Principles of Business Organization and Structure

Posted on Sep 15, 2024 in Economy

2 The Principles Common to All Businesses

Unit Address

Predominantly a single standard across the enterprise.

Control Unit

Each subject will have one leader, to whom he is responsible.

Balance

There will be a harmonious relationship between the horizontal and vertical development of the organization, including the scope and content of jobs.

Authority and Responsibility

The authority and responsibility shall be equivalent in every job.

Location of Authority

The authority will be located in the most appropriate structure to achieve maximum efficiency in decision making.

Presence of Authority

Who will define the authority and who shall replace him if absent.

Graduation of Authority

The scope and content of the authority will be greater the higher it is in the business pyramid.

Division of Labor

The work is divided into activities, assigning responsibility for its implementation to specific individuals.

Uniformity of the Tasks

The content of the tasks assigned to members of the organization should be as homogeneous as possible.

4 The Structure Types of Businesses

  • Functions: It groups the activities of the company according to the functions performed by each organizational unit (department). The expertise involved in this kind of structure makes it easier coordination and execution of functions and tasks. The disadvantage is that you can create a culture of rivalry between different areas.
  • Products or Services: The clustering of activities is performed taking into account the goods or services offered by the company. There is a body responsible for each group of products or services that are responsible for all activities relating to this group.
  • Manufacturing Processes or Service: When processes involve manufacturing or service different specializations, departmentalization is used according to these.
  • Necessary Technical Equipment: If you require expensive equipment and complex structuring of the company can do in terms of them.
  • Territorial Distribution: Certain functions of the company are grouped taking into account a geographical basis. This division allows for greater autonomy and adaptation to the characteristics of each area.
  • Clients: When the company’s clientele is varied or when the various products it manufactures or sells commercial activities require very different departmentalization can be done taking into account the differential features presented by each client group.

6 The Enterprise Culture

Characteristics of the Enterprise Culture

Individual Autonomy

The degree of responsibility, independence and opportunity to exercise the initiative that individuals have within the company.

Structure

Refers to the extent that the rules and monitoring are used to monitor and control the behavior of workers.

Support

It is the point of warmth and support given by the excess.

Identity

The level of worker identification with the organization as a whole.

Reward Performance

The degree to which the allocation of rewards in the business is based on performance criteria of employees.

Tolerance of Conflict

Refers to the willingness to be open and honest with the differences and the degree to which support conflict situations with peers.

Risk Tolerance

The extent to which workers are encouraged to be aggressive, innovative and take risks.

Check What You Know

1. An organization is:
  1. a) The best way to structure a business.
  2. b) The graphical representation of the structure of a company.
  3. c) The representation of functional relationships within a company.
2. The functional relationships are represented in the flowchart:
  1. a) by a dashed line.
  2. b) By a continuous line.
  3. c) Using mathematical functions.
3. The hierarchical relationships are:
  1. a) The authority relationships that exist between a superior and a subordinate.
  2. b) The friendly relations within the company.
  3. c) The relationship of limited authority to a member function over another.
4. The departmentalization by function:
  1. a) Facilitates the coordination and execution of tasks.
  2. b) allow the occurrence of the firm within a broader geographical context.
  3. c) It occurs in large, diversified companies.
5. A typical example of territorial division of the organization occurs in:
  1. a) Hospitals.
  2. b) Manufacturers of automotive accessories.
  3. c) Banks and insurance companies.
6. The departmentalization based on the necessary technical equipment makes sense when:
  1. a) require expensive and complex facilities for the job.
  2. b) The manufacturing processes involve different specializations.
  3. c) When products or services offered are very different.
7. According to the principle of unity of direction:
  1. a) Every subordinate should have only one boss.
  2. b) The authority is greater the higher the hierarchical level.
  3. c) There must be a single criterion that prevails throughout the company.
8. It is understood by the authority:
  1. a) The power to act in an official within an area.
  2. b) The ability to recognize and accept the consequences of an accomplished fact.
  3. c) The increased specialization of workers in certain areas.