Chapter 5.doc - Chapter 5 Basic Organization Designs KEY...

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Chapter 5: Basic Organization Designs KEY TERMS Organization design – process in which managers develop or change their organization’s structure Work specialization – component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual dot he whole job Chain of command – management principle that no person should report to more than one boss Span of control – number of subordinates a manager can direct efficiently and effectively Authority – rights inherent in a managerial position to give orders and expect them to be obeyed Responsibility – obligation to perform assigned activities Line authority – authority that entitles a manager to direct the work of an employee Staff authority – positions that have some authority but that are created to support, assist, and advise the holders of line authority Power – individual’s capacity to influence decisions Centralization – function of how much decision making authority is pushed down to lower levels in an organization; the more centralized an organization, the higher the level at which decisions are made Decentralization – pushing down of decision making authority to the lowest levels of an organization Functional departmentalization – grouping of activities by functions performed Product departmentalization – grouping of activities by products produced Customer departmentalization – grouping of activities by common customers Geographic departmentalization – grouping of activities by territoties Process departmentalization – grouping of activities by work or customer flow
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