Principle of Management - Chap 7 Organizing [PDF]

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CHAPTER 7. ORGANIZING NỘI DUNG KIẾN THỨC 1. Definitions - Organizing - Organizing structure (O.S) 2. Designing the O.S. - Division of labor - Departmentalization - Chain of command - Span of control - Centralization or Decentralization - Formalization 3. Contemporary O.S CHI TIẾT BÀI GIẢNG VÀ BÀI TẬP TRÊN LỚP 1. DEFINITIONS a. Organizing b. Organization structure (O.S) E1. FILL IN THE BLANK 1. Organizing is a ______(1) of _____ (2) and _____ (3) resources and designing organizational ______ (4) to achieve the goals. 2. Organizational Structure (O.S) is an ______ (5) framework in which ______ (6) within the organization are divided and ______ (7). 2. DESIGNING THE ORGANIZATION STRUCTURE (O.S) a. Division of labor / Work specialization - First defined by Adam Smith (1776) in “The Wealth of Nations” - Dividing work activities into separate jobs / tasks - Main advantages: Economies of specialization + Increased productivity + Staffs are more skilled and capable due to repeatly doing one task - Disadvantages: Human diseconomies in the long run + Boredom, fatigue, stress, low productivity, poor quality, increased absenteeism, high turnover + Staffs cannot develop their abilities or explore their potential b. Departmentalization - Definition: Departmentalization is how JOBS are GROUPED TOGETHER - Five types of deparmentalization + Functional Departmentalization: Grouping activities by functions performed + Product Departmentalization: Grouping activities by major product areas + Customer Departmentalization: Grouping activities by customer + Geographic Departmentalization: Grouping activities on the basis of geography or territory. + Process Departmentalization: Grouping activities on the basis of work or customer flow.

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Cross-functional Teams: Teams made up of individuals from various departments and that cross traditional departmental lines. Matrix structure: A structure in which specialists from different functional departments are assigned to work on projects led by a project manager. E2. FIND THE NAME OF THE FOLLOWING STRUCTURES Figure 1. _______________________

Figure 2. _______________________

Figure 3. _______________________

Figure 4. _______________________

Figure 5. _______________________

Figure 6. _______________________

E3. ANSWER THE FOLLOWING QUESTIONS BASED ON EXERCISE 2 1. Which type is suitable for Vietnamese SMEs? Why. ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 2. Which types is suitable for big corporations? Why? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ c. Chain of command - Chain of Command: The line of authority extending from upper organizational levels to lower levels, which clarifies who reports to whom. - Authority: The rights inherent in a managerial position to give orders and expect the orders to be obeyed. - Responsibility: An obligation to perform assigned duties. - Line authority entitles a manager to direct the work of an employee. It is the employer–employee authority relationship that extends from the top of the organization to the lowest echelon. - As organizations get larger and more complex, line managers find that they do not have the time, expertise, or resources to get their jobs done effectively. In response, they create staff authority functions to support, assist, advice, and generally reduce some of their informational burdens.

E4. FILL IN THE BLANKS 1. Chain of command is an authority _______(1) which starts from the _____(2) level and

comes to the _____(3) level within an organization. 2. In a chain of command, the relationship of report is described and there are 2 items: _______(4) and ______(5) for each position. 3. Line authority refers to the relationship of _____(6) while staff authority refers to the relationship of _______(7) 4. There are 2 principles to design the chain of command including: ________(8) and _______(9). d. Span of control - Is the number of employees that a manager can efficiently and effectively supervise - A manager with a large S.O.C has a lot of people under him. The smaller a manager’s S.O.C, the less subordinates he can lead. - The span of control always involves two dimensions: + Horizontal dimension: the number of direct subordinates a manager actually supervises + Vertical dimension: the number of levels that are (in)directly managed. - A large Span of Control leads to a flatter organisational structure, which results in lower costs. - A small span of control creates a steeper organisational structure, which requires more managers and which will consequently be more expensive for the organisation. E5. ANALYZE TWO OPTIONS BELOW AND GIVE RECOMMENDATION • A company has 4096 non managerial employees. The CEO is thinking of 2 options:  Option 1: Span of control is 4  Option 2: Span of control is 8 •The jobs are simple and familiar. ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________

____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________

E6. FILL IN THE BLANK AND ANSWER THE QUESTIONS 1. This concept refers to the ____ (1) of employees that a manager can control ______ (2) and ______ (3). 2. Span of control can be large or small depending on many factors. What are those factors? ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ ____________________________________________________________________________ 3. If the jobs are new and complicated, span of control should be large or small? Why? ____________________________________________________________________________ ____________________________________________________________________________ 4. If the employees are Y people, span of control should be large or small? Why? ____________________________________________________________________________ ____________________________________________________________________________ 5. If jobs are easy and familiar, span of control should be large or small? Why? ____________________________________________________________________________ ____________________________________________________________________________

e. Centralization or Decentralization - Centralization + Top managers hold the power in their hands + Centralization is the degree to which decision making takes place at upper levels of the organization. - Decentralization + Lower level managers have or involve in decision making + Decentralization is the degree to which lower-level managers provide input or actually make decisions. - The two concepts is linked to traditional and MBO goal setting + None of them is better + However, many firms today want to develop the flexibility and apply decentralization

f. Formalization - Formalization refers to how standardized an organization’s jobs are and the extent to which employee behavior is guided by rules and procedures. - Example: In Japanese firm, there are many rules such as choosing clothes, not taking phone to work, etc. - It depends whether high or low formalization is better.

3. CONTEMPORARY ORGANIZATIONAL STRUCTURE

E7. ANSWER THE QUESTIONS

1. Which structure is this in the attached picture? Why is called with this name? ____________________________________________________________________________ ____________________________________________________________________________ 2. This structure breaks a principle of organizing. Which principle is this? ____________________________________________________________________________

Đáp án bài tập: E1. (1) process (3) coordinating (5) official (7) grouped (2) allocating (4) structure (6) jobs E2. Fig.1. Functional Fig.3. Geographic Fig.5. Customer Fig.2. Product Fig.4. Process Fig.6. Cross-functional E3. 1. Vietnamese SMEs suit the Functional departmentalization structure because: - SMEs have limited capital and number of employees - They do not have wide product ranges or branches - They can have efficiency from putting together similar specialties and people - They can coordinate well within functional areas - They can have in-depth specialization 2. Big corporation suit the Product, Geographic, Customers and Cross functional structures. Because they have wide product ranges or branches or customers and many projects or SBUs. E4. (1) Line (4) Authority (7) Support/assistant/cooperation (2) Top/highest (5) Responsibility (8) Unity of command (3) Bottom/lowest (6) Direction (9) Acceptance of authority E5. 

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Option 1:  1 manager controls 4 employees  6 levels of management  1365 managers Option 2:  1 manager controls 8 employees  4 levels of management  585 managers

ANALYSIS  Option 1: Because there are more levels of management and more managers, so:  The organizational structure is more complicated and power distance is further.  Higher costs for payment to the managers  But also higher level of control  Option 2: Because there are fewer levels of management and managers, so  The organization structure is simpler and power distance is nearer  Lower costs for payment to the managers RECOMMENDATION  Since it is stated that the jobs are simple and familiar  Employees can do it themselves  So option 2 is more beneficial  Should choose option 2 E6. 1. (1) number (2) efficiently (3) effectively 2. S.O.C can be large or small, depending on 6 main factors:

(1) Abilities of managers (2) Abilities of employees (3) Nature of the jobs: similarity – complexity – standardization (4) Technology (5) Organization culture (6) Leadership 3. If the jobs are new and complicated: Small S.O.C  Managers can instruct and control closely to ensure the jobs are well done 4. If the employees are Y people: Large S.O.C  Because according to Theory Y, employees are highly capable, need litle supervision and can be left on their own  The employees have the ability and responsibility to do the jobs. 5. If the jobs are easy and similar: Large S.O.C  Because employees can do the jobs themselves. E7. 1. Matrix Organizational Structure as there is it is a mix of the functional organizational structure and the projectized organizational structure. 2. The principle of unity of command