Chapter 7 Organizing the Business Firm

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Chapter 7Organizing the Business Firm
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Junior Soprano
Silvio Dante
Paulie Walnuts
Tony Soprano
Christopher Moltisanti
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Bart Simpson
Mafia Guy
Assassinator Cy
Shady Saliano
Cueball Clemenz
Happy Vito
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Todays Outline

• Organization Charts
• Profit Centre v Cost Centre
• Organization Forms
• Delegation
• Cooperation across Divisions

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Organization Chart
CEO
VP Marketing
VP - Mfg
CFO
Foreman 2
Foreman 1
Payroll clerk
A/R clerk
Line Worker
Line Worker
Line Worker
Line Worker
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Profit Centre v Cost Centre

• Profit Centre
• Cost Centre
• Which of the following departments / divisions
  could be evaluated as a profit centre and which
  would be evaluated as a cost centre?
• an RD division
• Aliants mobile phone division
• Tim Hortons international division
• Sobeys marketing division
• What about the following UPEI departments?
• bookstore
• payroll department
• Faculty of Arts

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Functional Organization

• Traditional
• Natural due to different skill sets required for
  each function

CEO
VP Mktg
VP Prodn
VP Finance
VP RD
VP HR
Controller
Director - Taxation
Director of Internal Auditing
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Product Lines
CEO

• Corporations with multiple products
• What are some of the advantages of this structure
  (over the functional structure)?
• What are some disadvantages?

VP Film Products
VP Camera Equipment
VP Photography Services
Director Of Finance - Film
Director Of Film Mfg
Director Of Film Mktg
Director Of RD - Film
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Geographical Structure

• divisions can be treated as profit centres

CEO
VP United States
VP Europe
VP Canada
Director Of Polish Operations
Director Of German Operations
Director Of UK Operations
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Matrix Structure
CEO
VP Europe
VP N. America
VP Asia
VP Production
Mgr of European Prodn
Mgr of N American Prodn
Mgr of Asian Prodn
VP Marketing
Mgr of Mktg - Europe
Mgr of Mktg N America
Mgr of Mktg - Asia
VP Finance
Mgr of Finance - Europe
Mgr of Finance N America
Mgr of Finance - Asia
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Matrix Structure

• devised by Boston Consulting Group
• Dutch Royal Shell used to use it
• Was supposed to retain the advantages of the
  above structures, but eliminate the disadvantages
• Many companies have abandoned it. Why do you
  think they did that?

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Hybrid Structure

• can pick and choose
• some functions may have high economies of scale

CEO
VP New England Operations
VP Ontario Operations
VP Atlantic Canada
VP R D
VP Finance
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Floating Structure
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Tall versus Flat
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silveroranges organization chart
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Delegation

• its a skill
• Most of you have worked for a boss at one time or
  another. Was your boss an effective delegator?
  If so, what led you to conclude that that boss is
  an effective delegator? If not, what led you to
  your negative conclusion?

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Tips for the subordinate

• consult with boss, but come with recommended
  course of action
• keep supervisor informed and updated
• gives supervisor opportunity to help
• supervisor may have other projects that are
  affected
• CYA
• if supervisor blames others a lot, keep records

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Co-operation across Divisions

• CHALLENGE getting managers and employees in one
  department to co-operate with managers and
  employees in another department
• Why do you think cooperation and coordination is
  harder between people in different departments
  than between people in the same department?
• projects often need cross-sectional involvement
  e.g. new product development
• Often use cross-departmental teams for special
  projects

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Co-operation across Divisions

• value of informal links
• What can firms do to foster informal links?

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Management skills

• Technical Skills
• examples
• important at all levels, but proportion changes
• role of university education
• Human Relations Skills
• very important
• not universitys forte
• can be learned
• What are some things you can do while at
  university to develop those skills?

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Management skills (contd)

• Conceptual Skills
• understand, analyze, develop solutions, consider
  numerous issues simultaneously
• universitys forte
• versus college
• broad education
• Some students contend that UPEI should introduce
  majors within business because specialized
  degrees would improve our students employment
  prospects. Do you agree with this view?

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Management skills (contd)

• Decision-making skills
• Think of someone you know who has strong
  decision-making skills. What is it about that
  person that makes you think that?
• How important is it to make decisions quickly?
• Suppose as a manager you make a decision and
  later conclude that it was the wrong decision.
  Should you always stick with your first decision?
  Should you always correct your decision (if you
  can)?

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Time Management Skills

• Mis-nomer
• You cant manage time
• You CAN manage yourself
• What are some bad habits that cause people to
  squander time?

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International skills

• Increasingly important
• Prerequisite for senior management positions
• Opportunities at university!

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Corporate Culture

• Can powerfully affect behaviour!
• Traits that are desirable for virtually all
  firms
• Culture of ethical behaviour
• Why?
• Culture of co-operation
• Spirit of high performance

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Corporate Culture (contd)

• But some aspects of optimal culture are
  strategy-dependent
• examples
• Wal-Mart people friendly, celebrates cheapness
• The HP way
• Androids
• How can management influence corporate culture?

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