30. The concept and stages of organizing.

Organizing

The process of construction or adjustment of the formal organizational structure to the targets, resources and environment of the organization.

AIMS OF ORGANIZING:

a) achievement of strategic targets;

b) saving time, efforts and costs of top managers;

c) increased efficiency of management.

PHASES OF ORGANIZING:

a) designing the hierarchy in organization;

b) appointment of people with managerial skills;

c) delegation of authority;

d) elaboration of:

• rights, obligations, and responsibilities;

• task descriptions for individual work places;

• regulations, procedures etc.;

• principles of coordination;

• principles of control (auditing);

• rules of conduct;

e) performing respective trainings.

Formal Organizational Structure

The layout and the interaction between components of the organization. It:

1. Describes hierarchy and authority structures;

2. Shows responsibilities layout;

3. Describes division of labor in the organization;

4. Indicates degree of specialization of work;

5. Shows allocation of tasks between functions and activities;

6. Enables coordination of activities within organization;

7. Enables coordination of contacts of organization with its environment;

8. Ensures sustainability and continuity of the organization in spite of the personal changes.

31. The types of organisational structures and their advantages and disadvantages.

Types of Organizational Structures

1. Functional:

All people who deal with the given group of professional activities are grouped in one department.

ADVANTAGES:

• High effectiveness of the use of specialized skills;

• High effectiveness, especially in SME with relatively small resources and not vast palette of products (some activities may be outsourced);

• Relatively simple supervision (because of narrow scope of tasks);

• Quick and simple training.

DISADVANTAGES:

• Difficult determination of responsibilities of managers, especially if allocation of competencies between different levels is not clearly defined;

• Long decision-making process, especially in large organizations;

• Hampered coordination of actions of managers of different levels;

• Difficult evaluation of results of managers of different levels.

2. Substantive:

All people who are involved in the given substantive group of activities are grouped in one department according to:

a) products: if specific technologies or methods are used in the process of their production;

b) geographical markets:

• sources of raw materials (because of the transportation costs);

• location of highly qualified specialists;

• markets, because of transportation costs of finished goods, and law regulations;

c) groups of customers to meet specified customers' needs.

ADVANTAGES:

• Low loading of top managers;

• Clear allocation of responsibilities;

• Enables simultaneous implementation of different activities;

• Simple coordination of activities of different managers;

• Quick decision making process;

• High quality of products;

• Simple and good presentation of products;

• Simple measurement of effectiveness;

• Simple reaching and maintaining of effectiveness.

DISADVANTAGES:

• Interests or organizational units are in conflict with the whole organization ones;

• Encourages to neglect long term interests;

• Hampers coordination between different organizational units;

• Fosters competitiveness between managers of different organizational units;

• Administrative costs are high