Goals

Understand important principles in designing an effective organization

Determine when each form of business ownership is most appropriate

Recognize other specialized business ownership forms

The Main Idea

This lessons introduces the major forms of business ownership and outlines the strengths and limitations of each

Organizational Structure for Businesses

Mission Statement—short, specific written statement of the reason a business exists and what it wants to achieveGoal—precise statement of results the business expects to achieve

Policies—guidelines used in making consistent decisionsProcedures—descriptions of the way work is to be done.

Principles of Effective Organization

Responsibility—obligation to complete specific workAuthority—right to make decisions about how responsibilities should be accomplishedAccountability—taking responsibility for the results achievedUnity of Command—clear reporting relationship for all staffSpan of Control—the number of employees who are assigned to a particular work task and manager

Types of Organizational Structures

Organization chart—diagram that shows the structure of an organization, classification of work and jobs, and relationships among those classifications

Functional organizational structure-work is arranged within main business functions (production, operation, marketing, finance)

Matrix organizational structure—work is structured around specific projects, products, or customer groups