Lecture 13

Chapter 7

Organizing The Business Enterprise

Chapter Outline

What is Organizational Structure?The Building Blocks of Organizational

StructureEstablishing The Decision-Making

HierarchyBasic Forms of Organizational

StructureInformal Organization

Organizational Structure Influenced By:

• Jobs To Be Done

• How Jobs Relate To One Another

Determinants Of Organization

• Purpose

• Mission

• Strategy (e.g a rapid growing firm VS a stable firm

• Size, technology and changes in environment also affect structure

Organization Chart

•Use charts to clarify structure and to show where employee fit

•Solid lines defines the chain of command or reporting relationships

•Large organizations more complex organizational charts

Organization Chart

Chain Of Command

CEOCEO

Division V.P.Division V.P.

StoreStoreManagerManager

DepartmentDepartmentSupervisorSupervisor

FrontlineFrontlineEmployeeEmployee

Building BlocksOf Structure

• First step in developing structure involves two activities– Specialization- Specific Jobs To Specific

People

– Departmentalization• Group Jobs In Logical Units• Profit Center

Building BlocksOf Structure

• First step in developing structure involves two activities– Specialization- Specific Jobs To Specific

People– Identifying jobs that needs to be done and

identifying people who will do them– Small VS big organizations

Building BlocksOf Structure

–Departmentalization• Group Jobs In Logical Units• Profit Center

Types Of Departmentalization

• Customer

• Product

• Process

• Geographic

• Functional

Customer Departmentalization

Big BoxBig BoxRetailRetail

Men’s Men’s DepartmentDepartment

Women’sWomen’sDepartmentDepartment

LuggageLuggageDepartmentDepartment

Product Departmentalization

LucentLucentTechnologyTechnology

WirelessWirelessCommunicationCommunication

OpticalOpticalNetworkingNetworking

Process Departmentalization

LicenseLicense

TokenToken PicturePicture InformationInformation

Geographic Departmentalization

LeviLeviStraussStrauss

U.S.U.S. EuropeEurope AsiaAsiaPacificPacific

Functional Departmentalization

SmallSmallBusinessBusiness

ProductionProductionMarketingMarketing

&&SalesSales

HumanHumanResourcesResources

AccountingAccounting&&

FinanceFinance

Multiple Forms Of Departmentalization

Hierarchy For Decisions

• Goal is to figure out how to structure and stabilize the firm so that every one works together

• Assign Tasks– Responsibility– Authority

• Perform Tasks– Delegation– Accountability

• Distribute Authority

Small Business Delegation Fear

o Employee Can’t Do As Wello Something Will Go Wrongo No Long-Range Plan because you do

everyday fire fightingo Not Up-To-Date On Industry Trends &

Competitive Productso Solution: do not run show independently

Big BusinessDelegation Fear

o Subordinate Doesn’t Know Job

o Subordinate “Show Manager Up”

o Desire To Retain Control

o Inability To Effectively Delegateo Solution:

o Cannot do everything themselveso Train subordinates if they cant performo Subordinate performs well it will reflect favorably

Hierarchy For Decisions

• Goal is to figure out how to structure and stabilize the firm so that every one works together

• Assign Tasks– Responsibility– Authority

• Perform Tasks– Delegation– Accountability

• Distribute Authority