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					                              ORGANIZING
 Review
      Legal Forms of Organization:
            Proprietorship, Partnership, Corporation, and Cooperative

      Organizing Process
      Comparison of subdivision logics (Departmentalization)
       Span of Control, nature of line, staff and service relationships
       Effect of technology on organization structure




cetinerg@itu.edu.tr                                            Dr.B.G.Cetiner
ORGANIZING                   Proprietorship, Partnership, Corporation, and Cooperative


 Legal Forms of Organization
Sole Proprietorship
       Owned and operated by one person
       Simple to organize and shut down
       Has few legal restrictions
       Owner is free to make all decisions
       Profit is taxed only once (in USA)
       Unlimited responsibility for debts
       Difficult to raise capital for growth of business
       Duration of business is limited to the life of proprietor




cetinerg@itu.edu.tr                                                   Dr.B.G.Cetiner
ORGANIZING                  Proprietorship, Partnership, Corporation, and Cooperative


 Legal Forms of Organization
Partnership
       Association of two or more partners
       Has relatively few legal restrictions
       Permits the pooling the managerial skills and judgements
       Divided decision making and authority might cause problems
       Partners have unlimited liability for debts
       In a limited partnership, there must be at least one general partner
       Limited partners are limited only to the extent of their investment


Most common form of business organization



cetinerg@itu.edu.tr                                                  Dr.B.G.Cetiner
ORGANIZING                 Proprietorship, Partnership, Corporation, and Cooperative


 Legal Forms of Organization
Corporations
      Legal 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
      Easiness in transfer of ownership and change management
      More difficult and expensive to organize
      Subject to many rules and regulations
      More taxing is applied

Most large organizations are corporations



cetinerg@itu.edu.tr                                                 Dr.B.G.Cetiner
ORGANIZING               Proprietorship, Partnership, Corporation, and Cooperative


 Legal Forms of Organization
Cooperatives
      Special type of organization owned by users or customers
      Earnings are usually distributed tax free
      Board members managing cooperative are elected by all members




cetinerg@itu.edu.tr                                               Dr.B.G.Cetiner
ORGANIZING

 Organizing
To work efficiently in a team, members need to know the parts to play
(roles) and how these roles relate to one another.

Designing and maintaining these systems of roles is called organizing.




cetinerg@itu.edu.tr                                         Dr.B.G.Cetiner
ORGANIZING
 Organizing
Organizing involves
   1. Identification and Classification of Required Activities
   2. Grouping of Activities to Obtain Objectives
   3. Assignment of a manager to each group with the authority

   4. Provision for Coordination horizontally and vertically


                                                      Top Level


                                                     Middle-Level

                                                  First-Line Managerial Level



cetinerg@itu.edu.tr                                                 Dr.B.G.Cetiner
ORGANIZING
 Organizing by Key Activities
   Effective organizing must first consider basic mission and
   long-range objectives established for the organization and
   the strategy.

       Therefore, key activities have to be considered first




cetinerg@itu.edu.tr                                            Dr.B.G.Cetiner
ORGANIZING
 Organizing by Key Activities
 Ask three questions to identify key activities
1. In what area is excellence required to obtain the company’s objectives
2. In what areas would lack of performance endanger the results?
3. What are the values that are truly important to us in this company?




cetinerg@itu.edu.tr                                          Dr.B.G.Cetiner
ORGANIZING
 Organizing by Key Activities

 After establishing key activities,

 two additional works are suggested:
    1. Decision Analysis
       What decisions are needed to obtain effectiveness in key activities?
        (Futurity, effectiveness on the functions, frequency and results
        are addressed)
    2. Relations Analysis
       With whom the person in charge of an activity will have to work?
       Find the crucial relations for success and effectiveness. These
       relations should be easy, accessible, and central to unit.

cetinerg@itu.edu.tr                                           Dr.B.G.Cetiner
ORGANIZING
 Patterns of Departmentalization

                      Primitive Organization


                               You


                      Tom     Dick    Mary


cetinerg@itu.edu.tr                            Dr.B.G.Cetiner
ORGANIZING
 Patterns of Departmentalization

      Functional Departmentalization
                                   President

      Finance         Production                Sales
                                                         Designer
      Manager          Manager                 Manager




cetinerg@itu.edu.tr                                            Dr.B.G.Cetiner
ORGANIZING
 Patterns of Departmentalization
                                 President


Finance Production                      Marketing              R&D

         CD Cabinet Div                 Disk Box Div.

 Acctg    Prodn.      Mktg   Pers.     Acctg   Prodn.   Mktg    Pers.

                        Product Departmentalization
cetinerg@itu.edu.tr                                        Dr.B.G.Cetiner
ORGANIZING
 Patterns of Departmentalization
                                 President


Finance Production                      Marketing              R&D

         Western Division               Eastern Division

 Acctg    Prodn.      Mktg   Pers.     Acctg   Prodn.   Mktg    Pers.

                        Geographic Departmentalization
cetinerg@itu.edu.tr                                        Dr.B.G.Cetiner
ORGANIZING
 Patterns of Departmentalization
                                  President


Finance Production                       Marketing           R&D

 CD Cabinets          Disk Boxes        Western Sales    Eastern Sales



 Parts    Assembly    Finishing         Industry Sales   Consumer Sales

                       Mixed Departmentalization
cetinerg@itu.edu.tr                                          Dr.B.G.Cetiner
ORGANIZING
 Span of Control
  Defines number of Subordinate Managers

                                                   CEO


               M                           M                           M                           M



  M      M      M      M     M      M      M      M      M      M      M      M      M      M      M      M

 wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww   wwww




                              Control of Span for 4
                              (needs 20 managers)
cetinerg@itu.edu.tr                                                                                Dr.B.G.Cetiner
ORGANIZING
 Span of Control
  Defines number of Subordinate Managers

                                     CEO


     M         M       M      M            M      M      M         M

     wwww      wwww    wwww   wwww         wwww   wwww   wwww       wwww
     wwww      wwww    wwww   wwww         wwww   wwww   wwww       wwww




                      Control of Span for 8
                      (needs 8 managers)
cetinerg@itu.edu.tr                                             Dr.B.G.Cetiner
ORGANIZING                             CEO                       Span of Control
          M                     M                   M                     M
                                                                                        Narrow
  M M M M M M M M M M M M M M M M                                                        Span
 wwww wwww wwww wwww   wwww wwww wwww wwww wwww wwww wwww wwww   wwww wwww wwww wwww



                                                                  CEO

        Wider                    M        M         M        M          M        M        M      M
        Span                    wwww
                                wwww
                                         wwww
                                         wwww
                                                    wwww
                                                    wwww
                                                             wwww
                                                             wwww
                                                                        wwww
                                                                        wwww
                                                                                 wwww
                                                                                 wwww
                                                                                          wwww
                                                                                          wwww
                                                                                                 wwww
                                                                                                 wwww




Multiple Levels can increase communication and decision time
Narrow spans of control (tall organizations) are expensive (we have more managers)
Wide spans leave managers with inadequete times to supervise the activities.



cetinerg@itu.edu.tr                                                                     Dr.B.G.Cetiner
ORGANIZING

  Factors Determining Effective Spans
     Number of relationships that exists between manager
     and subordinates individually and in various combinations,
     and among the suordinates themselves.
  Number of relationships with n subordinates
                                              300000


 n [   2(n-1)+n-1     ]       Relationships
                                              250000

                                              200000

                                              150000
  For n=1, 1 relationship
                                              100000
      n=2, 6 relationships
                                              50000
      n=3, 18 relationships
                                                  0
                                                       1   2   3   4   5   6   7   8   9 10 11 12 13 14 15
                                                                       Number of Subordinates
cetinerg@itu.edu.tr
ORGANIZING

  Following Conditions affect a manager to effectively supervise people

      Subordinate Training
      Nature of jobs Supervised
      Rate of Change of Activities and Personnel
      Clarity of instruction and delegation
      Staff Assistance




cetinerg@itu.edu.tr                                         Dr.B.G.Cetiner
ORGANIZING

  Current Trends in Spans

      To increase the spans of control (decreases number of
      organizational levels)

 Results of Wider Spans
1. Significant reduction of administrative costs
2. More effective and efficient organization communication
3. Faster Decisions and closer interaction between organizational levels
4. Requirement for more personnel training for all levels
5. Better leadership at all levels



cetinerg@itu.edu.tr                                           Dr.B.G.Cetiner
ORGANIZING

  Classification of Companies

      1. Unit: production according to the Customer orders (job-shop)

      2. Mass Production
      3. Process




cetinerg@itu.edu.tr                                         Dr.B.G.Cetiner
ORGANIZING

  Impact of Information Revolution

  Reduction of number of workers, more skilled workers, requires
  monitoring abilities rather than physical one.

  Skills Required
     1. Visualization (ability to manipulate mental patterns)
     2. Conceptual Thinking (or abstract reasoning)
      3. Understanding of processes such as machine fundamentals
         and machine/material interactions
      4. Statistical understanding (trends, and meaning of data)
      5. Oral and Visual Communication
      6. Attentiveness
      7. Individual Responsibility
cetinerg@itu.edu.tr                                             Dr.B.G.Cetiner
ORGANIZING

  Impact of Information Revolution

  RESULT

     Little future in industry for the uneducated employee




cetinerg@itu.edu.tr                                          Dr.B.G.Cetiner

				
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