Understanding Business Chap 8

Economics of Scale

Situation in which companies can reduce their production costs if they can purchase raw materials in bulk; average cost of goods goes down as production levels increase.

Hierarchy

System in which one person is at top of organization and there's a ranked ordering from top down of managers who are responsible to that person.

Chain of Command

Line of authority that moves from top of a hierarchy to lowest level.

Bureaucracy

Organization with many layers of managers who set rules and regulations and oversee all decisions.

Centralized Authority

Organization structure in which decision-making authority is maintained at top level of management at company's headquarters.

Decentralized Authority

Organization structure in which decision-making authoirty is delegated to lower-level managers more familiar with local conditions than headquarters management could be.

Span of Control

Optimum number of subordinates a maanger supervises or should supervise.

Tall Organization Structure

Organizational structure in which pyramidal organization chart would be quite tall becuase of various levels of management.

Flat Organization Structure

Organization structure that has few layers of management and a broad span of control.

Departmentalization

Dividing of organizational functions into separate units.

Line Organization

Organization that has direct two-way lines of responsibility, authority, and communcation running from top to bottom of organization, with all ppl reporting to one supervisor.

Line Personnel

Employees who are part of chain of command that's responsible for achieving organizational goals.

Staff Personnel

Employees who advise and assist line personnel in meeting their goals.

Matrix Organization

Organization in which specialists from different parts of organization are brought together to work on specific projects but still remain part of a line-and-staff structure.

Cross-Functional Self-Managed Teams

Groups of employees from different departments who work together on a long-term basis.

Networking

Using communications technology and other means to link organizations and allow them to work together on common objectives.

Real Time

Present moment or actual time in which something takes place.

Transparency

Concept that describes a company being so open to other companies working with it that the once-solid barriers between them become see-through and electronic info is shared as if companies were one.

Virtual Corporation

Temporary networked organization made up of replaceable firms that join and leave as needed.

Benchmarking

Comparing an organization's practices, processes, and products against world's best.

Core Competencies

Those functions that organization can do as well as or better than any other organization in world.

Restructuring

Redesigning an organization so that it can more effectively and efficiently serve its customers.

Inverted Organization

Organization that has contact ppl at top and CEO at bottom of organization chart.

Organizational (or corporate) Culture

Widely shared values within an organization that provide unity and cooperation to achieve common goals.

Formal Organization

Structure that details lines of responsibility, authority, and position; that is, structure show on organization charts.

Informal Organization

System of relationships and lines of authority that develops spontaneously as employees meet and form power centers; that is, human side of organization that does not appear on any organization chart.