Management Exam #2: Chapter 8

Organization
a system of consciously coordinated activities or forces of two or more people; Chester Barnard; can be for-profit, nonprofit (hospitals, schools) and mutual-benefit to advance members’ interests (unions, trade associations)
Organization Chart
box-and-lines illustration showing the formal lines of authority and the organization’s official position or work specializations; CFO, CEO
Vertical Hierarchy
the chain of command; who reports to who
Horizontal Specialization
the different jobs or work specialization
Elements of an Organization
Edgar Schein; common purpose, coordinated effort, division of labor, hierarchy of authority, span of control, authority responsibility and delegation, centralization vs decentralization of authority
Common Purpose
unifies employees or members and gives everyone an understanding of the organization’s reason for being
Coordinated Effort
the coordination of individual efforts into a group or organization wide effort; used to achieve common purpose
Division of Labor
work specialization; the arrangement of having discrete parts of a task done by different people
Hierarchy of Authority
chain of command; a control mechanism for making sure the right people do the right things at the right time
Unity of Command
an employee should report to now more than one manager in order to avoid conflicting priorities and demands
Span of Control
span of management; refers to the number of people reporting directly to a given manager; narrow span of control has limited number of people reporting to manager, wide span of control has several people reporting to manager
Authority
refers to the rights inherent in a managerial position to make decisions, give orders and utilize resources
Accountability
managers must report and justify work results to the managers above them
Responsibility
the obligation yo have to perform the tasks assigned to you
Delegation
the process of assigning managerial authority and responsibility to managers and employees lower in the hierarchy; line position, staff position
Line Managers
have authority to make decision and usually have people reporting to them (president)
Staff Personnel
have authority functions; they provide advice, recommendations and research to line managers
Centralized Authority
important decisions are made by higher-level managers; less duplication of work, uniform and easier to control; used by small companies
Decentralized Authority
important decisions are made by middle-level and supervisory-level managers; managers are encouraged to solve their own problems rather than give them to higher authority; decisions are made quicker with flexibility
Organizational Design
concerned with designing the optical structures of accountability and responsibility that an organization uses to execute its strategies; 1. traditional designs 2. horizontal designs 3. designs that open boundaries between organizations
Traditional Designs
simple, functional, divisional, and matrix structures
Simple Structure
has authority centralized in a single person, a flat hierarchy, few rules and low work specialization; usually found in the firm’s very early entrepreneurial stages
Functional Structure
people with similar occupational specialities are put together in formal groups; very common
Divisional Structure
people with diverse occupational specialties are put together in formal groups by similar products or services, customers or clients, or geographic regions; product divisions (group activities around similar products/services), customer divisions (group activities around common customers or clients), geographic divisions (group activities around defined regional locations)
Matrix Structure
an organization combines functional and divisional chains of command in a grid so that there are two command structures – vertical and horizontal
Horizontal Design
teams or workgroups, either temporary or permanent, are used to improve collaboration and work on shared tasks by breaking down internal boundaries
Designs that Open Boundaries Between Organizations
hollow, modular and virtual
Boundary-less Organization
a fluid, highly adaptive organization whose members, linked by information technology, come together to collaborate on common tasks. the collaborators may include not only coworkers but also suppliers, customers and competitors
Hollow Structure
network structure; the organization has a central core of key functions and outsources other functions to vendors who can do them cheaper or faster
Modular Structure
a firm assembles product chunks, or modules, provided by outside contractors
Virtual Organization
an organization whose members are geographically apart, usually working with email and computers
Virtual Structure
a company outside a company that is created specifically to respond to an exceptional market opportunity that is often temporary
Contingency Design
the process of fitting the organization to its environment; managers must consider 1. environment (mechanistic vs organic) 2. environment (differentiation vs integration) 3. life cycle 4. link between strategy and structure
Mechanistic Organization
authority is centralized, tasks and rules are clearly specified, and employees are closely supervised
Organic Organization
authority is decentralized, there are fewer rules and procedures, and networks of employees are encouraged to cooperate and respond quickly to unexpected tasks
Differentiation
the tendency of the parts of an organization to disperse and fragment
Integration
the tendency of the parts of an organization to draw together to achieve a common purpose
Organizational Life Cycle
has a natural sequence of stages: birth, youth, midlife and maturity; as it moves through these stages it becomes larger, more mechanistic, specialized, decentralized and bureaucratic
Birth Stage
non-bureaucratic; the stage at which the organization is created
Youth Stage
the organization is in a pre bureaucratic stage, a stage of growth and expansion; adding people, division of labor
Midlife Stage
bureaucratic; the organization becomes more bureaucratic, a period of growth evolving into stability; staff of specialists, divisions, many rules
Maturity Stage
the organization becomes very bureaucratic, large, mechanistic; danger is lack of flexibility and innovation
Common Strategies
1) cost minimization 2) innovation 3) imitation