Organizing the business enterprise. Developing Organizational Structure Structure is the arrangement or relationship of positions within an organization,

Organizing the business enterprise

Developing Organizational Structure

• Structure is the arrangement or relationship of positions within an organization, and developed by:

– Assigning work tasks and activities to specific individuals or work groups

– Coordinating the diverse activities required to reach the firm’s objectives

• Organizational structure is depicted through organizational charts

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

Stages of Growth

The Evolution of a Clothing StorePhases 1, 2, and 3


Two Aspects of Assigning Tasks

• Specialization• Departmentalization


Specialization

• The division of labor into small, specialized tasks and the assignment of single tasks to employees– Efficiency


Departmentalization

• Departmentalization is the grouping of jobs into working units usually called departments, units, groups, or divisions

– Functional departmentalization

– Product departmentalization

– Geographical departmentalization

– Customer departmentalization


Functional Departmentalization


Product Departmentalization


Geographical Departmentalization


Customer Departmentalization


Assigning Responsibility and Delegating Authority

• Delegation of authority

• Assigning responsibility

• Employee accountability


Degree of Centralization

• Centralized organizations

– Authority is concentrated at the top level

• Decentralized organizations

– Decision-making authority is delegated as far down the chain of command as possible


Span of Management

• The number of subordinates who report to a particular manager

– A wide span of management exists when a manager directly supervises a very large number of employees.

– A narrow span of management exists when a manager directly supervises only a few subordinates


Span of Management: Wide Spanand Narrow Span


Organizational layers

• Organizational layers are the levels of management in an organization

– Flat organizations have few layers and have wide spans of management

– Tall organizations have many layers and have narrow spans of management


Forms of Organizational Structure

• Line

• Line-and-staff

• Multidivisional

• Matrix


Line Structure


Line-and-Staff Structure


An Example of Multidivisional Structure: The Walt Disney Company

Source: The Walt Disney Company Annual Report

Walt DisneyWalt DisneyAttractionsAttractionsWalt DisneyWalt DisneyAttractionsAttractions

MotionMotionPicturesPicturesMotionMotion

PicturesPictures TVTVTVTV AnimationAnimationAnimationAnimation DisneyDisneyChannelChannelDisneyDisney

ChannelChannel

DisneyDisneyStoresStoresDisneyDisneyStoresStores

SoftwareSoftwareandand

EducationEducation

SoftwareSoftwareandand

EducationEducation

CatalogCatalogMarketingMarketingCatalogCatalog

MarketingMarketing

MagicMagicKingdomKingdom

FLFL


FLFL

Disney-Disney-MGMMGM

StudiosStudios

Disney-Disney-MGMMGM

StudiosStudios

Walt DisneyWalt DisneyStudiosStudios

Walt DisneyWalt DisneyStudiosStudios


CACA


CACA

TokyoTokyoDisneylandDisneyland

TokyoTokyoDisneylandDisneyland

Euro-Euro-DisneyDisneyEuro-Euro-

DisneyDisney

WaltWaltDisneyDisneyWorldWorld

WaltWaltDisneyDisneyWorldWorld

ConsumerConsumerProductsProducts

ConsumerConsumerProductsProducts

LicensingLicensingLicensingLicensing PublishingPublishingPublishingPublishing DisneyDisneyMusicMusic

DisneyDisneyMusicMusic

EpcotEpcotCenterCenterEpcotEpcotCenterCenter

CEOCEOCEOCEO

The Matrix Structure


The Role of Groups and Teams in Organizations

• A group – Two or more individuals who

• communicate with one another, • share a common identity, and • have a common goal

• A team – A small group whose members have

• complementary skills; • a common purpose, goals, and approach; • and who hold themselves mutually accountable


Differences Between Groupsand Teams

Types of Groups

• Committee

• Task force

• Project team

– Product-development team

• Quality assurance team

• Self-directed work team (SDWT)


Virtual Teams

• Employees’ Reactions To Virtual Work

– 91% enjoyed the experience

– 73% would like to engage in virtual work more frequently

– 35% felt it enhanced their relationships with other employees

Source: Darryl Haralson and Adrienne Lewis, “USA Today Snapshots,” USA Today, April 26, 2001, p. B1.

Formal Communication

• Communication flow– Upward – Downward – Horizontal – Diagonal


The Flow of Communication in an Organizational Hierarchy


Informal Communication

• The informal organization– Friendships and other nonwork social

relationships

• The most significant informal communication occurs through the grapevine

• May relate to the job or organization• May be gossip and rumors unrelated to either


Monitoring Communications

• Monitoring the use of electronic communications in the workplace have become necessary for most companies

– 70 percent of attacks on corporate computer systems are conducted from inside the firm

• Failing to monitor employee’s use of e-mail and the Internet can be costly


Disciplinary Action for Misuse of Personal Use of Telecom Equipment

Defining Operations

• Service Operations: – Produce tangible and

intangible services.

• Goods Production:– Produces tangible

products.

Growth in the Goods and Services Sectors

100100

8080

6060

4040

2020

Millions of Workers

ServicesServices

Goods ProductionGoods Production

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

$4,000$4,000

$3,000$3,000

$2,000$2,000

$1,000$1,000

(Billions)(Billions)

ServicesServices

GoodsGoodsProductionProduction

198

4

198

6

198

8

199

0

199

2

199

4

199

6

199

8

200

0

Operations Processes Are Methods Used in Production

• Goods-Manufacturing:– Analytic processes– Synthetic processes

• Service Delivery– High contact processes– Low contact processes

Service Operations Differ Markedly From Manufacturing

• Focus on:– Performance– Process and outcome– Service characteristics– Customer-service link– Service quality

considerations

Layout Process Product Cellular

Methods

QualityLocation

Capacity

Operations Planning

Operations Scheduling

• Scheduling Goods Operations• Scheduling Service Operations

Operations Control Monitors Results, Which Ensures Performance

• Materials managers plan, organize, and control the flow of materials from design through distribution.• Transportation• Warehousing• Purchasing• Supplier Selection• Inventory Control

Tools for Operations Process Control

Worker Training

Just-in-time Production Systems (JIT)

Material Requirements Planning

Quality Control

Integration of Global Operations

• Technology has pushed operations to become cleaner, faster, and safer…on a global scale.

• The internet has integrated production with global suppliers and customers.

Products and Services Create UtilityTo Satisfy Human Wants

• Time Utility• Place Utility• Ownership utility• Form Utility

Operations managersOperations managers create utility create utility for customers through for customers through production, production, inventory, and quality controlinventory, and quality control..

Operations managersOperations managers create utility create utility for customers through for customers through production, production, inventory, and quality controlinventory, and quality control..

Operations Management: A Resource Transformation Process

Inputs Transformation Transformation ActivitiesActivities

OutputsOutputs(Goods and (Goods and

Services)Services)• land• capital• human resources• material• customers• information

• land• capital• human resources• material• customers• information

Operations ManagersOperations Managers• plan• organize

• schedule• control

Total Quality Management

• Always Delivering High Quality

– Planning for quality

– Organizing for quality

– Directing for quality

– Controlling for quality

Tools for Total Quality Management

Statistical Statistical Process Process ControlControl

Statistical Statistical Process Process ControlControl

Quality/Cost Quality/Cost StudiesStudies

Quality/Cost Quality/Cost StudiesStudies

Getting Close Getting Close to the to the

CustomerCustomer

Getting Close Getting Close to the to the

CustomerCustomer

Process Process ReengineeringReengineering

Process Process ReengineeringReengineering

ISO 9000ISO 9000ISO 9000ISO 9000

OutsourcingOutsourcingOutsourcingOutsourcing

Adding Value Through Supply Chains

GrainGrain GrainGrain FlourFlour BakeryBakery

PackagerPackager

Packaged Baked GoodsPackaged Baked Goods

WoodWood PulpPulp PaperPaper

The Supply Chain Strategy

Supply Chain ManagementSupply Chain Management

Working with the Working with the supply chainsupply chain as a whole to as a whole to improve overall flow.improve overall flow.

Supply Chain ReengineeringSupply Chain Reengineering

Improving the process for better results.Improving the process for better results.

Satu

Organizational Culture

• Corporate culture– Shared values– Beliefs– Traditions– Philosophies– Rules– Role models for behavior

Did You Know? Southwest Airlines employees are continually encouraged to have fun and make flying exciting for their passengers. New employees watch videotapes and attend training sessions on the company’s philosophies, policies, and culture.


How is Corporate Culture Expressed?

• Formally – Mission statement– Codes of ethics– Memos, manuals– Ceremonies

• Informally– Dress codes (or the lack

thereof)– Work habits– Extracurricular activities– Stories


Documents

Organizing the business enterprise. Developing Organizational Structure Structure is the arrangement or relationship of positions within an organization,