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Unformatted text preview: AEM1200, Introduction to Business Management. AEM1200, Wednesday 9/10 Organizational Structure Types of organizational structure Principles of hierarchy and bureaucracy Alternatives to hierarchy and bureaucracy Functional Areas of Business Functional
Operations Finance Transformation of Transformation resources into goods and services; services; The process of The determining customers’ wants and needs and then providing those customers with products or services that match or exceed their expectations; exceed Marketing The process of acquisition The of funds for a firm and management of this funds within the firm; within Human resources Research and development Public relations Legal Etc… Others Divisional Structure Divisional Fundaments of Bureaucracy: Fayol and Weber Fundaments
Unity of command Hierarchy of authority Division of labor Subordination of individual Subordination interests to the general interest interests Authority Degree of centralization Close communication Close channels channels Order Equity Esprit de corps Job descriptions Job Written rules, decision Written guidelines, and policies guidelines, Consistent procedures, Consistent regulations, and policies regulations, Staffing and promotion based Staffing on qualification on Fundamentals of Bureaucracy of 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 Departmentalization Skill Development Economies of Economies Scale Scale Good Coordination Lack of Communication Employees Identify with Employees Department Department Slow Response to Slow External Demands External Narrow Specialists Centralization vs. Decentralization Centralization Increased Uniformity Less Duplication Maximum Control Lots of Policies & Lots Procedures Procedures Many Layers/Slower Informed Decisions Worker Responsibility Few Layers/Faster Loss of Control Possible Duplication Span of Control Span
Optimum number of subordinates a manager Optimum supervises or should supervise; supervises 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 Jobs communication communication Little managerial experience Must be reduced when Coordinating and separating roles Coordinating
Gatekeeper Someone who controls access to something Organizational members who link their organization Organizational 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 Mechanistic vs. Organic Organizations Mechanistic
Mechanistic organizations have: Organic organizations have: Specialized jobs and Broadly defined jobs and Specialized Broadly responsibilities; responsibilities; responsibilities; responsibilities; Precisely defined, unchanging Loosely defined, Precisely Loosely roles; frequently changing roles; roles; frequently A rigid chain of command Decentralized authority; Centralized authority Horizontal Horizontal Vertical communication communication; communication; Based on sequential and Based Based on reciprocal Based pooled interdependence pooled interdependence interdependence Organization centered Task centered How to Improve How Organizational Structure
Break business into smaller units Build teamwork Impose autonomy Create meaningful incentives Outsource non-operating activities Share business capabilities across units Matrix Organization Matrix Outsourcing Outsourcing
+ Time to focus on Time company’s primary function function + Increased level of Increased expertise expertise + Cost effectiveness + Decreased overhead + Risk reduction + Flexibility + Technology - Less personal approach - Less control by owner in Less planning, implementing & carrying out company’s future future - Potential for competing Potential for the outsourcing firm’s time time Virtual Organizations Virtual
A temporary networked organization made up of temporary replaceable firms that join and leave as needed; replaceable Reduces fixed costs Obtains needed expertise quickly Promotes flexibility We act as an extension of your own business to We manage all aspects of your global supply chain. We take care of all vital aspects of the supply chain so that our customers - leading retailers and brands can focus on their customers.” can Example: Li and Fung Takeaways Takeaways
Formal organizational structures (organizational Formal charts) help in establishing responsibility and control lines. However, they are very inflexible. very Some ways to improve flexibility include flattening the structure, outsourcing non-critical activities, and sharing capabilities across units. activities, Organizations are composed of people. To Organizations people To improve organizations beyond their structure, one must motivate and empower people. motivate empower ...
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