3.1 - Organization & its Environment.pptx

The Organization and its Environment NATURE OF ORGANIZATIONS AND TYPES OF ORGANIZATIONAL STRUCTURES An organization is basically a group or collection of people who work together according to their authority, role and responsibilities and coordinate their actions while establish...

The Organization and its Environment NATURE OF ORGANIZATIONS AND TYPES OF ORGANIZATIONAL STRUCTURES An organization is basically a group or collection of people who work together according to their authority, role and responsibilities and coordinate their actions while establishing relationship for the purpose of achieving a wide variety of common goals and objectives. NATURE OF ORGANIZATIONS AND TYPES OF ORGANIZATIONAL STRUCTURES Along with this, there is also an organizational structure which is simply the pattern or network of division of the roles and responsibilities that are delegated, controlled and coordinated to people who shares common goals and objectives. It also depicts the hierarchy in which members of an organization rank themselves. Three (3) Options of an Organization Single Proprietor / Owner: one person holds the entire operation as his / her personal property and managing it on his / her own Three (3) Options of an Organization Single Proprietor / Owner – ADVATAGE Formation – less complicated in preparation of documents and cheaper compared to starting a formal corporation. The proprietor can be named after the owner, or a fictitious name can be used to enhance the business. Three (3) Options of an Organization Single Proprietor / Owner – ADVATAGE Tax Benefits – no requirement to file a separate business report. One will list the business information and figures within his/her individual tax return. The business will be taxed at the rates applied to personal income, not corporate taxes. Three (3) Options of an Organization Single Proprietor / Owner – ADVATAGE Decision Making – Business decision remains the responsibility of the owner. The owner can also fully transfer the sole proprietorship at any time as he/she deems necessary. Three (3) Options of an Organization Single Proprietor / Owner – DISADVATAGE Liability – the business owner will be held directly responsible for any losses, debts or violations coming from the business. Three (3) Options of an Organization Single Proprietor / Owner – DISADVATAGE Taxes – while there are many tax benefits to sole proprietorships, a main draw back is that the owner must pay self-employment taxes. Three (3) Options of an Organization Single Proprietor / Owner – DISADVATAGE Lack of “Continuity” – the business may discontinue if the owner become deceased or incapacitated. Three (3) Options of an Organization Single Proprietor / Owner – DISADVATAGE Difficulty in Raising Capital – generating the capital or the initial funds is usually provided by the owner. Sole proprietorship does not issue stocks or other money-generating investments unlike corporations. Three (3) Options of an Organization Partnership: requires more than one person in the decision-making process, it’s important that potential business partners discuss a wide variety of issues up front and develop legal partnership agreement. Three (3) Options of an Organization Partnership – ADVATAGE Easy & Inexpensive – the majority of time spent starting a partnership often focuses on developing the partnership agreement between or among few people and its shared ownership will express. Three (3) Options of an Organization Partnership – ADVATAGE Shared Financial Commitment – each business partner has equally invested in the success of the business. Partnerships have the advantage of pooling resources to obtain significant capital. Three (3) Options of an Organization Partnership – ADVATAGE Complementary Skills – a good partnership should be able to utilize the strengths, resources, and expertise of each partner. Three (3) Options of an Organization Partnership – ADVATAGE Partnership Incentives for Employees – partnerships have an employment advantage over other entities if they offer employees the opportunity to become a partner. Three (3) Options of an Organization Partnership – DISADVATAGE Joint and Individual Liability – partners are also liable for the business debts and decisions made by other partners. The personal assets of all partners can be used to satisfy the partnership’s debt. Three (3) Options of an Organization Partnership– DISADVATAGE Disagreements among partners – there can be disagreements like management styles, salary schemes, etc. that is why it is important to consult each other on all decision making having to compromise and resolve disputes. Three (3) Options of an Organization Partnership – DISADVATAGE Shared Profits – each partner must share the successes and profits of their business with the other partners. An unequal contribution of time, effort, or resources can cause dispute among partners. Three (3) Options of an Organization Corporation: business owners opt to form corporations to protect themselves against financial and legal liabilities, so they may decide to look for investors. Investors are only shareholders of the corporation. However, investors will elect a set of board of directors responsible for the different policies and vision for the corporation. Three (3) Options of an Organization Corporation: The Board of Directors will also appoint corporate officers for day-today operations of the corporation. Usually, a corporation has the following key personnel: president, secretary, treasurer, although there can be other officers, such as vice presidents. Three (3) Options of an Organization Corporation – ADVATAGE Separate Legal Personality – A corporation, once registered with the Securities and Exchange Commission and is issued a certificate, has acquired a legal personality separate and distinct from its stakeholders. Shareholders of a corporation are not liable to obligations of the corporation’s contracts into like debts, negligence or wrongful acts of the corporation. The maximum loss of money a shareholder can incur is just the amount of his/her investment in the corporation the value of his /her stock. Three (3) Options of an Organization Corporation – ADVATAGE Ease of raising funds – it is easy to raise additional funds since it has the option to sell shares of the corporation. Three (3) Options of an Organization Corporation – ADVATAGE Continuity – it can have a perpetual existence, which means it can outlive its owner because it is a separate person in the eyes of the law. This means investors don’t have to worry about the untimely demise of the owners. Three (3) Options of an Organization Corporation – ADVATAGE Ease of Transfer of Ownership – the board of directors can authorize the issue of shares of stocks in exchange for investors’ capital infusion into the company. Three (3) Options of an Organization Corporation – ADVATAGE Credibility – a business with an Incorporation or “Inc.” sign after its name often sounds more credible in the business context. One most likely attracts more partners, customers, and attention from the community. Three (3) Options of an Organization Corporation – DISADVATAGE More time and money spent in organizing – it will require more time and money than forming other sole and partnership business type. Three (3) Options of an Organization Corporation – DISADVATAGE More paperwork – several documentations and paper works required by governmental agencies monitor corporations like annual reports and to file corporate income tax returns as well. Three (3) Options of an Organization Corporation – DISADVATAGE Higher Tax – corporate profits may be subject to higher overall taxes since the government imposes taxes on profits at the corporate level and again at the individual level, if such profits are distributed to the shareholders. Three (3) Options of an Organization Corporation – DISADVATAGE More Costly – there are required number of board meeting and annual shareholder meetings/ sessions, all of these meetings/sessions will incur expenses. As well as the services of attorney and accountant with drafting legal documents and corporate filings. Nature and Role of the Firm Human Resource Management this is the entire spectrum of management of people that serves to maximize their performance in order to meet the organization’s objectives. It covers the major functions of recruitment, selection and placement, training and development, employee relations, and compensation and benefits administration. Nature and Role of the Firm Marketing Management this is the responsible for identifying, anticipating and satisfying consumer requirements profitably. Nature and Role of the Firm Operations Management this involves overseeing, designing, controlling the process of production and designing business operations in the production of goods and services. Nature and Role of the Firm Operations Management Manufacturing Setting: designs the effective and efficient production process, acquisition of raw materials, number of trained workers and proper maintenance of equipment. Nature and Role of the Firm Operations Management Service-oriented setting: availability of trained and customer-oriented personnel, presence and excellence provisions of customer services. Nature and Role of the Firm Financial Management The goal of any finance function is to ensure the set up of effective and efficient internal process designed to achieve business support service, lowest costs and effective control of the environment while being vision-oriented, growth focused, intuitive and risk taking. Nature and Role of the Firm Material and Procure Management it has the responsibility to ensure that it manages the procurement process and the supply base effectively and efficiently. Nature and Role of the Firm Office Management involves design, implementation, evaluation and maintenance of the process of work within an organization in order to maintain and improve efficiency and productivity. This is to monitor and review systems that would yield expected outcomes like improved turnover, output, sales. Nature and Role of the Firm Information and Communication Technology Management includes related form of communication or application that encompasses radio, television, cellular phones, computer and network hardware and software, satellite system, etc. It is the responsibility of the firm to provide the necessary information and communication facilities to all its business units in order to ensure that they are able to perform their functions more effectively and efficiently. Types of Organizational Structure Once a business plan has been established, a manager can begin to organize. Organizing involves assigning tasks, grouping tasks into departments, delegating authority and responsibility, and allocating resources across the organization. Basically, the nature of organization can be viewed in two (2) ways: (1) Organization as a process and (2) Organization as a structure or framework of relationship. Organizations can achieve higher sales and other profits by properly matching their needs with the structure they use to operate. Types of Organizational Structure An organization may come in different shapes and sizes. It can be “tall”, those that have many tiers between the worker and the owner of the company, or they can be “flat”, it means there are very few levels between the worker and the owner. Types of Organizational Structure The basic organization framework is called the Line Structure. It has only direct, vertical, relationships between different levels in the firm where similar activities are performed at a particular level. Each group of specialists can therefore operate independently, with management acting as the point of cross communication between functional areas. Line departments are directly involved in accomplishing the primary goals of the organization. In a line organization, authority follows the chain of command Types of Organizational Structure Advantages: Tends to simplify and clarify authority Promotes responsibility and accountability relationships Promotes fast decision-making Precise and simple to understand Types of Organizational Structure Disadvantages: Neglects specialists in planning Overloads tasks on key personnel It becomes more ineffective as the organization becomes bigger Managers become experts in too many fields or area Tendency to become overly dependent on the few key people who are performing numerous jobs Types of Organizational Structure There are two (2) functions that can be used in making the organization structure. Aline function is a position that has a direct chain of command that is responsible for the achievement of an organization’s goals. Types of Organizational Structure On the other hand, a staff function is intended to provide expertise, advice and support for the line positions. (example of Staff Functions: HR, Quality Assurance, and Corporate Planning) Several variations of organizational structures Functional: a set up wherein each department of the organization is grouped according to its function or purpose. The functional structure works very well for small business in which each department can support itself by relying on the talent and knowledge of its workers. Communication generally occurs Disadvantage: restriction in coordination and within each functional communication between and among other department and is transmitted departments by the boundaries of the organization in across departments through the department heads. which having the various departments working separately and independently. Several variations of organizational structures Divisional: this is typically used in larger companies or organizations with several branches or outlets that operate in a wide geographic area or that have separate smaller organizations within the umbrella group to cover different types of products or market areas. It provides Disadvantage: communication is inhibited because significant benefit which addresses employees in different divisions are not working needs more rapidly and more together and this structure could also be costly because specifically. of its size and scope. Several variations of organizational structures Matrix: this is hybrid of the 2 structures: functional and divisional. It is typically used in large multinational companies, the matrix structure allows for the benefits of functional and divisional structure to exist in Disadvantage: this can create power struggles because one organization. This most areas of the company will have a dual structure is flexible and management. It can lead to confusion among balance decision making. employees due to conflicting orders from multiple sources. Broader Organizational Structure Formal Organization: where it is usually represented with organizational charts and with position description and there is a clear reporting relationship that the manager is aware of. Informal Organization: is a set of evolving relationships and patterns of human interaction within an organization that actually do exist but are not officially prescribed. There is also the presence of an informal leaders who sometimes exert influence to organizational behavior.