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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
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Two Aspects of Assigning Tasks
• Specialization• Departmentalization
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Specialization
• The division of labor into small, specialized tasks and the assignment of single tasks to employees– Efficiency
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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
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Functional Departmentalization
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Product Departmentalization
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Geographical Departmentalization
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Customer Departmentalization
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Assigning Responsibility and Delegating Authority
• Delegation of authority
• Assigning responsibility
• Employee accountability
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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
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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
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Span of Management: Wide Spanand Narrow Span
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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
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Forms of Organizational Structure
• Line
• Line-and-staff
• Multidivisional
• Matrix
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Line Structure
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Line-and-Staff Structure
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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
MagicMagicKingdomKingdom
FLFL
Disney-Disney-MGMMGM
StudiosStudios
Disney-Disney-MGMMGM
StudiosStudios
Walt DisneyWalt DisneyStudiosStudios
Walt DisneyWalt DisneyStudiosStudios
MagicMagicKingdomKingdom
CACA
MagicMagicKingdomKingdom
CACA
TokyoTokyoDisneylandDisneyland
TokyoTokyoDisneylandDisneyland
Euro-Euro-DisneyDisneyEuro-Euro-
DisneyDisney
WaltWaltDisneyDisneyWorldWorld
WaltWaltDisneyDisneyWorldWorld
ConsumerConsumerProductsProducts
ConsumerConsumerProductsProducts
LicensingLicensingLicensingLicensing PublishingPublishingPublishingPublishing DisneyDisneyMusicMusic
DisneyDisneyMusicMusic
EpcotEpcotCenterCenterEpcotEpcotCenterCenter
CEOCEOCEOCEO
The Matrix Structure
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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
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Differences Between Groupsand Teams
Types of Groups
• Committee
• Task force
• Project team
– Product-development team
• Quality assurance team
• Self-directed work team (SDWT)
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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
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The Flow of Communication in an Organizational Hierarchy
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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
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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
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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.
Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved
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
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