**

CHAPTER
Adapting
Organizations to
Today’s Markets
8
Nickels McHugh McHugh
* *
1-1
1-1
BUILDING AN ORGANIZATION FROM THE
BOTTOM UP
 Organizing or Structuring: Determine what work
needs to be done.
 Division of Labor: Divide the tasks among others.
 Job Specialization: Dividing the tasks into smaller jobs.

 Departmentalization: The process of setting up

individual departments to do specialized tasks.
 Assign Authority & Responsibility:
 Organization Chart/Organogram
 Allocating Resources:
 Assigning Specific Tasks:

 Establishing Procedures:
8-2
 CENTRALIZATION
(NO DELEGATION)
Advantages Disadvantages
 Greater Top-Management
Control  Less Responsiveness
 More Efficiency
to Customers
 Simpler Distribution  Less Empowerment
System
 Inter organizational
 Stronger Brand/Corporate Conflict
Image
 Lower Morale Away
from Headquarters
8-3
 DECENTRALIZATION
(DELEGATE AUTHORITY)

Advantages Disadvantages
 Better Adaptation to  Less Efficiency
Customer Wants  Complex Distribution
 More Empowerment System
of Workers  Less Top-Management
Control
 Faster Decision
Making  Weakened Corporate Image

 Higher Morale
8-4
 ORGANIZATION STRUCTURES

 Tall organization: An organizational structure

in which the pyramidal organization chart would
be quite tall because of the various levels of
management.

 Flat organization: An organization structure

that has few layers of management and a broad
span of control.

8-5
 ORGANIZATIONAL STRUCTURES

Tall Organizations
 Many Layers of
Management
Flat Organizations
 High Cost of
Management  Current Trend
 Narrow Span of
Control  Creation of Teams
 Broad Span of
Control

8-6
 DEPARTMENTALIZATION
 Departmentalization: The dividing of organizational
functions into separate units.

Disadvantages
Advantages
• Lack of
 Skill
Development Communication
 Economies of Scale
• Employees Identify
 Good Coordination with Department
• Slow Response to
External Demands
• Narrow Specialists 8-7

• Groupthink
 WAYS OF DEPARTMENTALIZATION

 By Product
 By Function
 By Customer
Group
 By Geographic
Location
 By Process

8-8
 CROSS FUNCTIONAL SELF-MANAGED
TEAMS
 Groups of employees from different departments
who work together on a long-term basis.

Self-managed means they are empowered to

make decisions without management approval.

 Cross functional team works better when it

includes customers, suppliers, and distributors
too.

8-9
CREATING A CHANGE-ORIENTED
ORGANIZATIONAL CULTURE
 Organizational (Corporate) Culture: Widely
shared values within an organization that
provide unity and cooperation to achieve common
goals.

 Myths, stories, traditions, values etc are part of

corporate culture

8-10
 PRODUCTION PROCESS

Production
INPUTS OUTPUT
Control

 Land  Planning  Goods

 Labor  Routing  Services

 Capital  Scheduling  Ideas

 Entrepreneur  Dispatching

 Knowledge  Follow-Up
OPERATIONS MANAGEMENT PLANNING
 Planning that converts resources into goods or services.
 It helps to solve many of the problems:

 Facility Location
 Facility Layout
 Materials Requirement
Planning
 Purchasing
 Inventory Control
 Quality Control.