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MGT 111 chapter 8


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MGT 111 ADAPTING ORAGNIZATIONS TO TODAY’S MARKETS o EVERYONES DOING IT o Division of labor: determining what work needs to be done. o Departmentalization: the process of setting up individual departments to do specialized tasks. o You have to monitor the environment ot see what competitors are doing and what customers are demanding . o THE CHANGING ORGANIZATION o Companies designed many rules and regulations to give managers control over employees. o Economies of Scale: companies can reduce their production costs if they can purchase raw materials in bulk; the average cost of goods goes down as production levels increase. o Fayol: Unity of command, hierarchy of authority, division of labor, subordination of individual interest to the general interest, authority, degree of centralization, clear communication channels, order, equity, esprit de corps (a spirit of pride and loyalty should be created among people in the firm). Organizations were designed so that no person had more than one boss, lines of authority were clear, and everyone knew to whom they were to report. o Max Weber and Organizational Theory o The theory of social and Economic Organizations (1940). o Weber emphasized: job descriptions, written rules, decision guidelines and detailed records, consistent procedures, regulations, and policies, staffing and promotion based on qualifications. o Weber believed that large organizations demanded clearly established rules and guidelines that were to be followed precisely. He was in favor of bureaucracy. o ISSUES INVOVLED IN STRUCTURING ORGANIZATIONS
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o Centralizaed Authority: an organization structure in which decision- making authority is maintained at the top level of management at the company’s headquarters. o Decentralized Authority: An organization structure in which decision-making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be. CENTRALIZED
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