8-1 chapter 88 adapting organizations to today’s markets 8-1
TRANSCRIPT
McGraw-Hill/IrwinUnderstanding Business, 7/e
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8-1
Chapter
8888 Adapting Adapting Organizations to Organizations to Today’s MarketsToday’s Markets
8-1
McGraw-Hill/IrwinUnderstanding Business, 7/e
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8-2
Workers in Large* Companies in the Workers in Large* Companies in the Last 5 Years Have UndergoneLast 5 Years Have Undergone......
0% 10% 20% 30% 40% 50% 60% 70%
Reengineering orReorganization
Merger orAcquisition
Downsizing orLayoffs
Declining Sales orProfits
*500+ Employees*500+ Employees
Source: Source: Gallup for Carlson Marketing Group
McGraw-Hill/IrwinUnderstanding Business, 7/e
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8-3
Fayol’s Principles Fayol’s Principles of Organizationof Organization
• Unity of Unity of CommandCommand
• Hierarchy of Hierarchy of AuthorityAuthority
• Division of LaborDivision of Labor
• Subordination of Subordination of Individual InterestIndividual Interest
• AuthorityAuthority
• Degree of Degree of CentralizationCentralization
• Communication Communication ChannelsChannels
• OrderOrder
• EquityEquity
• Esprit de CorpsEsprit de Corps
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8-4
Weber’s Weber’s Organizational PrinciplesOrganizational Principles
• Job DescriptionsJob Descriptions
• Written RulesWritten Rules
• Procedures, Regulations, Procedures, Regulations, PoliciesPolicies
• Staffing/Promotions based Staffing/Promotions based on Qualificationson Qualifications
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Fundamentals Fundamentals of Bureaucracyof Bureaucracy
Chain of CommandChain of CommandRules & Rules &
RegulationsRegulationsSet Up by FunctionSet Up by FunctionCommunication is Communication is
MinimalMinimal E m p loyee
S u p erviso r
V ice P res id en t
B oss
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CentralizationCentralization (No Delegation)(No Delegation)
AdvantagesAdvantages
• Increased Increased UniformityUniformity
– Less Less DuplicationDuplication
– Maximum Maximum ControlControl
DisadvantagesDisadvantages
– Lots of Lots of Policies & Policies & ProceduresProcedures
– Many Many Layers/SlowerLayers/Slower
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8-7
Decentralization Decentralization ((Delegate Authority)Delegate Authority)
AdvantagesAdvantages– Informed Informed
DecisionsDecisions
– Worker Worker ResponsibilityResponsibility
– Few Few Layers/FasterLayers/Faster
DisadvantagesDisadvantages
– Loss of ControlLoss of Control
– Possible Possible DuplicationDuplication
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8-8
Span of ControlSpan of Control• Capabilities of Subordinates & Capabilities of Subordinates &
ManagerManager
• Complexity of JobComplexity of Job– Geographically CloseGeographically Close– Functional SimilarityFunctional Similarity– Need for CoordinationNeed for Coordination– Planning DemandsPlanning Demands– Functional ComplexityFunctional Complexity
Subordinate Subordinate Subordinate
Boss
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8-9
Organizational StructuresOrganizational Structures
Tall OrganizationsTall Organizations
- Many Layers of Many Layers of ManagementManagement
- High Cost of High Cost of ManagementManagement
Flat OrganizationsFlat Organizations
- Current TrendCurrent Trend
- Creation of Creation of TeamsTeams
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8-10
DepartmentalizationDepartmentalization
• ProductProduct
• FunctionFunction
• CustomerCustomer• LocationLocation• ProcessProcess
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8-11
Departmentalization by Departmentalization by FunctionFunction
DisadvantagesDisadvantages– Lack of Lack of
CommunicationCommunication
– Employees Identify Employees Identify with Departmentwith Department
– Slow Response to Slow Response to External DemandsExternal Demands
– Narrow SpecialistsNarrow Specialists
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8-12
Line OrganizationsLine Organizations
AdvantagesAdvantages– Clear Authority Clear Authority
& Responsibility& Responsibility
– Easy to Easy to UnderstandUnderstand
– One Supervisor One Supervisor per Employeeper Employee
DisadvantagesDisadvantages– InflexibleInflexible
– Few Specialists for Few Specialists for AdviceAdvice
– Long Line of Long Line of CommunicationCommunication
– Difficult to Handle Difficult to Handle Complex Complex DecisionsDecisions
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8-13
Line/Staff OrganizationsLine/Staff Organizations
Line PersonnelLine Personnel
– Perform FunctionsPerform Functions
– Contribute Directly Contribute Directly to Organizational to Organizational
GoalsGoals
Staff PersonnelStaff Personnel
– AdviseAdvise
– Assist Line Assist Line PersonnelPersonnel
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8-14
Matrix OrganizationsMatrix OrganizationsAdvantagesAdvantages
– FlexibilityFlexibility
– Cooperation & Cooperation & TeamworkTeamwork
– CreativityCreativity
– More Efficient Use More Efficient Use of Resourcesof Resources
DisadvantagesDisadvantages– Costly/ComplexCostly/Complex
– Confusion in Confusion in LoyaltyLoyalty
– Requires Good Requires Good Interpersonal Skills Interpersonal Skills & Cooperation& Cooperation
– Not PermanentNot Permanent
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8-15
Reasons to OutsourceReasons to Outsource
0% 10% 20% 30% 40% 50%
Reduce Cost
Focus on Core Competencies
Access to Expertise
Increase Profit
Faster Delivery
Resource Constraints
Technology Access
Source: CIO, “2003 Outsourcing Trends”
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8-16
Top Five Outsourced Top Five Outsourced Business CategoriesBusiness Categories
0% 10% 20% 30% 40% 50% 60%
Information Tech.
HR/Benefits
Facilities Mgmt
Finance & Acctg
Marketing/Sales
Source: BusinessWeek, July 8, 2002
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Outsourcing PossibilitiesOutsourcing Possibilities
CountryCountry PossibilitiesPossibilities
ChinaChina Hardware, Software, Call CentersHardware, Software, Call Centers
PhilippinesPhilippinesAccounting, Graphic Artists, Architects, Accounting, Graphic Artists, Architects,
TelemarketersTelemarketers
MexicoMexico Car & Electronic ManufacturingCar & Electronic Manufacturing
Costa RicaCosta Rica Call Centers, IT Support, BookkeepingCall Centers, IT Support, Bookkeeping
South AfricaSouth Africa French, English, German Speaking Call CentersFrench, English, German Speaking Call Centers
RussiaRussia R & D Centers in Sciences, IT, MathR & D Centers in Sciences, IT, Math
IndiaIndia IT, Chip Design, Call CentersIT, Chip Design, Call CentersSource: BusinessWeek, February 3, 2003
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8-18
Inverted Inverted Organization StructureOrganization Structure
Empowered Empowered front-line front-line workersworkersSupport Support
PersonnelPersonnel
Top Top Mgmt.Mgmt.
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Examples ofExamples ofInformal Group NormsInformal Group Norms
Do your job but don’t produce Do your job but don’t produce more than the rest of the group.more than the rest of the group.
Don’t tell off-color jokes or use Don’t tell off-color jokes or use profane language among group profane language among group members.members.
Listen to the boss and use his/her Listen to the boss and use his/her expertise but don’t trust him/her.expertise but don’t trust him/her.
Everyone is to be clean/organized at Everyone is to be clean/organized at the workstation.the workstation.
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8-20
Never side with managers in a Never side with managers in a dispute involving group members.dispute involving group members.
Respect/help your fellow group Respect/help your fellow group members on the job.members on the job.
Criticize the organization only Criticize the organization only among group members- never among group members- never among strangers.among strangers.
Drinking is done off-the-job- Drinking is done off-the-job- Never at work!Never at work!
Examples ofExamples ofInformal Group Informal Group
NormsNorms(cont’d)(cont’d)
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