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ORGANIZING
ReviewLegal Forms of Organization:
Proprietorship, Partnership, Corporation, and Cooperative
Organizing Proess
Comparison of s!"division logis #$epartmentalization%
&pan of Control, nat!re of line, staff and servie relationships
'ffet of tehnolog( on organization str!t!re
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ORGANIZING
Legal Forms of Organization
&ole ProprietorshipOwned and operated by one person
Simple to organize and shut down
Has few legal restrictions
Owner is free to make all decisionsProfit is taed only once !in "S#$
"nlimited responsibility for debts
%ifficult to raise capital for growth of business
%uration of business is limited to the life of proprietor
Proprietorship, Partnership, Corporation, and Cooperative
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ORGANIZING
Legal Forms of Organization
Partnership#ssociation of two or more partners
Has relatively few legal restrictions
Permits the pooling the managerial skills and &udgements
%ivided decision making and authority might cause problemsPartners have unlimited liability for debts
'n a limited partnership( there must be at least one general partner
Limited partners are limited only to the etent of their investment
)ost ommon form of "!siness organization
Proprietorship, Partnership, Corporation, and Cooperative
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ORGANIZING
Legal Forms of Organization
CorporationsLegal entities owned by shareholders
Shareholder has no liability beyond loss of the value of stock
Have perpetual life as long as submitting necessary reports
Raising money for growth is easy)asiness in transfer of ownership and change management
*ore difficult and epensive to organize
Sub&ect to many rules and regulations
*ore taing is applied
)ost large organizations are orporations
Proprietorship, Partnership, Corporation, and Cooperative
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ORGANIZING
Legal Forms of Organization
CooperativesSpecial type of organization owned by users or customers
)arnings are usually distributed ta free
+oard members managing cooperative are elected by all members
Proprietorship, Partnership, Corporation, and Cooperative
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ORGANIZING
Organizing
*o +or effiientl( in a team, mem"ers need to no+ the parts to pla(#roles% and ho+ these roles relate to one another-
$esigning and maintaining these s(stems of roles is alled organizing-
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ORGANIZING
Organizing
Organizing involves
.- Identifiation and Classifiation of Re/!ired Ativities
0- Gro!ping of Ativities to O"tain O"1etives
2- Assignment of a manager to eah gro!p +ith the a!thorit(
3- Provision for Coordination horizontall( and vertiall(
Top Level
Middle-Level
First-Line Managerial Level
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ORGANIZING
Organizing by ,ey #ctivities
'ffetive organizing m!st first onsider "asi mission and
long4range o"1etives esta"lished for the organization and
the strateg(-
*herefore, e( ativities have to "e onsidered first
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ORGANIZING
Organizing by ,ey #ctivities
As three /!estions to identif( e( ativities
.- In +hat area is e5ellene re/!ired to o"tain the ompan(6s o"1etives
0- In +hat areas +o!ld la of performane endanger the res!lts7
2- 8hat are the val!es that are tr!l( important to !s in this ompan(7
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ORGANIZING
Organizing by ,ey #ctivities
After esta"lishing e( ativities,
t+o additional +ors are s!ggested:
.- $eision Anal(sis 8hat deisions are needed to o"tain effetiveness in e( ativities7
#F!t!rit(, effetiveness on the f!ntions, fre/!en( and res!lts
are addressed%
0- Relations Anal(sis 8ith +hom the person in harge of an ativit( +ill have to +or7
Find the r!ial relations for s!ess and effetiveness- *hese
relations sho!ld "e eas(, aessi"le, and entral to !nit-
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ORGANIZING
Patterns of %epartmentalization
P r i m i t i v e O r g a n i z a t i o n
T o m D i c k M a r y
Y o u
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ORGANIZING
Patterns of %epartmentalization
Functional Departmentalization
President
Finance
Manager
Production
Manager
Sales
Manager Designer
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#cctg Prodn- *ktg Pers-
ORGANIZING
Patterns of %epartmentalization
President
Finance R.%*arketingProduction
%isk +o %iv-/% /abinet %iv
#cctg Prodn- *ktg Pers-
Prod!t $epartmentalization
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#cctg Prodn- *ktg Pers-
ORGANIZING
Patterns of %epartmentalization
President
Finance R.%*arketingProduction
)astern %ivision0estern %ivision
#cctg Prodn- *ktg Pers-
Geographi $epartmentalization
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'ndustry Sales /onsumer Sales
ORGANIZING
Patterns of %epartmentalization
President
Finance R.%*arketingProduction
0estern Sales/% /abinets
Parts #ssembly Finishing
)i5ed $epartmentalization
%isk +oes )astern Sales
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ORGANIZING
Span of /ontrol
$efines n!m"er of &!"ordinate )anagers
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Control of &pan for 3
#needs 09 managers%
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ORGANIZING
Span of /ontrol
$efines n!m"er of &!"ordinate )anagers
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Control of &pan for
#needs managers%
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ORGANIZING Span of /ontrol
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Multiple Levels can increase communication and decision timeNarrow spans of control (tall organizations) are expensive (we have more managers)
Wide spans leave managers with inadequete times to supervise the activities.
Narro+
&pan
8ider&pan
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Fators $etermining 'ffetive &pans
ORGANIZING
N!m"er of relationships that e5ists "et+een managerand s!"ordinates individ!all( and in vario!s om"inations,
and among the s!ordinates themselves-
0
50000
100000
150000
200000
250000
00000
1 2 ! 5 " # $ % 10 11 12 1 1! 15
Number of Subordinates
Relations
hips
N!m"er of relationships +ith n s!"ordinates
n12!n34$5n346For n;., . relationship
n;0, < relationships
n;2, . relationships
O GA G
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Follo+ing Conditions affet a manager to effetivel( s!pervise people
ORGANIZING
Dr.B.G.Cetiner
&!"ordinate *raining
Nat!re of 1o"s &!pervised
Rate of Change of Ativities and Personnel
Clarit( of instr!tion and delegation
&taff Assistane
ORGANIZING
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C!rrent *rends in &pans
ORGANIZING
Dr.B.G.Cetiner
*o inrease the spans of ontrol #dereases n!m"er oforganizational levels%
Res!lts of 8ider &pans
.- &ignifiant red!tion of administrative osts
0- )ore effetive and effiient organization omm!niation
2- Faster $eisions and loser interation "et+een organizational levels
3- Re/!irement for more personnel training for all levels
=- >etter leadership at all levels
ORGANIZING
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Classifiation of Companies
ORGANIZING
Dr.B.G.Cetiner
.- ?nit: prod!tion aording to the C!stomer orders #1o"4shop%
0- )ass Prod!tion
2- Proess
ORGANIZING
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Impat of Information Revol!tion
Red!tion of n!m"er of +orers, more silled +orers, re/!ires
monitoring a"ilities rather than ph(sial one-
ORGANIZING
Dr.B.G.Cetiner
.- @is!alization #a"ilit( to manip!late mental patterns%0- Conept!al *hining #or a"strat reasoning%
2- ?nderstanding of proesses s!h as mahine f!ndamentals
and mahinematerial interations
&ills Re/!ired
3- &tatistial !nderstanding #trends, and meaning of data%
=- Oral and @is!al Comm!niation
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Impat of Information Revol!tion
R'&?L*
Little f!t!re in ind!str( for the !ned!ated emplo(ee
cetinerg@itu edu tr
ORGANIZING
Dr B G Cetiner