16 Questions
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.
What is meant by 'span of management' in an organizational structure?
The number of subordinates that report to a single supervisor or manager.
What are the units formed through departmentalization called?
Departments, units, groups, and divisions.
What is one of the concerns reflected in an organizational structure?
Delegation of authority.
What is the hierarchy of objectives in an organizational structure?
A system of goals and objectives that are aligned and prioritized.
What are the functions according to which a department may be organized?
Finance, Marketing, Human resources and development, Product, Territory, Customers
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.
What happens when there are too many subordinates reporting to a single supervisor?
The quality of directing and controlling the subordinates may be compromised.
What is the ultimate objective of an entrepreneurial venture?
Realization of profits.
What is the characteristic of a centralized organization?
Concentration of authority for decision-making in the hands of one or few.
In what type of environment is decentralized organization useful?
Complex and unpredictable environment.
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.
What is the result of proper delegation of authority?
It simplifies the task of the owner.
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.
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.
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