Page 347 - Business Principles and Management

Unit 4

FIGURE 13-4 An organization chart provides a visual picture of how
work is structured in a business.

General
Manager

V.P. of V.P. of V.P. of
Purchasing Merchandising Finance

Advertising and Customer Sales
Promotion Manager Service Manager Manager

Service and
Delivery
Repairs

THE PROCESS OF ORGANIZING WORK

The manager of a new business has the complicated task of organizing the entire
structure of the business. A manager for an ongoing business cannot ignore the
organization function either. The organization may need to change, for example,
when goals are revised or when the business expands. Using the example from the
beginning of the chapter, if Eldron Huntley is successful in developing the new
Internet business, he will have a very different organization than before the expan-
sion. It is not likely that the current organizational structure and employees will be
able to accommodate all of the new activities and the extra workload. He will need
to carefully organize the business to perform the new activities efficiently while still
maintaining the existing business activities. If he does not pay attention to the orga-
nization of the work, the business may not be able to adjust to the changes.
Whether the focus is on a new or existing department, division, or firm, the
process of organizing involves three elements: (1) the division of work, (2) the
facilities and working conditions, and (3) the employees.

DIVISION OF WORK In establishing an organization structure, the total work to be
done must be divided into units, such as departments. The first consideration is the
grouping of activities into broad, natural divisions, such as buying and selling or
production, marketing, and administration. For small businesses, only two or three
divisions may be needed to separate the work into manageable units. For large
businesses with many employees and activities, the major divisions will need to be
divided several times into departments or work units of reasonable size. Depart-
ments should be organized around meaningful and related work, work should flow
smoothly within and among departments, and employees should be assigned to the
units where they have expertise to complete that work.
Major divisions of work vary with the type of industry and business. A small
retailer will usually organize around the major activities of purchasing and selling.
Manufacturing will have purchasing, production, and marketing. Most businesses
have departments or work units for administration, information management,

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