CHAPTER 8 terms

Understanding Business

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The key to success is to remain flexible and adapt to changing times. Often that means going back to basic principles and building the organization on a solid foundation. Structuring an organization requires allocation of resources, assigning specific tasks and establishing procedures for accomplishing organizational objectives. This includes: Division of Labor determining what work needs to be done then dividing up the tasks among the people you have Job Specification dividing tasks into smaller jobs Departmentalization the process of setting up individual departments to do specialized tasks Mass Production efficiently producing large quantities of goods 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 Fayol’s Principles of Organization 1900’s - Henri Fayol, economic theoretician Unity of Command each worker reports to only one boss Hierarchy of Authority all workers should know to whom they report Division of Labor functions are to be divided into areas of specialization such as production, marketing and finance Subordination of individual interests to the general interest workers are to thin of themselves as a coordinated team Authority managers have the right to give orders and the power to enforce obedience; authority and responsibility are related: whenever authority is exercised, responsibility arises. This is being modified with employee empowerment. Degree of Centralization the amount of decision making power vested in top management should vary by circumstances ; in a small organization it’s possible to centralize all decision making power in the top manager; in a larger organization, some decision making power should be delegated to lower level managers and employees on both major and minor issues Clear Communication Channels all workers should be able to reach others in the firm quickly and easily Order materials and people should be placed and maintained in the proper location Equity a manager should treat employees and peers with respect and dignity Esprit de Corps a spirit of pride and loyalty should be created among people in the firm Max Weber and Organizational Theory Max Weber, German sociologist and economist in the 1940’s, promoted the pyramid shaped org structure popular in large firms – he was in favor of bureaucracy – his principles of organization were similar to Fayol’s including: Job Descriptions Written rules, decision guidelines and detailed records
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CHAPTER 8 terms - CHAPTER 8 Adapting Organizations to...

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