**

CHAPTE
Adapting

R
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 to
More Efficiency Customers
Simpler Distribution System ⚫ Less Empowerment
Stronger Brand/Corporate ⚫ Inter organizational
Image Conflict
⚫ Lower Morale Away
from Headquarters
8-3
 DECENTRALIZATION
(DELEGATE AUTHORITY)

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

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