Organizing the business enterprise -- summary

business essentials -- part 6 -- summary

Common structural and operating components and all businesses include a series of jobs to be done and a specific overall purpose. Each organization must develop the most appropriate organizational structure -- the specification of the jobs to be done in the ways in which they relate to one another.

Firms prepare organization charts to clarify structure and to show employees were they fit into a firm's operations. Each box represents a job, and solid lines define the chain of command, or reporting relationships. The charts of large firms are complex and include individuals and many levels. Because size prevents them from charting every manager, they may create single organization charts for overall corporate structure and separate charts for divisions.

The building blocks of organizational structure.

Two activities constitute the building blocks of all organizations. the process of identifying specific jobs and designating people to perform them leads to job specialization. After they're specialized, jobs are grouped into logical units -- the process of departmentalization period departmentalization follows one (or any combination) of five forms: (1) customer departmentalization; (2) product departmentalization; (3) process departmentalization; (4) geographic departmentalization; (5) functional departmentalization. Larger companies take advantage of different types of departmentalization for various levels.

The reporting process.

After jobs have been specialized and departmentalized, firms established decision-making hierarchies. They define reporting relationships so everyone will know who has responsibility for various decisions and operations. The development of this hierarchy results from a three-step process: (1) assigning tasks: determining who can make decisions and specifying how they are to be made; (2) performing tasks: implementing decisions that have been made; and (3) distributing authority: deciding whether the organization is to be centralized or decentralized. With fewer management layers, decentralized firms reflect a flat organizational structure.

Popular new forms of organizational design.

Most firms rely on one of four basic forms of organizational structure: (1) functional organization; (2) divisional organization; (3) matrix structure, or (4) international structure. As global competition becomes more complex, companies may experiment with ways to respond. Some adopt truly global structures, acquiring resources and producing and selling products and local markets without consideration of national boundaries. Organizations continue to seek new forms of organization that permits them to compete effectively. Four of the most popular new forms are: (1) the boundaryless organization; (2) the team organization; (3) the virtual organization; and (4) the learning organization.

Intrapreneuring

The formal organization is the part that can be represented in chart form. The informal organization -- everyday social interactions among employees that transcend formal jobs in job interrelationships -- may alter formal structure. There are two important elements and most informal organizations: (1) informal groups and (2) the grapevine. Many firms support intrapreneuring -- creating and maintaining the innovation and flexibility of a small business within the confines of a large bureaucratic one.