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72. An advantage of decentralized authority is that those individuals closest to the customers
and more familiar with local conditions make decisions.
73. Centralized authority provides for the delegation of authority to employees who are then
better able to respond to customers’ needs.
74. As a result of rapidly changing markets and global differences in consumer tastes, more
firms are considering centralized authority.
75. A weakened corporate image is one of the disadvantages of a decentralized business
organization.
76.
Chapter 08 – Structuring Organizations for Today’s Challenges
In firms with centralized authority, each business unit is treated as if it is a completely
separate and independent organization.
77. Span of control refers to the number of different markets a business can serve efficiently.
78. The optimum number of subordinates a manager should supervise is referred to as the
span of control.
79. In today’s business environment, the trend is to decrease the span of control.
80. The more standardized the work, the wider the span of control.
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108. A flat organization is less likely to respond quickly to customer needs.
Feedback: Flat organizations have wider spans of control. A wider span of control lends itself
to empowering lower level employees to respond more quickly to customer needs, without the
need to get permission from managers.
109. To avoid losing that small company feel, fast growing companies try to maintain a flat
organization structure.
Feedback: Large companies use flat structures to try to match the friendliness of small
companies.
110. Although a firm may experience better cost controls through departmentalization, it
may not increase its responsiveness to customer needs.
Feedback: An advantage of departmentalization is economies of scale. A disadvantage is less
responsiveness to customers.
111.
Chapter 08 – Structuring Organizations for Today’s Challenges
Businesses seldom create separate departments to serve customers with different needs.
Feedback: Some organizations departmentalize by customer group.
112. Rise ‘n Shine Bakeries is a nationwide bakery that has plants located throughout the
United States. Top management at Rise ‘n Shine believes that customers in different
regions have different tastes. It also recognizes that its bakeries face more intense
competition in some regions than in others. Therefore, Rise ‘n Shine’s top management
gives local managers the freedom to offer different types of breads and desserts, and to
decide on a reasonable pricing strategy for its products. Rise ‘n Shine typifies a
decentralized organization.
Feedback: A decentralized organization gives decision-making authority to managers at lower
levels of the hierarchy.
113. Management at Hottie Potatee, a nationwide potato bar chain, believes that its
customers value a predictable and consistent level of service and quality. When customers
stop at one of its potato bar chain restaurants anywhere in the United States, they should
know what to expect in terms of menu, price and quality. In order to maintain this
consistency, Hottie Potatee should adopt a decentralized organization.
Feedback: By giving individual managers and employees more flexibility, a decentralized
organization would result in less standardization and uniformity.
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120. Jesse started a successful telecommunications company that provided voicemail
services to business clients in the Midwest. As the business grew, Jesse added functional
departments including a marketing department and an accounting department. After a few
years, he realized that employees who specialized in these areas no longer shared
knowledge with each other in the same way they did when the operation was smaller. As
one of Jesse’s business consultants, you explain that as the company grows taller, it cannot
avoid this pitfall, and he should focus on continued functional departmentalization,
especially if he supports innovation and learning.
Feedback: A disadvantage of functional departmentalization is a lack of communication
between and among departments. Employees may identify with their own department’s goals,
as opposed to the goals of the company.
121. Jackie works in the finance department, at the home office of a large retailer. Her main
responsibility is to watch department expenditures and find ways to cut costs whenever
possible. Tim, the marketing director for the same company shares information with
Jackie only when necessary. He finds her inflexible, and not understanding of what it
takes to roll-out a new product line. Jackie and Tim typify a disadvantage of
departmentalization.
Feedback: A disadvantage of departmentalization is that department members begin to think
like each other and do not understand the point of view of members of other departments.
They experience a phenomenon known as groupthink.
122.
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Traditional organizational models such as a line model or a line and staff model provide
the flexibility demanded in a changing business environment.
123. In a line organization, there are many specialists who serve as advisors and assistants
to the managers who make decisions.
124. Small businesses often use a line organization model.
125. Line organizations follow Fayol’s traditional management rules.
126.
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Line managers issue orders, enforce discipline, and adjust the organization as conditions
change.
127. In large businesses, a line organization provides firms the ability to respond quickly to
a changing environment.
128. Line organizations clearly define the lines of authority and responsibility.
129. Line organizations often experience the problem of employees reporting to more than
one boss.
130.
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A line organization in a large business often suffers from excessively slow lines of
communication.
131. Staff personnel perform functions such as production and sales that contribute directly
to the primary goals of the organization.
132. In a line-and-staff organization, staff positions are temporary jobs to train new line
managers.
133. While staff personnel have the authority to make policy decisions, line personnel have
the authority to advise and make suggestions.
134.
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An advantage of a line-and-staff organization is that it provides people that advise and
assist line managers as they perform their jobs.
135. The matrix organization model brings together experts from different functional units
of the firm to work on specific projects.
136. The team experts in a matrix organization remain part of the traditional line-and-staff
structure.
137. A matrix organization produces an environment that discourages cooperation and
teamwork.
138.
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Team participants in a matrix organization model may report to two managers at one
time.
139. A serious disadvantage of the matrix organization is the temporary nature of the
teams.
140. Matrix organizations give managers flexibility in assigning people to projects.
141. Matrix organization structures provide for more efficient use of organizational
resources.
142.
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A recent trend in organization models is the development of cross-functional, self-
managed teams of employees who work together on a long-term basis.
143. Cross-functional self-managed teams are groups of employees empowered to work
with suppliers and customers to develop new products and give great service.
144. Cross-functional teams serve as advisory committees offering their expertise to line
decision makers.
145. Cross-functional teams defy the trend towards customer-driven organizations.
146.
Chapter 08 – Structuring Organizations for Today’s Challenges
Cross-functional teams consist of employees from different departments who work
together on a long-term basis.
147. Cross-functional teams avoid involving groups outside of the firm to ensure their plans
are not leaked to their competitors.
148. Cross-functional teams work best when the “voice of the customer” is brought into
organizations.
149. Cross-functional teams work well when leadership of the team is shared.
150.