1. Introduction to Business
ORGANIZING THE BUSINESS
Chapter # 8
SECTION: A3 and A4
Organizing is the management function of
(Designing and Developing a Blueprint or
structure) so that the firm’s objectives can be
3. Organization Structure
The arrangement of work to be done in a business.
Managers need to keep the following issues in mind
organizing the business :
Clearly stated, meaningful, specific, and challenging.
The objectives must give meaning to the business and what it is attempting
to accomplish. The objectives could be multiple (Like, profit, market
share, human resource development) of a business that provides the
direction for those organizing the firm.
Coordination must be in Organizational, Departmental,
Subunit and Individual Objectives. They all must fit together.
Team Work must be there.
Should not underestimate the group members.
4. Formal and Informal
The management designed official structure of
the business. The formal organization is
displayed in the organization chart, the graphical
representation of the formal structure of the
The network of personal and social relationships
that emerges when people work together.
5. Formal Authority
The right to give orders
Is the process by which authority is distributed or
pushed downward in an organization.
That is, giving an employee at a lower level in
the organization, the responsibility for a given task as
well as the authority to carry it out.
6. Formal Authority
Each position in the managerial hierarchy has the
line authority or unquestioned direct authority to
make decisions and take actions.
Example: At Pizza Hut, the manager has authority
over the sales people and the cooks.
An advisory authority in which a person studies a
situation and makes recommendations but has no
authority to take action.
7. Centralization and
An organization in which all or nearly all authority to
make decisions is retained by a small group of managers
and hold most of the power and authority.
An organization in which a significant amount of the
authority to make decisions is delegated to lower- level
8. Organization Chart
A graphic blueprint, or map of
positions, people and formal
authority relationships in the
9. Top Manager
Director of Engineering
Staff Position –
expert in law
ORGANIZATION CHART : LINE AND STAFF AUTHORITY
10. Principles of Organizing
The guidelines that managers can use in making
decisions. Some principles are used exactly as they are
stated: other times they are modified or completely
Division of Labor
A principle of organization that a job can be performed
more efficiently if the jobholder is allowed to specialize.
Unity of command
The principle of organization that no employee should
report to more than one superior. Subordinates should
know from whom they receive the authority to make
decisions and do the job.
11. Principles of Organizing
The principle of organization that authority and
responsibility should flow in a clear unbroken
line from the highest to the lowest manager.
Because managerial levels are arranged in a
hierarchy, the importance of the scaler chain
from Top to Bottom is obvious.
Cutting out entire layers of management.
12. Principles of Organizing
Span of Control
The principle of organization that limits the number
of subordinates reporting to a supervisor. There is a
limit to the number of subordinates one superior
However, some supervisors can handle more
subordinates than others. The minimum span of
control depends on many factors, such as type of skill
and the experience levels of subordinates, the nature
of the job, the supervisor’s skill in handling the
subordinates, the situation and the time available to
do the job.
13. How to Organize a Business
A structure in which each unit or department
has a different set of activities and
14. How to Organize a Business
Specific set of activities
Day by day become skilled
15. How to Organize a Business
De-emphasizes the exchange of ideas and cooperation with
Each department only concentrated on their own department
If necessary the coordination, the situation becomes
Lack of flexibility
Slow in reacting