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Welcome to BUSI 1110!

Instructor: Russ Heritage

Week 7

Organizing the Business Enterprise

1-2

Today’s Agenda

Welcome

Questions from last time?

Review

Lecture – Organizing the Business Enterprise

Your Questions

1-3

Midterm Results

Class Average =

The Management Process (LO 6-1) (1 of 5)

Planning

Leading

Organizing

Controlling

Functions of Management

Review

Learning Objective: 6-1

Page(s): 113-114

Notes

Management- A series of activities developed to allow businesses to achieve their goals

Planning

Leading

Organizing

Controlling

The Management Process (LO 6-1) (2 of 5)

Planning -what business are we in?

determining what the business needs to do and the best way to achieve it

Review

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Learning Objective: 6-1

Page(s): 113-114

The Management Process (LO 6-1) (3 of 5)

Organizing – how do we get the work done and who will do it?

determining how to use existing resources to implement the plan

arranging jobs in a structure to create an efficient task system

Review

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Learning Objective: 6-1

Page(s): 113-114

The Management Process (LO 6-1) (4 of 5)

Leading -The Human side

guiding and motivating subordinates to meet objectives

managers have various responsibilities with regard to their employees

Authority to give orders

Ability to guide employees

Power to motivate subordinates

Review

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Learning Objective: 6-1

Page(s): 113-114

The Management Process (LO 6-1) (5 of 5)

Controlling: managers monitor the firm’s performance

Review

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Learning Objective: 6-1

Page(s): 113-114

Figure 6.1

Types of Managers (LO 6-2) (1 of 2)

Levels of Management

Top Management

responsible for overall performance of the firm

Middle Management

responsible for implementing decisions of top managers

First-line Management

responsible for supervising employees

Review

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Learning Objective: 6-2

Page(s): 116-117

Table 6.1

Basic Management Skills (LO 6-3) (1 of 4)

Conceptual skills

Decision-Making skills

Time Management skills

Human Relations skills

Technical skills

Review

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Learning Objective 6-3

Page(s): 118-119

Figure 6.3

Notes

Different levels in an organization require different combinations of managerial skills.

Strategic Management: Setting Goals and Formulating Strategy (LO 6-4) (3 of 8)

Analyzing the Organization and Its Environment

Internal

Strengths

External

Opportunities

Internal

Weaknesses

External

Threats

SWOT Analysis

Review

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Learning Objective: 6-4

Page(s): 122-123

Strategic Management: Setting Goals and Formulating Strategy (LO 6-4) (4 of 8)

Matching the Organization and Its Environment

Final step in strategy formulation

Matching company strengths to environmental opportunities

Minimizing the impact of threats and company weaknesses

Review

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Learning Objective: 6-4

Page(s): 122-123

A sample of proper APA

(an excerpt)

It is understood that organizational design can be a key factor for business success. It has been noted that how a business structures its workforce and staff can lead to significant efficiency (Smith, 2003). Once a firm has determined how it wants to set up its organization, it must then decide which tasks will be assigned to which staff members…

References

Smith, J.B (2003), The Art of Organizational Design. Simon and Schuster.

Citing Properly in your Assignments – A refresher

Keys to remember

You need to use sources in the assignments. 3 or 4 are ideal.

Make sure to include an in-text citation to tell me where you used someone else's idea.

Simply creating a list of sources at the end without in-text citations doesn’t cut it 

Not using any sources significantly reduces your score (make sure to review the marking rubric).

Your Questions

Business Essentials

Ninth Canadian Edition

Chapter 7

Organizing the Business Enterprise

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Learning Objectives (1 of 2)

Discuss the elements that influence a firm’s organizational structure.

Explain how specialization and departmentalization are the building blocks of organizational structure.

Distinguish between responsibility and authority and explain the differences in decision making in centralized and decentralized organizations.

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These learning objectives are based upon those at the beginning of the chapter. For a review of learning objectives, see the summary at the end of the chapter, as well as the list of key terms.

Learning Objectives (2 of 2)

Explain the differences between functional, divisional, project, and international organization structures, and describe the most popular forms of organizational design.

Understand how the informal organization is different from the formal organization.

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Purposes of Organizing

Divides work to be done into specific jobs and departments. Assigns tasks and responsibilities associated with individual jobs. Coordinates diverse organizational tasks. Clusters jobs into units. Establishes relationships among individuals, groups, and departments. Establishes formal lines of authority. Allocates and deploys organizational resources.

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What Is Organizational Structure? (LO 7-1) (1 of 3)

Organizational Structure

specification of the jobs or roles to be done and how they are related

each organization (profit, not-for-profit, and government) must develop a structure that meets its specific needs

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Learning Objective: 7-1

Page(s): 136-137

What Is Organizational Structure? (LO 7-1) (2 of 3)

Determinants of Organizational Structure

purpose, mission, and strategy

size, technology, and changes in the environment

it may be carefully planned or develop as the organization evolves

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Learning Objective 7-1

Page(s): 136-137

What Is Organizational Structure? (LO 7-1) (3 of 3)

Chain of Command

the organizational chart shows employee positions and the flow of decision-making power

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Learning Objective: 7-1

Page(s): 136-137

Figure 7.1

The Building Blocks of Organizational Structure (LO 7-2) (1 of 5)

Specialization

process of identifying the specific jobs that need to be done and designating the people who will perform them

Departmentalization

determining how tasks should be grouped together to make the workplace more efficient

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The Building Blocks of Organizational Structure (LO 7-2) (2 of 5)

Specialization and Growth

small companies have fewer employees (less specialization)

large companies become more efficient through specialization

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Learning Objective: 7-2

Page(s): 137-139

The Building Blocks of Organizational Structure (LO 7-2) (3 of 5)

Departmentalization: grouping jobs into logical units

increases efficiency (division of labour)

better control and coordination

easier to monitor performance

profit centres are accountable

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Learning Objective: 7-2

Page(s): 137-139

The Building Blocks of Organizational Structure (LO 7-2) (4 of 5)

Bases of Departmentalization

Functional

Customer

Product

Geographic

Process

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Learning Objective: 7-2

Page(s): 137-139

The Building Blocks of Organizational Structure (LO 7-2) (5 of 5)

Example of a firm using multiple forms of departmentalization

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Learning Objective: 7-2

Page(s): 137-140

Establishing the Decision-Making Hierarchy (LO 7-3) (1 of 8)

Decision-Making Hierarchy

defines who is responsible for making certain decisions

Three-step process

assigning tasks

performing tasks

distributing authority

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Learning Objective: 7-3

Page(s): 140

Establishing the Decision-Making Hierarchy (LO 7-3) (2 of 8)

Assigning Tasks

Responsibility

duty to perform an assigned task

Authority

power to make decisions to complete a task

Performing Tasks

Delegation

assignment of a task, responsibility, or authority to a subordinate

Accountability

Obligation of subordinates to finish tasks and justify outcomes

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Learning Objective: 7-3

Page(s): 140-143

Establishing the Decision-Making Hierarchy (LO 7-3) (3 of 8)

Distributing Authority

Centralization

top managers reserve most of the decision-making rights

Decentralization

lower- and middle-level managers have some discretion in making decisions on their own

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Learning Objective: 7-3

Page(s): 140-143

Activities

Invite students to give examples of what kinds of organizations should be centralized? Why do they feel that way? Are there disadvantages to centralization? What are they? Are there organizations that should be decentralized? The objective of the discussion is to illustrate that there is no “right way” to distribute authority in organizations. It is not “one size fits all”!

Establishing the Decision-Making Hierarchy (LO 7-3) (4 of 8)

Span of Control

number of subordinates that a manager is responsible for supervising

wide span: many subordinates

narrow span: very few subordinates

complicated tasks require more supervision and a narrow span of control

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Learning Objective: 7-3

Page(s): 140-143

Figure 7.3

Establishing the Decision-Making Hierarchy (LO 7-3) (4 of 8)

Span of Control:

The number of employees who can be effectively and efficiently supervised by a manager.

Span of control at a call cener might be 50+

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Learning Outcome 1: Describe the six key elements of organizational design.

The concept of span of control refers to the number of subordinates a manager can supervise effectively and efficiently.

1. The span of control concept is important because it determines how many levels and managers an organization will have (see Exhibit 11-3 for an example).

2. What determines the “ideal” span of control? Contingency factors such as the skills and abilities of the manager and the employees, the characteristics of the work being done, similarity of employee tasks, the complexity of those tasks, the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of the organization’s information system, the strength of the organization’s culture, and the preferred style of the manager will influence the ideal number of subordinates.

3. The trend in recent years has been toward larger spans of control.

Defining Organizational Structure

Determination of span is impacted by:

Skills and abilities of the manager and the employees

Characteristics of the work being done

Similarity of tasks

Complexity of tasks

Physical proximity of subordinates

Standardization of tasks

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Learning Outcome 1: Describe the six key elements of organizational design.

What determines the “ideal” span of control? Contingency factors such as the skills and abilities of the manager and the employees, the characteristics of the work being done, similarity of employee tasks, the complexity of those tasks, the physical proximity of subordinates, the degree to which standardized procedures are in place, the sophistication of the organization’s information system, the strength of the organization’s culture, and the preferred style of the manager will influence the ideal number of subordinates.

Establishing the Decision-Making Hierarchy (LO 7-3) (5 of 8)

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Learning Objective: 7-3

Page(s): 140-143

Figure 7.3

Establishing the Decision-Making Hierarchy (LO 7-3) (6 of 8)

Three Forms of Authority

Line authority

Staff authority

Committee/Team authority

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Learning Objective: 7-3

Page(s): 140-143

Establishing the Decision-Making Hierarchy (LO 7-3) 7 of 8)

Line Authority

direct chain of command (indicated by a solid line in the org. chart)

Staff Authority

staff that advise/support line managers (indicated by a dotted line in the organizational chart)

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Learning Objective: 7-3

Page(s): 140-143

Establishing the Decision-Making Hierarchy (LO 7-3) (8 of 8)

Committee and Team Authority

authority granted to committees/work teams (permanent or temporary)

plan their work and complete the task independently

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Learning Objective: 7-3

Page(s): 140-143

Activities

The students often work on group projects. Use this analogy to demonstrate a team or committee authority system. Then, ask students to work in groups to develop company profiles for the types of firms that will use team/committee authority structures.

Basic Organizational Structures (LO 7-4) (1 of 5)

Functional Structure

units are formed based on the job functions (i.e. payroll, accounting, sales & purchasing)

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Learning Objective: 7-4

Page(s): 144-147

Activities

Have students contrast the departmentalization and organizational structures components of the chapter. They must understand that while one looks are task assignment and divisional design, the other looks at the overall organizational design. These two components come together to create similar structures. It is important that they understand that the functional structure essentially the same as the functional organization presented earlier.

Basic Organizational Structures (LO 7-4) (2 of 5)

Divisional Structure

divisions operating as semi-autonomous units and profit centres

e.g., products, customers, or geography

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Learning Objective: 7-4

Page(s): 144-147

Table 7.3

Activities

Have students compare the divisional structure for basic organizational structure, back to the various divisional structures for departmentalization. Make sure they see that the divisional method of departmentalizing, and the divisional method of basic organizational structure, accomplish the same goal.

Basic Organizational Structures (LO 7-4) (3 of 5)

Project Organization

used by organizations with new product opportunities or for special projects

in a matrix organization, the project manager and regular line managers share authority until the project is completed

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Learning Objective: 7-4

Page(s): 144-147

Basic Organizational Structures (LO 7-4) (4 of 5)

Example of a Matrix Organization

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Learning Objective: 7-4

Page(s): 144-147

Figure 7.6

Basic Organizational Structures (LO 7-4) (5 of 5)

International Organization

designed to help a company succeed in international markets

international departments & divisions, integrated global organization

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Learning Objective: 7-4

Page(s): 144-147

Figure 7.7

Activities

Have students work in groups of two or three to complete this library-based research assignment. Students should research two international companies. Then, they should try to determine how the companies structure their international operations. They can be asked to present their findings to the class. An optional ending to this assignment is to have the students evaluate whether the international organization seems to be appropriate given the current and future growth opportunities facing the firm.

New Organizational Structures (LO 7-4) (1 of 2)

Organizational Design for the Twenty-First Century

Boundaryless organization

Team organization

Virtual organization

Learning organization

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Learning Objective: 7.4

Page(s): 147-149

New Organizational Structures (LO 7-4) (2 of 2)

A Virtual Organization Model

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Learning Objective: 7-4

Page(s): 147-149

The Informal Organization (LO 7-5) (1 of 3)

Informal Organization

network of social interactions and relationships among employees unrelated to the formal structure

a powerful force that can alter the formal structure

informal groups

organizational grapevine

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Learning Objective: 7-5

Page(s): 149-150

The Informal Organization (LO 7-5) (2 of 3)

Informal Groups

groups of individuals who decide to interact among themselves even though they are not required to do so

may work together or not

may discuss business or other interests

may or may not have a positive impact on the business

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Learning Objective: 7-5

Page(s): 149-150

The Informal Organization (LO 7-5) (3 of 3)

Organizational Grapevine

an informal communication network that carries gossip and other information

managers must maintain open channels of communication and respond to inaccurate information to minimize damage

managers can use it to measure employee reactions, gain information and improve decision making

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Learning Objective: 7-5

Page(s): 163

Activities

Ask students if there is a “grapevine” operating in their school. How do they know which classes to take? Which faculty to take? Do they feel that the “grapevine” is an efficient or inefficient communication system?

Your Questions

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Quick-Check Questions (1 of 10)

Organizational charts illustrate:

A) positions of seniority within an organization.

B) only those reporting relationships between middle management and top management.

C) organizational structure, employee titles and their relationship to one another.

D) operational plans.

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Quick-Check Questions (2 of 10)

Organizational charts illustrate:

A) positions of seniority within an organization.

B) only those reporting relationships between middle management and top management.

C) organizational structure, employee titles and their relationship to one another.

D) operational plans.

Answer: C) organizational structure, employee titles and their relationship to one another.

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Quick-Check Questions (3 of 10)

Specialization permits higher levels of productivity through efficiency gains. However, a potential risk of excessive specialization is:

A) higher training costs

B) employee boredom, dissatisfaction and isolation

C) higher wage rates to compensate for poor working conditions

D) excessive product defects

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Quick-Check Questions (4 of 10)

Specialization permits higher levels of productivity through efficiency gains. However, a potential risk of excessive specialization is:

A) higher training costs

B) employee boredom, dissatisfaction and isolation

C) higher wage rates to compensate for poor working conditions

D) excessive product defects

Answer:

B) employee boredom, dissatisfaction and isolation

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Quick-Check Questions (5 of 10)

A company that emphasizes superior customer service needs to respond quickly to satisfy customers. They are likely using ____________.

A) line authority

B) centralized decision making

C) decentralized decision making

D) functional authority

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Quick-Check Questions (6 of 10)

A company that emphasizes superior customer service needs to respond quickly to satisfy customers. They are likely using ____________.

A) line authority

B) centralized decision making

C) decentralized decision making

D) functional authority

Answer:

C) decentralized decision making

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Quick-Check Questions (7 of 10)

Beta Engineering uses the _________ corporate structure, where teams of specialists from various functional areas work together on specific challenges and report to both a project manager and a line manager.

A) functional

B) matrix

C) divisional

D) project

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Quick-Check Questions (8 of 10)

A) functional

B) matrix

C) divisional

D) project

Answer:

B) matrix

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Quick-Check Questions (9 of 10)

The __________ is an informal person-to-person means of communicating information or rumours.

A) matrix

B) chain of command

C) hybrid chart

D) grapevine

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Quick-Check Questions (10 of 10)

The __________ is an informal person-to-person means of communicating information or rumours.

A) matrix

B) chain of command

C) hybrid chart

D) grapevine

Answer:

D) grapevine

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Your Questions

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