Unit IV business organization

Lead-in

1.What forms of business organization do you know?

2.Which of them are more common in different spheres? Give your examples.

3.What characteristics should a person have to be in any type of business?

4.“If you don’t like problem solving, you shouldn’t be in business, because every day is filled with problems”. Give your arguments.

Reading

Text 1

Read the following text. Find the key words and answer the question “What is organization?” Use the information from the text on Henry Ford’s example

What is organization?

Despite the great number of organizations, the term organization is elusive and somewhat difficult to define. This difficulty is pointed up by the fact that a variety of definitions have been suggested by sociologists, psychologists, and organization and management theorists. Chester I. Barnard’s definition, though put forth many decades ago, still remains popular among organization and management theorists. Barnard defined an organization as “a system of consciously coordinated activities or forces of two or more persons”. In other words, when people gather together and formally agree to combine their efforts for a common purpose, an organization is the result.

Although Barnard’s statement is a good general definition, it is necessary to go a step farther and identify some important common denominators of organizations. According to Edgar Schein, a prominent organizational psychologist, there are four characteristics common to all organizations: 1) coordination of effort 2) common goal or purpose

3) division of labor 4) hierarchy of authority.

As the old saying goes, “Two heads are better than one”. When individuals join together and coordinate their mental and/or physical efforts, great and exciting things can be accomplished. Coordination of efforts multiplies individual contributions.

Coordination of effort cannot take place unless those who have joined together agree to strive for something of mutual interest. A common goal or purpose gives organization members a rallying point. For example, Nucor, a small but highly successful steel company, prints the name of every Nucor employee on the front and back pages of its annual report.

By systematically dividing complex tasks into specialized jobs, an organization can efficiently use its human resources. Division of labour permits each organization member to become more proficient by repeatedly doing the same specialized task. The advantages of dividing labor have been known for a long time. One of its early proponents was the pioneering economist Adam Smith.

According to traditional organization theory, if anything is to be accomplished through formal collective effort, someone should be given the authority to see that the intended goals are carried out effectively and efficiently. Organization theorists have defined authority as the right to direct the actions of others. Without a recognized hierarchy of authority, coordination of effort is difficult, if not impossible, to achieve.

All four of the four characteristics are necessary before an organization can be said to exist. Through the years, many well-intentioned attempts to create organizations have failed because something was missing. For example, in 1896 Frederick Strauss, a boyhood friend of Henry Ford, helped Ford set up a machine shop, supposedly to produce gasoline-powered engines. But while Strauss was busy carrying out his end of the bargain by machining needed parts, Ford was secretly building a horseless carriage in a workshop behind his house. Their organization never got off the ground. Although Henry Ford eventually went on to become an automobile-industry giant, his first attempt at organization failed because not all of the pieces of an organization were in place. Ford’s and his partner’s efforts were not coordinated: they worked at cross-purposes, their labor was vaguely divided, and they had organizational intentions, but not an organization.

Text 2

Read the following text and answer the questions that follow it.