Introduction to business Third/ Fourth meeting

which its activities are grouped or arranged. It is a

hierarchical concept of subordination of entities (employees).
It depend on:
Size and number of employees
Whether it is in the manufacturing or service sector
Whether it is a local, national or international organization
The type of work with which it is involved

organization chart. It usually provides us with the job titles

of employees (or sections) and their relationship with each other.
Various forms in practice. There is no right or wrong structure, provided that it reflect the needs of company and allows to communicate and work effectively and achieve business objectives.

strategic policies
Compensation Committee – nonemployee directors setting the remuneration package

for management
Chief Executive Officer (CEO) – head of management team
Chief Financial Officer (CFO) – responsible for: accounting, raising capital, evaluation of effectiveness of operation and investment.
Chief Operating Officer (COO) – production and often sales.

(CEO or management board) is responsible both for the firm’s

day-to-day operations and for formulating its business strategy.
Communication relies on the central part.
Often inefficient as problems with bounded rationality – limits in ability to absorb and process information by management.

such that responsibility for the day-to-day management is separated from

the formulation of business’s strategic plan.
Medium to large firms
Advantages:
Reduced lenght of information flows
CEO can concentrate on overall planning
Enhanced level of control – each divison may become „mini-firm” competing with other – when introducing properly designed budgeting and controlling procedures

directly with those lower in the organizational structure. Middle managers

are bypassed.
Problems similar as with U-form:
Communication cost (now lower)
Misinterpretation of information or decisions
Managers may focus on their own departmental goals rather than overall goals of the company.

holds interest in a number of other companies or subsidiaries.

These subsidiaries can in turn control other companies.
Integrated international enterprise – international company pursues a single business strategy – coordinates activities of various other subsidiaries accros different countries.

with little investment from the parent company) are contractually bound

to the parent company to provide output to or receive inputs from other subsidiaries.
Global sourcing – company uses production sites in different part of the world to provide particular component for a final product.

set of business goals, the reasons why they are believed

attainable, and the plan for reaching those goals. It may also contain background information about the organization or team attempting to reach those goals.
No strict rules on how to organise/design
However, some issues are indispensable!