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Chapter 7 Organizational Structures

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Learning ObjectivesLearning ObjectivesAfter completing this chapter, you’ll be After completing this chapter, you’ll be able to:able to:1.1. ExplainExplain how businesses organize for

management.

2.2. List List three levels of management and compare their responsibilities.

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Learning ObjectivesLearning ObjectivesAfter completing this chapter, you’ll be After completing this chapter, you’ll be able to:able to:

3.3. NameName the four functions of management.

4.4. AnalyzeAnalyze if a managerial position is for you.

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Why It’s ImportantWhy It’s ImportantUnderstanding business organization and management is key to knowing how a company is run.

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Key WordsKey Wordsmanagement plan organizational chart line authoritycentralized organizationdecentralized organizationdepartmentalization

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Key WordsKey Wordstop-level managersmiddle managersoperational managers

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Managerial Structures Managerial Structures A management plan divides a company into different departments run by different managers.

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Managerial Structures Managerial Structures Companies use an organizational chart to show how the business is structured and who is in charge of whom.

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Managerial Structures Managerial Structures One way to organize management is called line authority.

Managers at the top of the organization are in charge of those beneath them.

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Managerial Structures Managerial Structures Centralized organization puts authority in one place, with top management.

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Managerial Structures Managerial Structures Decentralized organization gives authority to a number of different managers to run their own departments.

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Formal Structure Formal Structure Formal structures are usually departmentalized.

Departmentalization divides responsibility among specific units, or departments.

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Informal Structure Informal Structure Smaller businesses can be run more informally.

If a business does not need a big marketing or distribution network, it does not need a lot of managers.

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Fast Review

1. Match term with definition (handout)

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Levels of Management Levels of Management Most businesses have three levels of managers:

• Top-level managers• Middle managers• Operational managers

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Levels of Management Levels of Management Top-level managers are responsible for setting goals and planning for the future.

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Levels of Management Levels of Management Middle managers carry out the decisions of top management.

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Levels of Management Levels of Management Operational managers are responsible for the daily operations of the business.

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Graphic OrganizerLevels of ManagementLevels of ManagementGraphic OrganizerGraphic Organizer

TOP LEVELTOP LEVELMANAGERSMANAGERS

OPERATIONALOPERATIONALMANAGERSMANAGERS

MIDDLEMIDDLEMANAGERSMANAGERS

• Set goals• Plan for the

future

• Carry out thedecisions oftop management

• Plan and control operations

• Oversee daily operations

• Supervise workers to meet deadlines

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Fast Review

1. Match term with definition

2. Chart

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Planning Planning A good manager has four different functions:

• Planning• Organizing• Leading• Controlling

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Planning Planning Long-range planning involves top-level management deciding how the company should perform.

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Planning Planning As part of the planning process, management must answer the following key questions:

• What must be done?• Who will do it?

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Planning Planning • How will the work be grouped?• Who supervises whom?• Who makes decisions about the

work to be done?

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Planning Planning The key questions of the planning process are applied and answered when you get together with your management team.

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Organizing Organizing To organize a business plan you need to assign managers different tasks and coordinate their activities.

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Organizing Organizing Each manager needs to organize his or her department and know what the other managers are doing.

You need to determine who makes decisions and who answers to whom.

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Leading Leading Good management also requires good leadership.

You have to create a vision of your company to inspire your employees.

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Leading Leading You need to set standards so your managers know their goals.

You need to communicate with them to provide guidance and resolve conflicts.

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Leading Leading You especially want to encourage your employees.

Most companies offer incentives such as pay raises and promotions.

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Controlling Controlling Controlling means keeping the company on track and making sure all goals are met.

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Controlling Controlling You have to keep track of the budget, the schedule, and the quality of the product.

You also have to monitor your employees and review their performance.

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Controlling Controlling Controlling also involves monitoring customer satisfaction.

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Figure7.2 MANAGEMENT FUNCTIONS

Managers carry out four different functions.

Which function involves coordinating resources?

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Fast Review

1. What are the four functions of management?

2. What is a manager’s objective in leading?

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Is Being a Manager for You? Is Being a Manager for You? Most managers begin their careers as company employees. They’re promoted after they have gained experience and have shown certain leadership qualities.

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Is Being a Manager for You? Is Being a Manager for You? Managerial qualities include:

• Ability to perform varied activities• Ability to work under pressure• Effective communication • Interpersonal skills • Ability to gather and use information

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Advantages to Being a ManagerAdvantages to Being a ManagerManagers usually earn more money than employees in non-management jobs.

Being a manager has prestige.

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Advantages to Being a ManagerAdvantages to Being a ManagerBecause managers are leaders, they have more influence than other employees on how the company is run.

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Advantages to Being a ManagerAdvantages to Being a ManagerManagers also have greater control over their time and how they will spend it.

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Disadvantages to Disadvantages to Being a ManagerBeing a Manager

Managers get the blame when things go wrong, even if another employee caused the problem.

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Disadvantages to Disadvantages to Being a ManagerBeing a Manager

When managers make mistakes, they can be more costly than other employees’ mistakes because their decisions affect many workers.

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Disadvantages to Disadvantages to Being a ManagerBeing a Manager

Some managers feel their relationship with lower-level employees is different than their relationship with fellow managers.

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Fast Review

1. What are five qualities or skills a manager should have?

2. What are the advantages and disadvantages of being a manager?

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