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Chapter 5Organizing

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Advanced Organizer

Decision Making

Planning

Organizing

Leading

Controlling

Research

Design

Production

Quality

Marketing

Project Management

Time Management

Ethics

Career

Management Functions Managing Technology Personal Technology

Managing Engineering and Technology

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Chapter Objectives

• Analyze the different forms of an organization

• Explain different organizational structures• Describe the differences in line and staff

relationships • Describe the use and value of teams

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Legal Forms of Organization

• Sole Proprietorship

• Partnership

• Corporations– S-Corporation– Limited Liability Companies

• Cooperatives

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Sole Proprietorship

Ownership:1 personLegal Restrictions: fewDuration: Life of the ProprietorTaxation: Through personal taxAdvantages• Simple to operate• Owner is free to make all decisionsDisadvantages• Owner faces unlimited liability• Difficult to raise capital

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Partnership

Ownership: 2 or MoreLegal Restrictions: FewDuration:Taxation: Through personal taxAdvantages• Pooling of management skills, financial strengthDisadvantages• Divided decision-making authority• Partners face unlimited liability

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Corporations

Ownership: ShareholdersLegal Restrictions: manyDuration: PerpetualTaxation: Double taxesAdvantages• Easy to raise capital, • Easy to transfer ownership, and change mgmt.Disadvantages• Difficult to organize• Double taxes

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S-Corporation

Ownership: Shareholders

Legal Restrictions: many

Duration: No perpetual life

Taxation: Through personal tax

Restrictions• No more than 75 owners • Only one class of stock• No retained earnings

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Limited Liability Companies (LLC)

Ownership: Members

Duration: Perpetual (in most of states)

Taxation: Through personal taxAdvantages• Limited liabilities • No limitation on the number of members• May issue more than one class of stock

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Cooperatives

Ownership: Users

Legal Restrictions: 

Duration: 

Taxation: Tax-free

Advantages 

Disadvantages 

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Organizing:

• Identification and classification of required activities

• Grouping of activities necessary to attain objectives

• Assignment of each grouping to a manager with authority

• Provision for coordination horizontally and vertically

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Purpose of Organizing

“Organizations are not built to serve customers; they are built to preserve internal order. To customers, the internal structure may not only mean very little; it may serve as a barrier.

“Organizational charts are vertical and serving the customers is horizontal.”

George Fisher, CEO, Motorola

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Patterns of Departmentation

• Function

• Product

• Geographic location

• Type of customers

• Process or equipment

• Shift or time

• Numbers

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Span of Control

Number of people reporting directly to each manager

• Number of relationships: n [2(n-1) + n – 1]• Subordinate training• Nature of job supervised• Rate of change of activities and personnel• Clarity of instruction and delegation• Staff assistance

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Line & Staff Relationships

Line functions: those accomplish the main mission of the organization, e.g. production, sales, finance, etc

Staff functions: those help the line accomplish the objectives by providing some sort of advice or service

• Personal staff• Specialized staff: serve the entire organization,

e.g., personnel, procurement, legal counsel, market research

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Line & Staff Relationships

• Line relationships: Superior-subordinate relationships (chain of command) typically represented vertically in organizational charts

• Staff relationships: Advisory in nature, degree of influence may vary– Provide advice on request– Recommendations when appropriate– Must be consulted by line but have no direct

authority– Concurring authority - veto authority over line

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Line and Staff Relationships

• Service: Centralized support functions

– Custodial

– Security

– Medical

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Line and Staff Relationships

Staff

Line

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Modern Organization Structures

• Project and Other Temporary Organizations

• Impact of Information Revolution

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Project and

Other Temporary Organizations • Matrix management

• Team Organization

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Teams

• Small group of people

• Serve interests of its members

• Exchange ideas freely and clearly

• Have common goals

• Committed to achieving goals

• Each team member treated equally

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Impact of Information Revolution

• Computer

• Internet

• Intranet

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Computer Technology’s Impact on the Work Force

• Factory workers will require a higher level of skills– Visualization– Conceptual thinking– Knowledge of production process– Statistical inference– Oral and visual communication– Attentiveness– Individual responsibility

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Impact of Information Revolution

• Disappearance of job security• Shared responsibility of employers (providing opportunity)

and employees (self-improving)• Increasing demand for professional & technical workers• Decreasing demand for operators, laborers, craftsmen,

clerical staff, and farm workers.• Reduced real wages• Continuing downsizing of staff, longer working hours under

high stress.• Increases in part-time, contract, and self-employed workers.