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What Is An Organization?
 An organization is a group of individuals
who work together toward common goals.
Organizational Complexity

Simple                       Complex
(1 person)           (1,000’s of persons)

   How does the need for a well-defined
     structure change as the size of the
           organization increases?
The Elements Organizing
• Organizing
  – Deciding how to best
    group organizational
    activities and
    resources.
• Organization
  Structure
  – The set of building
    blocks that can be
    used to configure an
    organization.
Organization Structure & Design


• Organization structure – the pattern and
  groups of jobs in an organization

• Organizational Design - individuals and
  groups are arranged in an organization
  with respect to the tasks they perform. It
  is the management decisions and actions
  that result in a specific organization
  structure
The Elements of Org Structure
• Organization design
 – A process in which managers develop or
   change their organization’s structure.
• Work specialization
 – A component of organization structure that
   involves having each discrete step of a job
   done by a different individual rather than
   having one individual do the whole job.
Organizational Structure:
             Control
• Chain of command
 – The continuous line of authority that extends
   from upper organizational levels to the lowest
   levels and clarifies who reports to whom.
• Unity of Command
 – The management principle that no person
   should report to more than one boss.
• Span of control
 – The number of subordinates a manager can
   direct efficiently and effectively.
Organizational Structure:
         Control (cont’d)
• Authority
  – The rights inherent in a managerial position to
    give orders and expect them to be obeyed.
• Power
  – An individual’s capacity to influence decisions.
• Responsibility
  – An obligation to perform assigned activities.
Organizational Design Decisions

1. Managers decide how to divide the overall task
   into successively smaller jobs
2. Managers decide the bases by which to group the
   jobs
3. Managers decide the appropriate size of the group
   reporting to each superior
4. Managers distribute authority among the jobs
Simple
• Few employees reporting directly to one
  person (owner)

                    Owner




    Employee      Employee      Employee
Functional Organizational
        Structure
•Organizes employees around skills or
other resources (marketing, production)
•Create subordinate goals

                President




Finance        Production      Marketing
Divisionalized Structure
  Organizes employees around outputs,
  clients, or geographic areas


               President



Enterprise     Laserjet      Consumer
 Systems       Solutions     Products
Project-Based Matrix Structure
            Employees are temporarily assigned to a specific
            project team and have a permanent functional unit

President

                    Engineering    Marketing     Software
                     Manager       Manager       Manager

        Project A
        Manager

        Project B
        Manager

        Project C
        Manager
Flat Organizations
Tall Organizations




 Figure 7.10
                     7-14
Tall Versus Flat Organizations
Organizational Structure
There is no permanent organization chart for
  the world. . . . It is of supreme importance
  to be ready at all times to take advantage
             of new opportunities.

—Robert C. Goizueta, (Former) Chairman and Ceo, Coca-Cola
 Company © 2006 Prentice Hall




                                                            8-16
Simple, International Division

                            CEO


                                            International
Production      Marketing         Finance
                                              Division




Example: Levi Strauss, Inc.
Extension of Geographical
       Departmentalization

                          CEO


             North
                        European       Asian
           American
                        operations   operations
           operations




Example: Ford Motor Company, Coca Cola
Extension of Product
     Departmentalization

                     CEO


        Product     Product     Product
       Manager A   Manager B   Manager C


                                 North
        Europe       Asia
                                America



Example: Unilever, NV, FedEx, H.J. Heinz
Extension of Multi-Divisional
   (SBU) Departmentalization

                         CEO


SBU A        SBU B       SBU C          SBU D    SBU E
 US         Germany      Japan          France   Taiwan




Examples: General Electric, BOC, Ltd.
Global Matrix Design




Example: N.V. Phillips
Global Geographic Structure




                       Return

© 2006 Prentice Hall               8-22
Organizational Change and Design




 © 2006 Prentice Hall          8-23
Scope of Authority

                     Responsibility
                     and Authority
Adam Smith’s Example
  of Job Specialization
Making a pin (nail) requires 18
            tasks
 1 worker doing all 18 tasks might make
          20 pins (nails) a day.

    20 workers = (20 x 20) = 400 pins
  ______________________________

      With specialization:
  20 workers make 100,000 pins a day.
         1 worker = 5,000 pins
    20 pins vs. 5,000 pins per worker
Alternatives to Specialization
• Job Rotation
  – Systematically moving employees from one job to
    another in an attempt to reduce employee boredom.
• Job Enlargement
  – An increase in the total number of tasks workers
    perform.
• Job Enrichment
  – Increasing both the number of tasks the worker does
    and the control the worker has over the job.
Job Designing
• Job Design
  – The determination of an individual’s work-
    related responsibilities.
• Job Specialization (Division of Labor)
  – The degree to which the overall task of the
    organization is broken down and divided into
    smaller component parts.
Job Design
Job design refers to how organizations define and structure jobs

Job Design is the function of specifying the work activities of an individual
or group in an organizational setting.

The objective of job design is to develop jobs that meet the requirements of
the organization and its technology and that satisfy the jobholder’s
personal and individual requirements.
6A-29




                         Job Design Decisions


Who               What          Where           When            Why                How

                                                                Organizational
Mental and                      Geographic
                                                Time of day;    rationale for      Method of
physical                        locale of the
                  Tasks to be                   time of         the job; object-   performance
characteristics                 organization;
                  performed                     occurrence in   ives and mot-      and
of the                          location of
                                                the work flow   ivation of the     motivation
work force                      work areas
                                                                worker




                                        Ultimate
                                        Job
                                        Structure
Job Design Strategies
• Job simplification - breaks work down into its
  simplest form and standardizes each task.
• Job enlargement (horizontal job loading) -
  adds more tasks to a job to broaden its
  scope.
• Job rotation - cross-trains workers so they
  can move from one job in a company to
  others, giving them a greater number and
  variety of tasks to perform. Often used with a
  skill-based pay system.
Job Design Strategies
                                           (continued)

• Job enrichment (vertical job loading) - builds
  motivators into a job by increasing the planning,
  decision making, organizing and controlling functions
  (which traditionally were managerial tasks).
• Five core characteristics:
   –   Skill variety
   –   Task identity
   –   Task significance
   –   Autonomy
   –   Feedback

                                            Enriched
                                              Job
Job Design Strategies
                                       (continued)




• Flextime - an arrangement under which
  employees build their work schedules around a
  set of “core hours” – such as 11 a.m. to 2 p.m. –
  but have flexibility about when they start and stop
  work.
• Job sharing - a work arrangement in which two or
  more people share a single full-time job.
Job Design Strategies
                                        (concluded)


• Flexplace - a work arrangement in
  which employees work at a place
  other than the traditional office, such
  as a satellite branch closer to their
  homes or, in some cases, at home.
• Telecommuting - an arrangement in
  which employers have employees
  working from their homes use
  modern communications equipment
  to hook up to their workplaces.
Important Hiring Decisions
•   Look inside the company first
•   Encourage employee referrals
•   Make employment ads stand out
•   Use the Internet as a recruiting tool
•   Recruit on campus
How To Avoid Hiring Mistakes
                                        (continued)

• Forge relationships with schools and other
  sources of workers
• Consider using offbeat recruiting
  techniques
• Offer what workers want
Hiring the Right Employees

• Conduct a job analysis and create
  practical job descriptions and job
  specifications
• Plan an effective interview
• Conduct the interview
• Check references
Conducting a Job Analysis
• Create a job description - a written statement
  of the duties, responsibilities, reporting
  relationships, working conditions, and
  materials and equipment used in a job.
• Create a job specification - written statement
  of the qualifications and characteristics
  needed for a job, stated in such terms as
  education, skills, and experience.
• See sample job description from the
  Dictionary of Occupational Titles for a worm
  picker.
Advantages to the Organization
             Job - Person Fit

         Increased Performance

       Maximise Internal Resources

         Greater Job Satisfaction

     Reduced Absenteeism & Turnover
Employees are allocated job activities based on individual competencies and
realistic job requirements.

Performance increases as employees and jobs are match to maximize the
resources of the organization.

Internal resources are allocated in the most efficient and effective manner to
generate the maximum return for capital investment for the organization.

Leads to increased job satisfaction and thereby results in low employee turnover
and high productivity.
Job Design Challenge -
          Motivate Workers
•   Empowerment
•   Job design
•   Rewards and compensation
•   Feedback
Four Vital Tasks of a Leader
1. Hire the right employees and
  constantly improve their skills.
2. Build an organizational culture and
  structure that enable the company to
  reach its potential.
3. Motivate workers to higher levels of
  performance.
4. Plan for “passing the torch” to the next
  generation of leadership.
Human Resource Management

   For exhaustive reading

Job Design, Org Structure, etc
Strategy Quotations

However beautiful the strategy, you should occasionally look at the results.
Winston Churchill

If GE's strategy of investment in China is wrong, it represents a loss of a billion dollars, perhaps a couple of billion dollars. If it is right, it
is the future of this company for the next century.
Jack Welch

Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.
Sun Tzu

All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved.
Sun Tzu

Thus, what is of supreme importance in war is to attack the enemy's strategy.
Sun Tzu

You have to be fast on your feet and adaptive or else a strategy is useless.
Charles de Gaulle

My whole career strategy has been to build a base so that I could take the roles I want to play. I'd hate to think that a shorter part might not
be available because I was worried about my billing.
Jack Nicholson

I think we have to notice that the business processes we use right now for thinking and planning and budgeting and strategy are all
delivered on very tight agendas.
Margaret J. Wheatley

Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.
Norman Schwarzkopf

You may not be interested in strategy, but strategy is interested in you.
Leon Trotsky
Questions
• CSR of a company of your choice
• Managerial decision making – how
  leaders take decision – example of
  leaders
• Bangalore:
  Divyasree Greens,
  Intermediate Ring Road,
  Next to Embassy Golf Links, Domlur,
  Ph: 9980020224
Bill Gates foundation, Michael Dell
        Foundation = CSR
Sunlight Electric – Clean Power
http://www.sunlightelectric.com/index.htm
http://www.bellaenergy.com/
Capture the Sun




A PV system includes panels, racking, inverters, wiring, and conduit. Batteries
and charge controllers are required only if you will require back up power
HBS case study

Assignment Questions:

1. Should Wollen recommend Lewis for the U.K. position? Is Abbott correct
in saying that Wollen has made this too much of a personal issue?

2. If she does recommend him, are there other steps she should take to
ensure his success?

3. If she does not recommend him, are there other steps she should take on
his behalf or within the firm more generally?
Managerial Decision
Managerial decisions in today's turbulent business environment are
characterised by uncertainty, multiple objectives and complexity.

If there is one quality that distinguishes a good manager from a poor one, it is
decisiveness and strong communication. A person in managerial position who
is poor in decision making is fit to be called only an administrator and not a
manager.

The theory about the decision making process is an interesting subject. Every
manager is in fact some kind of decision maker and usually the performance is
formed by (the results of) the choices made (Vroom, 1973).

Decisions are made all the time, although sometimes unconsciously. It is a
subject that is relevant for many business areas and, in this situation, it can be
used to define the optimal way of defining new policies concerning forecasting,
cost and price management.
The decision making process normally involves the following stages:

1) Defining the problem /issues / situations / challenges which calls for a
   decision making

2) Collecting relevant facts (through effective communicating), figures and
   statistics to facilitate and support decision making process

3) Identifying the various alternatives of choice

4) seeking opinions and alternative view points from "people who know" and
    "people who matter".

5) Pondering over the issues peacefully (where time permits) and

6) Deciding on the best choice or a couple of best courses of action.
a. Identifying Potential Problems and Opportunities
In some cases, it is difficult to identify the problems and opportunities. For example, what is
causing the different projects within the organization to go consistently over budget in relation
to the different specific corrective actions that were undertaken?

b. Assessing Business Situation
Before attempting to make a decision, it is important to assess the business environment and
define the constraints related to the problem. The assessment may also include an analysis of
markets, competition, prices, or anything that can be related to the problem or opportunity.

c. Determining Success Criteria
Very often project managers have to make decisions based on multiple criteria.

d. Identifying Uncertainties
Understanding of uncertainties is the key to the decision analysis process.
.
e. Generating Alternatives
It is vital to identify what cannot be changed, or project constraints for making the particular
decision analysis.
Elements of organizing
Making Decisions in
         Organizations
         Managerial       Employee
High                                  High
          Control       Empowerment


       Centralized    Decentralized
        Decision        Decision
         Making          Making

         Employee        Managerial
Low                                   Low
       Empowerment        Control
Problem solving approach
• Information is key to managerial decision
  making. Therefore collect information
  through effective communication.
• Optimizing decision making process
• Quantitative techniques for decision
  making
• Decision tree
• Consistency in decision making, problem
  solving skills

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Elements of organizing

  • 1. What Is An Organization? An organization is a group of individuals who work together toward common goals.
  • 2. Organizational Complexity Simple Complex (1 person) (1,000’s of persons) How does the need for a well-defined structure change as the size of the organization increases?
  • 3. The Elements Organizing • Organizing – Deciding how to best group organizational activities and resources. • Organization Structure – The set of building blocks that can be used to configure an organization.
  • 4. Organization Structure & Design • Organization structure – the pattern and groups of jobs in an organization • Organizational Design - individuals and groups are arranged in an organization with respect to the tasks they perform. It is the management decisions and actions that result in a specific organization structure
  • 5. The Elements of Org Structure • Organization design – A process in which managers develop or change their organization’s structure. • Work specialization – A component of organization structure that involves having each discrete step of a job done by a different individual rather than having one individual do the whole job.
  • 6. Organizational Structure: Control • Chain of command – The continuous line of authority that extends from upper organizational levels to the lowest levels and clarifies who reports to whom. • Unity of Command – The management principle that no person should report to more than one boss. • Span of control – The number of subordinates a manager can direct efficiently and effectively.
  • 7. Organizational Structure: Control (cont’d) • Authority – The rights inherent in a managerial position to give orders and expect them to be obeyed. • Power – An individual’s capacity to influence decisions. • Responsibility – An obligation to perform assigned activities.
  • 8. Organizational Design Decisions 1. Managers decide how to divide the overall task into successively smaller jobs 2. Managers decide the bases by which to group the jobs 3. Managers decide the appropriate size of the group reporting to each superior 4. Managers distribute authority among the jobs
  • 9. Simple • Few employees reporting directly to one person (owner) Owner Employee Employee Employee
  • 10. Functional Organizational Structure •Organizes employees around skills or other resources (marketing, production) •Create subordinate goals President Finance Production Marketing
  • 11. Divisionalized Structure Organizes employees around outputs, clients, or geographic areas President Enterprise Laserjet Consumer Systems Solutions Products
  • 12. Project-Based Matrix Structure Employees are temporarily assigned to a specific project team and have a permanent functional unit President Engineering Marketing Software Manager Manager Manager Project A Manager Project B Manager Project C Manager
  • 15. Tall Versus Flat Organizations
  • 16. Organizational Structure There is no permanent organization chart for the world. . . . It is of supreme importance to be ready at all times to take advantage of new opportunities. —Robert C. Goizueta, (Former) Chairman and Ceo, Coca-Cola Company © 2006 Prentice Hall 8-16
  • 17. Simple, International Division CEO International Production Marketing Finance Division Example: Levi Strauss, Inc.
  • 18. Extension of Geographical Departmentalization CEO North European Asian American operations operations operations Example: Ford Motor Company, Coca Cola
  • 19. Extension of Product Departmentalization CEO Product Product Product Manager A Manager B Manager C North Europe Asia America Example: Unilever, NV, FedEx, H.J. Heinz
  • 20. Extension of Multi-Divisional (SBU) Departmentalization CEO SBU A SBU B SBU C SBU D SBU E US Germany Japan France Taiwan Examples: General Electric, BOC, Ltd.
  • 22. Global Geographic Structure Return © 2006 Prentice Hall 8-22
  • 23. Organizational Change and Design © 2006 Prentice Hall 8-23
  • 24. Scope of Authority Responsibility and Authority
  • 25. Adam Smith’s Example of Job Specialization Making a pin (nail) requires 18 tasks 1 worker doing all 18 tasks might make 20 pins (nails) a day. 20 workers = (20 x 20) = 400 pins ______________________________ With specialization: 20 workers make 100,000 pins a day. 1 worker = 5,000 pins 20 pins vs. 5,000 pins per worker
  • 26. Alternatives to Specialization • Job Rotation – Systematically moving employees from one job to another in an attempt to reduce employee boredom. • Job Enlargement – An increase in the total number of tasks workers perform. • Job Enrichment – Increasing both the number of tasks the worker does and the control the worker has over the job.
  • 27. Job Designing • Job Design – The determination of an individual’s work- related responsibilities. • Job Specialization (Division of Labor) – The degree to which the overall task of the organization is broken down and divided into smaller component parts.
  • 28. Job Design Job design refers to how organizations define and structure jobs Job Design is the function of specifying the work activities of an individual or group in an organizational setting. The objective of job design is to develop jobs that meet the requirements of the organization and its technology and that satisfy the jobholder’s personal and individual requirements.
  • 29. 6A-29 Job Design Decisions Who What Where When Why How Organizational Mental and Geographic Time of day; rationale for Method of physical locale of the Tasks to be time of the job; object- performance characteristics organization; performed occurrence in ives and mot- and of the location of the work flow ivation of the motivation work force work areas worker Ultimate Job Structure
  • 30. Job Design Strategies • Job simplification - breaks work down into its simplest form and standardizes each task. • Job enlargement (horizontal job loading) - adds more tasks to a job to broaden its scope. • Job rotation - cross-trains workers so they can move from one job in a company to others, giving them a greater number and variety of tasks to perform. Often used with a skill-based pay system.
  • 31. Job Design Strategies (continued) • Job enrichment (vertical job loading) - builds motivators into a job by increasing the planning, decision making, organizing and controlling functions (which traditionally were managerial tasks). • Five core characteristics: – Skill variety – Task identity – Task significance – Autonomy – Feedback Enriched Job
  • 32. Job Design Strategies (continued) • Flextime - an arrangement under which employees build their work schedules around a set of “core hours” – such as 11 a.m. to 2 p.m. – but have flexibility about when they start and stop work. • Job sharing - a work arrangement in which two or more people share a single full-time job.
  • 33. Job Design Strategies (concluded) • Flexplace - a work arrangement in which employees work at a place other than the traditional office, such as a satellite branch closer to their homes or, in some cases, at home. • Telecommuting - an arrangement in which employers have employees working from their homes use modern communications equipment to hook up to their workplaces.
  • 34. Important Hiring Decisions • Look inside the company first • Encourage employee referrals • Make employment ads stand out • Use the Internet as a recruiting tool • Recruit on campus
  • 35. How To Avoid Hiring Mistakes (continued) • Forge relationships with schools and other sources of workers • Consider using offbeat recruiting techniques • Offer what workers want
  • 36. Hiring the Right Employees • Conduct a job analysis and create practical job descriptions and job specifications • Plan an effective interview • Conduct the interview • Check references
  • 37. Conducting a Job Analysis • Create a job description - a written statement of the duties, responsibilities, reporting relationships, working conditions, and materials and equipment used in a job. • Create a job specification - written statement of the qualifications and characteristics needed for a job, stated in such terms as education, skills, and experience. • See sample job description from the Dictionary of Occupational Titles for a worm picker.
  • 38. Advantages to the Organization Job - Person Fit Increased Performance Maximise Internal Resources Greater Job Satisfaction Reduced Absenteeism & Turnover
  • 39. Employees are allocated job activities based on individual competencies and realistic job requirements. Performance increases as employees and jobs are match to maximize the resources of the organization. Internal resources are allocated in the most efficient and effective manner to generate the maximum return for capital investment for the organization. Leads to increased job satisfaction and thereby results in low employee turnover and high productivity.
  • 40. Job Design Challenge - Motivate Workers • Empowerment • Job design • Rewards and compensation • Feedback
  • 41. Four Vital Tasks of a Leader 1. Hire the right employees and constantly improve their skills. 2. Build an organizational culture and structure that enable the company to reach its potential. 3. Motivate workers to higher levels of performance. 4. Plan for “passing the torch” to the next generation of leadership.
  • 42. Human Resource Management For exhaustive reading Job Design, Org Structure, etc
  • 43. Strategy Quotations However beautiful the strategy, you should occasionally look at the results. Winston Churchill If GE's strategy of investment in China is wrong, it represents a loss of a billion dollars, perhaps a couple of billion dollars. If it is right, it is the future of this company for the next century. Jack Welch Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat. Sun Tzu All men can see these tactics whereby I conquer, but what none can see is the strategy out of which victory is evolved. Sun Tzu Thus, what is of supreme importance in war is to attack the enemy's strategy. Sun Tzu You have to be fast on your feet and adaptive or else a strategy is useless. Charles de Gaulle My whole career strategy has been to build a base so that I could take the roles I want to play. I'd hate to think that a shorter part might not be available because I was worried about my billing. Jack Nicholson I think we have to notice that the business processes we use right now for thinking and planning and budgeting and strategy are all delivered on very tight agendas. Margaret J. Wheatley Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy. Norman Schwarzkopf You may not be interested in strategy, but strategy is interested in you. Leon Trotsky
  • 44. Questions • CSR of a company of your choice • Managerial decision making – how leaders take decision – example of leaders • Bangalore: Divyasree Greens, Intermediate Ring Road, Next to Embassy Golf Links, Domlur, Ph: 9980020224
  • 45. Bill Gates foundation, Michael Dell Foundation = CSR
  • 46. Sunlight Electric – Clean Power http://www.sunlightelectric.com/index.htm
  • 48. Capture the Sun A PV system includes panels, racking, inverters, wiring, and conduit. Batteries and charge controllers are required only if you will require back up power
  • 49. HBS case study Assignment Questions: 1. Should Wollen recommend Lewis for the U.K. position? Is Abbott correct in saying that Wollen has made this too much of a personal issue? 2. If she does recommend him, are there other steps she should take to ensure his success? 3. If she does not recommend him, are there other steps she should take on his behalf or within the firm more generally?
  • 50. Managerial Decision Managerial decisions in today's turbulent business environment are characterised by uncertainty, multiple objectives and complexity. If there is one quality that distinguishes a good manager from a poor one, it is decisiveness and strong communication. A person in managerial position who is poor in decision making is fit to be called only an administrator and not a manager. The theory about the decision making process is an interesting subject. Every manager is in fact some kind of decision maker and usually the performance is formed by (the results of) the choices made (Vroom, 1973). Decisions are made all the time, although sometimes unconsciously. It is a subject that is relevant for many business areas and, in this situation, it can be used to define the optimal way of defining new policies concerning forecasting, cost and price management.
  • 51. The decision making process normally involves the following stages: 1) Defining the problem /issues / situations / challenges which calls for a decision making 2) Collecting relevant facts (through effective communicating), figures and statistics to facilitate and support decision making process 3) Identifying the various alternatives of choice 4) seeking opinions and alternative view points from "people who know" and "people who matter". 5) Pondering over the issues peacefully (where time permits) and 6) Deciding on the best choice or a couple of best courses of action.
  • 52. a. Identifying Potential Problems and Opportunities In some cases, it is difficult to identify the problems and opportunities. For example, what is causing the different projects within the organization to go consistently over budget in relation to the different specific corrective actions that were undertaken? b. Assessing Business Situation Before attempting to make a decision, it is important to assess the business environment and define the constraints related to the problem. The assessment may also include an analysis of markets, competition, prices, or anything that can be related to the problem or opportunity. c. Determining Success Criteria Very often project managers have to make decisions based on multiple criteria. d. Identifying Uncertainties Understanding of uncertainties is the key to the decision analysis process. . e. Generating Alternatives It is vital to identify what cannot be changed, or project constraints for making the particular decision analysis.
  • 54. Making Decisions in Organizations Managerial Employee High High Control Empowerment Centralized Decentralized Decision Decision Making Making Employee Managerial Low Low Empowerment Control
  • 55. Problem solving approach • Information is key to managerial decision making. Therefore collect information through effective communication. • Optimizing decision making process • Quantitative techniques for decision making • Decision tree • Consistency in decision making, problem solving skills

Notes de l'éditeur

  1. Organizational design is the process by which managers alter the structure of their organization to meet the implementation demands of its chosen strategy. Division of labor, or work specialization , describes the degree to which organizational tasks are subdivided into separate jobs. An entire job is not done by one person. Instead, it is divided into discrete steps, each one completed by a different person.
  2. How many employees can a manager efficiently and effectively direct? Some advocate small spans of control because they help managers maintain close control; but, there are several drawbacks: they require more managers and are more costly, they retard vertical communication, and they foster tight controls and limited employee autonomy. In contrast, wide spans of control reduce costs, cut overhead, expedite decision making, increase flexibility, empower employees, and promote customer contact. All things being equal, the broader the span of control , the more efficient the organization. Organizational variables that influence how a company will determine an appropriate span of control: similarity and complexity of employee tasks, the proximity of employees, the presence of standardized procedures, the capabilities of the information management system, the strength of the firm’s value system, and the preferred style of management.
  3. Authority refers to the rights inherent in a managerial position, such as giving orders and expecting that the orders will be obeyed. Authority, therefore, is related to one’s position within an organization and ignores the personal characteristics of the individual manager. When managers delegate authority, they must allocate commensurate responsibility to perform. How does the contemporary view of authority and responsibility differ from the historical view? Early management scholars assumed that the authority and rights inherent in one’s formal position were the sole source of influence; so, managers were all powerful.
  4. Organizational structures must change to accommodate a firm’s evolving internationalization in response to worldwide competition. Considerable research has shown that a firm’s structure must be conducive to the implementation of its strategy. In other words, the structure must “fit” the strategy, or it will not work. Managers are faced with how best to attain that fit in organizing the company’s systems and tasks.
  5. In the global geographic (area) structure —the most common form of organizing foreign operations—divisions are created to cover geographic regions. Each regional manager is then responsible for the operations and performance of the countries within a given region. In this way, country and regional needs and relative market knowledge take precedence over product expertise. Local managers are familiar with the cultural environment, government regulations, and business transactions. In addition, their language skills and local contacts facilitate daily transactions and responsiveness to the market and the customer. While this is a good structure for consolidating regional expertise, problems of coordination across regions may arise. With the geographic structure, the focus is on marketing, since products can be adapted to local requirements.
  6. Determining how many and what types of decisions can be made and by whom can have drastic consequences; both the locus and the scope of authority must be carefully considered. This centralization–decentralization variable actually represents a continuum. In the real world, companies are neither totally centralized nor totally decentralized: The level of centralization imposed is a matter of degree. continuum and the different ways that decision making can be shared between headquarters and local units or subsidiaries. In general, centralized decision making is common for some functions (finance; research and development) that are organized for the entire corporation, whereas other functions (production; marketing; sales) are more appropriately decentralized. Two key issues are the speed with which the decisions have to be made and whether they primarily affect only a certain subsidiary or other parts of the company as well.
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