Organizational structure is the internal, formal framework of a business that shows the way in which management is linked together and how the authority is transmitted. It is basically a framework used to describe the hierarchy in an organisation. Every business needs to have their own organizational structure as it helps in identifying the job at each level of an individual followed by its functions and it also assists in obtaining their own goals for development. There is a need for every type of organisation to have their own structure specially when it comes to large enterprises as it becomes difficult activities of the various departments and functions. A business will opt for an organisation structure which is best suited to them and the way they would like to be working, and the chart they create will reflect this. A flat organisation is one that has eliminated most or all Continue reading
Management Concepts
Six Elements of Organizational Design
Organizational design is a process of developing and changing the organization’s structure by its managers. It is a chart containing the reporting structure i.e. who reports to whom. Organizational structure is thus a framework on which an organization is patterned for coordinating and carrying out organizational tasks. Organizational design involves decisions about the following six elements: 1. Work Specialization: Work specialization describes to which the overall task of the organization is broken down and divided into smaller component parts. For example, one person would paint a wall and another person fixes a door. So by breaking jobs up into small tasks, it could be performed over and over every 10 seconds while using employees who had relatively limited skills. The main thought of this process is that the entire job is not done by an individual and it is broken down into steps, and a different person completes each step. Continue reading
Importance of Decision Making in Management
Decision making is a process of selecting the best course of action from among many alternatives. It is useful for the successful operation of organizational activities. All the managerial functions such as planning, organizing, directing and controlling are determined by the decision. The following points describes the importance of decision making in the organization. 1. Pervasive Function Decision making is essential in each level of management. Top level management makes strategic decisions such as planning, organizing, directing and controlling. Middle level management makes tactical decisions such as division of works, fixation of authority and responsibility, integration of efforts etc. Operating level management makes regular operating decisions such s preparation of schedule of daily works, divisions of works, delegation of authority etc. Thus, decision making function is performed in all the levels of management according to needs. This is necessary to bring uniformity and smoothness in the organizational performance. 2. Indispensable Continue reading
Management by Objectives (MBO) Derivatives
One of the pre-requisites for effective implementation of Management by Objectives (MBO) is a clear thinking at the corporate level translated into long-term plans. Many organizations have over the years, implemented MBO and improved their operations and performance. Effective implementation of MBO requires a good reporting system. This is necessary for taking timely remedial action in case of deficiency is noticed in any area. As organization grows in size, this reporting system becomes complex and time consuming. It may not be possible for top management to directly supervise each and every activity at lower interested in critical activities rather than every activity. Thus, as a bye product of MBO, large organizations introduced what is called Management By Exception (MBE). In this management technique, higher levels of management will concentrate only on exceptional situations, i.e., critical areas. Both MBO and MBE are scientific forms of management. However, they can be successful Continue reading
Management Planning and Control
The essence of the management process is decision-making. Decision making is an unavoidable and continuous management activity. It may be directed towards some specific objectives, or it may result as a reaction of environmental factors as they occur. The decision-making process should be both efficient and effective. It would be effective when management’s objectives are achieved. It is said to be efficient when objectives are realized with the minimum use of resources. The process of decision-making involves two basic management functions of planning and control. Planning Function of Management The decision-making process starts with planning. Planning is a statement of what should be done, how it should be done and when it should be done. It is the design of a desired future state of an entity and of the effective ways of bringing it about. Its basic purpose is to provide guidelines for making decisions. Continue reading
Methods of Corporate Restructuring
The important methods of Corporate Restructuring are: Joint ventures Sell off and spin off Divestitures Equity carve out (ECO) Leveraged buy outs (LBO) Management buy outs Master limited partnerships Employee stock ownership plans (ESOP) 1. Joint Ventures Joint ventures are new enterprises owned by two or more participants. They are typically formed for special purposes for a limited duration. It is a combination of subsets of assets contributed by two (or more) business entities for a specific business purpose and a limited duration. Each of the venture partners continues to exist as a separate firm, and the joint venture represents a new business enterprise. It is a contract to work together for a period of time each participant expects to gain from the activity but also must make a contribution. For Example: GM-Toyota JV: GM hoped to gain new experience in the management techniques of the Japanese in building high-quality, Continue reading