ESSENTIALS OF MANAGEMENT: An International Perspective

Sixth Edition Weihrich and Koontz

Chapter 7: The Nature of Organizing, Entrepreneuring, and Reengineering

2004 H. Weihrich

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

After studying this chapter, you should understand:

1. 2. 3. 4. 5. The purpose of an organization structure The meaning of "organizing" and "organization." The distinction between formal and informal organization. How organization structures and their levels are due to the limitations of the span of management. The exact number of people a manager can effectively supervise depends on a number of underlying variables and situations. The nature of entrepreneuring and intrapreneuring. The key aspects and limitations of reengineering. The logic of organizing and its relationship to other managerial functions. That organizing requires taking situations into account.
Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

6. 7. 8. 9.

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Organizational Roles
For an organizational role to exist and be meaningful, it must incorporate (1) verifiable objectives, which, are a major part of planning (2) a clear idea of the major duties or activities involved and (3) an understood area of discretion or authority so that the person filling the role knows what he or she can do to accomplish goals

2004 H. Weihrich

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

Organizing involves:
(1) the identification and classification of required activities, (2) the grouping of activities necessary to attain objectives, (3) the assignment of each grouping to a manager with the authority (delegation) necessary to supervise it, and (4) the provision for coordination horizontally (on the same or a similar organizational level) and vertically (for example, corporate headquarters, division, and department) in the organization structure
2004 H. Weihrich Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

Definition of Organization
Organization implies a formalized intentional structure of roles or positions

2004 H. Weihrich

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

Formal and Informal Organization

Formal organization pertains to the intentional structure of roles in a formally organized enterprise
The informal organization is a network of interpersonal relationships that arise when people associate with each other
2004 H. Weihrich Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

What is a Department?
The department designates a distinct area, division, or branch of an organization over which a manager has authority for the performance of specified activities

2004 H. Weihrich

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

Organization with Narrow Spans

2004 H. Weihrich

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

Organization with Wide Spans

2004 H. Weihrich

Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

What is the Principle of the Span of Management?

The principle of the span of management states that there is a limit to the number of subordinates a manager can effectively supervise, but the exact number will depend on the impact of underlying factors

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What Determines an Effective Span of Management?

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Difference Between an Intrapreneur and an Entrepreneur

An intrapreneur is a person who focuses on innovation and creativity and who transforms a dream or an idea into a profitable venture by operating within the organizational environment The entrepreneur is a person who does similar things as the intrapreneur, but outside the organizational setting
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Definition of Reengineering
"...the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical contemporary measures of performance, such as cost, quality, service, and speed. The underlined words are considered key aspects of reengineering by Hammer and Champy
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Key Aspects of Reengineering

Fundamental rethinking of what the organization is doing and why. Radical redesign of the business processes [Note:Downsizing or "rightsizing" is not the primary purpose of reengineering, although in many cases it does result in a need for fewer people] Reengineering calls for dramatic results The fourth key word in the reengineering definition is processes. The need for carefully analyzing and questioning business processes
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Management by Processes

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Chap. 7. The Nature of Organizing, Entrepreneuring, and Reengineering

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The Steps in the Organizing Process:

1. Establishing enterprise objectives 2. Formulating supporting objectives, policies, and plans 3. Identifying, analyzing, and classifying the activities necessary to accomplish these 4. Grouping these activities in light of the human and material resources available and the best way, under the circumstances, of using them 5. Delegating to the head of each group the authority necessary to perform the activities 6. Tying the groups together horizontally and vertically, through authority relationships and information flows
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Basic Questions for Effective Organizing

It is useful to analyze the managerial function of organizing by raising and answering the following questions: 1. What determines the span of management and hence the levels of organization? (answered in this chapter) 2. What determines the basic framework of departmentation, and what are the strengths and weaknesses of the basic forms? (answered in Chapter 8)

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Basic Questions for Effective Organizing cont.

3. What kinds of authority relationships exist in organizations? (answered in Chapter 9) 4. How should authority be dispersed throughout the organization structure, and what determines the extent of this dispersion? (answered in Chapter 9) 5. How should the manager make organization theory work in practice? (answered in Chapter 10)
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