internal factors that impact business ease of starting your own business
TRANSCRIPT
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Internal factors that impact businessEASE OF STARTING YOUR OWN BUSINESS
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External factors that impact business
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Principles of organization – Chapter 9 Henri Fayol
Max Weber
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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
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Henri Fayol 3. Division of Labour – Responsibilities are divided into
areas of specializationList 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 interestsEx: Sports teams
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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 circumstancesEx: Large organization vs small organization
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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
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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 managersThus, workers should just do as they are told
What is the problem with this?
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Max Weber In addition, Weber also emphasized 4 things:
Job descriptionsWritten rules, guidelines and detailed recordsConsistent procedures, regulations and policiesStaffing and promotion based qualifications
Weber believed in Bureaucracy
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Centralization vs. decentralization of authority
Centralized authority – decision making authority is maintained at the top level of management.Ex: at headquartersWhat does CA enable a company to do?
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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
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Advantages of informal organization Forges camaraderie and teamwork amongst workers Fosters creativity
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Centralization vs. decentralization of authority
Decentralized authority – decision making authority is given to lower-level managers and employeesWhat advantages could this have?
30 SECONDS TO THINK OF AN ANSWER15 SECONDS LEFTTIME IS UP
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Adv and disadv of centralized authority
ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP
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Centralization vs. decentralization of authority
Advantage Disadvantage
Centralized authority
Greater top management control
Less responsiveness to customers
More efficiency Less empowerment
Simpler distribution system
Interoganizational conflict
Consistent brand/corporate image
Lower morale away from headquarters
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ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP
Adv and disadv of decentralized authority
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Centralization vs. decentralization of authority
Advantage DisadvantageDecentralized authority
Better adaptation to customer wants
Less efficiency
More empowerment of workers
Complex distribution system
Faster decision making Less top-management control
Higher morale Diverse corporate image
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Span of Control The optimal number of subordinates a manager supervises
or should supervise
When work is standardized, one supervisor can manage many workersEx: assembly line workers
When work is less standardized, supervisors manage less workersWhy?
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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”
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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 managerIn a flat organizational structure, workers are empowered
to make decisions
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Adv and disadv of a tall organizational structure
ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP
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Advantage Disadvantage
Tall organizational structure
More control by top management
Less empowerment
More chances for advancement
Higher costs
Greater specialization Slower decision making
Closer supervision Less responsiveness to customers
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Adv and disadv of a wide organizational structure
ONE MINUTE TO THINK OF AN ANSWER30 SECONDS LEFTTIME IS UP
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Advantage Disadvantage
Wide organizational structure
Reduced costs Fewer chances for advancement
More responsiveness to customers
Overworked managers
Faster decision making Loss of control
More empowerment Less specific management expertise
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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
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Departmentalization
Advantages:Improves efficiencySaves costsProfessional development of employeesEasy for top management to direct and control activities
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Departmentalization Disadvantages:
Departments may be isolated – lacking communicationEmployees may identify with department goals instead of
the company’s goalSlow response to external changesLess diverse skill base in employeesGroupthink tendencies
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Organizational models Line organization – ‘Top down’ model, where orders come
from the boss, and employees follow ordersEffective if a business is small, ineffective when a
business is large… Why?They lack specialists and departmentalization to
handle diverse situations
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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
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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?
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Communication flow Chain of command – line of authority that moves from the top
of a hierarchy to the lowest levelWorker manager supervisor department head …
CEO
5 types of communication flowUpwardDownwardHorizontal/lateral DiagonalExternal
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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
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Communication flow 2. Downward – communication that comes from superiors
directly to subordinates.
Used to transmit work-related information to employeesGiving instructionsFeedback on performance
Methods: meetings, letters to employees
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Communication flow 3. Lateral/Horizontal – communication between people at
the same levels of hierarchyManager to manager, employees to employees
Advantages: saves time, facilitates coordination and cooperation, provides mutual support
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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
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Communication flow External – communication between managers and external
groups/companies
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HOW HAVE PEOPLE BEEN INNOVATIVE? Adapting to change, that’s how
What is adapting to change?
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Restructuring Goal: to redesign on organization such that is can more
effectively and more efficiently serve its customers
Inverted organization – upper level employees (supervisors, managers) are expected to support lower level employees, not to direct and give ordersWhat are some possible advantages?Advantages: front-line workers are generally more
educated, customer satisfaction is high, better pay