expertise.• Stability and benefits

of belonging to permanent departments.

• Allows focus on specific projects, products, or customers.

Disadvantages• Confusion of

command.• Power struggles and

conflicts.• Lost time in

coordinating.• Excess overhead for

dual sets of managers.


Departmentalization in Practice: A Hybrid

• Why mix the types of departmentalization?Hierarchical considerations

The relationship of top level departments to their subsidiary departments.

Efficiency Product, customer, and territorial departments tend to

result in duplicate sales, manufacturing, and other functional departments.

Common sense Departmentalizing is still more an art than a science.


Combination Departmentalization


Functional vs. Divisional Organizations

Functional Organization Advantages1. It is simple, obvious, and logical.2. It fosters efficiency.3. It can simplify executive hiring and training.4. It can facilitate the top manager’s control.

Functional Organization Disadvantages1. It increases the workload on the executive to

whom the functional department heads report.2. It may reduce the firm’s sensitivity to and

service to the customer.3. It produces fewer general managers.


Functional vs. Divisional Organizations (cont’d)

Divisional Organization Advantages1. The product or service gets the single-minded

attention of its own general manager and unit, and its customers may get better, more responsive service.

2. It’s easier to judge performance.3. It develops general managers.4. It reduces the burden for the company’s CEO.


Functional vs. Divisional Organizations (cont’d)

Divisional Organization Disadvantages1. It duplicates effort.2. It may diminish top management’s control.3. It requires more managers with general

management abilities.4. It can breed compartmentalization.


Tall And Flat Organizations and the Span Of Control

• Span of ControlThe number of subordinates reporting directly to a

supervisor. Wide spans: larger number of direct reports. Narrow spans: fewer number of direct reports.

• Tall vs. Flat OrganizationsTall organizations: more management layers and

more hierarchical controls.Flat organizations: fewer management layer and

decision making closer to the customer.


FIGURE8–10

Spans of Control in Country-Based Organization


Network-Based Organizations

• Organizational NetworkA system of interconnected or cooperating

individuals.

• Informal Organizational Network Informal relationships between workers that help get

work accomplished.


Network-Based Organizations (cont’d)

• Formal Organizational NetworkA recognized group of managers or other employees

assembled by the CEO and the other senior executive team, drawn from across the company’s functions, business units, geography, and levels.

• Electronic NetworkingNetworking through technology-supported devices

such as e-mail, video-conferencing, and collaborative computing software.


FIGURE8–11

How Networks Reshape Organizations


Network-Based Organizations (cont’d)

• Team-Based OrganizationsTeam

A group of people who work together and share a common work objective.

• Horizontal CorporationsA structure that is organized around customer-

oriented processes performed by multidisciplinary cross-functional teams rather than by formal functional departments.


The Horizontal Corporation


The Horizontal Corporation (cont’d)


FIGURE 8–13

How to Create a Horizontal Corporation

Source: Source: Reprinted from the December 20, 1993, issue of Business Week by special permission. Copyright © 1993 by the McGraw-Hill Companies, Inc.


Other Organization Types

• Federal OrganizationAn organization in which power is distributed among a

central unit and a number of constituents, but the central unit’s authority is intentionally limited.

• Virtual OrganizationA temporary network of independent companies

linked by information technology to share skills, costs, and access to one another’s markets.

Its success depends on each of the individual firms’ responsibility and self-interest to accomplish the network’s purpose.


FIGURE 8–14

TGC’s Cellular Organization

Source: Reprinted with permission of the Academy of Management Executive, from “Organizing in the Knowledge Age: Anticipating the Cellular Form,” Raymond Miles, vol. 11, no. 4, © 1997; permission conveyed through Copyright Clearance Center, Inc.


Next week: Oct 18th no class!

Next Class Oct 25th

- Hand out RA 2- Review RA 1- Lecture on Chapters 9 & 10


Next Up: Don Streuber….

http://www.bisontransport.com/BisonWeb2010/

http://www.bisontransport.com/BisonWeb2010/

Copyright © 2004 Pearson Education Canada, Inc. All rights reserved.8–1 Introduction to Management Bob Fast Chapter 8 – Fundamentals of Organizing Week.

Documents

line managers

network organization

divisional organization

line of authority

horizontal organization

workable organization

enterprises activities

staff managera manager