Key Terms:

Organizational Structure is the formal framework that defines the organizational boundaries and
internal relationships within those boundaries.

Job satisfaction is a measure of the positive feelings employees have about their jobs.

Job design is when managers determine how to deconstruct tasks to form specific jobs in a
process

Job specialization is decreasing the number of tasks a worker must perform to gain efficiency.

Job enlargement is the process of increasing the number of tasks to make the job more
meaningful. Job enlargement seeks to balance specialization and motivation.

Job enrichment is increasing the responsibility workers have over their job to make it more
meaningful and provide psychic ownership.

Job rotation is intentionally moving employees from one job to another to provide variety.

Job Characteristics Model (JCM) is a theory that suggests that all jobs should be designed
around five core dimensions: Skill variety, task identity, task significance, autonomy, and
feedback.

Skill variety, according to the job characteristics model, means that workers apply a range of
abilities to prevent boredom.

Task identity, according to the job characteristics model, refers to the degree to which the worker
can see that he is completing a whole piece of the puzzle.

Task significance, according to the job characteristics model, is when the worker can see he has
a useful or lasting effect on others through his work.

Autonomy, according to the job characteristics model, is the degree of freedom he has to
complete his task.

Feedback, according to the job characteristics model, is the degree to which results are
evaluated.

Centralization is concentrating authority in the hands of top management.

Decentralization pushes decision-making authority down through the organization to the lowest
possible level.

Mechanistic organization is an organization based on the classical perspective of management.

It is built on the machine analogy of the organization. Mechanistic organizations often feature

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central authority, bureaucratic rules, fonnalization and structure, hierarchy, and command and
control.

Organic organizations are characterized by flexibility and adaptability. Organic organizations

typically are marked by decentralized authority, fewer procedures, and authority that is
intentionally pushed down to front line.

System approach to management requires us to structure the organization so the parts work
together effectively

Integration is the degree to which the parts of an organization work together to achieve a
common goal.

Alignment means that all the parts are working together-the vision and mission, the strategy,
the top-management's directives, and the goals that members of the organization pursue daily.

Organizational chart is a diagram of the fonnal relationship between employees that shows
fonnallines of authority.

Departmentalization is organizing the company into logical units. There are three common
approaches to departmentalization: functional, divisional, and matrix.

Functional structure is a fonn of departmentalization where the business is organized by job

function.

Divisional structure is where the business is organized by each unit. Each business is self-
contained, possessing all of the functions.

Product structure is a fonn of departmentalization where the business is organized by each

major product or group of products that it sells.

Customer structure (see market structure).

Market structure is a fonn of departmentalization where the business is organized by the type of
customer it serves. This is also known as a customer structure.

Geographic structure is a fonn of departmentalization where the business is organized by

territorial divisions.

Matrix is a fonn of departmentalization where the business is organized by division and

function, simultaneously creating two chains of command.

Grand strategy is the organization's primary strategy. These generally fall into one of three basic
strategies, a growth strategy, a stability strategy, or a retrenchment strategy.

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Growth strategy is a grand strategy where the organization attempts to expand and increase
business.

Stability strategy is a grand strategy that involves little change. This strategy seeks to maintain
the status quo.

Retrenchment strategy is a grand strategy where the organization tries to strengthen core
businesses.

Positioning strategies are used to enhance the organization's image in the marketplace. These
strategies include cost leadership, differentiation, and a focus strategy.

Cost leadership is a positioning strategy where the firm aggressively seeks market share by
undercutting the competition.

Differentiation strategy is a positioning strategy where the firm distinguishes itself from the
competitors. Often this raises the perceived value of the product.

Focus strategy is a positioning strategy where the organization concentrates 0).1 a narrow niche.

Adaptive strategies help organizations position themselves in the external environment.

Organizations may be defenders, prospectors, analyzers, or reactors.

Defenders are those whose adaptive strategies seek moderate growth while defending their core
products.

Prospectors are those whose adaptive strategies cause them to seek new opportunities. They are
often first to enter a new market with new innovations.

Analyzers are those whose adaptive strategies are a hybrid between defenders and prospectors.
Analyzers seek limited opportunities while defending the core of their business. Analyzers are
not first to market, but companies that reproduce similar products.

Reactors are those whose adaptive strategies cause them to simply respond to the external
environment.

Reactive change is changing because problems have arisen.

Diversification is intentionally entering a number of businesses to spread risk.

Portfolio strategy allows managers to determine which businesses to enter to spread the risk.

Acquisition is when one company buys a controlling interest in another.

Parent company is a company that owns enough stock (51 %) to control another company.

Subsidiary is the company owned or controlled by another company.

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Unrelated diversification is entering a number of businesses that are in no way connected to
each other.

Synergy means that the whole is greater than the sum of its parts

Related diversification is entering a number of similar or complimentary businesses.

BCG matrix evaluates businesses in light of market share and growth potential.

Stars are rapidly growing businesses according to the Boston Consulting Group (BCG) matrix.

Cash cows are established business with slow growth according to the Boston Consulting Group
(BCG) matrix.

Dogs have both low market share and low growth according to the Boston Consulting Group
(BCG) matrix.

Question marks are established businesses with slow growth according to the Boston Consulting
Group (BCG) matrix.

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