BUSİNESS MANAGEMENT

The organizing function is concerned with arranging and assigning tasks, allocating resources, and structuring work in order to reach organizational objectives. The correct answer is A.

We can readily see in a production process such as an automobile assembly line where each worker works on only certain parts of a car (and not the whole car). Since workers concentrate on one small aspect of production, this helps them to be more efficient as their skills at performing those tasks tend to increase. Further, workers with different skill-levels can be assigned to work on parts of the tasks which match their particular skill levels. Since highly skilled workers are more expensive than unskilled workers, managers can assign sophisticated tasks to only highly skilled workers to avoid inefficient use of resources. Although the division of labor is advantageous, too much specialization leads to problems as the job tasks can become repetitive and boring. The correct answer is C.

There are two forms of authority: line authority and staff authority. Line authority takes the form of the employer-employee relationship that moves from top to bottom according to the chain of command. Staff authority on the other hand, is created to assist, support, and advise the work of line managers. The correct answer is D.

The most basic method to divide job activities for managers is to follow the sequence of activities:
➢ Examine objectives,
➢ Design job activities to reach those objectives,
➢ Group similar activities to specific jobs, and
➢ Assign individuals to those jobs. The correct answer is C.

In general, there are some factors influencing centralization versus decentralization:
• Higher level of environmental dynamism (greater change and uncertainty) is associated with decentralized decision making while a stable environment is associated with centralization.
• In time of crisis or risk of failure, authority may be centralized at the top.
• Adaptive organizational culture is more appropriate for decentralization.
• Risk taking and innovation and associated with decentralized authority. The correct answer is E.

In customer departmentalization, each department targets a specific customer classification and each group would have the needs that can best be served by a certain set of specialists. For example, large clothing stores are often grouped according to men’s, women’s, children’s and baby’s departments. This way, shoppers can readily identify where to go for specific items. Similar to product departmentalization, there may be redundancies and increased costs because of the duplication of efforts. The correct answer is B.

In a functional structure, activities are grouped according to their similar or related skills, expertise and use of the same resources. It is often used by SMEs (small and medium-sized enterprises) around basic business functions such as production, marketing and sales, and finance and accounting. We can readily see the benefits of grouping by specialization: it encourages in-depth skills development and core competence, high standards and efficient use of resources. Centralized operations within each function enhance the coordination of work activities. Correct answer is B.

Technical complexity is categorized according to the level of mechanization of the manufacturing process. The correct answer is D.

A cross-functional or horizontal team is composed of employees from different departments or functions. Members are brought together to deal with a specific activity or to solve mutual problems. In large companies, members can come from different business units or divisions. Cross-functional teams may be involved in a form of matrix structure. Therefore, team members report to their functional departments and to the team leader. The correct answer is A.

The norming stage is reached when conflict is resolved and agreements about the roles of members, values, and acceptable behaviors are reached. The team leader should emphasize unity and harmony within the team. The correct answer is C.

Organizational structure is a system that consists of rules and policies to outline work roles, responsibilities and reporting relationships, and how they fit within the overall system.5 A visual representation of an organization structure is an organization chart. It shows the tasks or major activities and how employees and tasks are grouped, the line of authority (who people report to) including the flow of communication and the levels in the hierarchy. A simple organization chart for a manufacturing firm is illustrated in Figure 6.1. It shows an organization chart with four departments where the tasks are grouped by functions (Sales, Production, Finance, and HR). The sales department is further divided into three groups that focus on geographical location of customers (Asia, North America and Europe). 

Authority refers to the right of a person to give instructions, make decisions and allocate resources. In an organization, a manager has the formal authority from his or her position that is accepted by subordinates. The authority flows down the hierarchy such that top managers have more authority than those at the bottom. Managers work within their authority in order to be accepted by their subordinates. However, if they give orders beyond their area of authority then they may face resistance. Also if managers are given too little authority then their jobs may be more difficult. 

Delegation occurs when a manager divides work among subordinates and gives them the responsibility and authority to accomplish tasks. A manager is responsible for all work in an area and can only complete the work by delegating part of the work to subordinates. This process continues down the chain of command. In general, the delegation process involves:

➢ Assign responsibility or the duty to perform certain tasks, 

➢ Give authority to complete those tasks, and 

➢ Create accountability for successful completion of the tasks. 

To be more effective at delegation, managers should keep in mind to select the right person for the job, to ensure that authority equals responsibility, to maintain feedback and to evaluate and to reward performance. In today’s dynamic business environment, managers may need to delegate more to lower level employees especially those who regularly face customers. This way, organizations can be more responsive to customer needs while becoming more flexible and adaptable to the changes in the environment. 

Authority is a right that comes with a professional capacity or position. Power is a personal trait or capacity to influence others’ actions, decisions, and performances. The major source of power is knowledge and expertise. While authority flows downward through the hierarchy, power flows in any direction and individuals can be powerful even though s/he has little authority. 

Another issue in designing organization structure is the span of control or span of management which refers to the number of employees directly supervised by a manager. The question is the appropriate number of subordinates each manager can efficiently and effectively manage in the hierarchy. To use human resources effectively, managers should manage as many employees as they can. However, if they supervise too many subordinates then they may lose part of their effectiveness. Therefore, managers should limit the size in order to maintain closer control. There is no magic number of how many employees a manager should supervise. In today’s organizations, the span of control is believed to be determined by various contingency variables. In other words, organizations, employees and situations are different therefore require different spans of control for managers. 

In a mass production setting for example, workers perform similar tasks and those tasks are simple. In this case, a supervisor can manage larger numbers of workers. However, a CEO of a large firm probably cannot effectively manage many top executives all at once as their work is complex and interrelated. Therefore, in general, a manager’s ability to directly control subordinates is limited by the complexity of tasks and the interrelatedness of the subordinates’ tasks.1

If the physical locations of subordinates are distant or if they need much coordination then the spans of control should be narrow. Also, when subordinates and/or supervisor are knowledgeable these factors would tend to widen the span of control. Managers can further implement some other forms of control within the company’s information systems used by employees in their jobs. This way, managers are able to widen the spans of control. For the same reason, the use of standard operating procedures would lead to a higher level of standardization of work activities and allow managers to supervise larger numbers of employees. 

The span of control in a company influences the height of its hierarchy. A flat organization structure has relatively fewer layers of management while a tall structure has multiple layers. Generally, the lower the height of the structure, the wider the span of control. It shows a typical consulting firm structure where partners/managers can supervise relatively large numbers of associates, i.e. wider span of control. This is because in these types of firms, both partners and associates are knowledgeable about the topics in which they specialize.

We can see that companies with tall structures tend to make decisions at a slower rate because the decisions need to pass through more layers of management in the hierarchy. Today’s business environment requires that organizations speed up their decision making and therefore have been flattening their structures. Also, businesses with fewer numbers of managers can reduce the human resources expenses. Larger spans of control and flattening of structures are consistent with managers’ efforts to speed up decision making, to increase flexibility and to reduce costs.

The characteristics exhibited in the question are the ones that mechanistic organizational structures.  A mechanistic structure is characterized by a rigid bureaucratic structure that is controlled by rules and procedures in a clear hierarchy of authority or chain of command. It is tightly controlled or that the span of control is narrow which leads to a relatively tall structure. Work activities are standardized with high degree of specialization.

Tasks in an accounting firm are very specific, rigid, routine, requiring strict rules and regulations. That's why accounting firms will exhibit a much more mechanistic organization structure.

A cross-functional or horizontal team is composed of employees from different departments or functions. Members are brought together to deal with a specific activity or to solve mutual problems. In large companies, members can come from different business units or divisions. Cross- functional teams may be involved in a form of matrix structure. Therefore, team members report to their functional departments and to the team leader.

Kolter and Schlesinger provide ways that managers can positively influence organizational change:

- Education and communication: Employees should be educated and communicated about any changes beforehand through discussions (one- on-one), presentations (groups) or with memos and reports. They need adequate and accurate information and analysis to understand change.

- Participation and involvement: Managers can use employees’ advice about some aspects of change that may lead to potential problems. Participation often leads to commitment and increasing the chance of successful change.

 - Facilitation and support: Managers should provide support through employees training of new skills and emotional support in order to deal with personal fear and anxiety that cause the resistance in the first place.

- Negotiation and agreement: Managers can offer incentives such as higher wages or better benefits for employees. Negotiation is needed to win acceptance and approval, especially when someone may lose out as a result of change.

- Organizations are facing rapidly changing environments such that managers need to respond and to adjust to those changes effectively to stay competitive.

- Manipulation and cooptation: Managers can try to influence others by the selective use of information or the structuring of events. Cooptation involves giving an individual or a group desirable roles in the change process.

- Explicit and implicit coercion: Managers can force people to accept a change or lose something (such as rewards, promotions or loss of jobs). This can be used when the firm is in a crisis situation or when there are no other options.

Organizing is one of the main management functions that typically follows the planning function. The organizing function is concerned with arranging and assigning tasks, allocating resources, and structuring work in order to reach organizational objectives. In other words, the organizing function creates the organization’s structure.