ESSENTIALS OF MANAGEMENT:

An International Perspective
Sixth Edition
Weihrich and Koontz

Chapter 7: The Nature of Organizing,

Entrepreneuring, and Reengineering

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

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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

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

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 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

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 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

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 Organization with Narrow Spans

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Organization with Wide Spans

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 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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 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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