Business Organization and Management Process
Organizational Models
Companies can adopt various organizational structures, each with its advantages and disadvantages:
- Linear or Hierarchical: Based on the direct authority of the head over their subordinates.
- Advantages: Clarity, simplicity, and well-defined responsibilities.
- Disadvantages: Undemocratic, little relationship between departments, and unspecialized management.
- Functional: Lower levels are connected to different specialists, each an expert in their function.
- Advantages: Expertise develops, and orders come directly from specialists.
- Disadvantages: Potential for conflicting commands.
- Matrix: Combines two organizational structures, usually departmentalizing functions for products or projects.
- Advantages: Flexible structure that can adapt, with departmental structures and hierarchical subordination.
- Disadvantages: Can be complex.
- Staff: A consultative role; the staff advises and helps make decisions but has no authority over anyone and is not commanded by anyone (often close to the linear/hierarchical model).
- Committee: A group of people, usually department heads, who make decisions together (similar to the functional model).
Understanding the Organization
An organization chart is a graphic representation of the formal structure of the company, including its functions, levels of authority, and channels of information transmission. For optimal utility, it should:
- Be easily understood.
- Present important company elements, including the names of each unit.
- Show the existing hierarchy.
Types of Organization Charts
- Vertical: More units at the top.
- Horizontal: More power to the left.
- Radial: More power in the middle.
- General: Represents the whole structure of the company.
- Detailed: Focuses on a specific part of the company.
The Management Process
Managing a company involves managing human and material resources in the best possible way to achieve its objectives. This includes several key functions:
Planning Function
Consists of determining the objectives and establishing the strategies and tasks necessary to achieve them. Elements of a plan include:
- Objectives: The results expected from the plan.
- Policies: The general guidelines the enterprise will follow.
- Procedures: Specify the activities required to carry out an action.
- Rules: Set what can and cannot be done in certain situations.
- Budgets: The monetary quantification of the plans, including revenues and expenditures.
Organizing Function
Involves designing a structure in which all tasks are defined, and each person is assigned their responsibilities and authority. This includes:
- Formal Organization: Defined by the company, placing each element in its most appropriate place.
- Informal Organization: Arises spontaneously between people and is a natural part of the formal organization.
Organizational Structure
The formally defined organizational structure of the company. Any company must confront a set of more or less complex jobs. This implies:
- Dividing the company’s activity into groups, so each person is assigned tasks for which they are trained (Division of Work).
- Assigning each group of activities to a responsible group of individuals.
- Establishing mechanisms to ensure good coordination among all groups of activities (Communication).