Download CHAPTER 8 –Organizing a Customer

CHAPTER 8 – ADAPTING ORGANIZATIONS TO TODAY’S MARKETS
LEARNING GOALS
After you have read and studied this chapter, you should be able to:
1.
2.
3.
4.
5.
6.
Outline the basic principles of organization management.
Compare the organizational theories of Fayol and Weber.
Evaluate the choices managers make in structuring organizations.
Contrast the various organizational models.
Identify the benefits of inter-firm cooperation and coordination.
Explain how restructuring, organizational culture, and informal organizations can help
businesses adapt to change.
LEARNING THE LANGUAGE
Listed below are important terms found in the chapter. Choose the correct term for each definition and
write it in the space provided.
Benchmarking
Flat organization structure
Bureaucracy
Centralized authority
Chain of command
Core competencies
Cross-functional self managed
teams
Decentralized authority
Departmentalization
Digital natives
Economies of scale
Formal organization
Hierarchy
Informal organization
Inverted organization
Line organization
Line personnel
Matrix organization
Networking
Organizational (or corporate)
culture
Real time
Restructuring
Span of control
Staff personnel
Tall organization structure
Transparency
Virtual corporation
1.
Groups of employees from different departments who work together on a long- term basis
are called ______________________.
2.
A ________________ is a system in which one person is at the top of the organization and there is
a ranked or sequential ordering from the top down of managers who are responsible to that
person.
3.
Using communications technology and other means to link organizations, or ______________,
allows them to work together on common objectives.
4.
Redesigning an organization so that it can more effectively and efficiently serve its customers is
known as ______________.
5.
Widely shared values within an organization, or the _______________________, provide unity
and cooperation to achieve common goals.
6.
The _____________________ is the system of relationships and lines of authority that develop
spontaneously as employees meet and form relationships, and lines of authority outside the
formal organization.
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7.
Those functions that the organization can do as well as or better than any other organization in
the world are called _______________________.
8.
A ___________________ is an organization with many layers of managers who set rules and
regulations and oversee all decisions.
9.
An organization in which decision-making authority is maintained at the top level of
management at the company’s headquarters utilizes __________________________.
10.
In a(n) __________________ contact people are at the top and the chief executive officer is at the
bottom of the organization chart.
11.
The ________________ refers to the optimum number of subordinates a manager supervises or
should supervise.
12.
The line of authority that moves from the top of the hierarchy to the lowest level is called the
__________________________.
13.
Employees known as _____________________are part of the chain of command that is responsible
for achieving organizational goals.
14.
When a company is using _______________________, it is comparing its practices, processes, and
products against the world's best.
15.
When decision-making authority is delegated to lower-level managers more familiar with local
conditions than headquarters’ management could be, a company is said to have ______________.
16.
A____________________ has few layers of management and a broad span of control.
17.
Dividing organizational functions into separate units is commonly called
_____________________.
18.
The __________________ is the structure that details lines of responsibility, authority, and
position and is shown on the organizational chart.
19.
A _____________________ is one in which specialists from different parts of the organization are
brought together to work on specific projects but still remain part of a traditional line and staff
structure.
20.
Employees known as ____________________ advise and assist line personnel in meeting their
goals.
21.
The concept of ___________________describes a situation in which companies can reduce their
production costs if they can purchase raw materials in bulk, so the average cost of goods goes
down as production levels increase.
22.
An organizational structure in which the pyramidal organization chart would be quite tall
because of the various levels of management would be called a __________________________.
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23.
A ____________________is one that has direct two-way lines of responsibility, authority, and
communication running from the top to the bottom of the organization, with all people reporting
to only one supervisor.
24.
The present moment or the actual time in which something takes place is called _____________.
25.
The term _______________ is used to describe young people who grew up using the Internet.
26.
A _________________is a temporary, networked organization made up of replaceable firms that
join the network and leave it as needed.
ASSESSMENT CHECK
Learning Goal 1
Everyone’s Organizing
1.
According to the text the key to success for organizations is: ________________________________
_____________________________________________________________________________________.
2.
3.
Describe:
a.
Division of labor: _________________________________________________
b.
Job specialization: _________________________________________________
Structuring an organization consists of:
a.
__________________________________________________________________
b.
__________________________________________________________________
c.
__________________________________________________________________
d.
__________________________________________________________________
e.
__________________________________________________________________
f.
__________________________________________________________________
4.
What does an organization chart show?
5.
What has created so much change in organizations?
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Learning Goal 2
The Changing Organization
6.
Identify and briefly describe 10 of Fayol's "principles" of organizing:
a.________________________________________________________________________
b.________________________________________________________________________
c.________________________________________________________________________
d.________________________________________________________________________
e.________________________________________________________________________
f.________________________________________________________________________
g.________________________________________________________________________
h.________________________________________________________________________
i_________________________________________________________________________
j._________________________________________________________________________
7.
The process of rule making often led to __________________________________________.
8.
Identify four characteristics of Max Weber's bureaucracy.
a.__________________________________________________________________________
b.__________________________________________________________________________
c.__________________________________________________________________________
d.__________________________________________________________________________
9.
How do workers today differ from those during the time that Weber was writing, and how did that
affect management?
10.
In a company with many layers of management, what is the process for an employee to introduce a
work change? What did Weber mean by the term “bureaucrat”?
11.
When employees have to ask their manager for permission to make a change __________________
______________________________________________________________________________________.
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12.
How are companies reorganizing to make customers happy?
Learning Goal 3
Decisions to Make in Structuring Organizations
13.
14.
What are the advantages and disadvantages of centralized authority?
Advantages
Disadvantages
a. _______________________________
a. __________________________________
b. _______________________________
b. __________________________________
c. _______________________________
c. __________________________________
d. _______________________________
d. __________________________________
What are the advantages and disadvantages of decentralized authority?
Advantages
a. _______________________________
Disadvantages
a. __________________________________
b. _______________________________
b. __________________________________
c. _______________________________
c. __________________________________
d. _______________________________
d. __________________________________
15.
Why does span of control narrow at higher levels of the organization?
16.
What is the trend in today’s organizations regarding span of control?
17.
Compare span of control in tall and flat organizational structures.
18.
Why can flat structures respond more readily to customer demands?
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19.
What are the advantages and disadvantages of the traditional functional structure?
Advantages
Disadvantages
a. _______________________________
a. ____________________________________
b. _______________________________
b. ____________________________________
c. _______________________________
c. ____________________________________
d. ____________________________________
e. ____________________________________
20.
What are five methods of grouping, or departmentalizing, workers?
a._______________________________
d.___________________________________
b._______________________________
e.___________________________________
c._______________________________
21.
The decision about which way to departmentalize depends on ___________________________
__________________________________________________________________________________.
22.
A hybrid form of departmentalization is being used when _______________________________
__________________________________________________________________________________,
Learning Goal 4
Organization Models
23.
24.
Name four types of organizational structures.
a.______________________________
c.____________________________
b.______________________________
d.____________________________
What are the disadvantages of a line organization, for a larger organization?
a. ___________________________________________________________________________
b. ___________________________________________________________________________
c. ___________________________________________________________________________
d. ___________________________________________________________________________
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25.
What is the difference between line and staff personnel?
26.
In a matrix system, a product manager can: ____________________________________________
___________________________________________________________________________________.
This is important in industries in which the emphasis is on ________________________________
____________________________________________________________________________________.
27.
What are the advantages and disadvantages of a matrix structure?
Advantages:
a.
_________________________________________________________
b.
_________________________________________________________
c.
_________________________________________________________
d. _________________________________________________________
Disadvantages:
a.
_________________________________________________________
b.
_________________________________________________________
c.
_________________________________________________________
d. _________________________________________________________
28.
A potential problem with the teams created by matrix management is _____________________
___________________________________________________________________________________.
An answer to the disadvantage of the teams created by matrix management is: ______________
___________________________________________________________________________________.
29.
Describe the characteristics of cross-functional teams.
30.
Why should cross functional teams include customers, suppliers and distributors?
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Learning Goal 5
Managing the Interactions Among Firms
31.
What is meant by the concept of transparency?
32.
How have the networking, real time and the concept of transparency, changed the way
information is shared between organizations?
33.
What is the result of those changes on organizational design and structure?
34.
How does benchmarking lead to outsourcing, and ultimately to a firm’s core competencies?
Learning Goal 6
Adapting to Change
35.
Why is introducing change in an organization difficult?
36.
How are companies using the Internet to help adapt to changes?
37.
Illustrate and describe an inverted organization.
38.
What is a manager’s job in an inverted organization?
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39.
How does the inverted organization support front line personnel? How does this change the
requirements for front-line personnel?
40.
How is the culture of an organization reflected?
41.
Describe the kind of organizational cultures that the best organizations have, including the key to
a productive culture.
42.
What are two organizational systems that all companies have?
a. _______________________________
b. _______________________________
43.
What is a drawback of the formal organization? What is a benefit of the formal organization?
44.
What is the drawback of the informal organization? What is the benefit?
45.
Describe the importance of the “grapevine” in the organization.
46.
How have managers’ views toward the informal organization changed in the new more open
organizations?
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CRITICAL THINKING EXERCISES
Learning Goal 1
1.
Consider an organization with which you are familiar. This could be the school you attend, or the
company you work for, or a charitable organization with which you have worked. Can you
identify the manner in which this organization is “organized”?
How is the work divided? Are there teams? Is the organization departmentalized? Are the
positions of authority clear? What are the various types of tasks that need to be accomplished?
Are there clear procedures for doing work? Is there an organization chart?
Learning Goal 2
2.
Many organizations today have been organized around principles developed by Henri Fayol and
Max Weber. Read the following and determine whose ideas are being described.
a. ____________
Introduced several "principles" of organizing.
b. ____________
Believed workers should think of themselves as coordinated teams, and that
the goal of the team is more important than individual goals.
c. ____________
Promoted a bureaucratic organization.
d.____________
Believed that large organizations demanded clearly established rules and
guidelines, which were to be precisely followed.
e. ___________
Wrote that each worker should report to only one boss.
f.____________
Said that managers should treat employees and peers with respect
g. ___________
Wrote that functions are to be divided into areas of specialization such as
production, marketing and so on.
h. ___________
Believed in written rules, decision guidelines and detailed records.
i. ____________
Said that staffing and promotions should be based solely on qualifications.
j. ____________
Proposed that an organization should consist of three layers of authority:
top managers, middle managers, and supervisors.
k. ____________
Believed the less decision-making employees had to do, the better.
l. ____________
Believed that managers have the right to give orders and expect obedience.
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Learning Goal 3
3.
You are a manager for Sun-2-Shade, a company that makes a self-darkening windshield for
automobiles using the same technology that is used for prescription eyeglasses. Sun-2-Shade is a
small company right now, with just a few workers. Eric is the CEO and founder of the company.
You are the plant manager. The customers for Sun-2-Shade for right now are automobile
manufacturers. Do you think a centralized or decentralized authority structure would be most
effective? Why?
4.
As companies are moving away from traditional methods of organizing, and taking different
perspectives regarding span of control, how are companies changing in the area of centralization
versus decentralization, and tall versus flat organizational structures?
5.
There are a number of ways companies have tried to departmentalize to better serve
customers:
Product
Function
Customer group
Geographic location
Process
The hybrid structure is an organization that has used several forms of departmentalization
Match each of the following to the correct form:
a. ________________
General Motors has the Chevrolet and Buick, divisions, each employing
separate staffs for design, engineering, product development and so on.
b. ________________
At the highest corporate levels, G.E. has a corporate strategic planning
staff, production staff, human resources staff, technical resources staff
and finance staff.
c. ________________
Apple Computer, in manufacturing the Mac Computer System, begins
with an assembly line that makes the logic board; another line makes the
analog board. Once assembled, the boards go through diagnostic tests
before being assembled into a computer unit.
d. ________________
When Wendy's made the decision to expand into the European market,
the company created a separate European division.
e. _________________
Most banks have commercial loan officers who deal only with business
customers and consumer loan specialists for personal loans.
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Learning Goal 4
6.
There are 4 types of organizational structures:
Line
Line and Staff
Matrix
Cross-functional self-managed teams
Read below brief descriptions of several companies and decide which form of organizational
structure would be most suitable for each.
a. _________________
A small company, Dynalink, is in the biotechnology industry.
Competition is fierce, and new product development is of highest
importance. The field is changing and growing so rapidly that new
product ideas must come fast and furious. The firm employs highly
skilled, very creative people.
b. _________________
Another small firm is Cleanem Up, a dry cleaning establishment, with
one owner and one store. They are located in a suburban area and have a
loyal clientele. The store is known for its quality and courteous service.
c. _________________
Wells Industries is a medium sized firm employing about 1500 people.
Wells makes a variety of business- related products such as stationary,
forms, and so forth. They have a good sales force, which knows the
product very well. While this is a fairly competitive industry, new
product development happens as the need arises, such as when firms
went from sophisticated word processing machines to even more
sophisticated computerized office management.
d. _________________
Mitsubishi wants to develop a new luxury car to compete with Lexus,
Infiniti, and others. Time is important, as they want to enter the market
within 18 months.
Learning Goals 4, 5
7.
How will cross functional self managed teams impact organizational designs of the future?
8.
How does the inverted organizational structure relate to the other kinds of changes we have read
about in this chapter, such as wider spans of control, decentralization, cross functional teams,
outsourcing, benchmarking, and so on?
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Learning Goals 5, 6
9.
What is the relationship between leadership style, the organizational structure (such as tall vs flat
organizations, span of control, delegation, teams) and the creation of an organizational culture?
Learning Goals 1-5
10.
Think about the organizational design of the school you are attending, or an organization with
which you are familiar, such as where you work. Can you identify the "hierarchy"? Identify how
many layers of management come between the front-line workers and the highest level of
management. Are there separate departments for various functions (instruction, bookstore, and
so on)? Are there rules and regulations that seem to keep workers organized and are meant to
make the organization run efficiently? (Hint - perhaps your instructor will have a copy of the
organizational chart for your school, or your manager may have one for the company for which
you work.)
11.
Sun-2-Shade is in a growth state and Eric, the CEO and founder, wants to be sure to build on a
good foundation. The product is a windshield that darkens automatically when your car goes
into a sunny area, much like the eyeglasses. This is a small company, with a educated and well
trained workers, and Eric is very concerned about customer service. What suggestions can you
give Eric about organizational design, knowing what you already know about the company and
its employees?
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PRACTICE TEST
MULTIPLE CHOICE – Circle the best answer
Learning Goal 1
1.
The first step in the process of organizing a business is to:
a.
determine the work that needs to be done.
b.
divide people into teams.
c.
grouping workers into departments based on skills or expertise.
d.
develop an organization chart.
2.
The process of setting up individual departments to do specialized tasks is called:
a..
division of labor.
b.
job specialization.
c.
departmentalization.
d.
planning
Learning Goal 2
3.
The evolving business environment has made ____________ a critical managerial function.
a.
controlling employees
b.
managing change
c.
finding new employees
d.
division of labor
4.
The principle of _______________ means that each person should know to whom they report, and
that managers should have the right to give orders and expect others to follow.
a.
unity of command
b.
division of labor
c.
order
d.
hierarchy of authority
Learning Goal 3
5.
Robin Banks is in a supervisor for a large, bureaucratic organization on the West Coast.
According to the views of a bureaucratic organization, this means that Robin should:
a.
be included on decision making when decisions affect her workers.
b.
do her work and let middle and upper level managers do the decision making.
c.
try to get her workers organized into cross-functional teams.
d.
have a wide span of control.
6.
A manager’s span of control:
a.
can narrow as subordinates need less supervision.
b.
will narrow as the manager gets to higher levels in the organization and work becomes
less standardized.
c.
will decrease as employees become more professional.
d.
is generally the same in most organizations.
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7.
Who Dunnit is a new firm that makes murder mystery games for sale in retail stores and through
catalogs. The company has very few management positions, and most everybody pitches in
when they need to, to get the job done. It is really a “team” effort, with very few layers of
management. Who Dunnit is an example of a:
a.
tall organization.
b.
bureaucratic organization.
c.
centralized organization.
d.
flat organization.
8.
Dewey, Cheatum, and Howe is a car company that makes four models, a hybrid sport utility, a
sports car, a four door sedan, and a compact car. Workers at Dewey basically work on only one
type of vehicle, and separate marketing and product development processes are designed for
each type of vehicle, to better serve the customers for each type of vehicle. Dewey, Cheatum, and
Howe is departmentalized by:
a.
product.
b.
function.
c.
process.
d.
customer.
9.
In order to more quickly respond to customer needs, Hewlett Packard is changing it’s
organizational structure to give more authority and responsibility to field managers located
across the country. These managers spend time with customers and know what the customers
need right away. It appears that H-P is moving toward a _______________ structure.
a.
more decentralized
b.
more centralized
c.
more bureaucratic
d.
more traditional
Learning Goal 4
10.
The form of organizational structure that is most flexible, and allows the organization to
take on new projects without adding to the organizational structure is the:
a.
Line.
b.
Line and staff.
c.
Matrix.
d.
Cross-functional self managed team.
11.
12.
Maria Escobar works as an attorney for a large East Coast consulting firm. Maria’s job is to act as
an advisor to the consultants, to be sure that they do not confront any legal issues when they are
working at the various clients’ job sites. Maria’s position would be classified as a __________
position.
a.
line
b.
middle management
c.
first line
d.
staff
Banana Computers is restructuring, and intends to implement cross-functional teams.
All of the following are likely to serve on a cross-functional team except:
a.
a Banana engineer.
b.
an employee of Peelit, Inc. one of Banana’s competitors.
c.
an employee of Monkeyshine, one of Banana’s suppliers.
d.
a Banana salesperson.
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13.
One of the advantages of the matrix organization is:
a.
It is less costly
b.
It can result in creative solutions to problems.
c.
There is less need for interpersonal skills because there is constant communication.
d.
It is a long term solution to problems.
Learning Goal 5
14.
When a firm is rating its processes and products against the best in the world, the firm is
practicing:
a.
total quality management.
b.
outsourcing.
c.
their core competencies.
d.
benchmarking.
15.
An auto assembly plant in suburban Detroit is “connected” to its seat supplier in a way that the
seat supplier has the information it needs to schedule its production to coordinate with the
production of cars at the plant. The seat supplier knows, for example, that B. Goode’s cherry red
compact with tan leather interior is scheduled for production, so that it can make sure that the
correct seats are in the process when the car is made. This type of system is known as:
a.
a cross functional team.
b.
a virtual corporation.
c.
Transparency.
d.
Benchmarking
Learning Goal 6
16.
In an inverted organization, the managers’ job is to:
a.
maintain direct contact with customers.
b.
direct and closely monitor employee performance.
c.
look for the best ways to outsource functions.
d.
assist and support sales personnel and other employees who work directly with
customers.
17.
When IBM changed its organizational design, the company gave more authority to lower level
employees, to become more flexible in responding to customer needs. The company broke down
barriers between functions, and ended top-down management. This process is known as:
a.
creating an informal organization.
b.
changing span of control.
c.
restructuring.
d.
becoming more bureaucratic.
18.
Which of the following would not be used to describe a company with a positive corporate
culture?
a.
Emphasizes service to others, especially customers.
b.
People enjoy working together to provide good products at reasonable prices.
c.
Less need for policy manuals, formal rules and procedures.
d.
Closer supervision of employees.
19.
The corporate structure shown on the organizational chart, which details lines of responsibility, is
known as the:
a.
informal structure.
b.
bureaucratic structure.
c.
formal structure.
d.
grapevine.
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20.
Mr. Bilko is the one to see in the company when there is something you need. He will obtain
what you need quickly, and can avoid the red tape that often delays action. Mr. Bilko is the one to
see if you need advice or help. Mr. Bilko is an important member of the firm’s:
a.
purchasing deportment.
b.
informal structure.
c.
formal structure.
d.
bureaucratic structure.
TRUE-FALSE
Learning Goal 1
1. _____
Many U.S. firms have been reorganizing in an effort to adjust to the changing business
climate.
2. _____
Structuring an organization consists of devising a division of labor, setting up teams or
departments to do specific tasks and assigning responsibility and authority to people.
Learning Goal 2
3. _____
A bureaucratic organizational system is a good when workers are relatively well
educated and trained to make decisions.
4. _____
It has basically been proved that an organization with many rules, procedures and
policies is more effective because employees can respond quickly to problems by simply
referring to a rule or policy guideline.
5. _____
To make customers happier, some companies are reorganizing to give upper
management the primary power to make more decisions and to have strict rules and
regulations.
Learning Goal 3
6. _____
A company that must focus on regional or global differences in customer tastes should
use decentralized authority.
7. _____
Today’s rapidly changing markets tend to favor centralization of authority, so decisions
can be made quickly.
8. _____
The trend today is to expand the span of control as organizations reduce the number of
middle managers.
9. _____
An organization with many layers of management, such as the U.S. Army or a large
corporation, is a good example of a flat organization.
10. ____
The decision about which way to departmentalize depends greatly on the nature of the
product and the customers served.
11. ____
Firms should not use more than one form of departmentalization.
Learning Goal 4
12. ____
Human resource management and legal advising are examples of staff positions in a
manufacturing firm.
13. ____
Companies that create cross-functional self-managed teams empower the teams to make
decisions on their own without seeking the approval of management.
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14. ____
One of the advantages of the matrix form of organizing is that it gives managers
flexibility in assigning people to projects
Learning Goal 5
15. ____
When a company can’t perform a certain function as well as the best, the company may
outsource that function, in order to concentrate on the functions at which they are the
best.
16. ____
Cross functional teams should definitely not include customers or suppliers, as they
could leak sensitive product information to competitors.
17. ____
The term “digital natives” is used to describe young people who have grown up with the
Internet.
Learning Goal 6
18. ____
In general, an organizational culture cannot be negative.
19. ____
The informal organization in most organizations is not particularly powerful.
You Can Find It on the Net
Visit the website http://www.organizedchange.com/index.htm
Click on Teams and Facilitation
What is meant by 360 degree feedback?
What kinds of groups are defined?
Click on “Ten Commonly Asked Questions”.
What are some indicators of poor teamwork?
What are the group causes of poor teamwork?
What are the organizational causes of poor teamwork?
What can be done to encourage teamwork?
What types of seminars and training does this company provide that corresponds to the material related
in this and previous chapters?
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ANSWERS
LEARNING THE LANGUAGE
1. Cross-functional self managed
teams
2. Hierarchy
3. Networking
4. Restructuring
10. Inverted organization
19. Matrix organization
11. Span of control
12. Chain of command
13. Line personnel
20. Staff personnel
21. Economies of scale
22. Tall organization structure
5. Organizational (or corporate)
culture
6. Informal organization
7. Core competencies
8. Bureaucracy
9. Centralized authority
14. Benchmarking
23. Line organization
15. Decentralized authority
16. Flat organization structure
17. Departmentalization
18. Formal organization
24. Real time
25. Digital natives
26.Virtual corporation
ASSESSMENT CHECK
Learning Goal 1
Everyone’s organizing
1.
According to the text the key to success for organizations is remaining flexible and adapting to
the changing times. Often that means going back to basic organizational principles.
2.
a.
b.
3.
Structuring an organization consists of:
a.
devising a division of labor
b.
setting up teams or departments to do specific tasks
c.
assigning responsibility and authority to people
d.
allocating resources
e.
assigning specific tasks
f.
establishing procedures for accomplishing organizational objectives
4.
An organization chart shows relationships among people: who is accountable for the completion
of specific work and who reports to whom.
5.
The change in organizations is due to the changing business environment – more global
competition, a declining economy, faster technological change, and pressure to do more about the
environment. Consumer expectations have also changed, and consumers expect the highest
quality products and fast, friendly service at a reasonable cost.
Division of labor refers to dividing up tasks among workers
Job specialization is dividing tasks into smaller jobs
Learning Goal 2
The Changing Organization
6.
a.
b.
c.
Unity of command – reporting to only one boss
Hierarchy of authority – workers should know to whom they report
Division of labor – functions are divided into areas of specialization
19
d.
e.
f.
g.
h.
i.
j.
Subordination of individual interests to the general interest – team work
Authority – managers have the right to give orders and power to enforce obedience
Degree of centralization – The amount of decision making power given to top
management
Clear communication channels – worker should be able to easily contact each other
Order – people and materials should be in the proper location
Equity – managers should treat employees with respect and justice
Esprit de corps – a spirit of pride and loyalty should be created
7.
The process of rule making often led to rigid organizations that didn’t always respond quickly to
consumer requests.
8.
Four characteristics of Weber’s bureaucracy are:
a.
Job descriptions
b.
Written rules, decision guidelines and detailed records
c.
Consistent procedures, regulations and policies
d.
Staffing and promotions based on qualifications
9.
Workers during Weber’s time were much less educated and trained than today’s workers. Weber
felt that a firm would do well if employees would do what managers told them to do. The less
decision making employees had to do, the better.
10.
In a company with many layers of management, if employees want to introduce work changes,
they ask a supervisor, who asks a manager, who asks a manager at the next level up, and so on.
Eventually a decision is made and passed down from manager to manager until it reaches the
employee. Decisions can take weeks or months to be made.
Weber used the term bureaucrat to describe a middle manager whose function it was to
implement top management’s orders.
11.
When employees have to ask their manager for permission to make a change, the process may
take so long that customers become annoyed. This can happen in both large and small
organizations. Since customers want efficient, quick service, slow service is not acceptable.
11.
To make customers happy, organizations are giving employees more power to make decisions on
their own and to please the customer no matter what.
Learning Goal 3
Decisions to Make in Structuring Organizations
13.
14.
Centralized authority
Advantages
a. Greater management control
b. More efficiency
c. Simpler distribution system
d. Stronger brand/corporate image
Disadvantages
a. Less responsiveness to customers
b. Less empowerment
c. Interorganizational conflict
d. Lower morale away from headquarters
Decentralized authority
Advantages
a. Better adaptation go customer wants
b. More empowerment of workers
Disadvantages
a. Less efficiency
b. Complex distribution system
20
c. Faster decision making
d. Higher morale
c. Less top-management control
d. Weakened corporate image
15.
At levels where work is standardized, span of control can be broad. The appropriate span
gradually narrows at higher levels of the organization because work becomes less standardized
and managers need more face-to-face communication.
16.
The trend is to expand the span of control by reducing the number of middle managers and
hiring more educated and talented lower level employees.
17.
In a tall organization there are many levels of management, and span of control is small. In a flat
organization, there are fewer layers of management, and the span of control gets broader.
18.
A flat structure can respond more readily to customer demands because lower-level employees
have authority and responsibility for making decision s, and managers can be spared some dayto-day tasks.
19.
The advantages and disadvantages of the traditional functional structure are:
Advantages
a.
Skills can be developed in depth and employees can progress as skills are developed.
b.
Economies of scale because resources can be centralized.
c.
Coordination with the function.
Disadvantages
a.
Lack of communication among departments.
b.
Employees identify with the department and not with the corporation as a whole.
c.
Response to change is slow.
d.
People trained too narrowly.
e.
People in the same department tend to think alike – groupthink.
20.
Five methods of grouping, or departmentalizing, workers are:
a.
Product
d.
Geographic location
b.
Function
e.
Process
c.
Customer group
21.
The decision about which way to departmentalize depends upon the nature of the product and
the customers served.
22.
A hybrid form of departmentalization is being used when companies use a combination of
departmentalization techniques.
Learning Goal 4
Organization Models
23.
Four organizational structures are:
a.
Line organizations
b.
Line and staff organizations
c.
d.
21
Matrix-style organizations
Cross-functional self-managed teams
24.
In a large business, a line organization may have the disadvantages of
a. being too inflexible
b. having too few specialists
c. having long lines of communication
d. being unable to handle complex decisions necessary in a large organization.
25.
The difference between line and staff personnel is authority. Line personnel have formal
authority to make policy decisions. Staff personnel have the authority to advise the line
personnel and make suggestions, but they can’t make policy changes themselves.
26.
In a matrix system a product manager can borrow people from different departments to help
design and market new product ideas.
This is important in industries where competition is stiff, and the life cycle of new ideas is short,
and where the emphasis is on new product development, creativity, special projects, rapid
communication, and interdepartmental teamwork.
27.
The advantages and disadvantages of a matrix structure are:
Advantages
a.
Flexibility in assigning people to projects.
b.
Encourages cooperation among departments.
c.
Can produce creative solutions to problems.
d.
Allows for efficient use of resources.
Disadvantages
a.
Costly and complex.
b.
Can cause confusion among employees as to where their loyalty belongs.
c.
Requires good interpersonal skills and cooperative managers and employees.
d.
Temporary solution to long term problem.
28.
A potential problem with teams created by matrix management is that the project teams are not
permanent. After a problem is solved or a product developed, the team breaks up, so there is
little opportunity for cross-functional training.
An answer to the disadvantage of the temporary teams created by matrix management is to
develop permanent teams and to empower them to work closely with suppliers, customers, and
others to quickly and efficiently bring out new, high-quality products while giving great service.
29.
Cross- functional teams consist of groups of employees from different departments who work
together on a long term basis. These teams are empowered to make decisions without having to
seek the approval of management. Barriers between functions fall when these interdepartmental
teams are created.
30
When cross functional teams include customers, suppliers and distributors it goes beyond the
boundaries of the organization, and market information can be shared.
22
Learning Goal 5
Managing the Interactions Among Firms
31.
Transparency occurs when a company is so open to other companies that electronic information is
shared as if the companies were one company.
32.
Organizations are so closely linked via networking that each organization knows what the others
are doing, in real time. Since data is so readily available to organizational partners, companies
are so open to one another that the solid walls between them have become transparent. Because
of this integration, two companies can now work together so closely that they operate as two
departments within one company.
Most organizations are no longer self-sufficient or self-contained. Many modern organizations are
part of a vast network of global businesses. An organizational chart showing what people do
within any one organization may not be complete because the company is actually part of a larger
system of firms.
33.
Organizational structures tend to be flexible and changing. Experts from one company may work
for one company one year, and another the next year. Organizations deal with each other on a
temporary basis and the ties between organizations are no longer permanent. These are often
called virtual corporations because they are made up of replaceable firms or individuals that join
the network and leave it as needed.
34.
Benchmarking demands that organizations compare each function against the best in the world.
If an organization can’t do as well as the best in a particular area, it often will try to outsource the
function to an organization that is the best. Outsourcing is assigning various functions to outside
organizations. When a firm has completed the outsourcing process, the remaining functions are
the firm’s core competencies, which are functions that the organization can do as well as, or better
than, any other organization in the world.
Learning Goal 6
Adapting To Change
35.
Introducing change in an organization is difficult because managers and employees may have a
tendency to “get stuck” in their old ways, and resist the efforts to change.
36.
The Internet has created new opportunities to ask customers questions and provide them with
information. Companies are coordinating the efforts of traditional departments with their
Internet staff to create easy-to-manage interactions. Companies are also training older
employees to be more tech savvy to become familiar with social networking sites such as
Facebook and Twitter as well as other applications.
37.
Empowered front-line workers
Support personnel
Top Management
23
An inverted organization has contact people at the top and the chief executive officer at the
bottom. There are few layers of management.
38.
A manager’s job in an inverted organization is to assist and support front line people, not boss
them around.
39.
Companies based upon an inverted organization structure support front-line personnel with
internal and external databases, advance communication systems and professional assistance.
This means that front line personnel have to be better educated, better trained and better paid
than in the past.
40.
The culture of an organization is reflected in stories, traditions, and myths.
41.
The best organizations have cultures that emphasize service to others, especially customers. The
atmosphere is one of friendly, concerned, caring people who enjoy working together to provide a
good product at a reasonable price. Those companies have less need for close supervision of
employees, and fewer policy manuals, organization charts and formal rules, procedures and
controls.
These companies stress high moral and ethical values such as honesty, reliability, fairness,
environmental protection, and social involvement. The key to a productive culture is mutual
trust.
42.
All companies have a(n)
a.
formal organization
b.
informal organization
43.
The drawback of the formal organization is that it is often too slow and bureaucratic to enable an
organization to adapt quickly. The benefit of a formal organization is that it provides helpful
guidelines and lines of authority to follow in routine situations.
44.
The drawback of the informal organization is that it is often too unstructured and emotional to
allow careful, reasoned decision-making on critical matters. But the informal organization is very
effective in generating creative solutions to short-term problems and providing a feeling of
camaraderie and teamwork among employees.
45.
The grapevine is the nerve center of the informal organization. It is the system through which
unofficial information flows between employees and managers. Key people in the grapevine
have considerable influence.
46.
In more traditional organizations, managers and employees were often at odds, and the informal
structure often hindered management. In the new, more open organizations, managers and
employees work together and the informal structure is viewed as an asset that promotes harmony
among workers and establishes a positive corporate culture.
CRITICAL THINKING
Learning Goal 1
1.
Obviously the answer to these questions will depend upon the organization you are evaluating.
A college or university for example, will be divided by various functions that have to do with
either administration or student issues. Then there will be the various academic departments,
such as Accounting, Marketing and Finance. The lines of authority will be visible through
24
department chair and dean positions. There are usually very clear procedures in colleges and
universities for things such as applying for financial aid, obtaining on-campus housing, and
registering for classes. In general, an academic institution will be very organized, and is often a
good example of a bureaucracy.
Learning Goal 2
2.
a.
b.
c.
d.
Fayol
Fayol
Weber
Weber
e.
f.
g.
h.
Fayol
Fayol
Fayol
Weber
i.
j.
k.
l.
Weber
Weber
Weber
Fayol
Learning Goal 3
3.
Sun-2-Shade is very small with a customer base where most of the needs are similar. In other
words, there is no need to customize products to meet different regional needs, only shapes and
sizes for different automobile brands. This company could use centralized authority because it is
small and decision-making can still be made quickly. Employees probably have easy access to
Eric, the founder and CEO of the company, who may want to retain control over his new
company for the time being.
4.
Changes in the areas we have been discussing are closely related to the changes we are seeing in
the area of decision making. As spans of control widen and non-traditional ways of grouping
workers emerge, decision-making is being delegated to lower levels of management, or even to
non-management levels. Cross functional Self-managed teams, which are at the "lowest levels" of
the organization, for example, are being given decision-making authority. Today's rapidly
changing markets and differences in consumer tastes are favoring a more decentralized structure,
flatter organizational structures, with wider spans of control and a team based structure.
5.
a.
b.
c.
Learning Goal 4
6.
a.
b.
c.
d.
Product and function (hybrid)
Function
Process
d.
e.
Geographic location
Customer group
The best answer is most likely a matrix system.
Line
Line and staff
Cross-functional self-managed teams
Learning Goals 3, 4
7.
Cross functional self managed teams will have a major impact on organizational designs of the
future. Companies will be linked with customers, suppliers, and distributors through these
teams, often through virtual corporations, creating an integrated system of firms working
together to create products and services designed to quickly and exactly meet customers needs.
Firms designed in such a manner will have a real competitive edge over corporations that are
more traditional in their organizational structure.
Learning Goal 5
8.
These organizational changes are focused on designing the organization with meeting the needs
of the customer as the most important objective. Inverted organizations empower front-line
workers, who deal directly with the customers, and provide them with the information and
support to satisfy customers. There is a focus on customer service and an emphasis on the firm’s
core competencies, outsourcing the functions at which the company is less proficient. Those
functions that are not outsourced are benchmarked against the best in the world. The Internet
25
makes it possible for firms to link with suppliers and customers to bring the “voice of the
customer into the organization. The common theme is customer service.
9.
The best organizations have positive corporate cultures that emphasize service to customers, have
a relaxed atmosphere and concerned employees who enjoy working together to provide the best
product at the best price. Companies that have good organizational cultures have less need for
close supervision of employees, organization charts and formal rules, procedures and controls.
That would indicate broad spans of control, empowered employees, flatter organizations, and a
participative leadership style. Employees who need minimal supervision will flourish in selfmanaged teams, and there is mutual trust between workers and management.
Learning Goals 1-5
10.
There will obviously be many different answers to this question. A typical hierarchy in a
community college for example may be President, Dean of Instruction, Associate Deans,
Department Chairs, and faculty for instruction. For non-instruction areas, there may be Associate
Deans, Directors, and non-management positions. There are often many layers of management
between the lowest levels and the higher levels, and functional areas are well defined. There will
be similar kinds of structures in a company.
11.
How you would design the organization is up to you. Many of the ideas presented in the chapter
will be helpful. This is a small company, so a line organization might be appropriate. We noted
earlier that the workers are well educated and trained and don't need a lot of supervision, so
close monitoring could prove to be counter-productive. There doesn't seem to be an immediate
need for new product development, so a matrix structure wouldn't be necessary. The emphasis
on customer service has been apparent throughout the chapter, so however you design the
company, the focus should be on whatever design will most effectively help the company to meet
customer needs using such tools as the Internet, to develop strong ties with both customers and
suppliers.
PRACTICE TEST
MULTIPLE CHOICE
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
a
c
c
d
b
b
d
a
a
c
TRUE-FALSE
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
d
b
b
d
c
d
c
d
c
b
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
26
T
T
F
F
F
T
F
T
F
T
11.
12.
13.
14.
15.
16.
17.
18.
19.
F
T
T
T
T
F
T
F
F