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

The Evolution of a Clothing Store Stages of Growth The Evolution of a Clothing Store Phases 1, 2, and 3 Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

Two Aspects of Assigning Tasks Specialization Departmentalization Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

Specialization The division of labor into small, specialized tasks and the assignment of single tasks to employees Efficiency Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

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

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

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

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

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

Assigning Responsibility and Delegating Authority Delegation of authority Assigning responsibility Employee accountability Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

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

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

Span of Management: Wide Span and Narrow Span Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

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

Forms of Organizational Structure Line Line-and-staff Multidivisional Matrix Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

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

Line-and-Staff Structure Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

An Example of Multidivisional Structure: The Walt Disney Company Walt Disney Attractions Motion Pictures TV Animation Disney Channel Disney Stores Software and Education Catalog Marketing Magic Kingdom FL Disney- MGM Studios Walt Disney Studios Magic Kingdom CA Tokyo Disneyland Euro- Disney Walt Disney World Consumer Products Licensing Publishing Disney Music Epcot Center CEO Source: The Walt Disney Company Annual Report

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

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

Differences Between Groups and Teams

Types of Groups Committee Task force Project team Product-development team Quality assurance team Self-directed work team (SDWT) Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

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

The Flow of Communication in an Organizational Hierarchy Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

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

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

Disciplinary Action for Misuse of Personal Use of Telecom Equipment

Defining Operations Service Operations: Goods Production: Produce tangible and intangible services. Goods Production: Produces tangible products.

Growth in the Goods and Services Sectors 100 80 60 40 20 Millions of Workers Services Goods Production 1984 1986 1988 1990 1992 1994 1996 1998 2000 $4,000 $3,000 $2,000 $1,000 (Billions) Services Goods Production 1984 1986 1988 1990 1992 1994 1996 1998 2000

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

Operations Planning Capacity Location Quality Layout Methods Process Product Cellular Methods

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 Utility To Satisfy Human Wants Time Utility Place Utility Ownership utility Form Utility Operations managers create utility for customers through production, inventory, and quality control.

Operations Management: A Resource Transformation Process Operations Managers plan organize schedule control Inputs Transformation Activities Outputs (Goods and Services) land capital human resources material customers information

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 Process Control Quality/Cost Studies ISO 9000 Getting Close to the Customer Process Reengineering Outsourcing

Adding Value Through Supply Chains Grain Grain Flour Bakery Packaged Baked Goods Wood Pulp Paper Packager

The Supply Chain Strategy Supply Chain Management Working with the supply chain as a whole to improve overall flow. Supply Chain Reengineering 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 Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved