Exam 8: Structuring Organizations for Todays Challenges

The design of a bureaucratic organization assumes a well-educated workforce.

As the span of control widens, there is usually a reduction of middle management and an emphasis on empowerment.

Assigning various functions that a firm might do for itself to outside organizations is known as competitive allocation.

Transparency describes the relationship between a firm and its stockholders.

Springfield National Bank organizes its loan operations based on the market served, such as consumer, small business, and nonprofit organizations. Departmentalization based on allows Springfield to better serve borrowers with different needs.

An organization that consists of many layers of management is referred to as a(n) organization.

Staff positions in an organization:

Empowerment works only when employees are given the proper training and resources to respond.

Centralized authority provides for the delegation of authority to employees who are then better able to respond to customers' needs.

The concept of suggests that as a firm produces more, the average cost of goods produced goes down.

A(n) consists of one person at the top of the organization and many levels of managers who are responsible to that person.

Management at Hottie Potatee, a nationwide potato bar chain, believes that its customers value a predictable and consistent level of service and quality. When customers stop at one of its potato bar chain restaurants anywhere in the United States, they should know what to expect in terms of menu, price and quality. In order to maintain this consistency, Hottie Potatee should adopt a decentralized organization.

Division of Labor refers to deciding how many jobs must be accomplished and then dividing them up amongst the labor force.

Mini-Case Angelica Canizales is the CEO of Mucho Dinero Enterprises. Sales have declined for four consecutive years and the firm's accountants have reported net losses in each of the last two years. Employees appear demoralized and frustrated. Recently, Angelica met with managers from marketing, production, and finance to listen to their views regarding the company's problems. The managers unanimously agreed that the main problem was a lack of communication between the several functional areas of the business. Each manager felt that the firm could increase quality and customer satisfaction with better interdepartmental communication. Angelica also met with marketing and production employees to get their respective opinions on the problems of the firm. One employee from the production department observed that, "We have so many layers of management that it takes forever to make decisions." An employee from marketing complained that, "This place is so bogged down with rules and regulations that there is no opportunity to be creative." Several employees shared their opinions regarding their bosses. Specifically, one employee expressed "My boss never pays attention to my ideas. He just issues orders and expects me to obey them." Angelica decided, after listening to many comments from employees, suppliers, and customers, that the only way to end Mucho Dinero's slide was to completely rethink the firm's structure and to make radical changes in its organization. She presented her ideas to the board of directors, promising to voluntarily resign if her efforts to reorganize did not return the firm to profitability. -Currently, Mucho Dinero is organized into specialized departments such as marketing, finance, production and personnel. These departments are designed to allow people with similar skills and expertise to work together. This approach is known as departmentalization.

The more complex the job, the narrower the span of control.

An informal organization can be a valuable asset to managers attempting to create an environment of harmony among workers and establish the corporate culture.

Cross-functional teams defy the trend towards customer-driven organizations.

A bureaucracy empowers employees to quickly respond to customers' wants and desires.

Sarah is a designer for a business that installs underground sprinkler systems for residential and commercial customers. Sarah designs and presents systems to prospective customers. Brothers Tom and Bill share the ownership responsibilities. Tom is in charge of commercial accounts and Bill is in charge of residential accounts. Sometimes Tom and Bill double book Sarah's time, creating frustration and animosity. Since they share supervisory responsibility, there is no clear way to decide whose accounts are most important. This type of situation represents a violation of Fayol's principle.

In the Crescent City manufacturing plant of the Granite Works Corporation, a foreman supervises workers. The foreman reports to the shift supervisor who reports to the head of the production department, who then reports to the assistant plant manager, who reports to the plant manager. The plant manager, in turn, reports to a district manager, who then reports to a product group manager, who reports to an assistant vice president of operations, who keeps in close touch with an executive vice president. The layers of management indicate that Granite Works Corporation is a tall organization.