983896 634395133169998750

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Understanding business

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983896 634395133169998750

  1. 1. 1/25/2012 Adapting Organizations to Today’s MarketsUNDERSTANDING BUSINESS
  2. 2. 1/25/2012EVOLVING BUSINESS ENVIRONMENTS  Global Competition  Declining Economy  Technological Changes  Preserving the Environment  Changing Customer Expectations
  3. 3. 1/25/2012 CUSTOMER EXPECTATIONS High quality products Fast Service Friendly Service Reasonable Cost
  4. 4. 1/25/2012THE DEVELOPMENT OF ORGANIZATION DESIGN Business Growth leads to economies of scale The larger the business the more organization is required
  5. 5. 1/25/2012 ECONOMIES OF SCALECompanies  Purchase raw Reduce materials in bulk Production  Average cost of Costs if: goods goes down as production increases
  6. 6. 1/25/2012 1900’S ERA OF MASS PRODUCTION The 1900’s spawned the Era of Mass Production Manufacturer’s main goal was to produce large quantities of goods efficiently Two organization theorists influenced mass production techniques
  7. 7. 1/25/2012HENRY FAYOL Published- Administration industriele et generale, 1919 in France His Book became popular in the U.S. in 1949 as General and Industrial Management
  8. 8. 1/25/2012HENRY FAYOL’S PRINCIPLES  Unity of command  Degree of  Hierarchy of centralization authority  Clear  Divisions of labor communication  Subordination of channels individual interests  Order to the general  Equity interest  Espirit’ de corps  Authority
  9. 9. 1/25/2012MAX WEBERAuthor of The theory of social and economic organizationsGerman socialogist and economistIntroduced the term bureaucracy by referring to a middle manageras a bureaucrat
  10. 10. 1/25/2012MAX WEBER’S ORGANIZATIONAL THEORY Principles similar to  Job descriptions Fayol’s with additional  Written rules, theories decision guidelines, Believed that and detailed records organizational rules  Consistent should be followed procedures, precisely regulations, and His theories worked policies well for uneducated  Staffing and and untrained workers promotion based on qualifications
  11. 11. 1/25/2012BUREAUCRACYLayers Set rulesof Set regulationsManagers Oversee all decisions
  12. 12. 1/25/2012 Based on Fayol’s and Weber’s theories managers sought to control workers
  13. 13. 1/25/2012 One person is at the top or in charge Everyone else is ranked according to whom they report to
  14. 14. 1/25/2012CHAIN OF COMMAND Chain of authority that moves from the top of the hierarchy to the bottom going through each level or chain of command
  15. 15. 1/25/2012 DECISIONS TO MAKE IN STRUCTURING ORGANIZATIONS Centralized or decentralized authority Appropriate span of control Tall and flat organization structures Weigh advantages and disadvantages of departmentalization
  16. 16. 1/25/2012 CENTRALIZED DECENTRALIZED Top level  Top level management managers maintains designate authority for authority to lower decision making level managers who are more familiar with operations & employees CENTRALIZED OR DECENTRALIZED?
  17. 17. 1/25/2012 ADVANTAGES DISADVANTAGES Top level managers have  Less empowerment more control  Less responsive to Distribution is basic customers Brand and corporate  Inter-organizational image strengthens conflict  Morale is lower away from headquarters CENTRALIZED
  18. 18. 1/25/2012 ADVANTAGES DISADVANTAGES  Adapt better to  Complex distribution customer wants system  More empowerment of  Less responsive to workers customer wants  Decisions made  Top level management quicker has less controlDECENTRALIZED
  19. 19. 1/25/2012
  20. 20. 1/25/2012 SPAN OF CONTROL Narrows at higher  More face-to-face levels of management communication Empowers lower level  Manager can handle management & more information employees  Work becomes Reduces amount of standardized middle managers
  21. 21. 1/25/2012 TALL ORGANIZATION STRUCTURE FLAT ORGANIZATION STRUCTURE  Pyramid organization chart shows as tall because of the many levels of management  Smaller span of control  Less people report to each manager  Higher costs  More paper work  Poor communication and decision makingCHOOSING TALL OR FLAT ORGANIZATIONSTRUCTURE
  22. 22. 1/25/2012Organizations are divided  Functions into separate units Design Typically divided by Production functions Marketing AccountingThe flatter the organization  Groups of Workers the greater the span of Skills control Expertise Resource
  23. 23. 1/25/2012 BENEFITS OF DEPARTMENTALIZATION  Specialize tasks  Work together more effectively  Save on costs  Improves efficiency  Coordinate work within functions  Top management has more control Improves Responsiveness to customers  Higher chances for advancement
  24. 24. 1/25/2012 ALTERNATE WAYS TO DEPARTMENTALIZE Nature, Product & Customer’s determine the type of departmentalization that is needed A combination of different types is called “Hybrid forms” Customer group Geographical location Activity Processes
  25. 25. 1/25/2012 ADVANTAGES DISADVANTAGES  Narrow  Narrow  Top Management has more  Empowerment reduced control  Costs are higher  Greater advancement  Decision making delayed potential  Less responsiveness to  Improved specialization customers  Supervision is closer  Broad  Broad  Fewer chances for  Cost reduction advancement  Improved Customer  Overworked managers responsiveness  Loss of control  Decision making quicker  Management expertise  More empowerment decreasedDEPARTMENTALIZATION
  26. 26. 1/25/2012 Line Organizations Line & Staff Organizations Matrix Organization Cross-Functional Self-Managed Teams
  27. 27. 1/25/2012 LINE ORGANIZATIONSDirect two-way lines running from the top to the bottom of the organization Responsibility Authority Communications Everyone reports to one supervisor
  28. 28. 1/25/2012 LINE & STAFF ORGANIZATIONS Line personnel-Employees who are part of the chain of command that is responsible for achieving organizational goals. Staff personnel-Employees who advise and assist line personnel in meeting their goal
  29. 29. 1/25/2012 MATRIX ORGANIZATIONSSpecialists from different parts of the organization are brought together to work on specific projects and remain part of the line and staff structure
  30. 30. 1/25/2012 ADVANTAGES DISADVANTAGES  Costly and complex Managers have flexibility  Confusing to employees (loyalty to project assigning people to manager or functional projects unit)  Good interpersonal skills Inter-organizational required teamwork  Managers and employees must cooperate (avoid Efficient use of communication problems) organization resources  Temporary solution to a long term problem
  31. 31. 1/25/2012 CROSS FUNCTIONAL SELF MANAGED TEAMS Groups of employees from different departments who work together on a long term basis Temporary solution for Matrix teams
  32. 32. 1/25/2012CROSS FUNCTIONAL TEAMS EMPOWERED Work closely with:  Suppliers  Customers  Others  Quick & Efficient  High quality products  Great service
  33. 33. 1/25/2012 CROSS FUNCTIONAL TEAMS LONG-TERMTeams who work together long term as self managed teams empowered to make managerial decisions without prior management approval break down barriers in: Design Engineering Marketing Distribution Other functions
  34. 34. 1/25/2012CROSS FUNCTIONAL TEAMS WORK BEST WHEN: Sharing Leadership Includes  Customers  Suppliers  Distributors  Going beyond organizational boundaries
  35. 35. 1/25/2012MANAGING INTERACTIONS AMONG FIRMS  Networking  Transparency & Virtual Organizations  Benchmarking  Core Competencies
  36. 36. 1/25/2012NETWORKING Communication links organizations allowing them to work together on common objectives
  37. 37. 1/25/2012 TRANSPARENCY & VIRTUAL ORGANIZATIONSReal time-Present moment when something takes place Virtual corporation-organization temporarily networked comprised of replaceable firms join and leave as needed
  38. 38. 1/25/2012BENCHMARKING Comparisons of Organizations Against the world’s best Practices  Products  Adapting to change  Process
  39. 39. 1/25/2012CORE COMPETENCIES Functions:  Organization can do “as good” or better than other organizations in the world
  40. 40. 1/25/2012 Prepare to adapt to structure changes Digital Natives-People who have grown up using Internet and social networking  Restructuring-Redesigning an organization so it is more effective & efficient
  41. 41. 1/25/2012 Traditional Organization-Top Management, Middle, Supervisory, Frontline Inverted Organization-Has contact people at the top and chief executive officer at the bottom of the organization chart-turning the traditional organization structure upside down.
  42. 42. 1/25/2012 Organizational (Corporate) culture- Shared values within an organization that provide unity and cooperation to achieve common goals Informal organization-System develops spontaneously as employees meet and form cliques, relationships and lines of authority outside the formal organization
  43. 43. 1/25/2012CREATING A CHANGE Formal organization Structure detailing lines of responsibility, authority and position
  44. 44. 1/25/2012CREATING A CHANGE Informal organization-System develops spontaneously as employees meet and form cliques, relationships and lines of authority outside the formal organization
  45. 45. 1/25/2012REFERENCESNickels, William G. McHugh, M. James, McHugh M. Susan. Understanding business.preview edition, 9th edition. McGraw Hill/Irwin. 2010./Photo.Fayol Henry.http://www.123people.com/ext/frm?ti=person%20finder&search_term=henry%20fayol&search_country=US&st=perso% 20finder&target_url=http://s657.photobucket.com/albumPhoto. Weber Max. http://www.mta.ca/faculty/socsci/sociology/fleming/weber_album/weberin1918.html

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