ORGANIZING Review - Legal Forms of Organization: Proprietorship, Partnership, Corporation, and Cooperative - Organizing Process - Comparison of subdivision logics (Departmentalization) - Span of Control, nature of line, staff and service relationships - Effect of technology on organization structure
Legal Forms of Organization • Sole Proprietorship • - Partnership • - Corporation • - Cooperatives
Sole Proprietorship Owned and operated by one person Simple to organize and shut down Has few legal restrictions Owner is free to make all decisions Profit is taxed only once (in USA) Difficult to raise capital for growth of business Duration of business is limited to the life of proprietor
Partnership Association of two or more partners Has relatively few legal restrictions Divided decision making and authority might cause problems In a limited partnership, there must be at least one general partner Limited partners are limited only to the extent of their investment Most common form of business organization
Corporations Legal entities owned by shareholders Shareholder has no liability beyond loss of the value of stock Have perpetual life as long as submitting necessary reports Raising money for growth is easy Easiness in transfer of ownership and change management More difficult and expensive to organize Subject to many rules and regulations Most large organizations are corporations
Cooperatives Special type of organization owned by users or customers Earnings are usually distributed tax free Board members managing cooperative are elected by all members
Organizing Defined To work efficiently in a team, members need to know the parts to play (roles) and how these roles relate to one another. Designing and maintaining these systems of roles is called organizing.
1. Identification and Classification of Required Activities 2. Grouping of Activities to Obtain Objectives 3. Assignment of a manager to each group with the authority 4. Provision for Coordination horizontally and vertically Top Level Middle-Level First-Line Managerial Level Organizing involves
Organizing by Key Activities Effective organizing must first consider basic mission and long-range objectives established for the organization and the strategy. Therefore, key activities have to be considered first Ask three questions to identify key activities 1. In what area is excellence required to obtain the company’s objectives 2. In what areas would lack of performance endanger the results? 3. What are the values that are truly important to us in this company?
After establishing key activities, two additional works are suggested: 1. Decision Analysis What decisions are needed to obtain effectiveness in key activities? (Futurity, effectiveness on the functions, frequency and results are addressed) 2. Relations Analysis With whom the person in charge of an activity will have to work? Find the crucial relations for success and effectiveness. These relations should be easy, accessible, and central to unit.
Organizational Chart An organizational chart is a diagram that describes the basic arrangement of worker positions within an organization.
Patterns of Departmentalization A- Basic Organization (Primitive Organization). B- Functional Departmentation. C- Product Departmentation. D- Geographic Departmentation. E- Mixed Departmentation.
Product Departmentalization C- Product Departmentation. President Finance Production Marketing R&D CD Cabinet Div Disk Box Div. Acctg Prodn. Mktg Pers. Acctg Prodn. Mktg Pers.
Geographic Departmentalization D- Geographic Departmentation. President Finance Production Marketing R&D Western Division Eastern Division Acctg Prodn. Mktg Pers. Acctg Prodn. Mktg Pers.
E- Mixed Departmentation. President Finance Production Marketing R&D Disk Boxes Eastern Sales CD Cabinets Western Sales Parts Assembly Finishing Industry Sales Consumer Sales Mixed Departmentalization