SILENCE GAME
Divide the group into two teams and position them on either
side of the room. Give the students instructions such as "Line up
according to birth dates," or "Arrange yourselves into
alphabetical order according to last names." The students must
complete the activity without speaking. They can make hand
motions or write instructions down on paper, however your
only instruction to them is that they cannot speak. The first
team to complete the task wins the game.
What Makes an Organization Effective?
• Knowing Your Customers and Responding to
Their Needs
• To succeed in the business world, companies
must change to keep up with customer needs
– Think of a company that has done this
Sec. 13.2: Creating an Organizational Chart
Discuss Journal #9
Factors Affecting Organizational Structure
SIZE & KINDS
• Size of the business
• Kinds of products or services it produces
• Structures will differ between:
– High-teach company employing 50,000 in eight countries (Motorola, Inc.)
– Small retail business with just a dozen employees (Bob’s Hardware Store)
Centralized vs. Decentralized
Organizational Structure
• Centralized
– Rely on one individual to make decisions and provide
direction for the company.
• Decentralized
– Several individuals responsible for making business
decisions and running the business.
Organizational Life Cycle Stages
Stage 1: Growth through creativity
Stage 2: Growth through direction
Stage 3: Growth through
delegation, coordination, and
collaboration
“As a company grows, organizational structure must change with it”
Question
At what point do you think a company will make
the shift from Stage 1 to Stage 2 growth?
Organizational Life Cycle Stages
Stage 1: Growth through creativity
Stage 2: Growth through direction
Stage 3: Growth through delegation, coordination, and
collaboration
Stage 1: Growth through creativity
• Entrepreneurs create products or services for
which there is a market
• Business is small in structure
• Lack formal structures, policies, and objectives
• Founder is involved in every aspect of the
business and makes all the decisions
• Current Importance
– An idea that appeals to consumers
Question: Why do you think creativity is most important during Stage 1?
Stage 2: Growth through direction
• Company grows in size
• Company founder is no longer solely responsible for all
decision making
• Professional managers hired to plan, organize, and staff
• Managers create written policies, procedures, and plans
• Rules and systems for hiring, firing, and rewarding employees
are implemented
• Set up:
– Systems for employees to communicate
– Financial controls/Budget constraints for departments
– Formal Rules are on decision-making are formulated
Stage 3: Growth through delegation, coordination,
and collaboration
• Problems occur which include:
– Company’s structure can become too rigid and decision making becomes too
centralized
– Lower-level employees feel left out of the decision-making process
– Top executives find themselves too far removed from the customer to make
good decisions
• To combat these problems, stage 3 is implemented which includes:
– Delegation of duties to lower-level employees in attempt to decentralize
– Focuses on:
• Motivating people at lower levels
• Allows senior executives to devote more of their time to long-term management
issues
• Set up:
– Systems for employees to communicate
– Financial controls/Budget constraints for departments
– Formal Rules are on decision-making are formulated
The Changing Nature of a Company’s
Organizational Structure
How have the needs of Apple Computer
changed over time?
• Stage 1:
– When a company is young, it depends
heavily on technical geniuses who had a
brilliant idea for a user-friendly desktop
computer.
– They turned this idea into a multimillion
dollar company by introducing the Apple
II computer in the 1970s
1976
The Changing Nature of a Company’s
Organizational Structure
Stage 2:
– As a company grows, it needs managers
with excellent managerial skills. To
continue to grow, in the 1980s Apple
Computer replaced its co-founder, Steven
Jobs, with a professional manager. The
new CEO, John Sculley, helped introduce
the company’s Macintosh Computer
1984
The Changing Nature of a Company’s
Organizational Structure
Stage 3:
– Managers learn to delegate
authority. In 1996 company
founder Steven Jobs returned to
Apple as interim CEO in an
effort to breathe new life into a
company that had fallen on hard
times. Apple’s organizational
structure allowed it to introduce
several important products in
the 1990s, including the iMac
and now in the 21st Century, the
iPod and iPhone.
Type of Product or Service
“The number of levels within an
organization increases as the
level of technical complexity
increases with producing a
product or service”
Organizing a Company into Departments
•
Organizing Departments by Work
Functions
– Production
•
Actual creation of company’s
goods or services
– Marketing
•
President
Vice President,
Marketing
Product development, pricing,
distribution, sales, and advertising
– Finance
•
Maintaining a company’s financial
statements and obtaining credit
so a company can grow
– Human Resources
•
Hiring employees and placing them in
appropriate jobs
Vice President,
Production
Vice President,
Finance
Advertising
Manager
Engineering
Manager
Accounting
Manager
Sales
Manager
Manufacturing
Manager
Credit
Manager
Market Research
Manager
Quality Control
Manager
Organizing a Company into Departments
• Each function includes various positions
– Production
• Engineering, Manufacturing, Quality Control
– Marketing
• Advertising, Sales, Market Research
– Finance
• Accounting and Credit
•
Advantages:
– Allows for functional specialization
•
Negative Effects:
– Conflicts may develop between departments with different goals
•
Production department not concerned about advertising
– Create managers whose scope is relatively narrow
•
Marketing manager may know a great deal about marketing, but lack skills in
other aspects of the business
Organizing a Company into Departments
Organizing Departments by Product
–
Single manager oversees all activities needed to produce and market a
product
President
Chemical
•
Automotive
Aerospace
Industrial and
Technology
Advantages:
–
–
–
–
•
Oil and Gas
Allows employees to identify with the product rather than with their particular job
function
Develops a sense of common purpose
Helps identify which products are profitable
Allows for training executive personnel by letting them experience a broad range
of functional activities
Negative Effects:
–
–
Departments could become overly competitive, to the detriment of the company
as a whole
Activities are duplicated for each division [multiple marketing departments for
each different product]
Organizing a Company into Departments
Organizing Departments in Other Ways
– Geographical region
• North America v Asia
– Type of Customer
• Sales to:
– Governments
– For-profit businesses
– Nonprofit organizations
Understanding the Role of Company Leadership
Committees
• An organized group of people appointed to consider
or decide upon certain matters
– I.E. – homecoming dance, food drive, blood drive, Grant-AWish, etc.
– Guidelines that managers must set:
• Clearly define the committee’s function
• Establish authority figures within a committee
• Set Clear Goals for members to attain
Understanding the Role of Company Leadership
Chief Executive Officer (CEO)
The most important executive in a company (Top Executive)
Together with other senior managers, the CEO:
1.
2.
3.
4.
5.
Makes decisions about meeting the company’s objectives
Sets the company’s objectives
Determines who fills senior management positions
Develops the company’s long-term strategies
Attends the company’s annual stockholders’ meeting and answers questions
about the company’s activities
6. Takes charge of the company in a crisis
7. Works with the board of directors
Understanding the Role of Company Leadership
Board of Directors
In companies owned by stockholders, approves all major
management decisions
Meet four to six times a year
The legal representative of a company’s stockholders
Inside Board Members = Work for the company
Outside Board Members = Do not work for the company
•
•
Examines all major decisions to ensure it is in best interest of
company’s stockholders
Makes it more difficult for corporate managers to act in ways
that benefit them personally at the expense of the company’s
owners
13. 2: Chapter Summary
 The type of structure a company adopts depends on many
factors including the company’s size and its products or
services
 Many companies are organized by work functions. Others are
organized by product, region, or customer
 An organization may form a committee to decide upon certain
matters
 Senior management, led by the company’s chief executive
officer, initiates or approves all of a company’s major
decisions
 A board of directors approves all major decisions made by
corporate management
Math Skills
• Lindholm Technologies, a high-tech company that
specializes in computer graphics, has decided to
reorganize its corporate structure into a team
structure. By organizing into teams, Lindholm
expects to be able to eliminate three mid-level
managers, each earning $82,000 a year. It also
expects to hire two additional entry-level employees,
to be paid about $25,000 a year each. If the cost of
the reorganization itself is $75,000, how much can
the company expect to save after two years?
Assessing Computer Skills
• Choose a major U.S. company, such as IBM,
Apple, Home Depot, Coca-Cola, General Mills,
McDonald’s. Using the Internet, find out how
the company you selected is organized and
identify the top six managers. Also, if you
can, obtain a copy of the company’s
organizational chart.