Unit1_Nature of organization.pdf

Unit1:Nature of Organization
Course Instructor
Jasmin James
EE Department ,GCET.
102003402_FE&BM_GCET

Aim of organizations/ corporate
objectives
•Once an organization has a purpose and undertakes
activities to achieve those aims, it will require a legal
identity.
•Need for corporate objectives: the question is not can I do
something constructive, instead it is which of the many
things would be best to do.
•Successful organizations therefore ensure that everyone is
not only engaged in constructive tasks but can also see the
benefit of the contribution they are making and so are
motivated to achieve their aims.

Vision Statement
• A vision is a statement about what your
organization wants to become. It should
resonate with all members of the organization
and help them feel proud, excited, and part
of something much bigger than themselves.
• A vision should stretch the organization’s
capabilities and image of itself. It gives shape
and direction to the organization’s future.
• Visions range in length from a couple of words
to several pages. Shorter vision statements
because people will tend to remember their
shorter organizational vision.

Mission statement
• Mission or Purpose is a precise description of
what an organization does.
• It should describe the business the
organization is in. It is a definition of “why”
the organization exists currently. Each
member of an organization should be able to
verbally express this mission.
• A mission statement articulates the
philosophy of a company towards business in
specific and society in general.

Vision
• To be among the global top 10 by 2010
Mission
• To help customers achieve their
business objectives by providing
innovative, best-in-class consulting, IT
solutions and services. Make it a joy for
all stakeholders to work with us

Vision
• “to move with velocity to drive
profitable growth and become an even
better McDonald's serving more
customers delicious food each day
around the world.”
Mission
• to be our customers' favourite place
and way to eat

Vision
• To be The Leader in the Indian
Automobile Industry, Creating Customer
Delight and Shareholder's Wealth; A
pride of India
• Mission
• Modernization of the Indian Automobile
Industry. - Developing cars faster and
selling them for less.

Mission
We will discover, develop and successfully market pharmaceutical products
to prevent, diagnose, alleviate and cure diseases.
We shall provide total customer satisfaction and achieve leadership in
chosen markets, products and services across the globe, through
excellence in technology, based on world-class research and
development.
We are responsible to the society. We shall be good corporate citizens
and will be driven by high ethical standards in our practices.
Vision
• Our vision is to be a leading pharmaceutical company in India and to
become a significant global player by providing high quality, affordable
and innovative solutions in medicine and treatment.

Example Corporate Social Responsibility
CSR Mission Statement:
1.To be a responsible corporate citizen for nurturing
human values and concern for society, the environment
and above all, people
2.To contribute towards community development and
nation building

Objectives of an Organization
Objectives are goals established to guide the
efforts of the company and each one of its sections and
Departments. It is the function of management not to
Merely laid down objectives and unambiguous term but fix
Priorities and devise ways of balancing these objectives.
Management by Objectives (MBO)
It is a process in which manager and his
subordinates jointly agree upon a set of activities and
targets and goals keeping in view of all the objectives of
enterprise and work for it.

Management By Objectives (MBO)
• Once a mission statement has been selected and agreed
upon, the management of the organization must
communicate it to all members within the organization.
• To arrive at tasks for all members of the organization
that contribute to this central task clearly involves a
great deal of subdivision and is far more than one person,
or even a small team, is likely to be able to do.

Important steps in M.B.O
▪Defining corporate objectives
These are long term objectives of top management
mainly concerned with the survival, growth, image and
profit of the organization. Once these are set, they are
conveyed to all departments
▪Unit sub goals
Having settled corporate objectives, the short term
objectives are set for each department
▪Individual targets
This involves fixing individual target for each manger at
different levels and departments

Important steps in M.B.O (Contd…..)
▪Periodical performance review
Periodical meetings and discussions are held between
superiors and subordinates towards accomplishment of the
targets
▪Evaluation of results and reappraisal of objectives
Discussions are held between superior and subordinate to
evaluate and appraise the results of performance of latter
against specified standards.

Key Result Areas for
Well-managed Organizations
• Market Share
• Innovation
• Productivity
• Physical and Financial Resources
• Profitability
• Manager performance and Development
• Worker performance and Attitude
• Social Responsibility

Important Points to be noted while
setting objectives
❖Quantifiable
❖Achievable
❖Time bound
❖Compatible
❖Measurable
Objectives should be

Quantifiable objectives
1. How much to sell (value of unit sales
volume)
2. What to sell (the mix of product lines)
3. Where to sell (the markets/segments
that take the company towards its
marketing

Quantifiable objectives
• WHAT am I going to do? This are best
written using strong, action verbs such as
conduct, develop, build, plan, execute, etc.
This helps your objective to be action-
orientated and focuses on what’s most
important.
• WHY is this important for me to do?
• WHO is going to do what? Who else need to
be involved?
• WHEN do I want this to be completed?
• HOW am I going to do this?

Achievable objectives
• Objectives need to be achievable, if the
objective is too far in the future, you’ll
find it difficult to keep motivated and
to strive to attain it.
• Objectives, unlike your aspirations and
visions, need to be achievable to keep
you motivated. I do feel that objectives
need to stretch you, but not so far that
you become frustrated and lose
motivation. 102003402_FE&BM_GCET

Time bound objectives
• Time-bound means setting a deadlines
for the achievement of the objective.
Deadlines need to be both achievable
and realistic.
• If you don’t set a time you will reduce
the motivation and urgency required to
execute the tasks. Timeframes create
the necessary urgency and prompts
action.

Measurable objectives
• If the objective is measurable, it means that the
measurement source is identified and we are able to
track the actions as we progress towards the
objective. Measurement is the standard used for
comparison. For example, what financially
independence means to me, may be totally different
compared to what is means for you.
• As it’s so often said if you can’t measure it, you
can’t manage it! It’s important to have measures that
will encourage and motivate you on the way as you see
the change occurring, this may require interim
measures. Measurements go along way to help us to
know when we have achieved our objective.

Legal establishment of organizations
Sole trader/ proprietor – a single owner, a sole trader is
the simplest form of business and is very common.
Features
1. Accounts do not have to be disclosed
2. Total control of the business. One man decisions.
3. Personal services to the customers can be offered
4. All the profits and the debts belong to the owner.
5. Difficulty in getting extra money for development or
expansion of the business
6. Difficulties in managing business in case of illness or while
going on holidays
7. High cost enterprise in absence of benefits like
“economies of scale”

Partnerships – when there are number of people involved
who are part-owner of the business. Profit will be split
between the partners.
1. The liability and decision making are shared
2. Less formality and expense
3. Accounts do not have to be publicly disclosed to
competitors
4. Possibility of raising large amount of capital
5. Partnership could be suddenly dissolved if one partner dies
or goes bankrupt
6. Holidays and illness can be taken care

Cooperatives – involves a voluntary association of people,
called members, who operate an enterprise collectively.
The aim may not be necessarily to make a profit.
Features
• Open and voluntary membership
• Interest paid on capital is limited
• Business is conducted for the mutual benefit of the
members and all profits are shared. In particular, people
are paid on the basis of what they need rather than on
the basis of ‘market rate for the job’

• Company-The word company is traced from a
1150 A.D.(CE) O.Fr. term compaignie or "body
of soldiers" and from L.L. companio
(companion). The word's meaning of
"subdivision of an infantry regiment" is from
1590.
• The use of the word in a sense of "business
association" was first recorded 1553, having
earlier been used in reference to trade guilds
(1303). The abbreviation co. dates from 1759.

Companies – has a separate legal identity from its owners
and will continue to operate even if the owners and
managers change. It is owned by shareholders who each
have a liability which is limited to the nominal value of
their shares.
• The process of creating a company is called incorporation.
The process requires that two documents are drawn up:
i) The memorandum of Association – relates to the external
affairs of the company giving information such as the
company name, its registered office, the purpose of the
company, and its share capital;
ii) The articles of Association – relate to the internal
operation of the company and include such things as the
right of the shareholders and the powers of its
directors.

Memorandum of association
• The memorandum of association of a
company, often simply called the memorandum
(and then often capitalized as an abbreviation
for the official name, which is a proper noun
and usually includes other words), is the
document that governs the relationship
between the company and the outside world.
It is one of the documents required to
incorporate a company in the United Kingdom,
Ireland and India, and is also used in many of
the common law jurisdictions of the
Commonwealth.

Articles of association
• Articles of association typically cover
the issuing of shares (also called stock),
the different voting and dividend rights
attached to different classes of share,
restrictions on the transfer of shares,
the rules of board meetings and
shareholder meetings, and other similar
issues.

• Public limited companies: larger than private companies.
Accounts have to be disclosed every year.
• Private companies: Owned by shareholders but, unlike
the public company, the shares cannot be offered to the
public. Shares are offered to company employees. Do not
have to disclose as much information in their accounts as
public companies. Require only one director but must have
a company secretary.
Features
1. Shareholders have limited liability
2. Extra capital can be raised in public companies by issuing
more shares
3. The accounts have to be disclosed publicly
4. The company is more controlled and regulated by
outsiders than sole traders or partnerships

Franchising: It is a license to sell the franchisor’s product
or service. In return for the franchise fee and other on-
going payments the business receives the support of the
franchisor, including a brand name or label under which
they are licensed to trade and full support for marketing
and training. Sole traders, partners and companies can
operate as franchises.
Features:
• Limited outlay and risk due to the support of franchisor
• The product has been tested, marketed and there is a
well-known image. In addition, the franchisor may provide
large-scale advertising.

Strategies for survival
• Effective product development: Always ensures that its
products can be developed more rapidly than its
competitor.
• Manufacturing-based strategy: Ensures that company is
constantly in possession of most cost-effective
manufacturing facility. Outsourcing of the
activity/function.
• Strategic marketing: Match is found between customers’
needs and the attributes of the product, at a profit.
Long-term view about customers’ expectations and
development of product is adopted. It helps to make
significant input to business planning and corporate
strategy by providing forecasts of demand in terms of
products and quality which are used to produce budgets
and prepare cash-flow forecasts, as well as allowing
decisions on company expansion or contraction.

Effective product development: Always ensures
that its products can be developed more rapidly than
its competition.

Manufacturing-based strategy: Ensures that
company is constantly in possession of most cost-
effective manufacturing facility. Outsourcing of the
activity/function

Strategic marketing: Match is found between
customers’ needs and the attributes of the product, at
a profit. expansion or contraction.

Strategies for survival
• Market penetration: involves maintaining sales by
attracting more customers through lower pricing or by
increasing awareness of your product through advertising.
• Product diversification – putting a new product into an
unknown market. A risky proposal!
• Simultaneous engineering: Simultaneous engineering is a
procedure in the technical development. With this
procedure it is possible to reduce the development costs
and time to market of the new product

Market penetration

Product diversification

Organization structures
• It is the way the organization allocates its resources
towards meeting its strategic aims. It is commonly
defined as organization charts.
– Hierarchy structures: hierarchy of authority,
specialization of tasks, a system of rules which is
tightly enforced throughout the organization,
impersonality in the application of rules
– Matrix organization: project responsibility as well
as functional responsibility
– Informal organizations: small group of people
working closely within the formal organizational
structure

Hierarchy structures:

Matrix organization:

Informal organizations:

Need for organizational change
• New investments in plant or products, requiring a new
organization or different skills
• Staff developing and being promoted, creating a need
for an organization change to accommodate them or
fill their previous positions
• External pressures: Changing markets, changing
customer requirements, changing legislation and
regulatory conditions, economic conditions such as
the availability of capital or the level of taxes,
supplier changes, new suppliers being added,
competitive pressures, technology changes, takeovers
and mergers

Barriers to change
• The inertia within the organization, caused by the norms
that have been operating over several years. Norms are
shared values within the organization (‘that’s the way we
always do things around here’)
• Employee feel threatened by the change
• Employee may feel that they are no longer in control of
their own career paths
• Uncertainty about future roles
• Employee who are put into a new role by the change may
feel that they would not be able to cope.
• Past experience within the organization often determines
future behavior.

Managing change
• Setting the vision
• Communicating the change
• Project managing the change
• Flexible policies – encourage feedback and comment from
all employees, customers and suppliers and if require
modify the policies
• Putting people first – people problem represent the
biggest obstacle in managing any change. All employee
must be treated as individuals and not groups.
Uncertainty and insecurity are the biggest barriers to
change, especially, where values need to be altered

Sample organization charts

Case study: Barriers to learning
• Sam File, Maintenance Engineer in the Dinsher shop, had heard that the
company was encouraging employee at all levels to take more interest in the
products being developed and to make suggestions on how they could be
improved.
• He approached John – a design engineer. ‘Hello, Mr. John, said Sam cheerily
when John came out. ‘This drawing looks a bit funny. Can you tell me how
you came to determine the exact strength of the flap?
• Sam’s question was quite innocent; he genuinely wanted to learn. John
misunderstood his intentions. What he saw was a young man in a boiler suit
from the shop floor questioning his design skills.
• John replied in an irritated manner “I don’t think I have the time”. Anyway,
I don’t think you would understand if I did”
RESULT
• Sam was taken aback. He turned and walked back to his machine. He
resolved never again to believe the company’s propaganda about breaking
down barriers between different groups and encouraging everyone to
participate in improving the quality of product.
QUESTION: WHAT IS THE TOTAL GAIN? HAD LEARNING BEEN SUPPORTED?
WISDOM: LOOK AT THE INTENTION, WORDS ARE MISLEADING
• *********

Unit1_Nature of organization.pdf

Recommended

Recommended

More Related Content

Similar to Unit1_Nature of organization.pdf

Similar to Unit1_Nature of organization.pdf (20)

Recently uploaded

Recently uploaded (20)

Unit1_Nature of organization.pdf