chapter 14, 15, 17 Flashcards
Which patterns are common to all companies and how can they be related to business concepts we know?
Processes are performed (Value chain) within a structure (organizational system) under direction of management (corporate management)
How does structure follow strategy (sketch)?
- Organizational architecture: Structure that enables a company to meet requirements of the business environment and stakeholders’ demands
- Business environment: Includes factors such as technology, markets, and regulations
- Strategy: Influenced by the business environment, aligns with organizational architecture
- Incentives and actions: Derived from the organizational architecture, aimed at creating value for the firm
Which 3(+1) interpretations does term organization have in business-management?
- Design aspect: Action of organizing something
- Instrumental aspect: Company has an organization - a conscious regime of rules
- Institutional: Company is an organization, entity with people and common goal
- Different approaches:
- Organizational structure
- Operational structure
What is the assignment of decision authority (sketch optimal decentralization level)?
centralized: most major decisions by individuals at the top
decentralized: many decisions made by lower level employees
* advantages: local knowledge, less senior management time, motivation/training for lower level
* disadvantages: coordination costs due to organizational complexity, less effective use of central information
Optimal decentralization level (D*) occurs when the tangent of the costs line is parallel to the benefits line.
What are two types of jobs and how can the assignment of tasks be done?
Important Variable
Specialized and Broad Task Assignment:
Benefits of Specialized:
* Higher output (competitive advantage)
* Reduced cross-training costs
Costs of Specialized:
* Coordination costs, Functional myopia (focus on indivisual function rather than overall), Reduced flexibility.
Important Variable: relative degree of complementarity among tasks within functional areas
How can subunits be grouped?
Divisional organization (geography, customer, product)
business unit (functional specialty)
What is line organization and its (dis)advantages?
- Top-down orders and instructions, Bottom-up requests and suggestions
- Worker accountability to single boss
- Functional subunits group jobs into departments
- Ideal for smaller firms with limited product range
- Multidivisional (M form) allows decentralized operating decisions to business unit level
Benefits/Problems
* Benefits: coordination within functional areas, expertise enhancement
* Problems: High management costs, coordination failures between departments, Functional myopia, communication issues
What is functional organization (foremanship)?
- System includes specialized foremen for functions
- Direct connection between every worker and the foremen
- separating mental and manual requirements
Draw a line and staff organization and explain.
- Balancing issues in line organization (too much control) and functional organization (too much division)
- Staff supports line managers, provides valuable information, advisory role, no decision making
- Staff responsible for planning/control
- Planned specialization, expert knowledge to line managers
Draw a matrix organization and explain benefits and costs.
Matrix organizations have functional departments such as finance and marketing.
Members of the departments are assigned to cross-functional product teams (subunits).
Team members report to both a product manager and a functional supervisor.
Advantage:
* Individuals are more likely to focus on the overall business process
* Functional departments help to ensure functional excellence
* Provide more clearly identified opportunities for development
Potential problem:
* Intersecting lines of authority
What is a workflow and what are its components?
- Workflow: orchestrated and repeatable patterns of activities enabled by systematic organization of resources
- Workflow definition includes:
- Spatial assignment (where an action should be performed)
- Timely assignment (when an action should be performed)
- Assignment of action executor (person or subunit)
- Equipment/machine assignment for action execution
- Example of workflow/flowchart: Start -> Action -> <Decision> (Yes\no) -> Action -> End</Decision>
What is the difference between organizational and operational structure?
Organizational structure defines who does what, while operational structure defines where, when and with which.
Define company’s overall planning. (Sketch)
Three functions all organizations perform:
Types of plans:
* Financial plan
* Investment plan
* Sales plan
* Production/operations plan
Three functions all organizations perform:
* Marketing
* Production/operations
* R&D and Finance/Accounting
What 10 decisions do operational managers make?
- Product design support (product selection, design for low production cost)
- Quality management
- Process and capacity design
- Location strategy (facility placement)
- Layout strategy (facility arangement)
- Human resources and job design
- Supply-chain management
- Inventory and material requirements planning
- Intermediate and short-term scheduling
- Maintenance
What is production function?
q
Production function: maximum quantity of output firm can produce given input (Q = f(L, K); Q = quantity of output, L = labor quantity, K = capital employed)
What are inputs/factors of productions, and how are they classified and subclassified?
Factors of production: all inputs used in product productionn
* Labor: managerial work (objectives defining, planning, deciding, leading) and operational work (completion of tasks specified by leading position)
* Materials:
* Direct materials (identifiable with product, high value)
* Auxiliary materials (identifiable with product, low value)
* Operating materials (used to run production machines, unidentifiable)
* Production facilities: tools, company estate and building
Classification of factors of production:
* Consumable resources: changed in production process (materials, short lifespan tools, electricity)
* Non-consumable resources: produce goods over longer time (employees, machines, buildings)
Explain production function with single input and law of diminishing marginal returns?
Law of return or law of diminishing marginal returns: decreasing marginal return when quality of one input increases, other inputs held constant
Stage I: Output Q rises with additional labor at an increasing rate
Stage II: Output Q rises with additional labor but at a decreasing rate
Stage Ill: Output Q rises with additional labor, Average returns (APL) and marginal returns (MPL) to labor decrease
Stage IV: When the quantity of labor exceeds L *, an increase in the quantity of labor results in a decrease in total return
Draw total, average and marginal product functions.
Stage I: Output Q rises with additional labor at an increasing rate
Stage II: Output Q rises with additional labor but at a decreasing rate
Stage Ill: Output Q rises with additional labor, Average returns (APL) and marginal returns (MPL) to labor decrease
Stage IV: When the quantity of labor exceeds L *, an increase in the quantity of labor results in a decrease in total return
Explain and draw Leontief production function.
Limitational relation between production factors
Linear relation between input and output quantity
Fixed proportion production functions
inputs are perfect complements (e.g., every bicycle needs 2 tires and one frame)
Name characteristics and draw Guttenberg production function.
- limitationality of production factors division of resources into potential factors (mainly machines and equipment) and consumption factors
- Consumption factors need not directly dependent on output quantity (operating materials)
- Coefficients of consumption factors not constant with change of aggregate production factors
What is cost theory and cost function.
- Cost theory: aims to find the most economical input combination from production functions
- Cost function: mathematical relation between quantity of input factors and costs (sum input quantity of factor * price per unit of factor)
Which types of cost are there?
Fixed costs, variable costs (product-dependent costs) and total costs of production.
What are four process strategies and briefly explain each?
- Process focus: low volume, high variety; high variable costs, low facility utilization (restaurants, hospitals, machinery production)
- Product focus: high volume, low variety; high fixed costs, low variable costs, high facility utilization (bread, glass, copper)
- Repetitive: medium volume and variety; often use modules; classic assembly lines (automobiles, household appliances)
- Mass customization: high volume and variety; makes what customer wants when wanted; products often variation of core product; needs tight linkage of sales, marketing, logistics…
What are four layout strategies?
- Job Shop (process oriented layout): aggregation of similar-function machines/workplaces
- Work cells: reorganization of people and machines into groups for single/several products
- Fixed-position layout: project stays in one place; workers and equipment come to work area (ship, highway, bridge)
- Repetitive and product oriented layout: high volume low variety; includes fabrication line and assembly line
