5-3 Organizational Structure for Businesses Intro to Business 5-3 Organizational Structure for Businesses

Objectives Understand important principles in designing an effective organization Compare alternative organizational structures for businesses.

Designing an Effective Business Organization Setting Direction Mission Statement: A statement that is short, specific written statement of the reason a business exists and what it wants to achieve

Terms Goal: A precise statement of results the business expects to achieve Policies: Guidelines used in making consistent decisions Procedures: Descriptions of the way work is to be done

Designing an Effective Business Organization Principles of Effective Organizations Responsibility is the obligation to complete specific work. Authority the right to make decisions about how responsibility should be accomplished Accountability is taking responsibility for the results achieved In an effective business, all managers and employees have set responsibilities for their part of the job. They also have the authority to make decisions. Finally, they must be accountable for their actions and take responsibility.

Principles of an effective org. Unity of Command – there is a clear reporting relationship for all staff of a business. People need to know who to report to and what to do…if the relationships are unclear, this creates confusion in the work environment Who approves the budget?

PPS

Span of Control The number of employees who are assigned to a particular work task and manager. Balance of supervision Few employees per manager = > control Too many employees per manager = < control SOC can be greater for motivated, responsible workers, less for inexperienced, non-motivated workers

Organization Chart Diagram that shows the structure of an organization, classifications of work and jobs, and the relationship among those classifications.

Structures Functional – work is arranged within main business function such as production, operations, marketing, and human resources Adv. – related people work together Dis. – focused on only one function vs. the whole Matrix – work is structured around specific projects, products, or customer groups Adv. – work with a variety of people w/ different skills Dis. – can be confusing, needs good leadership[

Key Concepts Answer questions 1-3 Pg. 118 Ch. Review Pg. 121 #s 10-23 Write out question with answer circled or underlined.