F1 The formal and informal business organization

1. Definition An informal organization is loosely structured, flexible and spontaneous. It exists alongside the formal one. Its mechanism consist of social relationships, informal communication networks, behavioral norms and power/influence structures, all of which may “by-pass” formal organizational management.

2. The benefits of the informal organization a. Employee commitment b. Knowledge sharing c. Speed d. Co-operation

3.The problems of informal organization a. Social grouping may act against organizational interests. b. The grapevine can carry rumours. c. Individuals may suffer acutely when excluded from the organization. d. Violation safety or quality assurance measures in order to “cut corners”

4. How to minimize the problem? a. Meeting employee needs by formal means b. Harnessing the dynamics of informal organization c. Involving managers in the informal structure

4. The demand Schedule Definition Demand for a good or service is the quantity of that good or service that potential purchasers would be willing and able to buy, or attempt to buy, at any possible price. The demand curve Demand falls as price increases. Demand rises as price falls.

4. The demand Schedule Factors determining demand for a good a. The price of the good b. The size of income c. The price of substitute goods d. Tastes and fashion e. Expectation of future price changes f. The distribution of income

4. The demand Schedule Substitutes and complements Substitutes goods are goods that are alternatives to each other. Complements are goods that tend to be bought and used together.

5. Hawthorne studies It is the human relations school of management theory which highlights the importance of groups within an organization.

5. Hawthorne studies Example question Which of the following statements about the informal organization is not true? A. The influence of the informal organization was highlighted by the Hawthorne Studies, in the way group norms and dynamics affected productivity. B. Informal organization can pose a threat to employee health and safety. C. Informal organization can stimulate innovation. D. Managers in positions cannot be part of the informal organization.

F1 Business organization structure and design

1. Components of the organization Mintzberg’s five components Strategic apexEnsure mission is followed; Manager relationship with environment Middle lineConvert the desires of the strategic apex to operating core Operating corePeople directed involved in converting inputs into outputs Techno structureAnalyzers and planners determine the best way of doing a job Support staffAncillary services such as public relations, legal counsel, the cafeteria

1. Components of the organization Example question Which of the following terms is not used by Mintzberg in his description of organizational structure? A. Strategic apex B. Support base C. Technostructure D. Operation core

2. How the organization can be structured? Functional Grouping people based on tasks such as finance, HR, marketing etc Advantages: Pool expertise, avoid duplication, facilitate management, suit centralized businesses Disadvantages: Too inward looking, poor coordination and communication, vertical barriers

2. How the organization can be structured? Geographic Structured according to territorial basis Advantages: Local decision making, cost efficient Disadvantages: Duplication, inconsistency

2. How the organization can be structured? Product/ brand Group activities on product/ brand basis Advantages: Accountability, specialization, coordination Disadvantages: Increased costs, fail to share resources

2. How the organization can be structured? Divisionalisation Activities are decentralized to business units or regions. Advantages: More focus on lower level performance, motivation to junior managers, reduce the management levels Disadvantages: Conflicting authority, demands and roles; Slower decision making

2. How the organization can be structured? Hybid/ matrix Cross types of structure Advantages: Flexibility, cooperation, motivation, horizontal workflow Disadvantages: Conflicting authority, demands and roles; Slower decision making

2. How the organization can be structured? Simple/ entrepreneurial Strategic apex exercises direct control over operating core Advantages: Coordination, fast decision making, minimal hierarchy Disadvantages: Risky, only suit small companies

2. How the organization can be structured? Shamrock Use of part-time and temporary contracts; Has four leaves (Professional core, self-employed professionals, contingent workforce and consumers) Advantages: Flexibility, cost efficient Disadvantages: Unstable

2. How the organization can be structured? Example question Which of the following principles of classical management is challenged by the matrix management? A. Structuring the organization on functional lines B. Structuring the organization on geographic lines C. Unity of command D. Decentralization of decision-making

3. Basic organizational structure concepts Span of control It refers to the number of subordinates directly responsible to a superior What influence the span of control? a. The managers’ capabilities b. The managers’ workload c. The geographical dispersion of subordinates d. The complexity of problems e. The interaction between subordinates f. The support received from other parts of the organization

3. Basic organizational structure concepts Example question Which of the following is a correct definition of “span of control”? A. The number of employees subordinate in the hierarchy to a given manager B. The number of levels in the hierarchy “below” a given manager’s C. The length of time between a manager’s decision and the evaluation of it by its superior D. The number of employees directly responsible to a manager

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