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Recommended textbook solutionsPrinciples of Economics8th EditionN. Gregory Mankiw 1,209 solutions Krugman's Economics for AP2nd EditionDavid Anderson, Margaret Ray 1,042 solutions Krugman's Economics for AP2nd EditionDavid Anderson, Margaret Ray 1,000 solutions Essentials of Investments10th EditionAlan J. Marcus, Alex Kane, Zvi Bodie 879 solutions Recommended textbook solutionsPrinciples of Economics8th EditionN. Gregory Mankiw 1,209 solutions Krugman's Economics for AP2nd EditionDavid Anderson, Margaret Ray 1,042 solutions Krugman's Macroeconomics for AP*1st EditionDavid Anderson, Margaret Ray 569 solutions Essentials of Investments9th EditionAlan J. Marcus, Alex Kane, Zvi Bodie 689 solutions What is a Hierarchical Organizational Structure?A hierarchical organizational structure contains a direct chain of command from the top of the organization to the bottom. Senior management makes all critical decisions, which are then passed down through subsidiary levels of management. If someone at the bottom of this organizational pyramid wants to make a decision, they pass the request up through the chain of command for approval, for which a decision will eventually be returned. A hierarchical structure operates well when there are few products that are sold in high volume, so that tight control can be maintained over the design, quality, production, and distribution of goods. For example, Horton Corporation develops a wildly popular super widget that is in strong demand in many countries. This widget is the only product that Horton sells. The president decides to tightly control the quality of this super widget by producing it in a single, large-scale facility, and selling it through a chain of distributors. This calls for a hierarchical structure to control all aspects of production and distribution. The distributors are allowed to engage in their own marketing activities, so this portion of the business is essentially localized and not under the control of Horton. Advantages of the Hierarchical StructureA hierarchical system allows a few people to control all aspects of an organization, which has the following advantages:
Disadvantages of the Hierarchical StructureThough the higher level of coordination associated with the hierarchical system is useful in some instances, there are also a number of problems with it relating to the flow of information, the speed of decision making, and added costs. Consider the following issues:
In general, there is a trend away from the hierarchical system and toward a decentralized organizational structure. This trend is primarily driven by the speed with which decisions must be made, since many markets are now highly competitive and require lightning-fast decision making. This does not mean that the hierarchical system is entirely outmoded – on the contrary, there are a number of businesses that require tight control over limited product lines, and which therefore continue to operate well within this structure. When an organization has a structure in which decision making authority?An organization structure in which decision making authority is delegated to lower-level managers more familiar with local conditions than headquarters management could be. The optimal number of sub ordinance a manager supervises or should supervise.
In which organizational structure is decision making made at the lowest level?In centralized companies, many important decisions are made at higher levels of the hierarchy, whereas in decentralized companies, decisions are made and problems are solved at lower levels by employees who are closer to the problem in question.
What is the line of authority that moves from the top of the hierarchy to the lowest level?The line of authority that moves from the top of a hierarchy to the lowest level is called the: chain of command.
What is organizational structure in management?Organizational structure is the method by which work flows through an organization. It allows groups to work together within their individual functions to manage tasks.
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