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MGMT 101 Outline1 RM

Managers who are functional area specialists that

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Managers who are functional-area specialists that give advice to line managers They do primarily support functions, so no visible, numerical impact on profit Tall Structures : have many levels of authority and narrow spans of control As hierarchy levels increase, communication gets difficult, creating delays in the time needed to implement decisions; communication may also become garbled as it is repeated through the firm Flat Structures : have fewer levels and wide spans of control; this structure results in quick communication but 7
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can lead to overworked managers; average # of people that are manageable is 7-10 Fortune 500 Survey noted that as firms became flatter, the CEOs span of control widened. Flatter implies then that there’s more control at the top of the organization. Between 1980 and 2000, Fortune 500 structures tended to be flatter: they expanded, new leadership positions/people tended to take on more control, and new jobs were created directly below the high-level positions. Strategy Determines Structure Differentiation Strategy favors coordination and adaptation over efficiency o If flexibility is key, then you must be decentralized to allow for quick change (then you won’t need to wait for approval from the top of the organization) o Vertical integration or diversification also favors more flexibility or decentralization A Cost Leadership Strategy favors efficiency, then coordination, over adaptation o Centralization and formalization are paramount Environment Determines Structure Quicker environment changes require managers to face more problems. This heightens the need for strategic change. Since structure follows strategy, the structure must be more flexible (decentralized) when environmental change is rapid. Types of Structure 1. Simple Oldest and most common form; highly informal, highly centralized decision-making, little specification of tasks and few rules and regulations; informal evaluation and reward system 2. Functional Mostly refers to how the first level or responsibility is split within the organization (which is based on their functions). You tend to see functional structures for single or closely related products/services, high production volumes, stable environments, and limited vertical integration. Advantages: centralized decision making can enhance coordination and control; more efficient use of managerial and technical talent; people spend time doing what they do best, and there’s easier communication Disadvantages : may lead to short-term thinking and very difficult to establish uniform performance standards 3. Divisional Splits in the levels aren’t based on functions but rather around products, projects, or markets. Each division includes its own functional specialists that are usually organized into departments. Divisions are generally 8
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autonomous and deal with products/services that are different from those in other divisions ; thus, the divisions don’t deal with each other much at all .
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