Chapter 8 - Management Chapter 8 Adapting Organizations to...

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Management Chapter 8 – Adapting Organization’s to Today’s Markets - The changing organization o Managing change has become a critical managerial function o The development of Organization Design Economies of Scale – Situation where companies can reduce production costs if they can purchase raw materials in bulk; avg cost of goods decreases as production levels increase o Fayol’s Principles of Organization Unity of Command – each worker has only one boss Hierarchy of authority – all workers should know whom to report Division of Labor – Functions should be divided into areas of specialization such as production, marketing, and finance Subordination of individual interest to general interest – workers should think of themselves as a coordinated team. Authority – Managers have the right to give orders and the power to enforce obedience Degree of Centralization – The amt. of decision making power vested in top mgmt. should vary by circumstances o Max Weber and Organizational Theory Weber’s principles were similar to Fayol’s. He also emphasized: Job Descriptions Written Rules, decision guidelines, records Consistent procedures and rules Staffing and promotion based on qualifications - Turning Principles into Organizational Design o Hierarchy – A system in which one person is at the top of the organization and there is a ranked or sequential ordering form the top down of managers who are
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