nickels 6e/copyright © 2007 mcgraw-hill ryerson chapter 9 adapting organizations to today’s...
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Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Chapter 9
Adapting Organizations to Today’s Markets
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Learning Goals
1. Explain the historical organizational theories of Henri Fayol and Max Weber.
2. Discuss the various issues involved in structuring organizations.
3. Describe and differentiate the various organizational models.
4. List the concepts involved in inter-firm co-operation and coordination.
5. Explain how restructuring, organizational culture, and informal organizations can help businesses adapt to change.
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Purpose of an Organizational Chart
Shows the activities of the organization
Highlights subdivisions of the organization
Identifies different types of work performed
Provides information about different management levels
Shows the lines of authority and the flow of organizational communications
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Fayol’s Principles of Organization
Unity of command Hierarchy of
authority Division of labor Subordination of
individual interest Authority
Degree of centralization
Communication channels
Order Equity Esprit de corps
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Weber’s Organizational Principles
Job descriptions Written rules, decision guidelines,
and detailed records Consistent procedures, regulations,
and policies Staffing and promotions based on
qualifications
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Fundamentals of Bureaucracy
o Chain of command
o Rules and regulations
o Set up by function
o Communication between departments is minimal E m p loyee
S u p erviso r
V ice P res id en t
B oss
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Variables To Considerin Span of Control
Capabilities of the manager Capabilities of the subordinates Geographical proximity Functional similarity Need for coordination Planning demands Functional complexity
Subordinate Subordinate Subordinate
Boss
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Organizational Structures
Tall Organizationso Many layers of
managemento Span of control
limitedo Costly to maintaino Lots of paperworko Inefficient
communication and decision making
Flat Organizations
o Few layers of management
o Broad span of control
o Highly responsive to customer demands due to increased employee empowerment
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Advantages
o Skill development
o Economies of scale
o Better coordination of activities
Departmentalization by Function
Business Education
Com m ., Hum anities,Social Sciences
Developm entalStudies
M ath, Sciences,Health Sciences
Technical, IndustrialService Occupations
CollegePresident
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Departmentalization by Function
Disadvantageso Lack of communicationo Employees identify
with department instead of company
o Slow response to external demands
o Narrow specialistso Silos of knowledge -
groupthink
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Departmentalization
By product By function
By customer By location By process
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Organization Models
Line organizations Line-and-staff organizations Matrix-style organizations Cross-functional self-managed
teams
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
A Virtual CorporationA Virtual Corporation
CoreCore
FirmFirm
Accounting Accounting FirmFirm
ProductioProduction Firmn Firm DistributioDistributio
n Firmn Firm
AdvertisinAdvertising Agencyg Agency
Design Design FirmFirm
Legal Legal FirmFirm
Nickels 6e/Copyright © 2007 McGraw-Hill Ryerson
Outsourcing
o Time to focus on company’s primary function
o Increased level of expertise
o Cost-effectiveo Decreased overheado Risk reductiono Flexibilityo Technology
o Less personal approacho Less control by owner
in planning, implementing and carrying out company’s future goals
o Potential for competing for the outsourcing firm’s time
AdvantagesAdvantages DisadvantagDisadvantageses