GROUP 1 REPORTERS

• ABIAN, REYMARK A.
• ACERO,RODRIGO B.
• BACOR, JAYRICK M.
• BURAY, JAN RIEL G.
• BURDEOS, AREAL GIE M.
CHAPTER 7: ORGANIZING BUSINESS
ACTIVITIES
 Objectives
At the end of this chapter, the students are expected to:
1. define the meaning of organizing;
2. cite the reasons for organizing;
3. Compare different organization structure and its determinants;
4. discuss the characteristics of a formal organization;
5. describe the characterestics informal groups;
6. Classify the levels of managemen ans supervision;
7. scrutinize the basic elements of organizational structure; and
8. evaluate the basic organizational designs.
 Introduction
The manager needs to aquire various skills in
management,including those for organizing business
activities. In this highly competitive environment, the
unskilled manager may not be able to bring his unit,or his
company, as the case may be, to sucess.
The value of a superior organizational structure has
been proven dramatically during the second world war
when a smaller American naval force confronted the
formidable japanese navy at midway. Military historians
indicated that the Americans emerged victorious largely
because of the superior organizational skills of their leaders.
Even today, skill in organizing is a very critical factor in
the accomplishment of the objectives of many
organizations, whether they are private business or
otherwise. the positive effects of business sucess become
more pronounced when they come as a result of
international operations. International
business,however,cannot hope to be effective unless they
are properly organized.
The benefits of superior organizing skills are too important
for the manager to ignore. this chapter is intended to
provide him with some background and insights in
organizing.
 ORGANIZING DEFINED
Organizing is a management function which relates to the
structuring of resources and activities to accomplish
objectives in an effecient and effective manner. The aim of
organizing activities is to have a collection of people in the
organization who perform activities for a specific purpose
 REASONS FOR ORGANIZING
Organizing is undertaken to facilitate the implementation of
plans. In effective organizing, steps are undertaken to break
up the total job into more managebale man-size jobs.Doing
these will make it possible to assign particular tasks to
particular persons. In turn, these will help facilitate the
assignment of authority, responsibility and accountability for
certain functions ans tasks.efforts expended in organizing
may also results to easier coordination among the various
activities.
 THE ORGANIZATIONAL STRUCTURE
AND ITS DETERMINANTS
The structure is the means by which the organizational will
attain its objective and goals. apart from the organations
goals and obejectives,the structure must be one that
considers, its resources and its environment, both internal
and external.
The determinants of an organization structure are;
1. strategy or plans for achieving the company’s
objectives
2. technology that will be used in carrying out the strategy;
3. people employed at all levels and thier functions;and
4. size of the organizations.
As the structure is the tool used in achieving the
organization’s objectives, it must follow a stratagey, which
defines the specific means of realizing goals. Strategy
determines the lines of authority and channels of
communication that will have to be set up between the
managers and thier respective units.
The nature of technology that will be used will determine
to a certain extent the type of structure that the organization
will have to adapt.
The structure,which is also determined by people in the
organization’s internal and external environment, must be
designed to served the needs of the managers and thier
subordinates.
the size of the entire organization and its various units
also determine the kind of structure that will have to be
adapted
 THE FORMAL ORAGNIZATION
After the business plan is adapted,management will
proceed to form an organization to carry out the activities
indicated in the plan.
The formal organization, as described by Nelson and
Quick” is the part of the system that has legitimacy anf
official recognation” What is depicted in the organization
chart is the formal organization. it is the planned structure
representing the intended configuration of positions,job
duties,and lines of authority among the component parts of
the organization.
 The formal structure is described by management trough;
1. Organizational Chart- is a diagram of the organization’s
official positions and formal line of authority.
2. Organization Manual- provides written description of
authority relationships, details the functions of major
organization units, and describeds job procedures.
3. Policy Manual- describes personal activities and
company policies.
 INFORMAL GROUPS
Formal organization require the formation of formal
groups,which will be assigned to perform specific tasks
aimed at achieving organazational objectives. The formal
group is a part of the organizational structure.
There are instances,however, when members of an
organization spontaneously form a group with friendship as
a principal reason for belongings (figure 21). This group is
referred to as an informal group. It is not a part of the formal
organization and it does n
 AN INFORAMAL
FRIENDSHIP PROPELS PEOPLE TO FORM GROUP
OR JOIN

AN INFORMAL
COMMON PROPELS PEOPLE TO
INTEREST GROUP
FORM OR JOIN

Like;concern for
environment or
love for classic
music
AN INFORMAL
PROXIMITY PROPELS PEOPLE TO GROUP
FORM OR JOIN
Which gives
people the chance
to share
ideas,opinions,an
d feelings
 NEED SATISFACTION PROPELS PEOPLE TO FORM AN INFORMAL GROUP
OR JOIN

Which is derived from joining

unions,cultural
societies,fraternities, etc.

COLLECTIVE POWER PROPELS PEOPLE TO FORM AN INFORMAL GROUP

OR JOIN
Which is derived from joining
unions,fraternities, etc

GROUP GOALS PROPELS PEOPLE TO FORM AN INFORMAL GROUP

OR JOIN

Which attract persons to join

groups like consumer
society,sports club, etc.
 REASONS OR FACTORS,FOR JOINING
OR FORMING AN INFORMAL GROUP
Informal groups are oftentimes very useful in the
accomplishment of major tasks,especially if these tasks
conform to theexpectations of the members of the informal
group, Valentine, however, stresses caution, ‘’ infromal
groups are vulnerable to expediency,manipulation,and
opportunism.’’
its low visibility makes it difficult for management to detect
those pervisions, and considerable harm can be done to the
organizations.
 LEVELS OF MANAGEMENT AND
SUPERVISION
The management and supervision of an organization may
be done though levels of hierarchy,which may be flat or tall
(figure 22)
 MANAGER

DOCUMENTS MECHANICS PARTS CASHIER COLLETOR

SALES / CI
UTILITY DRIVER CLERK CLERK
CLERK

FLAT STRUCTURE
 GENERAL
MANAGER

AREA MANAGER AREA MANAGER

BRANCH
BRANCH
MANAGER
MANGER

SALES SALES DOCUMENT

C&C MANAGER MANAGER
MANAGER
MANAGER
1. Flat Structure
the flat organization has few levels of management.
this characteristic provides it with the following advantages;

a. communication is generally faster and less distored;

b. decisions can be made quickly; and
c. supervisor’s salaries are eliminated.
Flat structures,however,have the following distinct
disadvantages;
a. they require manager with experience in the various task;
b. a manger may have little time for all subordinates;
c. when the manager is out,the group is without a
leader;and
d. managers may have little time to anticipate problem.

2. Tall Structure
The tall structure has many levels of management. it has
the following advantages;
a. since the average span of control is narrower, the
supervisory load is less for each manager;
b. there are more opportunities for promotion because there
are more levels of positions;
c. managers are provided with opportunities to specialize;
d. there is less demand for manager with multiple skills; and
e. managers are afforded with more time to attend to other
important problems
Tall structures are also saddled with disadvantages such as
the following;
a. communication tends to be slower and distored because
of the number of levels it has to pass through;
b. the number of management levels also hinders effective
decision making rendering such activity slower and less
accurate; and
c. it is more expensive to maintain as there more managers
to compensate
 BASIC ELEMENTS OF
ORGANIZATIONAL STRUCTURE
In designing the organizational structure,certain basic
elements are considered.these are as follows;
1. work specialization;
2. departmentation;
3. pattern of authority;
4. span of control,and
5. coordination of activities
 WORK SPECIALIZATION
The degree to which tasks are divided in the organization
is referred to as work specialization. A decision must be
made regarding this element and it should be reflected in
the organizational structure. An illustration on typical
choices in decision making regarding work specialization is
shown in figure 23.
 MANAGER

SALES,CREDIT SALES,CREDIT &

& COLLECTION COLLECTION
SUPERVISOR SUPERVISOR

SCC CLERK SCC CLERK SCC CLERK SCC CLERK

STRUCTURE A- NO SPECIALIZATION
 MANAGER

SALES & COLLECTION

SALES, SUPERVISOR SUPERVISOR

CREDIT
SALES CLERK SALES CLERK INVESTIGATOR COLLECTOR

STRUCTURE B-WITH SPECIALIZATION

 WORK SPECIALIZATION TO WHAT
EXTENT?
The decision-maker is confronted with choosing between a
structure with no specialized position and another with
specialized positions.In the former structure, the sales,the
credit,and the collection tasks are assigned to a supervisor.
Although another supervisor handles the same group of
tasks,none of them has the oppurtunity to specialize.
 BUSINESS ORGANIZATION AND
MANAGEMENT
In the alternate structure, a supervisor is assigned to handle
sales, while another is an charge of credit and
collection(figure 24)
 WITHOUT SPECIALIZATION

EMPLOYEE A EMPLOYEE B CREDIT

CREDIT INVESTIGATED/COLLECTOR
INVESTIGATOR/COLLECTOR

WORK OUTPUT fOR ONE DAY: WORK OUTPUT FOR ONE DAY:

1 Investigated three credit 1 Investigated three credit

application application
2 collected three accounts 2 collected three accounts

TOTAL OUTPUT:6 Investigation and 6 collection