Business Management Chapter 6

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the objective of organizing in a business?

To produce an organizational structure for the firm which indicates who performs which task and who supervises whom.

What are the three concerns that the owner needs to consider when designing the firm's organizational structure?

The activities necessary to reach the goals, an analysis of the jobs to be performed, and the placement of people with the interest and qualifications in performing the jobs.

What is the purpose of specialization in an organization?

To make employees more efficient.

What is departmentalization?

The process of grouping jobs into working units. Signup and view all the answers

What is meant by 'span of management' in an organizational structure?

The number of subordinates that report to a single supervisor or manager. Signup and view all the answers

What are the units formed through departmentalization called?

Departments, units, groups, and divisions. Signup and view all the answers

What is one of the concerns reflected in an organizational structure?

Delegation of authority. Signup and view all the answers

What is the hierarchy of objectives in an organizational structure?

A system of goals and objectives that are aligned and prioritized. Signup and view all the answers

What are the functions according to which a department may be organized?

Finance, Marketing, Human resources and development, Product, Territory, Customers Signup and view all the answers

Why is delegation of authority necessary in an organization?

Because no single individual can effectively handle the number of variety of situations where decisions have to be made. Signup and view all the answers

What happens when there are too many subordinates reporting to a single supervisor?

The quality of directing and controlling the subordinates may be compromised. Signup and view all the answers

What is the ultimate objective of an entrepreneurial venture?

Realization of profits. Signup and view all the answers

What is the characteristic of a centralized organization?

Concentration of authority for decision-making in the hands of one or few. Signup and view all the answers

In what type of environment is decentralized organization useful?

Complex and unpredictable environment. Signup and view all the answers

What is the benefit of decentralization in an organization?

It reduces the load of top management and more time will be available for them to attend to some other important matters. Signup and view all the answers

What is the result of proper delegation of authority?

It simplifies the task of the owner. Signup and view all the answers

Study Notes

Organizing a Business

Organizing is blending human and nonhuman resources through a formal structure of tasks and authority to achieve the firm's objectives.
The objective is to create an organizational structure that defines tasks and supervision.

Concerns Reflected in an Organizational Structure

Specialization: dividing total work into small specialized tasks and assigning employees to specific tasks to increase efficiency.
Departmentalization: grouping jobs into working units called departments, units, groups, or divisions, often by function (e.g., Finance, Marketing, HR).
Delegation of authority: assigning tasks and commensurate authorities to subordinates to simplify decision-making and management.
Span of management: considering the number of subordinates reporting to a supervisor to maintain effective directing and controlling.
Hierarchy of objectives: achieving overall objectives by setting subordinate objectives (e.g., target sales volume, expenditures).
Degree of centralization: balancing authority delegation to lower-level units for efficient work accomplishment.

Types of Organization based on Authority

Centralized organization: concentrating authority in one or few individuals (e.g., sole proprietor, top management) for decision-making, often in high-risk situations or when lower-level managers lack decision-making skills.
Decentralized organization: delegating authority to subordinates, suitable for complex and unpredictable environments, reducing top management's workload.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Learn about organizing, directing and controlling a business, including the design of a formal structure of tasks and authority, and the objectives of this function.