1. Organizational Structure
Business Management
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3. What is Organizational Structure?
The hierarchy within an organization that sets forth the chain of command in addition to the delegation of responsibilities
Depends upon the goals of the organization
Illustrated by an organizational chart
Centralized – decision-making rests with upper management
Decentralized – decision-making is the responsibility of departments or divisions
Every company has some form of organizational structure that basically sets forth who does what in that organization. This depends on the particular goals of the company. Businesses also must determine if decisions will be made by centralized upper management or decentralized by departments or divisions.
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4. What is an Adaptive Organization?
An organization that adjusts well to changes
More decision-making is with the employees (decentralized)
Team-oriented
Focus on anticipation of customer needs to more easily adjust to unpredictability
Because situations in business can change much more rapidly today, businesses need to adapt to change. This is more easily accomplished through decentralized management such as through teams. In this way the focus can be more on the needs of customers and, in turn, increasing revenue for the business.
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5. When is Change Needed? New competitors New technology
New product or service
Change in laws
Rapid growth or decline
Customer dissatisfac-tion
Increasing costs
Decreasing employee morale
Merger
Companies must be able to recognize when change is needed or they will be left behind. Many situations that require an adjustment by a company are as follows: new competitors in the market, new technology, a potential merger or acquisition, increasing costs, or decreasing employee morale.
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6. What is Human Resource Management?
All of the activities associated with the personnel of an organization:
Hiring
Compensation
Performance evaluation
Employee relations
Health and safety
Human resources are the most important resources of any business. Because of this, many activities are related to human resources. Personnel must be hired and compensated accordingly. Their performance on the job should be reviewed periodically as well. Employee relations refers to the working relationship between employees and management and includes issues regarding decision-making and ensuring non-discrimination. Human resources also provides for health and safety concerns for all employees.
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What is Span of Control?
Span of control refers to the number of subordinates a member of management has direct authority over
Easily displayed through an organizational chart
President
V.P. Sales
V.P. Finance
V.P. Human Resources
Span of Control = 3
Span of control or span of management, refers to the range or number of employees over which management has direct authority. This is usually evidenced by an organizational chart which depends on the type of organizational structure a business has.
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Types of Structure
Line
Direct line of authority from top executives downward
Line and Staff
Staff specialists assist the lines of authority
Matrix
Temporary work teams
Team
Permanent work teams
Businesses can be structured in different ways, depending upon the goals of the business. The line organization refers to the top-to-bottom chain of command structure which was more common in the past, as opposed to the line and staff structure that is more common today and utilizes specialists to assist at different levels. The matrix structure provides for temporary work teams whereas the team organization divides employees into permanent work teams.
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President
Production
Manager
Sales
Assistant
Controller
Branch A
Branch B
Line Organization
Oldest form of organization
Simplest form of organization
Due to top-to-bottom chain of command, decisions can be made quicker
Lack of specialization
The line organization is the oldest and simplex form of organization. While decisions can possibly be made quicker due to less people making the decisions, a lack of specialization may be a negative factor in this form of organization.
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10. Line-and-Staff Organization
President
Production Manager
Production
Supervisor
Sales Manager
Marketing Assistant
Finance Manager
Finance Supervisor
More complex than line organization
Allows for experts at different levels in the organization
Specialization
More costly than line organization
The line-and-staff organizational structure is more complex than the line organization. It may be more costly but it provides for more specialization at different levels.
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Matrix Organization
Teams designed for specific projects
No consistent organization structure because of the changing nature of projects
Matches skills with projects
In a matrix organization temporary work teams are formed. As projects are created, personnel with skills and abilities that match the requirements of the project are assigned as necessary.
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Team Organization
Team leader acts as manager for the team
In self-directed teams, team members have autonomy over planning, conducting, and reviewing their work with team leader acting as facilitator
Feedback can come from customers
The team handles HR functions such as hiring, firing, and evaluating performance
Teams are generally formed as permanent work teams, as opposed to the matrix structure which has temporary work teams. Self-directed teams are popular as they can make their own decisions regarding planning, conducting, and reviewing their work while their team leader acts as facilitator. Customer feedback is an important evaluation tool. Many HR functions are handled through the team structure instead of upper management.
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13. Independent Practice Assignments
Corporate Organizational Chart Assignment #1 - Students are use the Internet to do research needed to create organizational charts for 2 different corporations in different industries, or students can use a local community business. You may create these charts in a word processing program using online graphics. Identify each as to the type of organizational structure it is and comment on whether or not the structure varied for different industries. Students must include a bibliography.
Org Structure Rap Assignment #2 – In pairs students will create a rap outlining the four types of organization structure of a business. They should include enough detail in the rap to demonstrate their knowledge of the topic. They should also include reference to at least one major corporation or local business that the other students can recognize as well as its organizational structure. Students will then perform their rap to the class.
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14. Independent Practice Assignments (Cont.)
Case Study Report Assignment #3 – You are the owner of a business that sells uniforms and provides embroidery services for high school, college, and recreational sports teams in your area. You have managers in the following departments: High School Sales, Collegiate Sales, Recreational Sales, and Accounting. The High School and Collegiate Sales have one full-time sales associate and two part-time associates as well as a delivery person. The Recreational Sales department has one full-time and one part-time associate. The Accounting department has two full-time employees that report to the manager. Students will prepare a 2-page report that answer the following questions: 1) What does the organizational chart look like for your business? (Hint: create an organizational chart), 2) What organizational structure is your business?, 3) Assuming sales are declining in one of the sales departments, what would your recommendation be to possibly restructure to improve sales?, 4) If sales are increasing, make a recommendation on how to restructure to handle the increased business, 5) Is the current structure considered ‘tall’ (more centralized) or ‘flat’ (more decentralized)?
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15. Independent Practice Assignments (Cont.)
Teamwork Project Assignment #4 - Divide the class into teams of 5 if possible. They are to think of a team name and logo. They are to provide objects they can use to create a product. Bring either fruit or other food items you can arrange or put together in any way possible. Or bring wooden or plastic blocks or logs with which to create a toy. They must create an organization chart of all of their team members, identifying the type of structure, as well as job titles. They are to create a Marketing Plan for their finished food dish or toy including the four P’s for their product (product, price, place, promotion). All items can be affixed to a poster or flip chart. Finally, they will each prepare an ‘exit ticket’ that will include their own critique of their team’s organizational structure, team member duties, teamwork, their success (or lack of) with their product, and their overall assessment of their marketing plan. (An example of a marketing plan will be given.)
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