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7-AEM220_201ToPost(2) - AEM220 Introduction to Business...

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Unformatted text preview: AEM220, Introduction to Business Management. Friday 2/1 Organizational Structure Types of organizational structure Principles of hierarchy and bureaucracy Drawbacks of hierarchy and bureaucracy Functional Areas of Business Operations Finance Transformation of resources into goods and services; The process of determining customers' wants and needs and then providing those customers with products or services that match or exceed their expectations; Marketing The process of acquisition of funds for a firm and management of this funds within the firm; Human resources Research and development Public relations Legal Etc... Others Divisional Structure Fundamentals of Bureaucracy Chain of Command Rules & Regulations Set Up by Function B oss V ic e P r e s id e n t S u p e r v is o r Communication = Minimal E m p lo y e e Departmentalization Skill Development Economies of Scale Good Coordination Lack of Communication Employees Identify with Department Slow Response to External Demands Narrow Specialists Centralization vs. Decentralization Increased Uniformity Less Duplication Maximum Control Lots of Policies & Procedures Many Layers/Slower Informed Decisions Worker Responsibility Few Layers/Faster Loss of Control Possible Duplication Span of Control Optimum number of subordinates a manager supervises or should supervise; Usually between 7 and 15; Can be increased when Jobs are routine and/or low skilled Information technology Greater managerial experience Jobs are unique and/or highly skilled Jobs require extended periods of face-to-face communication Little managerial experience Must be reduced when Coordinating and separating roles Gatekeeper Someone who controls access to something Organizational members who link their organization with the external environment. Boundary spanning primarily concerns the exchange of information [Daft, 1989]. A boundary spanner is further defined as one who attempts to influence external environmental elements and processes. Thus, the fundamental task of a boundary-spanning strategist (BSS) is to make decisions concerning information gathered. Boundary spanners How to Improve Organizational Structure Break business into smaller units Build teamwork Impose autonomy Create meaningful incentives Outsource non-operating activities Share business capabilities across units Outsourcing + Time to focus on company's primary function + Increased level of expertise + Cost effectiveness + Decreased overhead + Risk reduction + Flexibility + Technology - Less personal approach - Less control by owner in planning, implementing & carrying out company's future - Potential for competing for the outsourcing firm's time Matrix Organization Takeaways Formal organizational structures (organizational charts) help in establishing responsibility and control lines. However, they are very inflexible. Some ways to improve flexibility include flattening the structure, outsourcing non-critical activities, and sharing capabilities across units. Organizations are composed of people. To improve organizations beyond their structure, one must motivate and empower people. ...
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