13

Instructions

Working in groups of two or three, analyze the strengths and weaknesses of the two candidates. Decide who should be offered the position, noting the reasons for your choice. Compare your decision with that of the other groups.

Unit 2 Company structure

Words to remember:

to launch ( to start, to found, to set up) a company – создать (основать) компанию a sole ownership – предприятие, принадлежащее одному человеку

to own a company – владеть компанией

the staff numbers….. – штат насчитывает …….

to be liable to (for) – нести ответственность перед (за) liability – ответственность

personal assets – личное имущество sleeping partner – пассивный партнёр

The company is insolvent. – Компания неплатёжеспособна. to make losses ( to carry losses) – нести убытки (потери) revenue (income) – доход

to join the company – вступить (присоединиться) division – подразделение

engineering department – конструкторско-технический отдел; конструкторское бюро; отдел инженерного проектирования

packing department – отдел фасовки и упаковки purchasing department – отдел закупок (снабжения) supply department – отдел снабжения

quality control department – отдел управления качеством accounting (account) department – бухгалтерия

law (legal) department – юридический отдел patent department – патентный отдел

research and development department – отдел исследований и разработок sales department – отдел сбыта

technical support department – отдел технического обеспечения

He is the head / at the head of the department. – Он глава компании. He is in charge of the department – Он отвечает за отдел.

He reports to (is accountable to)… – Он отчитывается перед ….. a project manager – руководитель проекта

a product manager – менеджер, отвечающий за выпуск отдельного вида товаров

to operate – работать, руководить

to carry out research – проводить исследования to draw up a contract – составлять контракт product range – ассортимент товаров

welfare of employees – благосостояние to process data – обрабатывать данные

14

to deliver goods – доставлять товары

sales representative – торговый представитель

to provide customers with – обеспечивать потребителей to keep a record – вести учёт

to persuade – убеждать

to handle – обрабатывать; регулировать; управлять to maintain standard – поддерживать (обеспечивать) to promote goods – продвигать товары

promotion – продвижение; поощрение; содействие (развитию) business savvy – деловая смекалка

to give authority (power) – наделять полномочием (властью)

Starting up

1. Read the three descriptions of company structures. Answer the questions.

Sole trader

One person sets up and runs the company. The person provides all the capital and has unlimited liability for business debts, even if it means selling personal assets.

Limited company

In a Limited company (US-Corporation), the capital is divided into shares, which are held by shareholders. Shareholders have limited liability, but they can vote at the Annual General Meeting to elect the Board of Directors. There are two types of Limited company:

1.in a private limited company, all shareholders must agree before any shares can be bought or sold.

2.in a public limited company, shares are bought and sold freely, for example on the stock exchange.

Partnership

A group of people provide the capital, set up the company and manage it together. There are two types of partnership:

Partners in an unlimited partnership are like sole traders – if the business fails they are fully liable for all debts, and may even have to sell personal assets.

In a limited partnership there can be sleeping partners who do not participate in the management of the company. Sleeping partners have limited liability – in the event of bankruptcy, they only lose their investment, not their personal assets.

1.What are most people’s main personal assets?

2.How can a sole trader get a capital to set up a business? Think of five methods.

3.If a limited company has 5000 shares and each share is worth $2.50, what is the capital of the company?

4.What are the advantages and disadvantages of being a sleeping partner?

5.What is the difference between a sleeping partner and a shareholder?

6.If a private limited company goes bankrupt, do the shareholders lose their personal assets? Why?

15

7.What must you do to sell your shares in a private limited company?

8.What are the advantages of a public limited company? Think of three.

Reading

1. Read the text about different ways of organizing companies, and then give the definitions of:

line structure matrix structure functional structure staff structure

Most organizations have a hierarchical or pyramidal structure, with one person or a group of people at the top, and an increasing number of people below them at each successive level. There is a clear line or chain of command running down the pyramid. All the people in the organization know what decisions they are able to make, who their superior (or boss) is (who they report to), and who their immediate subordinates are (who they can give instructions to).

Some people in an organization have colleagues who help them: for example, there might be an Assistant to the Marketing Manager. This is known as a staff position: its holder has no line authority, and is not integrated into the chain of command, unlike, for example, the Assistant Marketing Manager, who is number two in the marketing department.

Yet the activities of most companies are too complicated to be organized in a single hierarchy. Shortly before the first world war, the French industrialist Henry Fayol organized his coal-mining business according to the functions that it had to carry out. He is generally credited with inventing functional organization. Today, most large manufacturing organizations have a functional structure, including (among others) production, finance, marketing, sales, and personnel or staff departments. This means, for example, that the production and marketing departments cannot take financial decisions without consulting the finance department.

Functional organization is efficient, but there are two standard criticisms. Firstly, people are usually more concerned with the success of their department than that of the company, so there are permanent battles between, for example, finance and marketing, or marketing and production, which have incompatible goals. Secondly, separating functions is unlikely to encourage innovation.

Yet for a large organization manufacturing a range of products, having a single production department is generally inefficient. Consequently, most large companies are decentralized, following the modal of Alfred Sloan, who divided General Motors into separate operating divisions in 1920. Each division had its own engineering, production and sales departments, made a different category of car (but with some overlap (coвпадение) to encourage internal competition), and was expected to make a profit.

Business that cannot be divided into autonomous divisions with their own markets can simulate decentralization, setting up divisions that deal with each other using internally determined transfer prices. Many banks, for example, have established commercial, corporate, private banking, international and investment divisions.

An inherent problem of hierarchies is that people at lower levels are unable to make important decisions, but have to pass on responsibility to their boss. One solution to this is matrix management, in which people report to more than one superior. For

16

example, a product manager with an idea might be able to deal directly with managers responsible for a certain market segment and for a geographical region, as well as the managers responsible for the traditional functions of finance, sales and production. This is one way of keeping authority at lower levels, but it is not necessarily a very efficient one. Thomas Peters and Robert Waterman, in their well-known book “In Search of Excellence”, insist on the necessity of pushing authority and autonomy down the line, but they argue that one element - probably the product - must have priority; four-dimensional matrices are far too complex.

A further possibility is to have wholly autonomous temporary groups or teams that are responsible for an entire project, and are split up as soon as it is successfully completed. Teams are often not very good for decision-making, and they run the risk of relational problems, unless they are small and have a lot of self-discipline. In fact they still require a definite leader, on whom their success probably depends.

Comprehension / interpretation

1.Describe a hierarchical or pyramidal structure. What is the typical feature of this structure?

2.What organizations tend to have a functional structure? Why?

3.What is the difference between functional structures and decentralized companies?

4.What is the typical feature of matrix management?

5.What are the advantages of creating wholly autonomous temporary groups or teams?

6.Speak on strong and week points of line, matrix, functional and staff structures?

2.Read the text about centralization and decentralization and then discuss the questions below.

Alfred Sloan (1874 – 1966) was an outstanding figure in the business world of America. He worked for forty-five years in the general Motors Corporation (GM). From 1923 to 1946, he was Chief Executive of the corporation, and he stayed on as Chairman of the board until 1956. Sloan published an account of his career with the organization, calling his book “My years with General Motors”. In it he described some of the management problems he had had, and how he had dealt with them.

According to Sloan, every large enterprise has to face one major problem. It must decide how much it wishes to centralize or decentralize its business. What are centralization and decentralization? The terms refer to the degree of authority that is given to various levels of management and to the divisions of an organization. Authority may be defined as the right to make decisions, to direct the work of other people and to give instructions. When we talk about centralized and decentralized businesses, we mean the extent to which authority has been passed down – delegatedto lower levels or divisions of an organization.

When an organization is centralized, a limited amount of authority is delegated. If it is decentralized, a greater degree of authority is given to staff and divisions. For example, in a centralized company, Head Office may make most of the decisions concerning recruitment, the purchase of equipment and product lines. It may also be responsible for areas such as advertising, promotion and research and development.

17

In a decentralized company, the divisions will have wider responsibilities and authority. Divisional managers will, for instance, have authority to purchase expensive equipment and authorize substantial salary increases. In decentralized organizations, more important decisions can be made at lower levels. There are fewer controls from Head Office.

To sum up, a centralized business has a ‘tight’ structure, whereas a decentralized business has a ‘looser’ structure. No enterprise chooses complete centralization or decentralization. In practice, it tries to find a balance between the two forms. The problem for organization is to decide how much decentralization they want, and what kind?

When Alfred Sloan took over the running of General Motors, he inherited a corporation which was already decentralized. The previous Chief Executive, William Durant, had founded the company. Durant brought many businesses into General Motors and gave their managements a lot of independence. Alfred Sloan believed in decentralization and practised it in the corporation. He made sure his division managers (e.g. those in charge of Cadillac, Buick, and Chevrolet) had self-contained divisions. Each handled its own manufacturing, marketing, staff recruitment etc. However, Sloan did not give the divisions complete freedom. He wanted Head Office to coordinate action and keep a measure of control over the units. Therefore, he decided that certain functions would be controlled centrally.

Very early on, he realized that Head Office would have to control finance more tightly. When he arrived, each division controlled its own cash, having its own accounts and paying its own bills. This meant the corporation was getting little direct income. When it had to pay things like taxes and dividends, the treasurer used to ask the divisions for cash. Sometimes, he had to go to a division, first talk about general business matters, and then later on bring up the subject of cash. The division’s staff would often show surprise at the amount asked for, and delay handing it over. Clearly, with that system, cash was never available where and when it was needed in the corporation.

Alfred Sloan set up a new, centralized cash system. Cash accounts were controlled by the financial staff at Head Office. Cash receipts were made to them. And they authorized payments made from the corporation’s accounts. With this system, money could be quickly transferred to units needing it. The central staff also decided how much would be kept in local accounts, to be used by the divisions.

As time went on, Alfred Sloan and his top managers worked out a balance between central control and delegated authority. Head Office controlled things like cash, capital expenditure and stock control. In addition, it controlled the profitability of divisions by developing measures of efficiency. But the divisions had a great deal of autonomy, being responsible for designing, making and marketing the cars.

Nowadays, decentralization is the fashion, the ‘buzz’ word. Believers in decentralization argue along these lines: they say it helps ‘to develop people’ because staff get more responsibility, make more decisions, and so gain experience for later managerial positions. If an organization is too centralized, people become robots - which is demotivating. Decentralization allows top managers to delegate jobs, so these managers will have more time to work on setting goals, planning corporate strategy and working out policies. The strongest argument for decentralization is that, in

18

competitive conditions, the ‘looser’ companies will be more flexible, better able to make quick decisions and to adapt to change.

The best-run companies of the country know how to balance control and delegation. On the one hand, they have a simple structure, generally based on product divisions which also have great autonomy. These divisions have control over functions like product development, purchasing, finance, personnel etc. On the other hand, the center of these excellent companies - top management - provides ‘firm central direction’. It continually stresses the ‘core values’ of the organization, e.g. quality, need for innovation, service, informal communications and so on. These central values provide the context within which staff can be creative, take risks - even fail.

It is normal for people to like independence, to dislike control. The more educated staff are, the more they will want to make decisions, to have authority. However, it is not easy to have more decentralization if the right staff are not available. For example, if you own a chain of stores, it may be difficult to give more authority to employees. The employees may be used to following rules, so they may not be able to take decisions, to show initiative. As one of the experts on organization says, “It is one thing to prescribe diversity, decentralization and differentiation. It is another to manage it”

Comprehension / interpretation

1.Decide whether the following statements are true or false. Support yourself with arguments from the text.

1.Alfred Sloan’s book was mainly about the organizational problems of General Motors.

2.In a decentralized company most key functions are the responsibility of the head office.

3.The majority of companies have either a totally centralized or decentralized structure.

4.William Durant and Alfred Sloan had a completely different approach to running General Motors.

5.Alfred Sloan believed in what could be called ‘coordinated decentralization’.

6.When Alfred Sloan joined General Motors he established a new system which gave Head Office more control of the corporations finances.

7.Note down the benefits which a company can gain by decentralizing.

8.Explain what is meant under the phrase: “ It is one thing to prescribe diversity, decentralization and differentiation. It is another to manage it”

Language focus

1. Match the words or phrases on the left with the words from the text on the

2. Complete the following sentences with suitable forms of the words.

authorize innovate innovative control delegate function autonomy initiative

1.In many department store groups, buying and finance are two ____ which are handled by Head Office.

2.Managers who like power find it difficult to ____ responsibility.

3.To stay competitive, high technology firms must constantly ____ , or else their products become out of date.

4.When you delegate authority in a business, you lose a degree of ____ over certain functions.

5.In some multinational organizations, subsidiaries are given a great deal of ____ - they rarely have to consult Head Office.

6.____ firms often make the mistake of not concentrating enough on marketing.

7.In our factory, the General manager is ____ to spend up to 1,000 dollars a month on repairs and maintenance.

8.I like my staff to make decisions for themselves, but they seem afraid to show any

____.

3. Big companies employing a large workforce have complex internal structures with separate specialist departments in charge of different functions. Match each function with the department responsible for it.

20

Administration:

Board of Directors with a Chairman (GB) or President (US)

Managing Director (GB) or Chief Executive Officer (US)

Research and Development department carries out market research.

Functions:

1.carries out market research

2.works with the factory unit

3.runs the mail room for all incoming and outgoing correspondence

4.draws up contracts

5.operates the firm’s lorries, vans and cars

6.works to improve the firm’s product range

7.is responsible for recruitment and selection

8.pays wages and salaries

9.is in charge of the welfare of employees

10.includes data processing services

11.advises on corporate regulations

12.arranges delivery of goods to customers

13.organizes the activity of the sales representatives

14.provides office services, such a typing and photocopying

15.creates (develops) new products

16.keeps a record of all invoices (счёт фактуры) and payments made and received

17.brings the firm’s goods and services to the attention of the potential customers, persuade people to buy them

18.orders all supplies needed by the firm

19.organizes training courses

20.organizes quality control to maintain product standards

21.sets out strategy for the company’s future

22.handles advertising and new product launches

4.Use the spaces below to write a short description of your department. Use the information given above.

I work in the _____ department. There are _____ people working in the department. Our main tasks are ______ and ______. We also ______. I personally deal with ______ .

21

5. Translate the following sentences into English.

1.Председатель совета директоров крупных британских компаний обычно осуществляет надзор за общей деятельностью компании.

2.Директор-распорядитель (MD-managing director) несёт ответственность за повседневное руководство компанией.

3.В небольших компаниях роли председателя и директора-распорядителя обычно совмещаются.

4.Американцы предпочитают использовать термин “президент” вместо “председатель” и используют термин CEO (chief executive officer) – директор-

распорядитель, а не MD (managing director).

5.Управляющие делами (executive officers) или вице-президенты оказывают поддержку директору-распорядителю и наделены конкретными полномочиями и ответственностью (руководитель службы маркетинга – marketing officer, ответственный за производство, руководитель финансовой службы, начальник отдела кадров, и т.д.).

6.Руководители высшего звена компании обязаны ставить цели и разрабатывать определённые стратегии для их достижения.

7.Они ответственны за правильное распределение финансовых, материальных и трудовых (manpower) ресурсов.

8.Одной из задач руководителей компании является необходимость соразмерять (balance) сегодняшние задачи и потребности с задачами будущего. Бизнессреда постоянно меняется, и поэтому руководителям приходится модифицировать или менять свои задачи.

9.Кроме того, руководство компании берёт на себя ответственность за инновации, без которых жизнь компании будет ограничена.

10.Руководители компании обязаны устанавливать и поддерживать хорошие

отношения с потребителями, поставщиками, банкирами и государственными службами (agencies).

11.Руководители компании должны понимать свою социальную ответственность

ито влияние, которое их бизнес оказывает на окружающий мир.

6.Make up the description of any organization chart, or a company you know, in about 100-150 words. Use the following verbs common for describing structures

Listening

Listen to the talk between Alistair Burton, a novice in the company, and Martin Brown, his mentor. The talk focuses on the informal power hierarchy in the organization chart.

As you listen, number the relationships based on Martin’s analysis. How important can be connections (family, friendship, school, etc) in any organization?