Understanding Business Administration and Organizational Structures

Posted on Oct 7, 2024 in Economy

Administration

Administration is derived from the prefix “ad” (to) and “ministratio” (minister), signifying subordination or obedience. It refers to a function performed under command, a service being provided.

Definitions of Administration

GP Terry: “It consists in achieving a predetermined objective through the efforts of others.”

Henry Fayol: “It involves managing, organizing, commanding, coordinating, and controlling.”

Administration: “The function of getting things done through others” or “getting results through others.”

Coordination

Coordination refers to the harmonious execution of actions.

Management Features

Universality

Administration occurs within any social organism, requiring systematic coordination of resources.

Specificity

While accompanied by other phenomena, administration remains distinct.

Unit of Hierarchy

All leaders in a social organism are involved in administration to varying degrees.

Unit of Time

Although administration has distinguishable stages, it is a single, continuous process.

Organizational Role

Managing and directing routing concepts, leading, commanding, and executing.

Fayol’s Principles

Fayol’s principles are based on: division of labor, an administrative process, and guiding technical criteria.

Six Types of Operations (Fayol): Technical, commercial, financial, security, accounting, and administrative. Today, research and development would be included.

  • Technical Operations: Production, manufacturing.
  • Commercial Operations: Buying, selling, exchange.
  • Financial Operations: Capital management.
  • Security Operations: Protection of property and personnel.
  • Accounting Operations: Inventories, balance sheets, statistics.
  • Management Operations: Control, forecasting, organization, coordination.

Fayol’s View of Administration

Fayol emphasizes the general action program, building the social body, coordinating efforts, and harmonizing actions.

Key Elements of Administration

  • Provide: Plan and develop programs.
  • Organize: Build the company’s structure.
  • Lead: Guide the company.
  • Coordinate: Harmonize all actions and efforts.
  • Control: Ensure adherence to rules and orders.

Importance of Senior Management

Senior management focuses on tangible functions (sales, purchasing, production), making administration practical and important.

Principles and Rules

An organization’s success depends on applying principles and rules.

Fayol’s 14 Principles of Management

  • Division of Labor
  • Authority
  • Discipline
  • Unity of Command
  • Unity of Direction
  • Subordination of Individual Interests to the General Interest
  • Remuneration
  • Centralization
  • Hierarchy
  • Order
  • Equity
  • Stability of Personnel
  • Initiative
  • Esprit de Corps

Organizational Structure

Key Design Questions

  • Task division
  • Work grouping (Departmentalization)
  • Reporting structure (Chain of Command)
  • Management capacity (Span of Control)
  • Decision-making authority (Centralization/Decentralization)
  • Employee guidance (Formalization)

Key Concepts

  • Specialization of Labor: Division of tasks into separate jobs.
  • Chain of Command: Line of authority.
  • Authority: Right to give orders.
  • Base Group: Customer service, processing, etc.
  • Unity of Command: One superior per subordinate.
  • Centralization: Concentrated decision-making.
  • Decentralization: Delegated decision-making.

Delegating Authority

  • Clarify the task and recipient.
  • Specify the subordinate’s discretion.
  • Involve the subordinate in determining authority levels.
  • Communicate the delegation.
  • Establish feedback controls.

Formalization

Standardization of jobs.

Organizational Designs

  • Simple Structure: Low departmentalization, wide spans of control.
  • Bureaucracy: High routine, specialization, and formalization.
  • Matrix Structure: Dual lines of authority.
  • Team Structures: Teams as central coordinating units.
  • Virtual Organization: Outsources major functions.
  • Borderless Organization: Eliminates chain of command, empowers teams.
  • Mechanical Model: Extensive departmentalization, high formalization.
  • Organic Model: Flat structure, low formalization, participatory decision-making.

Project Management

Project Participants

Construction-client: real estate, contract, technical specifications.

Principal: A natural, real estate, business, educational institution, government agency (Serviu, MOP or other), construction company provides all the necessary specifications of the contract for architectural design, project specifications and specialties, agrees to finance or manage funding.

E. construction: an entity that is committed to realizing the construction project according to specifications provided by the client, undertakes to meet deadlines, permitting associated with the project, enforce regulations and legal requirements.

Classification of construction: size (annual sales in UF, UF big plus of 100,001, median 25,001 to 100,000, from 2401 to 25,000 small, less than 2,400 micro UF), nr of employees (more than 200 great Job, SMEs 5-199 Job, Job MICRO up to 4) considering financial solvency capital, balance sheets, income statements m2 experience, expertise emblematic works of the construction area in which they specialize.

Contract: defines committed amounts and payment methods, define deadlines, narrows and defines responsibilities and obligations of both defines and limits fines, determined course to follow if any future disagreements.

Lump sum: the amount and terms defined by the project as a whole, profit margin of the construction company included in the total amount, the company is in charge of all payments associated with the project, the greater risk to the construction company, requires more efficiency.

Administration: reference amounts, terms defined, firm charges a fee for administering% or and run the project, and assume principal responsibility for all costs associated with canceling the project.

Unit Price: undefined amounts and terms, projects with defined items, a few items, the company charged by the amount carried, used in large industrial projects.

Construction projects: residential correspond to the construction of housing solutions (or in individual houses and apartment number) The client can be classified into: Natural: Have the need to build their family home, managing projects of architecture and specialties, Listed with some companies and you choose the best offer, 100% financing the project, usually a lump sum contract.Real Estate The construction project is part of a building project, architecture and project manages specialist, called a proposal private construction companies with experience and financial backing, the developer usually has an associated construction company, in this case does not call proposed housing projects are in series (sets, condos, apartments buildings), 100% financing the project, usually a lump sum contract. Serviu The construction project is part of a larger project, housing projects are in series, solidarity funds: Serviu new policy aimed at solving housing the most disadvantaged quintile of the population, Main features: Living without debt (savings: 10UF/familia) and families are organized into committees, EGIS: social property management entity. Prepares and manages the project. Hire a construction company, 100% financing, money drawn in installments (3-4) according to the progress of construction Contract Lump Sum NGO charitable foundations are designed to provide housing solutions to extreme poverty groups (social housing), may manage and finance the entire project (personal project) or complement resources for improvement projects Serviu (joint project), in the case of the project itself, operates similarly to real estate.

Service projects: They correspond to the construction of buildings services (hospitals, schools, prisons, airports, commercial buildings etc …) The Principal can be classified into: Private Company generally need to build commercial buildings or education, architecture and project manages specialty Listed with some construction companies and you choose the best offer, 100% financing the construction project, usually a lump sum contract. MOP Need to build hospitals, schools, government buildings, public tender calls architecture and specialties, Flame for bids for construction, financing MOP, usually a lump sum contract.

Industrial Projects: This relates to the construction of factories and industrial installations Principal: private and state enterprises, the principal manages the architectural project and specialists, depending on the complexity of the project is called a public tender or private area of Chemical Engineering, Mechanical Metallurgical or another specialty.

Roadworks projects: Corresponding to the construction of roads, bridges and tunnels, Principal, MOP or dealer, Call for tenders to multinational companies, civil engineering field.

Real estate project: Technical Feasibility: Technical Studies (Essbio, soil mechanics, supplies), Legal Feasibility: Study of titles, surveys, online certificate, Economic Feasibility: Market research, architectural blueprint, budget, calculating economic indicators, for which a real estate project is viable, it must meet all three of feasibility, “necessity” of the project can start real estate product or land, in this case does the “study room”

Project management aims to: Ensure that the project is properly designed to achieve its objective, complete on time, cost and quality requirements, provide mechanisms and procedures for and monitoring and control.