Management Project

Attached is a video, powerpoint, and a pdf file.

You will only be answering the following question:

2. Some of the firms are not following a “pure” organization structure; rather, they are combining

elements of more than one type of structure. In what ways does this benefit the firms? In what

ways is this a potential weakness for the firms?

In addition to answering this question formally, you will create 2-5 powerpoint slides answering this question.

CHAPTER ELEVEN VIDEO CASE
ORGANIZING FOR SUCCESS

Teaching Tip: This video contains an introduction to various types of departmentalization, and then
has four segments describing each type in detail. You could pause after eah segment, and discuss the
information presented in that segment before viewing the others.

Chapter 11 introduces the basic elements of organizing. Key topics covered in the chapter are
designing jobs, grouping jobs via departmentalization, establishing reporting relationships,
distributing authority, coordinating activities, and differentiating positions. In addition, the universal
perspectives and situational perspectives on organization design and the basic forms of organization
design are described. The chapter concludes with a discussion of emerging trends in organization
design.

Overview and Objectives

After completing this video case, you should be able to:

1. Understand the complexities inherent in the organizing process.
2. See the different ways that a business can be organized.
3. Describe the advantages and disadvantages of each type of organization design.

Video Case Background

The Ritz-Carlton is a premium hotel chain known for its amazing service, luxurious rooms and
amenities, and high prices. But the people who can afford to stay at a Ritz-Carlton seldom complain
about the prices. They recognize that they are getting unsurpassed service for their money. The Ritz-
Carlton, similarly, understands that if it wants to continue its enviable record of sales and profit, it
must continue to cater to the individual needs, preferences, and whims of the well-heeled clients it
serves. Accordingly, each hotel within the company functions as an autonomous enterprise with a
manager totally responsible for its performance.

General Mills is a major food products company. The firm is the second largest in the breakfast cereal
market, its biggest business (Kellogg’s is a bit larger). But General Mills also has an enviable array of
other profitable product lines as well. For example, General Mills also makes Betty Crocker bakery
products, Yoplait yogurts, Pop Secret popcorn, and Gold Medal flour.

Xerox Corporation, as virtually everyone knows, makes photocopying machines. But Xerox aspires to
be much more, now calling itself “The Document Company.” The firm has recently tried to focus its
attention on being the premier provider of equipment and services for all phases of document
processing—from document creation to storage to formatting and printing to distribution. It sees its
major clients as being other businesses, hospitals, educational organizations, and the government—in
short, any entity that uses documents in any form.

TGI Friday’s is a fast-growing restaurant chain. At the present time, the company has about 480
restaurants scattered all across the country, and another 165 in 53 other countries. TGI Friday’s tries
to provide the same basic menu in each country, with only minor modifications for local tastes. It
hires all of its employees from the areas around its restaurants and then teaches those employees how
to conduct business the “Friday” way.

Video Case Questions

1. Describe the type of organization structure in use at each of the four companies. Is this the best

organization structure for that company? Why or why not?
2. Some of the firms are not following a “pure” organization structure; rather, they are combining

elements of more than one type of structure. In what ways does this benefit the firms? In what
ways is this a potential weakness for the firms?

3. What alternative methods of organizing might be called for in the future at each company?

© 2010 South-Western, Cengage Learning, Inc.
All rights reserved.
PowerPoint Presentation by Charlie Cook
The University of West Alabama

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
Identify the basic elements of organizations.
Describe the basic alternative approaches to designing jobs.
Discuss the rationale and the most common bases for grouping jobs into departments.
Describe the basic elements involved in establishing reporting relationships.
Discuss how authority is distributed in organizations.
Discuss the basic coordinating activities undertaken by organizations.
Describe basic ways in which positions within an organization can be differentiated.
Learning Objectives
After studying this chapter, you should be able to:

The Elements of 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.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Designing Jobs
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.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Designing Jobs (cont’d)
Benefits of Job Specialization
Workers can become proficient at a task.
Transfer time between tasks is decreased.
Specialized equipment can be more easily developed.
Employee replacement becomes easier.
Limitations of Specialization
Boredom and dissatisfaction with mundane tasks.
Anticipated benefits do not always occur.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

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
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Alternatives to Job Specialization

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11–
Job
Enlargement
Job
Enrichment
Job
Rotation
Job Specialization
Alternatives

Job Characteristics: Core Dimensions

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11–
Skill Variety
The number of tasks a person does in a job
Task Identity
The extent to which the worker does a complete or identifiable portion of the total job
Task Significance
The perceived importance of the task by the worker
Autonomy
The degree of control the worker has over how the work
is performed
Feedback
The extent to which the worker knows how well the job
is being performed
Growth Need Strength
The desire for people to grow, develop, and expand their capabilities that is their response to the core dimensions

Alternatives to Specialization (cont’d)
Work Teams
An alternative to job specialization that allows the entire group to design the work system it will use to perform an interrelated set of tasks.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Management Challenge Question
You will be leading your company’s transition team after the acquisition of your company by a much larger competitor.
What organizing problems would you anticipate will arise in merging the two companies?
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Grouping Jobs: Departmentalization
Departmentalization
The process of grouping jobs according to some logical arrangement.
Rationale for Departmentalization
Organizational growth exceeds the owner-manager’s capacity to personally supervise all of the organization.
Additional managers are employed and assigned
specific employees to supervise.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Departmentalization
Advantages
Each department can be staffed by functional-area experts.
Supervision is facilitated in that managers only need be familiar with
a narrow set of skills.
Coordination inside each department is easier.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
Disadvantages
Decision making becomes slow and bureaucratic.
Employees narrow their focus to their department and lose sight of broader goals and issues.
Accountability and performance are difficult
to monitor.
Functional Departmentalization
Grouping jobs involving the same or similar activities.

11.2 Bases for Departmentalization

Departmentalization (cont’d)
Advantages
All activities associated with one product are integrated and coordinated.
Speed and effectiveness
of decision making are enhanced.
Performance of individual products or product groups can be assessed.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
Disadvantages
Managers may focus
on their product to the exclusion of the rest of the organization.
Administrative costs
may increase due to each department having its own functional-area experts.
Product Departmentalization
Grouping activities around products or product groups.

Departmentalization (cont’d)
Customer Departmentalization
Grouping activities to respond to and interact with specific customers and customer groups.
Advantage
Skilled specialists can deal with unique customers or
customer groups.
Disadvantage
A large administrative staff is needed to integrate activities of various departments.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Departmentalization (cont’d)
Location Departmentalization
The grouping of jobs on the basis of defined geographic sites or areas.
Advantage
Enables the organization to respond easily to unique
customer and environmental characteristics.
Disadvantage
Large administrative staff may be needed to keep track of units in scattered locations.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Other Forms of Departmentalization
Alternative Groupings
By specific units of time
By sequence.
By customer characteristics, products, or services
Other Considerations
Departments are often called by other names.
Divisions, units, sections, and bureaus
Organizations are likely to employ multiple bases of departmentalization, depending on level.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Establishing Reporting Relationships

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Scalar
Principle
Span of
Control
Unity of Command
Reporting Relationships
Considerations

Reporting Relationships
Chain of Command
A clear and distinct line of authority among
the positions in an organization.
Unity of Command
Each person within an organization must have a clear reporting relationship to one and only one boss.
Scalar Principle
A clear and unbroken line of authority must extend from the bottom to the top of the organization.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Span of Management
Span of Control
The number of people reporting to a manager.
A. V. Graicunas
Subordinate interactions
Direct—manager’s relationship with each subordinate.
Cross—among the subordinates themselves.
Group—between groups of subordinates.
Formula for the number of interactions of all types:
I = N(2N/2 + N – 1), where I is the total number of interactions and N is number of subordinates.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Span of Management (cont’d)
Narrow Versus Wide Spans
Ralph Davis
Operative span for lower-level managers of up to 30 workers.
Executive span for middle and top managers set at 3 to 9.
Span depends on managers’ jobs, company growth rate, and similar factors
Lyndall Urwick and General Ian Hamilton
Executive span should never exceed six persons.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Establishing Reporting Relationships: Tall versus Flat Organizations
Tall Organizations
Are more expensive because of the number
of managers involved.
Foster more communication problems because of the number of people through whom information must pass.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
Flat Organizations
Lead to higher levels
of employee morale
and productivity.
Create more administrative responsibility for the relatively few managers.
Create more supervisory responsibility for managers due to wider spans of control.

11.3 Tall Versus Flat Organizations

11.1 Factors Influencing the Span of Management

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11–
Competence of supervisor and subordinates
(the greater the competence, the wider the potential span)
Physical dispersion of subordinates
(the greater the dispersion, the narrower the potential span)
Extent of nonsupervisory work in manager’s job
(the more nonsupervisory work, the narrower the potential span)
Degree of required interaction
(the less required interaction, the wider the potential span)
Extent of standardized procedures
(the more procedures, the wider the potential span)
Similarity of tasks being supervised
(the more similar the tasks, the wider the potential span)
Frequency of new problems
(the higher the frequency, the narrower the potential span)
Preferences of supervisors and subordinates

Distributing Authority
Authority
Power that has been legitimized by the organization.
Delegation
The process by which managers assign a portion of their total workload to others.
Reasons for Delegation
To enable the manager to get more work done by utilizing the skills and talents of subordinates.
To foster development of subordinates by having them participate in decision making and problem.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

11.4 Steps in the Delegation Process

Problems in Delegation
Manager
Reluctant to delegate.
Disorganization prevents planning work in advance.
Subordinate’s success threatens superior’s advancement.
Lack of trust in the subordinate to do well.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
Subordinate
Reluctant to accept delegation for fear of failure.
Perceives no rewards for accepting additional responsibility.
Prefers to avoid any risk and responsibility.

Decentralization and Centralization
Decentralization
Systematically delegating power and authority throughout the organization to middle- and lower-level managers.
Centralization
Systematically retaining power and authority
in the hands of higher-level managers.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Factors in Choice of Centralization

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11–
History of the organization
Nature
(cost and risk) of decisions to be made
External environment’s complexity and uncertainty
Organization’s
Centralization Choice

Coordinating Activities
Coordination
The process of linking the activities of the various departments of the organization.
The Need for Coordination
Where departments and work groups are interdependent; the greater the interdependence, the greater the need for coordination.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Coordinating Activities:
Forms of Interdependence
Pooled interdependence
When units operate with little interaction; their output is simply pooled at the organizational level.
Sequential interdependence
When the output of one unit becomes the input of another unit in sequential fashion.
Reciprocal interdependence
When activities flow both ways between units.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Major Forms of Interdependence

Structural Coordination

© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
Task Forces
Integrating Departments
Electronic Coordination
Structural
Coordination
Techniques
Management Hierarchy
Rules and Procedures
Managerial Liaison Roles

Structural Coordination Techniques
The Managerial Hierarchy
Placing one manager in charge of interdependent departments or units.
Rules and Procedures
Routine coordination of activities using rules and procedures that set priorities and guidelines for actions.
Managerial Liaison Roles
A manager coordinates interdependent units by acting as a common point of contact, facilitating the flow of information.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Structural Coordination… (cont’d)
Task Forces
Used with multiple units when coordination is complex, requiring more than one individual and the need for coordination is acute.
Disbanded when need for coordination has been met.
Integrating Departments
Permanent organizational units that maintain internal integration and coordination on an ongoing basis.
May have authority and budgetary controls.
Electronic Coordination
E-mail, electronic scheduling, PDAs, cell phones
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Differentiating Between Positions
Line Positions
Positions in the direct chain of command responsible for the achievement of an organization’s goals.
Have formal (legitimate) authority.
Staff Positions
Positions intended to provide expertise, advice, and support to line positions.
Have advisory authority; can give compulsory advice.
Have functional authority to enforce compliance with organizational policies and procedures.
Administrative Intensity
The degree to which managerial positions are concentrated in staff positions.
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–

Key Terms
organizing
organization structure
job design
job specialization
job rotation
job enlargement
job enrichment
job characteristics approach
work teams
departmentalization
functional departmentalization
product departmentalization
customer departmentalization
© 2010 South-Western, Cengage Learning, Inc. All rights reserved.
11–
location departmentalization
chain of command
span of management
authority
delegation
centralization
coordination
pooled interdependence
sequential interdependence
reciprocal interdependence
line position
staff position
administrative intensity

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