1. Internal factors that impact business EASE OF STARTING YOUR OWN BUSINESS

2.  External factors that impact business

3. Principles of organization – Chapter 9  Henri Fayol  Max Weber

4. Henri Fayol – pg 264  Fayol’s 10 Principles  1. Unity of Command – Workers report to only one boss (manager).  - Why is it important to have only one boss?  2. Hierarchy of authority – Workers should know to whom they report to.  In extension, workers should know when they have empowerment

5. Henri Fayol  3. Division of Labour – Responsibilities are divided into areas of specialization  List some “specialties”  4. Subordination of individual interests to the general interest – Workers are to think and act as a coordinated team. The goal of the team outweighs each individual’s interests  Ex: Sports teams

6. Henri Fayol  5. Authority – Managers have the right to give orders and the power to enforce obedience  6. Degree of centralization – Authority and decision making powers should vary by circumstances  Ex: Large organization vs small organization

7. Henri Fayol  7. Clear communication channels – Workers should be ablt to reach other in the firm quickly and easily  8. Order – Materials and people should be placed and maintained in the proper location  9. Equity – Managers should treat employees and peers with respect and justice  10. Esprit de corps – A spirit of pride and loyalty should be created among people in the company

8. Max Weber – pg 265  A contemporary to Fayol. Came up with mostly the same organizational theory  Promoted a pyramid shaped organization structure; great trust should be placed in managers  Thus, workers should just do as they are told  What is the problem with this?

9. Max Weber  In addition, Weber also emphasized 4 things:  Job descriptions  Written rules, guidelines and detailed records  Consistent procedures, regulations and policies  Staffing and promotion based qualifications  Weber believed in Bureaucracy

10. Centralization vs. decentralization of authority  Centralized authority – decision making authority is maintained at the top level of management.  Ex: at headquarters  What does CA enable a company to do?

11. Formal vs Informal organization  Formal organization – details lines of responsibility, authority, and position  Informal organization – formed spontaneously when people/employees come together and form cliques

12. Advantages of informal organization  Forges camaraderie and teamwork amongst workers  Fosters creativity

13. Centralization vs. decentralization of authority  Decentralized authority – decision making authority is given to lower-level managers and employees  What advantages could this have? 30 SECONDS TO THINK OF AN ANSWER 15 SECONDS LEFT TIME IS UP

14. Adv and disadv of centralized authority ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP

15. Centralization vs. decentralization of authority AdvantageDisadvantage Centralized authority Greater top management control Less responsiveness to customers More efficiencyLess empowerment Simpler distribution systemInteroganizational conflict Consistent brand/corporate image Lower morale away from headquarters

16. ONE MINUTE TO THINK OF AN ANSWER 30 SECONDS LEFT TIME IS UP Adv and disadv of decentralized authority

17. Centralization vs. decentralization of authority AdvantageDisadvantage Decentralized authority Better adaptation to customer wants Less efficiency More empowerment of workers Complex distribution system Faster decision makingLess top-management control Higher moraleDiverse corporate image

18. Span of Control  The optimal number of subordinates a manager supervises or should supervise  When work is standardized, one supervisor can manage many workers  Ex: assembly line workers  When work is less standardized, supervisors manage less workers  Why?

19. Bureaucracy  When an organization has many layers of managers who set rules and regulations  Workers are organized into groups, and each group has its manager  Workers are essentially being controlled by their managers  Weber comments that this is a “threat to individual freedoms”

20. Tall vs. Flat organization structures  Tall (narrow) organization structures have many layers of management where few people report to each manager  Flat (wide) organizational structures have few layers of management where many people report to each manager  In a flat organizational structure, workers are empowered to make decisions

21. Adv and disadv of a tall organizational structure ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP

22. AdvantageDisadvantage Tall organizational structure More control by top management Less empowerment More chances for advancement Higher costs Greater specializationSlower decision making Closer supervisionLess responsiveness to customers

23. Adv and disadv of a wide organizational structure ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP

24. AdvantageDisadvantage Wide organizational structure Reduced costsFewer chances for advancement More responsiveness to customers Overworked managers Faster decision makingLoss of control More empowermentLess specific management expertise

25. Departmentalization  Dividing a company up into separate units  Usually by function, skills, expertise, or resource use  Examples:  1. A publishing company may have departments for technical books, textbooks and novels.  2. International firms may have divisions for each country they operate in – Japan, China, Korea

26. Departmentalization  Advantages:  Improves efficiency  Saves costs  Professional development of employees  Easy for top management to direct and control activities

27. Departmentalization  Disadvantages:  Departments may be isolated – lacking communication  Employees may identify with department goals instead of the company’s goal  Slow response to external changes  Less diverse skill base in employees  Groupthink tendencies

28. Organizational models  Line organization – ‘Top down’ model, where orders come from the boss, and employees follow orders  Effective if a business is small, ineffective when a business is large… Why?  They lack specialists and departmentalization to handle diverse situations

29. Organizational models  Line and staff organization – have line personnel who are the primary workers and staff personnel who support the line personnel.  Staff personnel advise the line personnel and line personnel have the authority to enact change and decision making

30. Organizational models  Matrix-style organization – Maintains the line and staff organization, but is more flexible.  Managers can borrow people from different departments to help on projects  What are some advantages? Disadvantages? ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP

31. Communication flow  Chain of command – line of authority that moves from the top of a hierarchy to the lowest level  Worker  manager  supervisor  department head  … CEO  5 types of communication flow  Upward  Downward  Horizontal/lateral  Diagonal  External

32. Communication flow  1. Upward flow of communication – Feedback is reported to upper level management. Subordinates may report issues, concerns and performance reports to superiors.  Results in a more committed workforce, as workers voices and opinions are heard by their superiors  Methods: surveys, complaint and suggestion boxes, letters from employees

33. Communication flow  2. Downward – communication that comes from superiors directly to subordinates.  Used to transmit work-related information to employees  Giving instructions  Feedback on performance  Methods: meetings, letters to employees

34. Communication flow  3. Lateral/Horizontal – communication between people at the same levels of hierarchy  Manager to manager, employees to employees  Advantages: saves time, facilitates coordination and cooperation, provides mutual support

35. Communication flow  4. Diagonal – Communication between managers and workers of different departments  Used for completing projects or complex tasks requiring assistance beyond a single department’s expertise

36. Communication flow  External – communication between managers and external groups/companies