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BUSINESS EXAM UNIT 4
1. ORGANIGRAMS
Organigrams are a hierarchical organizational structure which offers:
- Hierarchies: Authority and decision-making flow from the top to the bottom. From general managers to employees
- Subordination: They follow clear reporting lines and chains of command; subordinates report back to their immediate superiors.
- Functional grouping: The organisation is divided into different functional departments (finance, marketing, etc.) Each department specialises in one function and is fully responsible for it.
- Priority of objectives: Organisations often follow centralised control, in which all the overall activities of the organisation lie within the top-level managers. Organigrams don’t offer:
- Stable processes
- Horizontal (transversal) relationships between departments
- Coordination system
- Shared authority
2. DIVISION AND SPECIALISATION
OF LABOUR
Division and specialization of labour refer to the separation/simplification of the work processes. Work processes are divided into different tasks; each task is assigned to different people, departments, etc. Division of labour main objectives:
- Increases productivity: assigning specific tasks allows the organisation to reach a best productivity thought repetition
- Simplifies work: dividing the work makes tasks simpler, which can elevate efficiency
- Ability development: workers develop skills through specialisation
- Dividing work into tasks can enhance precision, resulting in better quality results, enables individuals to focus and take full responsibility for specific skills and tasks. 2 types of division and specialization: (exam question)
- Horizontal: Less variety of task = more specialization
- Tasks and work are limited, causing workers to perform similar tasks. Resulting in high specialization
- Vertical: More responsibilities = less specialization
- Work is divided into levels of authority, max numbers a manager can have. SPAN OF CONTROL This refers to the total number of subordinates that managers can effectively oversee. Follow the span of control formula; amount of subordinates/ number of managers The control limit determined by:
- Managers span of control: The number of subordinates depends on the manager’s span of control. (Can vary among organizations)
- Volume and complexity of work: The manager’s control limit is influenced by the complexity and volume of the tasks
- Organizational structure: The hierarchical structure and delegation level define the control limit.
- Capacity of bosses: The boss’s capabilities and availability affect the number of subordinates they can control
- Capacity of subordinates: The level of skills and efficiency of the subordinates affect the control limit
- Type of activity: Different activities require a specific amount of management overseeing 2 types OF SPANS OF CONTROL FEW EMPLOYEES MANAGED MANY EMPLOYEES MANAGED
- Slow decision-making
- More control and supervision
- Follows a tall structure
- More bureaucracy
- Faster communication
- More authonomy
- Flat stracture
- Lower costs
- Less supervision EFFECTIVENESS:
- Enables employees to specialize in specific areas, allowing them to expand their expertise.
- Facilitates communication and coordination among team members. DISADVANTAGES:
- Grouping employees into separate units can cause the company to lose its global vision and alignment with its overall goals
PRODUCT DEPARTMENTALIZATION
Product departmentalization separates employees based on the product or service they are responsible for. This structure allows companies to focus on the unique needs of each product line, ensuring that specialized groups can efficiently develop, manage, and support the final product. BENEFITS: Enhances the company’s ability to respond rapidly to evolving market conditions and customer needs. Facilitates more targeted and effective marketing and sales strategies. Encourages a high level of responsibility and commitment toward the delivery and support of the final product. DISADVANTAGES: Although it may increase responsibility and focus, it can also lead to duplication of resources and efforts across different product teams. It can reduce communication and coordination between product divisions that may ultimately result in inefficiencies and a decrease in overall productivity.
GEOGRAPHICAL DEPARTMENTALIZATION
Geographical departmentalization separates workers based on their physical location. This structure improves adaptability and responds more effectively to local market conditions, cultural preferences, and environments. Improving the company’s reputation. BENEFITS:
- Enables companies to develop more efficient distribution systems, improving overall logistics.
- Provides a better understanding of local customers, partners, and stakeholders.
- Supports a more customized decision-making and enhances the ability to respond quickly to regional developments DISADVANTAGES: Companies may face coordination challenges between different geographic divisions which cause logistical difficulties in operations across multiple regions. There is a risk of duplication of resources and inconsistent practices across locations
CUSTOMER DEPARTMENTALIZATION
Customer departmentalization separates workers based on the specific needs and preferences that the different customer segments have. This structure Enables companies to provide more personalized services to customers. This increases customer loyalty and client satisfaction. BENEFITS: Enables companies to deeply understand the unique needs of their diverse customer base. Facilitates the development of specialized products, services, and support systems for each customer segment. Strengthens customer-focused strategies DISADVANTAGES:
- Companies may suffer from coordination issues between different customer-focused departments, leading to communication gaps.
- There may be a potential overlap in customer management responsibilities, which can create inefficiencies and confusion, increasing operational costs
PROCESS DEPARTMENTALIZATION
Process departmentalization divides employees based on where in the production process their work usually occurs.
- Input: This structure helps optimize workflow, minimize problems, and ensure quality throughout the value chain.
- Transformation:
- This ensures that both technical quality and project completion targets are met.
- Adaptability and flexibility enable organizations to quickly adapt to changing market conditions, technological advancements, or shifting customer demands.
- This dual reporting system can lead to increased collaboration, information sharing, and a more holistic view of the organization's objectives.
4. ORGANIZATION CHART
- HORIZONTAL ORGANISATION CHART Departments are divided into specific functional areas, such as marketing, finance, HR, sales, etc. Within each department, there may be a team leader, but there are few management layers. Employees are close to upper management, making communication and decision-making faster.
- HOLACRATIC ORGANISATION CHART Holacracy is an organisational approach that replaces traditional management hierarchies with self-organising teams. Each team is assigned clear responsibilities and decision-making authority, and members collectively participate in decisions while holding one another accountable.
- CIRCULAR ORGANISATION CHART In a circular chart, hierarchy is not clear, instead, teams are organised based on shared goals and missions rather than job titles. Each team member has a unique set of skills and expertise. Decision-making is based on structured group agreement rather than unilateral authority.
- MATRIX ORGANISATION CHART In a matrix organization, teams are formed based on the combination of functional projects or initiatives. Employees report to both a functional manager and a project manager, enabling greater flexibility, improved coordination, and stronger collaboration across different areas of the organization.
- NETWORK ORGANISATION CHART
In a network organizational structure, there is no formal hierarchy. Instead, teams are formed through relationships and connections between individuals or groups. This structure is commonly used in decentralized or geographically dispersed organizations, enabling greater flexibility and collaboration across different locations.
4. COORDINATION
Mutual adjustment, direct supervision, and standardization of work, production, and skills are essential components of organizational coordination.
5. HENRY MINTZBER’S THEORY
1. STRATEGIC APEX (STRATEGIC SUMMIT)
Top-level executives are responsible for:
- Making critical decisions that determine the organization's direction.
- They define strategies and ensure it aligns with the companie’s goals and objectives.
- Manage coordination between the different parts of the organizational structure to ensure alignment and effectiveness.
2.TECHNOSTRUCTURE
Composed of professional experts that are responsible for designing and implementing systems that enhance efficiency, productivity, and quality.
- Focuses on creating and enforcing standardized procedures to ensure consistency, reliability, and quality across outputs.
- Works to maintain alignment between the technostructure and other parts of the organization to support overall effectiveness and coordination.
3. MIDDLE LINE
The Management level is responsible for implementing the strategies and policies developed by the strategic apex
3. SANCTION AUTHORITY
- This is authority that is explicitly granted by someone higher up. A person is allowed to make decisions within a defined scope.
- GROUP AUTHORITY
- Here, authority belongs to the team rather than one individual. Decisions are made together, usually through discussion and agreement.
- DELEGATION OF AUTHORITY
- A leader passes part of their decision-making power to someone else but remains responsible for the outcome.
- LEADERSHIP AUTHORITY
- This is an influence that comes from vision, trust, and the ability to inspire others. It is not tied to position or formal permission.
RESPONSIBILITY VS AUTHORITY
RESPONSABILITY AUTHORITY
- Duty to perform tasks and ensure results are achieved
- Focus: execution and accountability
- Flows from bottom to top
- Power to decide and direct others
- Focus: control and decision-making
- Flows from top to bottom
7. MANAGING PEOPLE
MANAGERIAL SKILLS
The competencies, abilities, and qualities that define an effective manager in today's organizations. THREE DIMENSIONS OF MANAGERIAL SKILLS:
- Personal Strength: Self-awareness, resilience, emotional regulation, and the inner capacity to lead under pressure. A strong manager starts with a strong sense of self.
- Technical Skills Proficiency in the tools, methods, and domain knowledge relevant to the manager's field.
Technical credibility underpins team trust and effective decision-making.
- Social Responsibility Awareness of the broader impact of business decisions on employees, communities, and society. Ethical leadership is not optional. Managers capacities: STRATEGIC CAPACITIES OPERATIONAL CAPACITIES
- Understanding organisations as systems
- Capacity to plan strategically
- Ability to foresee challenges and opportunities
- Capacity to ensure continuous improvement processes
- Ability to manage available resources efficiently
- Ability to manage people and processes
- Ability to control performance and outcomes
- Ability to work in and build effective teams
MANAGEMENT STYLES
THREE DIMENSIONS OF MANAGEMENT STYLES:
- Autocratic:
- The manager makes all decisions, with little or no input from the team. Effective in crises or with unskilled teams, but can stifle creativity and reduce morale over time.
- Participative
- The manager involves employees in the decision-making process, encouraging input and collaboration. Increasing engagement, commitment, and decision quality, as diverse perspectives are considered.
- Laissez-Faire:
- The manager provides minimal direction and allows employees a high degree of autonomy in their work. Works best with highly skilled, experienced, and self- motivated teams. However, it can lead a lack of coordination, unclear responsibilities, and reduced control if not properly managed
SITUATIONAL LEADERSHIP
Individual Consideration
- Leaders pay attention to everyone's needs and development, acting as mentors who support personal growth. Inspirational Motivation
- Leaders communicate a clear and compelling vision that inspires commitment and gives meaning to the team’s work. Idealized Influence
- Leaders act as role models, demonstrating high ethical standards and earning trust, respect, and admiration from followers.
8. LEADERSHIP, LEADER VS MANAGERS
While managers and leaders often coexist in the same person, their default orientations differ significantly.
- Managers - Leaders Focus on the present — managing day-to-day operations
- Focus on the future — vision and direction
- Maintain the status quo and existing culture
- Create change and shape new culture
- Implement and enforce policy
- Initiate and challenge policy
- Remain objective and keep emotional distance
- Establish emotional bonds with followers
- Rely on position power (authority by role)
- Rely on personal power (influence through respect)
9. CONFLICT RESOLUTION
Constructive conflict management often relies on negotiation techniques such as focusing on interests rather than positions and seeking mutually beneficial outcomes.
UNDERSTANDING CONFLICT IN
ORGANIZATIONS
- Multiple Participants: Conflict involves individuals, small teams, or large organizational groups, each with distinct interests and perspectives.
- Antagonistic Interactions: are dominated by opposition rather than cooperation, creating tension, friction, and reduced trust between parties.
- Harmful Intent or Attribution: One party intends to harm the other or believes the other intends harm regardless of whether that intent is real or perceived
- Power Imbalance: Direct, indirect, or unfair use of power characterizes the conflict dynamic; one-party leverages advantage over another.
- Rules Breakdown: Established norms, procedures, or governance mechanisms fail to contain or resolve the dispute, allowing it to scale
NEGOTIATION PROCESS
- PREPARATION: Define maximum and minimum limits, non- negotiable issues, BATNA, and walk-away points.
- INFORMATION MEETING: Exchange information to understand interests; negotiation should not start at this stage.
- OFFERS AND ADJUSTMENTS: Make an initial offer with room for negotiation and gradually adjust positions to reach alignment.
- FINAL OFFER AND GUARANTEES: Agree on final terms, establish guarantees or penalties, and formalize the agreement in writing.
- FOLLOW-UP: Monitor implementation to ensure compliance and prevent future conflicts.
10. HARVARD NEGOTIATION
