Business Organization: Mission, Vision, and Types
Mission, Vision, and Aims of a Company
A company’s mission is its core business activity. The vision, however, is the desired future state it aims to reach within a given time. The aims and/or goals are the means by which to materialize the vision.
Essential Management Functions
Taylor’s Responsibilities of Management:
- Examine each piece of work.
- Select staff.
- Train and coach operators.
- Foster cooperation between management and workers.
Henri Fayol’s Six Key Functions:
- Financial: Obtaining and distributing capital.
- Accounting: Recording and controlling income and expenditure.
- Commercial: Market research, sales, and purchases.
- Technical: Manufacturing, maintenance, and technical services.
- Security: Protection of property and persons.
- Administrative and Direction: Management should:
- Plan: Create a plan of action.
- Organize: Manage human and material resources.
- Direct: Instruct each employee.
- Coordinate: Streamline activities.
- Control: Enforce the orders issued.
Types of Organizational Structures
1. Linear or Military Organization
A simple, old structure with a vertical chain of command. No one takes orders except from their superiors.
Advantages:
- Simplicity and minimal bureaucratic activity.
- Unity of command, with clear responsibilities and high discipline.
- Fast transmission of orders, facilitating action development.
- Quick and easy decision-making.
Disadvantages:
- Deficient instructions and lack of staff input.
- Overload of tasks on a limited number of people, leading to low delegation as the company grows.
- Lack of expertise; the system is inadequate when staff is not qualified and does not promote training.
2. Functional Organization
Primarily driven by Taylor, this structure divides production work into specialized units. Taylor believed that in a linear organization, a chief must possess a broad skill set: 1. intelligence, 2. skills, 3. education, 4. energy, 5. will, 6. common sense, 7. skill, and 8. good health. To remedy this, he proposed that each responsible person for a single activity should meet 4 or 5 of these characteristics.
The main drawback is the rupture of unity of command, a key element of the linear organization.
3. Line and Staff Organization
This structure attempts to synthesize previous systems, eliminating their respective problems. It incorporates a group of specialists and specialized areas into the linear scheme, but these specialists have no direct power over the organization. They act only through the chain of command, advising those in command but having no responsibility for the staff. Counselors advise not only the leadership but also specific areas.
4. Committees
Committees are working groups composed of individuals representing different areas of the company. They serve various purposes. The most common are quality committees, but they can also be convened for continuous improvement, strategic and operational planning, new product development, etc. Other names include: commission, circle, workgroup, team, etc. These committees may be temporary (ad hoc) or permanent.
Research and Development (R&D)
Research and Development (R&D) requires significant expenditure. This puts small businesses at a disadvantage compared to large corporations, as R&D often involves expensive equipment and highly qualified personnel with high salaries.
Main Problems Facing R&D:
- High cost of R&D.
- Diversity of new products required.
- Inability to assess the investment accurately. Usual investment weighting criteria are based on return on investment. However, with new, highly innovative products and high R&D costs, predicting market impact is difficult.