Page 214 - Introduction to Business

188 PART 2 Managing Business Behavior

Summary

LEARNING OBJECTIVE 1 charts are charts that lay out the chain of command or
Describe the strategic planning process, including reporting relationships in an organization. Job
the establishment of strategic goals, strategy specialization is an important part of organizing. It
formulation, and strategy implementation. involves breaking down organizational activities into
specific tasks and designating different people to
There are four basic functions in the management
perform those tasks.
process: planning, organizing, directing, and
controlling. Planning involves establishing
LEARNING OBJECTIVE 4
organizational goals and then figuring out how best to
achieve those goals. Once specific long-term business Analyze and describe different types of
departmentalization within organizations.
goals related to the company’s mission, known as
strategic goals, are established, a clear course of action Departmentalization is the process of grouping jobs
must be devised for their achievement. This process, into coordinated units and is an important part of
known as strategy formulation, usually involves organizing a business. Functional departmentalization
extensive environmental and internal analyses examining involves departmentalizing based on the functions
such things as the company’s competitors (external performed by a given unit, while product
analysis) and the computer skills of the company’s departmentalization involves departmentalizing based
workforce (internal analysis). Once an organizational on products or services sold by the unit. In turn,
strategy has been formulated, the company then makes geographic departmentalization involves dividing the
specific plans, for example, opening new plants or business up on the basis of the geographic areas or
buying newspaper ads, to implement this strategy. locations served by the organization, while customer
departmentalization involves departmentalizing
LEARNING OBJECTIVE 2
activities according to potential customers of the
Discuss the special planning elements of succession organization. Different types of departmentalization
planning, innovation planning, and contingency and will work more or less effectively in different types of
crisis planning.
organizations, and many organizations will have a mix
Businesses frequently face a variety of special planning of departmental forms.
elements. Succession planning, for example, involves
planning related to choosing successors for top LEARNING OBJECTIVE 5
company executives. Some companies put Describe different types of delegation of authority
extraordinary effort into this important process. within organizations.
Innovation planning involves explicit planning of ways
Michael Dell, when he started Dell Computer
to instill more of an entrepreneurial spirit into a
Corporation in his college apartment, didn’t have to
business. Planning of this kind has become
delegate any authority as he was the company’s sole
increasingly important in today’s highly competitive
employee and so had power over all matters. As the
marketplace. Finally, events of the kind that occurred
company grew, however, he necessarily had to
on September 11, 2001, have led business to put greater
relinquish authority over certain functions of the
effort into planning for abrupt changes or crises.
company to others in the organization. Centralized
Planning of this kind meant that some companies with
organizations have most of the authority kept at the top
numerous employees in the World Trade Center, such
of the organization, while decentralized organizations,
as American Express Corporation, were able to
such as the Ritz Carlton Hotel, have a significant
continue operations after September 11, 2001, without
amount of delegation that has taken place and
a hitch.
authority is spread throughout the entity. The degree of
delegation of authority affects the managerial span of
LEARNING OBJECTIVE 3
control, the number of employees directly reporting to,
Explain chains of command, organizational charts, or being supervised by, a manager. Some managers are
and job specialization.
delegated line authority which involves being directly
Organizations have various types of structures, and at responsible for a part of the company’s operations.
the heart of such structures are chains of command. A Other managers are delegated staff authority which
chain of command is the line of authority or reporting involves providing advice and support for line
relationships within an organization. Organizational managers, for example, the authority of a company’s
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