Discuss the different stages an organization goes through as it grows and matures. The first stage an organization goes through is the craft or family stage, which is characterized by the absence of formal policies, objectives, and structure. Operations at this stage generally center around one individual and one functional area. The second stage is the entrepreneurial stage, in which the organization grows first at an increasing and then at a decreasing rate. By the third stage, the entrepreneur has been replaced by a professional manager and profits are realized more from internal efficiency and less from a rapidly growing market.
Explain what an organization chart is. An organization chart uses a series of boxes connected with one or more lines to graphically represent the organization's structure.
List several factors that can affect which structure is the most appropriate for a given organization. Some of the most important variables that can affect an organization's structure are strategy, size, environment, and technology.
Describe the general relationship between an organization's strategy and its structure. Early research by Chandler reported that changes in strategy ultimately lead to changes in an organization's structure. Although subsequent research has supported the idea of some relationship between strategy and structure, it is clear that strategy is not the only variable that affects structure.
Define outsourcing, and summarize its potential benefits as well as its potential drawbacks. Outsourcing is the practice of subcontracting certain work functions to an outside entity. The potential benefits of outsourcing include allowing the organization to emphasize its core competencies; reducing operating costs; fewer personal headaches; accessing top talent and state-of-the-art technology; and improving resource allocations. Potential drawbacks include loss of control; loss of in-house skills; and threats to the morale of employees.
Describe a contingency approach to organizing. The contingency approach to organization states that the most appropriate structure depends on many situational variables, including strategy, environment, size, technology, and employee characteristics. When taking a contingency approach, a manager should first analyze these variables and design a structure to fit the situation.
Identify the different types of departmentalization. Departmentalization refers to the grouping of activities into related work units. Departmentalization may be undertaken on the basis of work function, product, geography, customer, or time worked (shift). Hybrid departmentalization occurs when an organization simultaneously uses more than one type of departmentalization.
Briefly describe each of the following types of organization structures: line structure, line and staff structure, matrix structure, horizontal structure, and virtual organization. A line structure is the simplest organization structure; it has direct vertical links between the different organizational levels. The addition of staff specialists to a line organization creates a line and staff structure. A matrix structure is a structure in which individuals from different functional areas are assigned to work on a specific project or task. Under a matrix structure, those working on a project are officially assigned to the project and to their original or base departments. In its pure form, a horizontal structure consists of two core groups. One group is composed of senior management who are responsible for strategic decisions and policies. The second group is composed of empowered employees working together in different process teams. A virtual organization is one in which business partners and teams work together across geographical or organizational boundaries by means of information technology.
Describe several trends that have taken place regarding the popularity of different types of organization structures. Beginning in the 1950s and 1960s, much attention was focused on the virtues of flat versus tall organizations. In the early 1980s, emphasis shifted to the concept of a simple form and a lean staff. More recently, many organizations have abandoned the more traditional line and staff structures in favor of horizontal structures and virtual organizations.
Describe how committees can be made more effective. The first step is to define clearly the committee's functions, scope, and authority. The next step is to carefully review who will serve on the committee. Size and member capability are extremely important.
Explain the difference between an inside and an outside board of directors. With an inside board, a majority of the members hold management positions in the organization; with an outside board, a majority of the members do not hold or have not held a position with the organization.
