principles of management chpt08
TRANSCRIPT
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OrganizationalStructure
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Designing Organizational Structure
Organizing:the process by which managersestablish working relationships amongemployees to achieve goals. Organizational Structure:formal system of task &
reporting relationships showing how workers useresources.
Organizational design:managers make specific choices
resulting in a given organizational structure.
Successful organizational design depends onthe organizations unique situation.
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Factors Affecting Organizational Design
Environment
Strategy
Human
Resources
TechnologyDetermine design
or organizational
structure
Figure 8.1
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Determinants of Structure
The envir onment: The quicker the environmentchanges, the more problems face managers.
Structure must be more flexible when environmental
change is rapid. Usually need to decentralize authority.
Strategy:Different strategies require the use ofdifferent structures.
A differentiation strategy needs a flexible structure,low cost may need a more formal structure.
Increased vertical integration or diversification also
requires a more flexible structure.
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Determinants of Structure Technology:The combination of skills, knowledge, tools,
equipment, computers and machines used in theorganization.
More complex technology makes it harder for managers toregulate the organization. Technology can be measured by:
Task Variety: new problems a manager encounters.
Task Analyzability:programmed solutions available to a
manager to solve problems.
High task variety and low analyzability present manyunique problems to managers.
Flexible structure works best in these conditions.
Low task variety and high analyzability allow managersto rely on established procedures.
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Technology & People
Small Batch Technology:produces small quantities ofone-of-a-kind products.
Based on the skills of the workers who need a flexible
structure.
Mass Production Technology:automated machines makehigh volumes of standard products.
Workers perform repetitive tasks so a formal structure
works well.
Continuous Process Technology:totally mechanizedsystems of automatic machines.
Workers must watch for unexpected problems and react
quickly. A flexible structure is needed here.
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Determinants of Structure
Human Resources:the final factor affectingorganizational structure.
Higher skilled workers who need to work in teams
usually need a more flexible structure.
Higher skilled workers often have professional
norms (CPAs, physicians).
Managers must take into account all fourfactors (environment, strategy, technologyand human resources) when designing thestructure of the organization.
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Job Design
Job Design:group tasks into specific jobs.
Results in a division of labor between workers that is
effective and efficient.
Job simplification: reduction of the tasks each workerperforms.
Too much and boredom results.
Job enlargement: increase tasks for a given job to
reduce boredom. Job enrichment: increases the degree of responsibility
a worker has over a job.
can lead to increased worker involvement.
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Job Characteristics Model
Skill Variety
Task Identity
Task Significance
Autonomy
Feedback
Meaningfulness
of work
Responsibility
for Work
Outcomes
Knowledge of
results of
work
High:
Motivation
Performance
Satisfaction
Figure 8.2
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Job Characteristics Model Jobs have five characteristics describing extent of:
Ski l l var iety:employee uses a wide range of skills
Task identi ty:worker involved in all tasks of job from
beginning to end of the production process
Task signi f icance:worker feels the task is meaningful to
organization.
Autonomy:employee has freedom to schedule tasks and
carry them out.
Feedback:worker gets direct information about how well
the job is done.
These affect the motivation, satisfaction and performance ofemployees.
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Grouping Jobs into Functions
Once tasks are grouped into jobs,managers must decide how to group jobstogether. Function:people working together with similar
skills, tools or techniques to perform their jobs. Functional structure consists of departments such
as marketing, production, and finance.
Workers can learn from others doing similar tasks.
Easy for managers to moni tor and evaluate workers.
Hard for one department to communicate with others.
Managers can become preoccupied with their department
and forget the firm
Pros
Cons
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A Sample of Pier 1s Functional Structure
V.P. Tax V.P. Controller
V.P. MIS Director
Corp. Planning
Exec. V.P.
Finance & Admin.
Senior V. P.
Stores
Director
Transportation
V.P.
Distribution
Senior V.P.
Logistics
Clark Johnson
CEO
Figure 8.3
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Divisional Structures
A division is a collection of functions workingtogether to produce a product.
Divisions create smaller, manageable parts of a firm.
Divisions develop a business-level strategy to compete.
A division has marketing, finance, and other functions.Functional managers report to divisional managers who then report to
corporate management.
Product structure:divisions created according to the type
of product or service. Geographic structure:divisions based on the area of a
country or world served.
Market structure:divisions based on the types ofcustomers served.
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Product Structure
Washing Machine
Division
Lighting
Division
Television
Division
CorporateManagers
CEO
Corporation
Figure 8.4a
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Geographic Structure
Northern
Region
Western
Region
Southern
Region
Eastern
Region
CorporateManagers
CEO
Corporation
Figure 8.4 b
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Market Structure
Large Business
Customers
Small Business
Customers
Educational
Institutions
Individual
Customers
Corporate
Managers
CEO
Corporation
Figure 8.4c
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Global Structures
When managers find different problems ordemands across the globe, global solutions areneeded. Global geographic structure:different divisions serve
each world region.
For customer needs that vary between regions.
Global product structure:Customers in different regionsbuy similar products so firms keep most functional workat home and set up a division to market product abroad.
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Matrix & Product Teams
Matrix structure:managers group people by functionand product teams simultaneously.
Results in a complex network of reporting relationships.
Very flexible and can respond rapidly to change.Each employee has two bosses which can cause
problems.
Functional manager gives different directions than
product manager and employee cannot satisfy both. Product Team Structure:no 2-way reporting and the
members are permanently assigned to the team andempowered to bring a product to market.
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Product Team StructureCEO
Func.
Managers
Sales Design Production
Manufacturing Manufacturing Manufacturing
= Product Team Manager = Team member
Figure 8.7b
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Hybrid Structures
Many large organizations have divisionalstructureswhere each manager can select thebest structure for that particular division. One division may use a functional structure, one
geographic, and so on.
This ability to break a large organization into
many smaller ones makes it much easier tomanage.
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Coordinating Functions
To ensure sufficient coordination betweenfunctions, managers delegate authority.
Authority:the power vested in the manager to makedecisions and use resources.
H ierarchy of authority:describes the relativeauthority each manager has from top to bottom.
Span of Control:refers to the number of workers a
manager manages.
L ine authori ty:managers in the direct chain ofcommand for production of goods or services. Example:Sales
Staff author i ty:managers in positions that give adviceto line managers. Example: Legal
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Tall & Flat Organizations Tall structureshave many levels of authority relative to
the organizations size.
As levels in the hierarchy increase, communication
gets difficult.
The extra levels result in more time being taken toimplement decisions.
Communications can also become garbled as it is
repeated through the firm.
F lat structureshave few levels but wide spans ofcontrol.
Results in quick communications but can lead to
overworked managers.
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Integrating Mechanisms
Direct contact:get managers from different divisions orfunctions together to solve mutual problems.
L iaison Roles:one manager in each area is responsible
for communication with other areas. Task Forces:temporary committees formed across
divisions to solve a specific problem.
Cross-functional teams:works much like a permanent
task force that deals with recurring problems. Matrix structure:already contains many integrating
mechanisms.
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Strategic Alliances
Strategic all iance:a formal agreementcommitting two or more firms to exchangeresources to produce a good.
Network Structure:a whole series of strategicalliances. Created between suppliers, manufacturers, and
distributors.
Toyota and Honda use many such alliances.
Network structures allow firms to bring resourcestogether in a boundary-less organization.