BUSINESS ENGLISH

CHAPTER 2: ORGANIZING FOR BUSINESS

1. Defining organization:
In today’s increasingly competitive business world, the structure of many companies has changed, and those
managers are seeking new approaches. However, the basic goals of business are the same. It is to organize
the factors of production including land, labor, and capital to produce goods and services that can be sold
and make a profit. And the first task is organization.

Organization is a group of people whose interactions are structured into goal-directed activities. Whether
their activity is playing a sport to win or producing computers to sell, group members work together to
achieve the organization’s objectives.

According to Encyclopedia, the term business organization describes how businesses are structured and how
their structure helps them meet their goals. This kind of internal organization helps to connect people with
different personal needs and styles to work together and achieve a common goal.

Take Wood Brothers’ Race Shop as an example. It is a small successful business of Glen and Leonard Wood.
They have producing championship racing since 1950. The Wood Brothers also have won at least one race in
every decade for the last six decades, an unmatched feat. They have 99 total points-paying victories and have
won 119 pole positions in 1,606 starts. They have earned over $30 million in career winnings and remain
among the winningest racing teams in NASCAR history. Their success is not spontaneous. Besides technical
skills and mechanical knowledge, their success is the results of good organization. It is a home-based
business, and everyone always tries their best to finish their own task which fits their own ability. In a word,
tasks will be divided among members, and they have to collaborate with each other, and there will be a
director who organizes all the activities. No matter how big your business is, a movie crew or a home-based
bakery, you all have to follow this kind of organization.

When a company grows, its organization becomes more complex, and job responsibilities become more
formally defined. Organization is universal, but it is not identical with each other. Some certain business may
have a rigid structure with many layers, but some may have fewer layers. In addition, the organization of a
company may also change during times. When it is small, it may have few layers in which managers and
workers work closely. However, as the company grows, there appears several organization changes:

1. Fewer decisions are made at the top.

2. Workers have less contact with top manager and more with middle managers.
3. Titles become more important, and jobs become more defined.
4. Communication becomes more standardized and more formal.
5. More rules and policies are established and written down.
6. Staff is expanded and given more authority.

2. Formal organization:
2.1. Authority, responsibility, accountability
2.1.1.Authority: power granted by the organization and acknowledged by the employees.
In most organization, certain employees are held accountable for work done by other people. If the workers
do not complete their tasks properly or on time, those who are responsible for the work must take the
blame. Person who is responsible for the work of others get employees to complete their works by exercising
authority. Organization charts show who has authority over whom, who is responsible for whose work, who
is accountable to and for whom.

2.1.2.Chain of command: pathway for the flow of authority from one level of an organization’s
employees to the next.

The chain of command makes it clear who reports to whom. A person at any point in the chain of command
is answerable to those who above him or her on the chain and has responsibility for and authority over those
below ( that is he or she can give order or “ command”). In a large company, there may be several chains of
command. For example, a typical manufacturing firm might have three chains of command: from the
production workers to the production department head to the president: from the sales staff to the
marketing department head to the president; and from the accountants and bookkeepers, to the finance
department head to the president.

2.1.3.Delegation: assignment of authority and responsibility to lower-level employees.

Except in the very smallest business, no one person can oversee and control all the word. The head of the
company must therefore make use of delegation. On paper, delegating authority is a fairly simple,
straightforward matter. In practice, however, it may become a far more complicated task. First of all,
planners have to deal with the sometimes tricky question of the degree to which those at the top will be held
accountable for the performance of underlings. A second major consideration is determining how much
authority must be given to someone so that he or she will be able to do the job properly.

Two other related points should be made about delegation of authority. The first is that duties, responsibility,
and authority must be assigned to a willing recipient. The word "willing" is important here. If a worker or
lower-level manager does not accept the assignment, there can be no delegation. Second, the leaders
themselves must also accept the idea of delegation, which inevitably means giving up a portion of their
control over things. For some, this turns out to be easier said than done-especially when it runs counter to
the habits of a lifetime.

2.2. Specialization and departmentation

2.2.1. Division of labor

2.2.2. Forms of departmentation

2.2.2.1. Department and departmentation

A department is a group or section of people within an organization who are working together on a specific
task related to the organization’s goal. Each department is headed by a departmental manager.

The division of departments is called departmentation which can be accomplished in several different ways.
Among them, the most common forms of departmentation are: departmentation by function, by product, by
territory (or geographical location), by customer/client and by process.

2.2.2.2. Forms of departmentation

 a. Departmentation by function

The most commonly used form is departmentation by function, in which the departments
are set up by grouping workers according to their responsibilities. This form
departmentation can be seen right in USSH which has many departments divided based
on the function of the workers such as: Office of Academic Affairs, Office of Student
Affair; or in a typical manufacturing business, there are Production Department, Finance
Department, Marketing Department, etc.

However, it has been shown through these examples that there is no formula for dividing
up departments, which means different companies or organizations should, and often
develop patterns to suit the particular functions that must be carried out in their
business.

The main features of this form is that each department works more or less independently,
with its own managers and personnel, budget, work schedules, etc. and the departments
only contact on certain levels and for specific purposes.

The biggest and clearest advantages a business or an organization can earn from this form
of departmentation is that each department will be staffed by experts in that functional
area and can simplify training and supervisor of subordinates. Besides, it is precise that
with departmentation by function, the departments follow exactly the principle of
occupational specialization because each one is in charge of only one function.

However, beside the advantages, there are still some disadvantages when applying this
form of departmentation in a business or an organization. Firstly, due to the
independence of each department, the connection between departments as well as the
overall objectives of the company can be de-emphasized. Moreover, the specialization of
them can somehow and sometime exceeds the standard and hinders the viewpoint of
workers. Lastly, as result of functional departmentalization, the response to the various
demands of the market and the customers tends to be slow.

b. Departmentation by product

In contrast with the slow response to the market changes of the first form of
departmentation, with departmentation by product, a company is able to catch up with
the market demand more easily and quickly. In this form of departmentation, the workers
are divided into different departments according to the product lines. There is one thing
noticeable about this form is that it is usually made by large-scale businesses which is into
manufacturing many products. Some of such large-scale businesses are TH company
which has introduced to the public many lines of product such as TH True Milk or TH True
Water or Nestle Corporation which have been famous for Milo milk or cereal, etc.

Departmentation by product allows each department is responsible for producing a

product and selling it to the customers. For more details, with this form, each product is
allocate to one department; then in the organization system of each department, there
will be many functionalized units taking responsibility for one function of manufacturing
that product such as sales, finance, personnel, etc.
 Besides the first advantage of this form of departmentation which is flexibility in
responding to the market changes, there are some other typical advantages a company
can earn from departmentation by product. One of which is the autonomous operation of
each department from each other. The second pros is that the profit and manufacturing
of each product can be controlled and managed better. And a new line of product can be
introduced or proposed much more easily.

On the other hand, there are also some disadvantages that need considering. Each
product line consists of many type of product, for example, in terms of baverage of
PepsiCo Incorporation, there are some products such as Pepsi, Revive, 7Up, Oolong Tea+,
etc. and each product is manufactured by one department. Therefore, it is likely to have
some unexpected competition between departments about sales, profits, etc. Besides, it
is necessary to take into consideration about problems coming from the cost which is
required for personnel, maintaining sale force for each type of product after it has been
introduced to the public.

c. Departmentation by customer/client

In departmentation by customer, the company’s staff is grouped to reflect the major

segments it markets to. For example, a sale department of a business concern can be
divided into industrial goods and consumer goods. This form of departmentation is
usually used when the various needs of customers are different in nature. For instance, to
meet the demand of customers, a bank or a financial institution may divide its loan
section into number of heads and assign them to various departments, such as – loans to
businessmen, farmers, professionals and so on.

With departmentation by customer, a company can fulfill the expectation and needs of
the customer, on the other hand, with the manufacturers, it will lead to a waste of a
vailable resources and facilities which are abandoned as a result of chasing after the
various demand of the customers. However, satisfying customers with better services can
help a company to win their good will; on the other hand, underutilization or duplication
for various types of customers divisions may appear. Lastly, this form of departmentation
allows a business to build long-term relationships with the customers, but, at the same
time, it will bring about a big challenge in maintaining those relationships.

d. Departmentation by territory/geographical location

The fourth form of departmentation is departmentation by territory which group an organization’s personnel
by physical location. This method is suitable for a business unit which is wholly dispered. Using this form, a
company is able to increase its sales as well as expand its scale because some of these following reasons:

- Regional managers can focus upon the unique requirements of their region.
- the cost of materials, operation, promotion, the required amount of time can be reduced
- It is easier to control process within a region.

Still, there are some drawbacks in departmentation by territory. The biggest disadvantage is that the control
and cooperation between the head office and the regional managers can be hindered. Secondly, in each
geographical location, there is the need of personnel for many positions, therefore, this method increases
the number of personnel and involves high cost of operation.

e. Departmentation by process

When the production activities are carried on in many places and the machinery or equipment requires
special skill for operating or technical facilities strongly suggest a concentrated location, a company will use
this form of departmentation. For example, a textile mill has many departments such as Ginning, Spinning,
Weaving, Dyeing and Printing, Packing and Sales. Each section will be in charge of separate specialized
persons.

Departmentation by process allow a company to utilize specialized equipment and simplify training fee and
time at the same time. Moreover, since the production activities take place in different places, the
interruption of other department or process is minimized. However, this may bring about heavy cost of
operation which is the result of separate rooms or factories for the departments, as well as the difficulty in
coordinating between departments. Moreover, there grows a need of training or recruiting specialized
manager since general managers with general knowledge is no more suitable.

2.3. Span of management

2.3.1. Definition:
The Span of Management (Span of Control) refers to the number of subordinates who can be managed by a
superior efficiently and effectively. Simply, it is the number of people a manager directly supervises.

There are two types of span of control: wide span of control and narrow span of control. In a wide span, the
manager has a huge number of people report directly to him. Whereas, with the narrow span, there are
fewer subordinates under him.

For example, a sales manager in an organization has about four people working for her. It means that her
span of control is four, and there are four employees report to and are controlled by the sales manager. Four
is a pretty small number, then her span of control can be considered a narrow span. However, if more
subordinates are added up to 7 people, her span of control increases and turns into a wider span of control.
The process continues, and her span of control can be even wider with hundreds or thousands of people
under her management.

Apparently, to an organization, a wide span of control will require fewer managers and vice versa. That is
why the size of a span of management is inversely proportional to the number of managers needed.

2.3.2. Factors affecting span of management

You can’t have the best of both worlds! A span of control with only one person or one with 10000 people
are not good at all. Therefore, having a span of control with the optimum number of subordinates is the
key to success. However, there is no formula for determining how many subordinates a supervisor can
 manage effectively. The ideal span of control can be varied depending on different factors. Still,
according to some research, the maximum number is certainly not more than a couple of hundred
people reporting to a single manager.

To be more detailed about this issue, here are some key factors that have a huge impact on the span of
management of a manager.

- Manager’s personal skill and leadership ability: the larger number of subordinates reporting directly
to an executive, the more difficult it is for him to supervise and coordinate their activities effectively.
That’s why if a manager has a wide span of control, he must have the ability to control subordinates,
the ability to make decisions, tactfulness, experience, quality of leadership, grasping power, and
power of command.
- The skill of the workers: Highly skilled, experienced, and sincere workers hardly need much
management and can even work without effective supervision hence provide for a wide span of
control. In contrast, a narrow span of control is more suitable for less-skilled workers because the
supervisor has more available time to help them with the job.
- The motivation of the workers: Motivated employees are an asset to an organization. They are
directly proportional to an organization’s success. A motivated worker can happy and feel safe at
work, which facilitates their competence and responsibilities. That leads to a few managers required
to supervise them, and hence a supervisor can have a relatively wide span of control.
- The nature of the job: The nature of the job refers to the type of work, both the basic daily tasks and
other non-routine tasks. If the work is of a simple and routine nature, managers can control many
people. On the contrary, if the work is more complicated, managers can only control effectively over
a small number of employees.
2.3.3. Tall organization vs. Flat organization
With a wider span, there will be less hierarchical levels, and thus, the organizational structure would be
flatter. Whereas, with the narrow span, the hierarchical levels increase, hence the organizational structure
would be tall.

In brief, a tall organization is a highly centralized operation, with many levels of workers and most of the
authority and responsibility concentrated at the top. For instance, one in which the CEO sits at the top of the
chain of command, with various management levels underneath, is called a tall organization.
A flat organization is quite decentralized, characterized by wider span of management and greater delegation
of authority to people in middle-management positions. It involves fewer levels of management and more
employee autonomy in the decision-making process.

Typical examples for a high organization can be found in large, complex organizations like the United States
military, and the Roman Catholic Church stands for a flat organization.

The U.S Army is a tall, centralized organization where important decisions are made by the generals and
colonel levels. There are eight levels to separate a general from a private, which is a great number. That’s the
reason why the general has a small area of control, a narrow span of management because it directly
oversees only a few colonies.

With the Roman Catholic Church, the Pope directly supervises many cardinals; the cardinals supervise
archbishops and bishops; bishops supervise priests, and priests can manage their own parish affairs. Those
are evidence that the church is a flat organization. It is noticeable that there are three levels between a
parish priest and the Pope, and each level is responsible for many people, which is the characteristic of a
wide span of management.

2.3.4. Advantages and disadvantages:

- Narrow span of control (Tall organization)

PROS
Better control
With fewer subordinates under one superior,
the superior can have better control over the
subordinates’ activities.
Better communication
A narrow span of control ensures that a close
relationship between managers and
subordinates develops by providing more
time for communication between superiors
and subordinates.
CONS
Expensive
This system puts a strain on the company’s
financial position because it has to employ
more supervisors or managers to manage
subordinates, which in turn leads to more
expenses in the form of salary and other
incentives for the company.
Higher number of managers
The greater number of managers a company
has, the more opinions and instructions are
set. It causes conflicts between the
managers or instructions that the
subordinates do not know who they should
follow. Then chaotic situations cannot be
avoided.
 Better opportunities
Fewer employees report to a manager, more
opportunities for them to get promoted. They
don’t have to compete with hundreds or even
thousands of people, which can increase their
success rate.
Less skill required
Suppose a manager is trying to control a much
larger group of direct reports, each of the
workers must be more autonomy. But with a
narrow span of control, an employee can be
supervised and trained carefully by his
supervisor to develop skills gradually.
Efficient management
It gives superior more time with subordinates,
which helps subordinates put their problems
regarding the work to superior and superior
acting on that problem to find a quick
solution. Moreover, fewer subordinates won’t
put much pressure on the managers, which
allows the manager to function efficiently.
Wide span of control (Flat organization)
PROS
Clear goals and policies
A wide span of control requires clear
communication to be more effective. It means
that the managers have to develop clear goals
and policies as well as delegate the tasks
effectively.
Less Expensive
The cost of operation is reduced because the
business employs fewer managers. With only
Too much interference
Too much supervision or interference can
create frustration and confusion in the
subordinates’ minds, which ultimately
affects their performances at work. It can
affect the overall efficiency of the company.
Slow decision making
The increased layers within the organization
can make decision making slower because, in
a narrow span of control, communication
begins to take too long to travel through all
the levels. These communication problems
hamper decision-making and hinder
progress.
Demotivation
The managers’ too much involvement in
their subordinates’ work can create
demotivation and morale reduction among
employees. It may limit the ability of team
members to exercise independence in
decision-making and problem-solving
processes.
CONS
Time-consuming
One person may have to give information to
lots of others, which can take lots of time. A
manager can spend all day making phone
calls and informing his hundreds of
subordinates.
Poor performance
Managers with a wide span of control might
become overloaded with work, have trouble
 one manager, a supervisor, or team leader in
management, the employees all work
together under the same manager.
Freedom
Less supervision and control can create a
more positive attitude among employees,
who appreciate the extra trust and freedom.
Empowerment
Staff are empowered to make their own
decisions and to carry out their tasks without
interference by managers.
making decisions, and lose control over their
subordinates. It severely affects the
company’s progress.
It is also hard for the managers to keep up
with all the employees’ works and ensure
that they are getting the job done, which
may increase the risk of wrong decisions
being made as subordinates may be less well
trained or lack experience.
Poor discipline
With so much autonomy given to
employees, these organizations can suffer
from poor discipline.
Poor relationships
Since a manager has to oversee many
people, it is hard for the manager to form a
strong and close relationship with each of
them to control them effectively.

Faster decision making Fewer opportunities for employees

With fewer levels within the organization, There are fewer opportunities for employees
decisions can be made more quickly. to prove their worth and get promotions
because of the intense competition between
many people, from the greatest to the worst.

3. Comparation between Japan’s and Vietnam’s organization

According to Geert Hofstede, a Dutch psychologist has been interviewing people working in the
same organization in more than 40 countries for more than a decade, analyzed the data to create
"Theory of five-dimensional culture". Each country will be graded with a scale of 0 to 100 for each
dimension. Here are the six dimensional Culture in Geert Hofstede's Theory in comparison of
Vietnam and Japan.
1. Power Distance (PD)
In general culture and working culture in particular, PD refers to the level of inequality that
exists – it deals with the fact that all individuals in societies are not equal among those with and
without power in society and organizations.
 Vietnam has a high PD score because of long-standing acceptance of inequality between
people. Accordingly, in the working culture of Vietnamese, employees follow the boss because they
consider it an obligation. People accept a hierarchical order in which everybody has a place and
which needs no further justification. Challenges to the leadership are not well-received. The move
of a lower-ranking person to a higher rank is quite difficult. It can be understood as an idiom, "The
king's son will be the king, the monk’s son will still swept the leaf”.
Countries with low intermediate PD scores like Japan do not emphasize the difference
between people and people in terms of social position, power or wealth. It is not as hierarchical as
most of the other Asian cultures. The business experience slow decision making process: all the
decisions must be confirmed by each hierarchical layer and finally by the top management. Equality
is considered a common goal of the whole company. An employee may frankly say his thoughts to
the boss or from the bottom of the power tower to the top is quite normal.
2. Individualism
Individualism is the degree of interdependence a society maintains among its members. In
Individualist societies, people are supposed to look after themselves and family only whereas in
collectivist societies people prefer being together that take care of them in exchange for loyalty.
 IDV of both Vietnam and Japan are not too high. With a low score, Vietnam is a collectivistic
society. Loyalty in a collectivist culture is paramount and overrides most other societal rules and
regulations. Such a society fosters strong relationships, where everyone takes responsibility for
fellow members of their group. This community will protect them when it is difficult, but in return
they must be loyal to the community without the right to question. In such a community, its
members often have to pursue so-called community responsibility.
Japan scores 46 on the Individualism dimension, which is higher than Vetnam, showing less
tendency of family, relatives, residential area.... This is why Japanese often spend more time for
work than family. Japanese are experienced as collectivistic by Western standards and experienced
as Individualist by Asian standards. They are more private and reserved than most other Asians.

3. Masculinity

A high score (Masculine) on this dimension indicates that the society will be driven by
competition, achievement and success. A low score (Feminine) means that the dominant values in
society are caring for others and quality of life. It also describes the degree of coherence and
appreciation of the traditional role of men and women in the working culture of a nation.
In Vietnam, this score is low because society is feminine. In such a society, women are generally
treated equally with men in all respects. You can set up a team based on the rational allocation of
skills, not just gender.

However in Japan, the high point MAS shows that this country is quite sexually
discriminating. In particular, men tend to dominate in much of the structure of family and social
power.
4. Uncertainty Avoidance (UAI)
This cultural dimension is related to the level of anxiety experienced by members of society
or employees in uncertain or unknown situations.
From the country with a low score on UAI In contrast, Vietnamese do not care too much about risk
and the unforeseen but maintain a more relaxed attitude. They are willing to accept change and
experiment. In such societies, people believe there should be no more rules than are necessary and
if they are ambiguous or do not work they should be abandoned or changed. Schedules are flexible,
hard work is undertaken when necessary but not for its own sake, precision and punctuality do not
come naturally, innovation is not seen as threatening.
In contrast, Japanese are always worried about unpredictable uncertainties in their live such
as natural disasters, epidemics because they are careful people. Under these circumstances
Japanese learned to prepare themselves for any uncertain situation. They do not easily accept new
things, changes that they have not experienced in their working culture. Therefore, we can see that
they often live and work by tradition, by laws and thoughts left by the ancients.

5. Long-term orientation (LTO)

Long-term orientation (LTO) refers to the fact that businesses and people in cultures tend to
look at the long-term or short-term when planning and living. They show an ability to adapt
traditions easily to changed conditions, a strong propensity to save and invest. thriftiness and
perseverance in achieving results.
On the dimension of Long-term Orientation, Vietnam is considered to have a pragmatic
culture. In societies with a pragmatic orientation, people believe that truth depends very much on
situation, context and time. They show an ability to adapt traditions easily to changed conditions, a
strong propensity to save and invest, thriftiness and perseverance in achieving results.
The score of Japan is high, which means they always worry about where their future is going,
then save for hard times. They all serve the durability of the companies. The idea behind it is that
the companies are not here to make money every quarter for the share holders, but to serve the
stake holders and society at large for many generations to come 
6. Indugence

Indulgence is the extent to which people try to control their desires and impulses. A low
score of 35 or 42 of VN and JP indicates that the culture of the 2 countries are characterized as
Restrained. Societies with a low score in this dimension have a tendency to cynicism and pessimism.
Also, in contrast to Indulgent societies which is more refered to Western nations, Restrained
societies do not put much emphasis on leisure time and control the gratification of their desires.
People with this orientation have the perception that their actions are Restrained by social norms
and feel that indulging themselves is somewhat wrong.

Ex: Workers are sometimes sent to an another company that has relation with his/her company but
mainly it is for making stronger connection between companies
 SIMILARITIES

1. Salary:
- The older you are, the higher salary you get. Salary JP determined by age group, the old get more
than the young. VN has some commons, but base on seniority allowance (PCTN) which will be
added to salary.
- Salary ≠ current performance. No matter how good, professional u are, new get few. (table) In VN,
basic pay = minimum rate x coeffiecients salary. Education is highly appraised.

2. Company system: cross functional

Large overview: Cross-functional system was designed to integrate the activities of the entire
businessprocess, and are called so because they 'cross' departmental boundaries.

More specific, workers are assigned various jobs within a company. Your career is developed within
a company. VN – JP same while in Western, people work in a specific department, and career is
developed within a market

Ex JP: Workers are sometimes sent to an another company that has relation with his/her company
but mainly it is for making stronger connection between companies

3. Recruiting and Promotion Decision makers

Human Resource department has the function of recruiting and promoting of allover the company.
Recruiting new employees, giving announcement about promotion bussiness of HR. However, not
all decision are made by HR but must be passed/adopted by Director maybe directly or indirectly.

4. Skills required

General skills is required in a company. In VN when applying for a jobs maybe Math teacher, JD
might include computer skills, little Eng skills.

Workers try to get overall skills that is necessary to fulfill various jobs in a company. At first u may
be asked to work in Students Enrollment department, communication & consulting skills. Right in
VN, many schools teach M using Eng, that time teacher need to have not only basic Eng
knowledge/skills but also some academic ones.

DIFFERENCES

6 dimensions according to Geert Hofstede, a Dutch psychologist represent for culture

differences. Each country will be graded with a scale of 0 to 100 for each dimension. But today we
just focus on organization so I’m gonna mention 2 typical distinction.

1. Commitment
In VN, changing working place is quite normal due to many reasons: geographical distance, passion,
demand for salary... JP Once you are hired to the company, basically you will work for the company
until you retire. Changing create low point for u, new company will wonder why u change the job
(low qualification, bad performance...)

2. Keiretsu

Keiretsu is an organizational structure unique to Japanese major corporations. While not all major
Japanese businesses are keiretsu, most of Japan's major corporate entities are. The meaning of
Keiretsu... Moreover, the influence of the keiretsu on the Japanese business world is important
even to non-keiretsu organizations. There are two types of keiretsu: the classical keiretsu and the
vertically integrated keiretsu.

As I have mentioned, the JP’s & VN’s business organization share some similarites in common but
also have differences in particular. However, the info our have given may not always 100% exactly
because different companies have different exception. It is just relative so if u find sth abstract/hard
to understand, feel free to raise ques and our group wil research & give answer in the next class.