CHAPTER 4: ORGANIZING

ACTIVITIES
CHAPTER 4: ORGANIZING BUSINESS
ACTIVITIES
• Organizing Defined
• Reasons for Organizing
• The Organitional Structure and it’s
Determinants
• The Formal Organizations
• Informal Groups
• Levels of Management and Supervision
• Basic Elements of Organitional Structure
• Basic Organizational Designs
• Forms of Business Ownership
ORGANIZING DEFINED
Organization is a management function which relates to the
structuring of resources and activities to accomplish objectives
in an efficient 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.

REASON FOR
Organizing is undertaken to facilitate the
ORGANIZING
implementation of plans. In effective organizing,
steps are undertaken to break up the total job into
more manageable man-size jobs.
THE ORGANITIONAL STRUCTURE AND ITS
DETERMINANTS
The structure is the means by which the organization will attain its
objectives and goals. The structure must be the one that considers,
it’s resources, and its environment, both internal and external.

Determinants of an organization
structure
1. Strategyare:
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 their functions; and
4. Size of the organization.
THE FORMAL ORGANIZATIONS
As described by Nelson and Quick formal organization “is the
part of the system that has legitimacy and official
recognition.” 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

through:
1. Organization Chart – is a diagram of the organization’s
official and formal lines of authority
2. Organization Manual – provides written description of
authority relationships, details the functions of major
organizational units, and describes job procedures.
3. Policy Manual – describes personal activities and company
policies.
INFORMAL ORGANIZATION
It is not a part of the Formal organization and it does
not have a formal performance purpose.
 AN INFORMAL
FRIENSHIPS Propels people to form or join
GROUP
COMMON Propels people to form or join AN INFORMAL
INTEREST GROUP
Like: concern for environment
or love for classical music
AN INFORMAL
PROXIMITY Propels people to form or join
GROUP
Which gives people the chance to share
ideas, opinions, and feelings
NEED
AN INFORMAL
SATISFACTIO Propels people to form or join
N GROUP
Which is derived from joining unions,
cultural societies, fraternities, etc.
COLLECTIVE AN INFORMAL
Propels people to form or join
POWER GROUP
Which is derived from joining
unions, fraternities, etc.
GROUP AN INFORMAL
Propels people to form or join
GOALS GROUP
Which attract person to join groups like
consumer society, sports club, etc.
LEVELS OF MANAGEMENT AND SUPERVISION
The management and supervision of an organization may be done through
levels of hierarchy, which may be flat or tall.
MANAGE
R
Flat Structure

Sales Documents Parts Cashie Collerctor/

Utility Driver Clerks
Mechanics
CI
Clerk Clerk r

General Manager Tall Structure

Area Manager Area Manager

Branch Manager Branch Manager

C & C Manager Sales Manager

Documents
Sales Manager
Manager
1. Flat
Structure
The flat organization has few levels of management. This
characteristics provides it with the following advantages:

a. Communication is generally faster and less distorted;

b. Decisions can be made quickly; and
c. Supervisor's salaries are eliminated.

Flat structures, however, have the following

distinct disadvantages:

a. they require managers with experience in the various

tasks;
b. a manager 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 problems.
2. Tall Structure
The tall Structure has many levels of
management. It has 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 managers with multiple skills; and
e. managers are afforded with more time to attend to other important
Tall structure are also added with
problems.
disadvantages such as following:
a. communication tends to be slower and distorted 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 are more managers to
compensate.
BASIC ELEMENTS OF
ORGANIZATIONAL STRUCTURE
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
refered to as work specialization.

Manager
Sales, Clerk & Sales, Clerk &
Collection Supervisor Collection Supervisor

SCC Clerk SCC Clerk SCC Clerk SCC Clerk

Structure A – No Specialization

Manager
Credit & Collection
Sales Supervisor Supervisor

Credit
Sales Clerk Sales Clerk Collector
Investigator

Structure B – With Specialization

The decision-maker is confronted with choosing between a structure with no
specialized position and another with specialized position. 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
opportunity to specialize.
In thie alternate structure, a supervisor is assigred to handle sales,
while another is in charge of credit and collection.

Without Specialization
Employee A Employee B
Credit Investigator/Collector Credit Investigator/Collector

Work Output for One Day: Work Output for One Day:
1. investigated three credit 1. investigated three credit
applications. applications.
2 collected three accounts 2 collected three accounts.

With Specialization
Employee A Employee B
Credit Investigator Collector

Work Output for One Day: Work Output for One

- Investigated eight credit Day:
applications -collected eight
acoOunts
Specialization promotes efficiency. This is so
because it is presumed that people can perform
more efficiently if they master just one task rather
than many tasks When an organization is efficient, it
mneans it can perform its function with the least
amount of resources.
Departmentation
Departmentation refers to the grouping of
jobs based on criteria that managers believe
help in the coordination and control of
activities. A decision must also be made on
whether the organization would be
departmentalized or not.
 Figure 25:
A Sample Grouping of Jobs According to Knowledge and
Skills
University

Nursing Nursing Business

Company

Sales Credit and Collections Service

Figure 26
A Sample Grouping of Jobs According to Work Process and Function

Company

First Shift Second Shift Third Shift

6:00AM to 2:00PM 2:00PM to 10:00PM 10:00PM to 6:00AM
Figure 27
A Sample Grouping of Jobs According to Time
 Figure 28
A Sample Grouping of Jobs According to
Product
Company

Motorcycle Appliance Lubricants

Company Company

Cash Service Government Consumers

Figure 29
A Sample Grouping of Jobs According to
Customer

Company

Luzon Division Visayas Division Mindanao Division

Figure 30
A Sample Groupings of Jobs According to
Location
Advantages of Grouping
Jobs.
1. Supervision is made easier.
2.The sharing ot resources, such as men, machines, and
materials results in maximum use of such resources.
3. Common measures of performance are established.
4. Communication is encouraged.

Pattern of
Authority
The pattern of authority as an element in designing
organizational structure reters to the extent by which
organization members are allowed to make decisions
without getting the approval of another member.
Authority
Patterns
It is centralized when decision
making is concentrated in the hands
of higher-level managers.
It is decentralized when decision
making authority is granted to middle
and lower level management
positions.
The Appropriate Pattern of Authority. The environments
of organizations differ and so nof authority is
appropriate for all. Instead, the pattern of authority
must match the organizations environment.
Centralized authority is better suited for stable
environments, no single pattern o while decentralized
authority is for complex and charnging environme
Centralized Authority offers the
following advantages:
1. Clear Chain of Command and Efficient Decision-
Making:
2. Focused Vision and Direction:
3. Improved Control and Accountability:
4. Uniformity and Consistency:
5. Reduced Costs and Improved Efficiency:
6. Enhanced Security:
Centralized Authority offers the
following disadvantages:
1. Hindered Creativity and Innovation:
2. Slow Decision-Making and Reduced
Flexibility:
3. Reduced Employee Motivation and Loyalty:
4. Potential for Bureaucracy and Inefficiency:
5. Strain on Top Management:
Decentralized authority offers
the following advantages:
1. Efficiency. Red tapes and bottlenecks are reduced.
2. Flexibility. Managers can cope with situations as they
come.
3 Initiative. Managers are highly motivated by the
challenge.
4. Development. Managers are provided with opportunity
Decentralized
for training. authority has
some disadvantages. These are
as 1.
follows:
Control. Coordinating overall activities is more difficult.
2. Duplication. There is a great chance of duplication of
efforts between departments.
3. Centralized Expertise. Home office experts may be
overlooked or disregarded.
4. Competency. The organization may not be able to
produce competent managers at all levels.
Span of Control
Span of control is another refers to
the number of subordinates reporting
to a single supervisor

The Narrow Span of control is

characterized by the following:
1. there is closer relationship between manager and
subordinates;
2. there is less delegation of authority;
3. controlling activities is more tight; and
4. there is more time for rewarding behavior
The following characteristics are
inherent to an organization with wide
span1. of control:work with little supervision;
employees
2. there is a high level of delegation of
authority;
3. controlling is lighter; and
4. there is less time for rewarding behavior.
 TASKS PERFORMED BY
SUBORDINATES CONTAIN
NON-PROFESSIONAL FREQUENT AND HARD-TO-
SUBORDINATES SOLVE
PROBLEMS

SUBORDINATES HAVE
LITTLE TRAINING

Narrow Span
SUBORDINATES
ARE SCATTERED
THROUGHOUT A WIDE AREA

MORE INTERACTIONS IS
REQUIRED BETWEEN
SUPERIOR AND SUBORDINATE

Figure 31
WHEN TASKS AMONG Situations
SUBORDINATES ARE
NOT SIMILAR Appropriate for
Narrow Span of
WHEN TASKS ARE PERFORMED
Control
TASKS ARE PERFORMED WITH
WITHOUT SPECIFIC AND UNIFORM AND SPECIFIC
UNIFORM PROCEDURES PROCEDURES
 TASKS PERFORMED ARE
ROUTINE AND SIMPLE
PROFESSIONAL
SUBORDINATES

SUBORDINATES ARE FULLY

TRAINED

Wide Span
SUBORDINATES
ARE LOCATED IN ONE OFFICE

LESS INTERACTIONS IS
REQUIRED BETWEEN
SUPERIOR AND SUBORDINATE

Figure 32
TASKS AMONG SUBORDINATES Situations
ARE
SIMILAR Appropriate for
Wide Span of
TASKS ARE PERFORMED WITH
Control
TASKS OF SUBORDINATES DO
SPECIFIC AND UNIFORM NOT REQUIRE INTEGRATION
PROCEDURES
Coordination
Coordination this term refers to
the linking of activities in the
organization that serve to
achieve a common goal or
objective.
 PRESIDEN
T

HUMAN
PRODUCTIO PRODUCTIO
SALES LEGAL AUDIT N N
RESOURCE
S

AREA 1 AREA 2 AREA 3 AREA 4 AREA 5

Figure 33
The Hybrid Design
Strength of the Hybrid
Design
1. simultaneous coordination;
2. integration of goals with objectives;
and
3. efficient and highly adaptable
Weakness of the Hybrid
Design
1. slow response to exceptional situations;
2. conflict between headquarters and divisions;
and
3. administrative overheard.
Matrix
Designed
An organization with a matrix design is one that
implements functional and divisional structures
simultaneously in each department. The employee is
supervised by the functional manager in his work as a
specialist.
The following conditions favor the use of
matrix design:
1. environmental pressures exist for a dual
focus, such as innovation and quality;
2. large quantities of information must be
processed; and
3. efficiency is needed in the use of
resources.
 Figure 34
The Matrix Designed
PRESIDEN Organization
T

PROJECT
MANAGEMENT SALES ACCOUNTING HRD FINANCE

PROJECT SALES ACCOUNTING

HRD UNIT
FINANCE
MANAGER A UNIT UNIT
UNIT

PROJECT SALES ACCOUNTING

HRD UNIT
FINANCE
MANAGER B UNIT UNIT
UNIT

PROJECT SALES ACCOUNTING

HRD UNIT
FINANCE
MANAGER C UNIT UNIT
UNIT
Strengths of the Matrix
Design
1. allows demands from environment to be met
simultaneously;
2. provides flexibility;
3. encourages resource efficiency;
4. enhances skill development;
5. increase motivation and commitment among
employees; and
6. aids top management in planning

Weaknesses of the Matrix

Design
1. Creates confusion;
2. Power struggles within the group are potential problems;
and
3. Places stress on individuals.
FORMS OF BUSINESS OWNERSHIP

Sole Proprietorship:
Partnership:
Limited Liability Company (LLC):
Corporation:
Sole Proprietorship:
Owned and operated by one individual,
it's the simplest form of business
ownership, with the owner directly
responsible for all business activities and
profits/losses.
Partnership:
Involves two or more individuals who agree
to share in the profits or losses of a
business, with each partner typically
contributing capital, skills, or resources.
Limited Liability Company (LLC):
Offers a blend of partnership and corporate structures,
providing limited liability to its owners (members) and
allowing for pass-through taxation (profits and losses
are passed through to the members' personal income
tax returns).
Corporation:
A separate legal entity from its owners
(shareholders), offering limited liability
and the ability to raise capital through the
sale of stock.
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Members:
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