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silence game


Divide the group into two teams and position them on either side of the room. Give the students instructions such as "Line up according to birth dates," or "Arrange yourselves into alphabetical order according to last names." The students must complete the activity without speaking. They can make hand motions or write instructions down on paper, however your only instruction to them is that they cannot speak. The first team to complete the task wins the game.

what makes an organization effective
What Makes an Organization Effective?
  • Knowing Your Customers and Responding to Their Needs
  • To succeed in the business world, companies must change to keep up with customer needs
    • Think of a company that has done this
factors affecting organizational structure
Factors Affecting Organizational Structure


  • Size of the business
  • Kinds of products or services it produces
  • Structures will differ between:
    • High-teach company employing 50,000 in eight countries (Motorola, Inc.)
    • Small retail business with just a dozen employees (Bob’s Hardware Store)
centralized vs decentralized organizational structure
Centralized vs. Decentralized Organizational Structure
  • Centralized
    • Rely on one individual to make decisions and provide direction for the company.
  • Decentralized
    • Several individuals responsible for making business decisions and running the business.

Organizational Life Cycle Stages

Stage 1: Growth through creativity

Stage 2: Growth through direction

Stage 3: Growth through delegation, coordination, and collaboration

“As a company grows, organizational structure must change with it”


At what point do you think a company will make the shift from Stage 1 to Stage 2 growth?

Organizational Life Cycle Stages

Stage 1: Growth through creativity

Stage 2: Growth through direction

Stage 3: Growth through delegation, coordination, and collaboration

stage 1 growth through creativity
Stage 1: Growth through creativity
  • Entrepreneurs create products or services for which there is a market
  • Business is small in structure
  • Lack formal structures, policies, and objectives
  • Founder is involved in every aspect of the business and makes all the decisions
  • Current Importance
    • An idea that appeals to consumers

Question: Why do you think creativity is most important during Stage 1?

stage 2 growth through direction
Stage 2: Growth through direction
  • Company grows in size
  • Company founder is no longer solely responsible for all decision making
  • Professional managers hired to plan, organize, and staff
  • Managers create written policies, procedures, and plans
  • Rules and systems for hiring, firing, and rewarding employees are implemented
  • Set up:
    • Systems for employees to communicate
    • Financial controls/Budget constraints for departments
    • Formal Rules are on decision-making are formulated
stage 3 growth through delegation coordination and collaboration
Stage 3: Growth through delegation, coordination, and collaboration
  • Problems occur which include:
    • Company’s structure can become too rigid and decision making becomes too centralized
    • Lower-level employees feel left out of the decision-making process
    • Top executives find themselves too far removed from the customer to make good decisions
  • To combat these problems, stage 3 is implemented which includes:
    • Delegation of duties to lower-level employees in attempt to decentralize
    • Focuses on:
      • Motivating people at lower levels
      • Allows senior executives to devote more of their time to long-term management issues
  • Set up:
    • Systems for employees to communicate
    • Financial controls/Budget constraints for departments
    • Formal Rules are on decision-making are formulated
the changing nature of a company s organizational structure
The Changing Nature of a Company’s Organizational Structure

How have the needs of Apple Computer changed over time?

  • Stage 1:
    • When a company is young, it depends heavily on technical geniuses who had a brilliant idea for a user-friendly desktop computer.
    • They turned this idea into a multimillion dollar company by introducing the Apple II computer in the 1970s


the changing nature of a company s organizational structure1
The Changing Nature of a Company’s Organizational Structure

Stage 2:

  • As a company grows, it needs managers with excellent managerial skills. To continue to grow, in the 1980s Apple Computer replaced its co-founder, Steven Jobs, with a professional manager. The new CEO, John Sculley, helped introduce the company’s Macintosh Computer


the changing nature of a company s organizational structure2
The Changing Nature of a Company’s Organizational Structure

Stage 3:

  • Managers learn to delegate authority. In 1996 company founder Steven Jobs returned to Apple as interim CEO in an effort to breathe new life into a company that had fallen on hard times. Apple’s organizational structure allowed it to introduce several important products in the 1990s, including the iMac and now in the 21st Century, the iPod and iPhone.
type of product or service
Type of Product or Service

“The number of levels within an organization increases as the level of technical complexity increases with producing a product or service”

organizing a company into departments


Vice President, Marketing

Vice President, Production

Vice President,






Sales Manager





Market Research


Quality Control


Organizing a Company into Departments
  • Organizing Departments by Work Functions
    • Production
      • Actual creation of company’s goods or services
    • Marketing
      • Product development, pricing, distribution, sales, and advertising
    • Finance
      • Maintaining a company’s financial statements and obtaining credit so a company can grow
    • Human Resources
      • Hiring employees and placing them in appropriate jobs
organizing a company into departments1
Organizing a Company into Departments
  • Each function includes various positions
    • Production
      • Engineering, Manufacturing, Quality Control
    • Marketing
      • Advertising, Sales, Market Research
    • Finance
      • Accounting and Credit
  • Advantages:
    • Allows for functional specialization
  • Negative Effects:
    • Conflicts may develop between departments with different goals
      • Production department not concerned about advertising
    • Create managers whose scope is relatively narrow
      • Marketing manager may know a great deal about marketing, but lack skills in other aspects of the business
organizing a company into departments2



Oil and Gas



Industrial and


Organizing a Company into Departments

Organizing Departments by Product

    • Single manager oversees all activities needed to produce and market a product
  • Advantages:
    • Allows employees to identify with the product rather than with their particular job function
    • Develops a sense of common purpose
    • Helps identify which products are profitable
    • Allows for training executive personnel by letting them experience a broad range of functional activities
  • Negative Effects:
    • Departments could become overly competitive, to the detriment of the company as a whole
    • Activities are duplicated for each division [multiple marketing departments for each different product]
organizing a company into departments3
Organizing a Company into Departments

Organizing Departments in Other Ways

  • Geographical region
    • North America v Asia
  • Type of Customer
    • Sales to:
      • Governments
      • For-profit businesses
      • Nonprofit organizations
understanding the role of company leadership
Understanding the Role of Company Leadership


  • An organized group of people appointed to consider or decide upon certain matters
    • I.E. – homecoming dance, food drive, blood drive, Grant-A-Wish, etc.
    • Guidelines that managers must set:
      • Clearly define the committee’s function
      • Establish authority figures within a committee
      • Set Clear Goals for members to attain
understanding the role of company leadership1
Understanding the Role of Company Leadership

Chief Executive Officer (CEO)

The most important executive in a company (Top Executive)

Together with other senior managers, the CEO:

  • Makes decisions about meeting the company’s objectives
  • Sets the company’s objectives
  • Determines who fills senior management positions
  • Develops the company’s long-term strategies
  • Attends the company’s annual stockholders’ meeting and answers questions about the company’s activities
  • Takes charge of the company in a crisis
  • Works with the board of directors
understanding the role of company leadership2
Understanding the Role of Company Leadership

Board of Directors

In companies owned by stockholders, approves all major management decisions

Meet four to six times a year

The legal representative of a company’s stockholders

Inside Board Members = Work for the company

Outside Board Members = Do not work for the company

  • Examines all major decisions to ensure it is in best interest of company’s stockholders
  • Makes it more difficult for corporate managers to act in ways that benefit them personally at the expense of the company’s owners
13 2 chapter summary
13. 2: Chapter Summary
  • The type of structure a company adopts depends on many factors including the company’s size and its products or services
  • Many companies are organized by work functions. Others are organized by product, region, or customer
  • An organization may form a committee to decide upon certain matters
  • Senior management, led by the company’s chief executive officer, initiates or approves all of a company’s major decisions
  • A board of directors approves all major decisions made by corporate management
math skills
Math Skills
  • Lindholm Technologies, a high-tech company that specializes in computer graphics, has decided to reorganize its corporate structure into a team structure. By organizing into teams, Lindholm expects to be able to eliminate three mid-level managers, each earning $82,000 a year. It also expects to hire two additional entry-level employees, to be paid about $25,000 a year each. If the cost of the reorganization itself is $75,000, how much can the company expect to save after two years?
assessing computer skills
Assessing Computer Skills
  • Choose a major U.S. company, such as IBM, Apple, Home Depot, Coca-Cola, General Mills, McDonald’s. Using the Internet, find out how the company you selected is organized and identify the top six managers. Also, if you can, obtain a copy of the company’s organizational chart.