Page 202 - Introduction to Business

176 PART 2 Managing Business Behavior

department representing a major product segment sold by GE. Similarly, law firms
are generally departmentalized according to the services sold by specialized groups
of lawyers within the firm. For example, a law firm might have a tax department, a
real estate department, a securities department, and so on.
geographic departmentalization Geographic departmentalization is departmentalization based on the geo-
Departmentalization based on the graphic areas served by the organization. Dell Computer Corporation has a depart-
geographic areas or locations served
by the organization ment for the Americas, for Europe and the Middle East, and for Asia and Japan.
On a smaller scale, a medium-sized ice cream manufacturer based in Texas might
have a Texas department, an Oklahoma department, an Arkansas department, a
Louisiana department, and a New Mexico department. These departments are in
charge of ice cream sales and general company operations in those states.
customer departmentalization Customer departmentalization is departmentalization according to potential
Departmentalization according to customers of the organization. Banks, for example, typically have different depart-
potential customers of the organization
ments that deal with retail (private individuals) versus commercial (business)
banking. Large retail stores usually have distinct clothing departments for men,
women, teens, and children.
Finally, it should be noted that many organizations have multiple forms of
departmentalization. For example, Dell Computer Corporation has a department
dealing with corporate ethics (functional department), as well as various depart-
ments dealing with different parts of the world, such as Dell Americas (geographic
department). The U.S. military has functional departments like the navy, air force,
and army and geographic departments such as Centcom, which handles all mili-
tary matters for Iraq and other parts of the Middle East. The regional hospital
depicted in Exhibit 5.3 has a wide range of departmentalization.

reality What is the departmental structure of your favorite retail store?
CH ECK

LEARNING OBJECTIVE 5
Describe different types of delegation of authority within organizations.

Delegation.
AUTHORITY AND RESPONSIBILITY. You’ve hired workers with specialized skills, you’ve
formed different departments, and you have an organization chart, but now comes
perhaps the hardest part of organizing for many managers and business
delegation The assignment by a founders—delegation. Delegation involves a manager assigning some of his or her
manager of some of his or her authority authority or work to other employees. Remember Michael Dell and when he first
or work to other employees
moved out of his college apartment to rented office space? At that time Michael Dell
was running everything at Dell Computer, including being in charge of the Coke
machine. Then one day an employee came along and wanted a refund from the
machine, and Michael Dell realized he had a lot more important things to do than
manage the Coke machine. This was Michael Dell’s management moment, and he
delegated his authority over and responsibility for the company Coke machine.
authority Legitimate power within an Authority means legitimate power within an organization over certain matters.
organization over certain matters Responsibility means the obligation within an organization to be accountable for
responsibility Accountability within an certain matters. Once Michael Dell turned over those keys to the company Coke
organization for certain matters
machine, he no longer had any power over it or was responsible for it.
Why is delegation so hard for many managers to do? The answers in many
respects are fairly obvious. Delegation means giving up control. You, the manager
or business owner, know that you can get the job done well, but with delegation you
now have to trust someone else to do the job. How can anyone else ever do the job
as well as you? Moreover, managers and business owners who delegate are

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