Chapter 5Organizing

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

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

Legal Forms of Organization

• Sole Proprietorship • Partnership • Corporations

– S-Corporation– Limited Liability Companies

• Cooperatives

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

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

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

S-Corporation

Ownership: ShareholdersLegal Restrictions: manyDuration: No perpetual lifeTaxation: Through personal taxRestrictions• No more than 75 owners • Only one class of stock• No retained earnings

Limited Liability Companies (LLC)

Ownership: MembersDuration: 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

Cooperatives

Ownership: UsersLegal Restrictions: Duration: Taxation: Tax-freeAdvantages Disadvantages 

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

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

Patterns of Departmentation

• Function• Product• Geographic location• Type of customers• Process or equipment• Shift or time• Numbers

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

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

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

Line and Staff Relationships

• Service: Centralized support functions– Custodial– Security– Medical

Line and Staff Relationships

Staff

Line

Modern Organization Structures

• Project and Other Temporary Organizations

• Impact of Information Revolution

Project and Other Temporary Organizations

• Matrix management• Team Organization

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

Impact of Information Revolution

• Computer

• Internet

• Intranet

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

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.