Organizing Legal Forms of Organizations PDF

Organizing Legal Forms of Organizations: Form # Owners Liability Comments  Simple to run  Decisions made by o...

Organizing Legal Forms of Organizations: Form # Owners Liability Comments  Simple to run  Decisions made by owner Sole Proprietorship 1 For all debt  Increasing capital is difficult  Lifespan = owner life  Wider pool to draw resources For all debt Partnership >1 and decisions/ideas from. Distributed by share size  Divided decision making  Wider pool to draw resources from  Easier to change management Corporation >1 For investment  Longer life  Expensive and difficult to organize  Legally complex Cooperatives >1 Equal distribution  Organizing: Organizing is: 1. Identification and classification of required activities. 2. Grouping of activities necessary to attain objectives. 3. Assigning of each grouping to a manager with the authority necessary to supervise it. 4. Provision for coordination horizontally and vertically in the organization structure. Key Activities: They are the primary activities for which the organization exists. These are the activities that answer the questions: 1. In what area is excellence required to obtain the company’s objectives? 2. In what areas would lack of performance endanger the results, if not the survival, of the enterprise? 3. What are the values that are truly important to us in the company? For each “key activity” we need to conduct “decision analysis” and “relation analysis” Organizational Structures: Departmentalization: The division of organizations into smaller units The type of structure needed is dependent on the organization, its size, products, and market. The stages of departmentalization are: 1. Primitive Organization: Used for very small companies. Usually sole owner with very few employees. 2. Functional: As company grows and there is a need for specialized individuals we start developing departments formed around specific functions. This can further be expanded by having sub-functions under a given function (e.g., Marketing ==> Marketing, Sales, and Market Research) 3. Product: For companies with products requiring distinctly different production or marketing methods, then it can divide along product line. 4. Geographic/Territorial: When sales regions are widespread and diverse, an organization can develop a Geographic structure. 5. Customer: Departmentalization along “customer” type is used when company has distinct customers requiring distinct marketing and sales approaches. Many larger organizations use a combination of these structures. Note that actual structure is driven by need. Span of Control: Span of Control defines the number of employees reporting to a single manager/supervisor. Less Span = More levels Greater Span = Less Levels Factors affecting span:  Subordinate training: o Better trained subordinates = less supervision required  Nature of jobs supervised o Simple, similar, or physically close jobs = less supervision required o Complex, dissimilar, distant jobs = more supervision is required  Rate of change of activities and personnel: o Rapidly changing situations and personnel require greater supervision.  Clarity of instruction and delegation: o Clearly defined, described, and delegated work requires less supervision.  Staff Assistance: The existence of support staff and their ability affect level of required supervision Larger Spans of Control (20 – 30 subordinates) leads to:  Reduction in administrative costs  More effective and efficient organization communication  Faster decisions and interaction between organizational levels  Increased requirement for better training, communication, and education at all levels.  Better leadership at all levels. Line and Staff Relationships Line Functions: Those that accomplish the main mission or objectives of the organization Staff Functions: Those that help the line accomplish its objectives by providing some sort of service or advice. Line Relationships: superior – subordinate relationships. Technology and Organizations: Type Production Volume Worker Skill Equipment Management Stages or small Small General Unit High skill level Organic batches quantities equipment Many stages, Large Moderate skill Specialized Mass Mechanistic large batches quantities level equipment Continuous Large High Process High skill level Organic process volume automation Teams: A small number of people who are committed to a common goal and an approach to this goal that they are mutually accountable for reaching. Use of complimentary skills. Crosses functional/departmental lines Disposable