Then he divides the total work into small, specialized tasks and assigns employees to specific tasks. Purpose: to make employees more efficient. The following concerns are reflected in the organizational structure: 2. Differentiations C] when jobs are grouped into working units. C] Units formed are called departments, units, groups, or divisions Departments may be organized according to function such as finance, marketing, and human resource placement, or product, or territory, or customers. The following concerns are reflected in the 3.

Delegation of Authority C] when an organization grows beyond phase one, some of the tasks will have to be assigned to subordinates who’ll be delegated with commensurate authorities CLC Proper delegation of authority will simplify the task of the owner. 4. Span of Management C] the small business operator must consider the number of subordinates reporting to a supervisor or to himself. 5. Hierarchy of objectives 0 an entrepreneurial venture is expected to achieve a certain objective which most Often is elated to the realization of profits. 6.

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Degree of Centralization L] authority is often required to be delegated to lower level units if work is expected to be accomplished. This not always the case, however. In any case, management has to decide on whether authority would be centralized or decentralized. Centralized organization -It is characterized by the concentration of authority for decision-making in the hands of one or a few, usually the sole proprietor, the senior partner or top management. 0 Centralized decision-making – It is adapted when conditions are risky and when lower level managers lack he necessary skills in decommissioning.

NOTE: In entrepreneurship, decision- Decentralized organization – It is one where authority is widely delegated to subordinates. It is useful in organizations that operate in complex unpredictable environments. It reduces the load of top management and more time will be available for them to attend to some other important matters ADAPTING A SMALL BUSINESS The organization is the vehicle by which the SOB or the entrepreneur will achieve his business objectives. In the day-today operations of the business, he is confronted with the formal and informal organizations

I. FORMAL ORGANIZATION – The formal structure is the one sanctioned by the management and is designed to achieve organizational objectives. The formal structure is shown in a pictorial representation called organizational chart. Various Types of Formal Organization 1 . Line Type – based on the direct flow of authority from the chief executive to the us fabricated. ; Decision-making is the responsibility of each person situated in the direct line of ; Manager of each unit can make decisions quickly based on the clear chain of command. This advantage is very important in highly nominative situations where quick decisions are required. Various Types of Formal 2. Functional Type – one in which there are number of functional specialists supervising the activities of a single subordinate. ; Adapts some kinds of specialized functions. As specialization is adapted and enhanced, it provides certain benefits that are required in certain situations like when specialized products or services are needed. The disadvantage of functional organization is that sometimes departmental concerns tend to override 3. Line and Staff – characterized by line functions directly responsible for the achievement of organizational objectives and which are indirectly influenced by staff functions through advice, recommendations, research, and technical expertise. ; Fuses the advantages of the line type and the functional type. ; The disadvantage refers to the cost involved in maintaining the structure. 4.

Committee ; Committee – a formal organizational group created to carry out a specific organizational task. ; It consists of a group of individuals vested with authority and responsibility and performs a specific task which the individual manager can’t complete. ; It is not a separate structure for the entire organization but a part of a regular line and staff structure. ; Committee provide effective means of pooling the expertise of different members of an organization and channeling their efforts toward a common goal.

Various Types Of Formal 2 Types of Committee a. Ad hoc committee – created for a short-term purpose and has a limited life. B. Standing Committee – relatively permanent and performs a specific, recurring task, like reviewing budgets, hiring practices, and pricing policies. II. INFORMAL ORGANIZATION – groups not formally sanctioned by the firm These types of informal groups are useful o the organization if the members accept the organizational goals.

This is one concern where the small business owner can use his management skill to motivate employees to work for the firm. IMPORTANCE OF ORGANIZATIONAL Many small business ventures will adapt IN the SMALL line structuralizes due to the following reasons: ; Its simplicity is conducive to an immediate start-up in operations ; Its a good launching mechanism for the more sophisticated organizational structures ; Its adaptable to small-scale operations as all employees will be fully occupied with work.

DIRECTING THE Directing refers to guiding and motivating employees to accomplish organizational objectives. C] It involves explaining procedures, issuing orders, and seeing that mistakes are corrected. DIRECTING THE SMALL BUSINESS A. Communicating with subordinates ;. Communication – a meaningful exchange of information through messages It plays an important role in the achievement of company objectives. C].