Restructuring Organization (Traditional V. Modern Organization Concepts…
Production in a large quantity
Economy of scale
The production cost of a company goes down as it produces more.
Theoretical Organization Concept
Traditional Organization concept
Principles of Organization Theory elaborated by Henri Fayol & Max Weber
Unity of Command
Every worker has only one boss
The chain of command with one decision making person at the top of the organisation
Division of labour
The work has to be divided among individuals or departments
You have to obey the orders that are given by someone higher in the hierarchy
Degree of Centralization
Part of decisions is made by the top managers and the other decision making is delagated to lower-level managers
Employees of a firm reach each other easily, this stimulates efficiency and productivity
Employees and materials are put in the right place
A manager should treat employees with fairness and respect
Esprit de corps
Create common values and goals within a company
Subordination of individual interest to the general interest
Individual goals are less important than the goals set in a team
Determine rules and producers, be consistant in applying them and keep records
Reorganization of a company
Changing customer demands in a capitalist society
Traditional V. Modern Organization Concepts
Centralized v. Decentralized Authority
Centralized authority keepys the decision-making process at the level of the top managers
Decentralized authority gives managers and employees the authority to make decisions. The act of delegating responsibility is called empowerment.
Tall versus flat organization structure
A tall organization structure consists of many layers of managers, a lot of paperwork and therefore slower communication. This means more control, more costs and less empowerment than in the flat organization structure.
A flat organization structure consists of fewer layers of manager but a broader span of control (one manager supervises more people) than in the tall organization structure. This means less control, less costs and more empowerment. These companies are more able to adapt to changes because their communication goes faster.
Traditional versus modern management structures
Line organization: workers correspond directly to a manager at higher level on the chain of command who acts on the behalf of a top-manager
Line-and-Staff organization: more interaction between line personnel (authority who makes decisions and give commands) and staff personnel (give advice to line personnel but have no influence on the decision-making process)
Matrix organizations: Line personnel and staff personnel cooperate. A manager “borrows” experts from departments to organize a temporary team (responding directly to the mangager) in order to create a new product/service. The experts still remain part of the Line-and-Staff organization, the have two bosses.
Self-Managed Teams: Experts from different departments work together on long term basis and they are empowered to make decisions on their own.
Traditional V. Inverted Organization
chief executive manager on top of the pyramid makes decisions and gives commands; hierarchy and chain of command
chief executive manager is on the bottom of the pyramid; he supports (with trainings) and assists (with transparency) the empowered frontline workers
Formal V. Informal Organization
structure of the company regarding authority, responsibility and position
system of relationships within an organization
Other Oragnizational Tools and Techniques
Departmentalization is the division of labour in groups
Different ways to departmentalize
Separation by function
production, design, accounting, finance, marketing, human resourc)
Separation by product
Separation by customer group
customer, institutions, manufacturers, commercial users
Separation by geographical location
Separation by process
Peeling,cooking, cutting, serving
Workers in labour groups specialize and develop skills in depth but on the other hand there is a lack of communication between the departments
Matrix organizations and self-managed teams
Virtual corporation is a temporary, network organization made up of replaceable firms that join the network and leave it if needed.
Communication technology is used to link companies with workers and other companies.
The employees of one firm are linked by an intranet. This is a database that registers functions and assignments of everyone in the firm.
The different firms are linked by an extranet.
Makes sure that people of the different firms know what the others are doing transperancy
Communication in rea real time
Widely shared values within an organization that lead to unity within the workers and identification with the firm in order to achieve common goals
Benchmarking and Core Competencies
Benchmarking means to compare one company’s services to another company and learn from the competitor in order to improve the own services and products.
Function that are done by a company because it does as well as or better than the competitors of other comapnies.