ORGANIZING THE

ENTERPRISE
 ORGANIZATION
 Itis a group of two or more persons
to work together to attain a common
set of goals.
Examples: Sari – Sari Store
- owned and manage by family.
San Miguel Corporation
Credit Cooperative
 ORGANIZING
It is a process of combining
and coordinating resources
and activities in order to
accomplish efficiently and
effectively the objectives.
 IMPORTANT ROLE OF
ORGANIZING
 This is a proper
development of human
resources.
 BEST RESOURCE OF THE
ORGANIZATION
 Employees, not money, machines,

materials or buildings.
 Entrepreneur must hire the best and

the philosophy of the organization.

ORGANIZATIONAL STRUCTURE
Every organization has
structure which indicates
positions and relationships.
Specification of the jobs to
be done w/n an
organization and how those
jobs relate to one another.
Elements influence organizational
structure
1. Purpose
2. Mission
3. Strategy
4. Size
5. Technology
6. External Environment
 Example of a simple
organizational chart:
Manager-Owner

Office Supervisor Sales Supervisor

Accountant Clerk Messenger SM SM SM

 Continuation…

MICRO BUSINESS – like

sari-sari store or backyard
piggery and poultry.
- positions and relationships are
very few.
SMALL BUSINESS
ENTERPRISES - we have
only the owner-manager,
supervisor, bookkeeper and
sales staff or workers.
 BIG CORPORATION - they have several
layers of management.
 Examples: Board of Directors
 President
 Executive Vice- President
 Several Vice- President
 Assistant Vice- President
 Many Managers/ Supervisors
 THE DIMENSIONS OF
ORGANIZATIONAL STRUCTURE
 the task of organizing an enterprise
involves five major steps.

- the results of these steps are often

referred to as the dimensions of
organizational structure.
 Continuation….
 1. JOB DESIGN - divide the work of the
organization into separate parts.
- assign these parts to positions
within the organization.
 2. DEPARTMENTALIZATION - group
the various positions into manageable
units.
 Continuation…
 3. CENTRALIZATION - distribute the
responsibility and authority within the
organization.
 4. SPAN OF MANAGEMENT - determine the
number of subordinates who will report to each
 manager.
 5. CHAIN OF COMMAND - distinguish
between those positions with direct authority
and those that are support positions.
 DEPARTMENTALIZATION

Jobs must be grouped into

working units in line with the
goals of the organization.
 The common bases of
departmentalization are by :
 1. FUNCTION - all jobs that pertain to the
same activity are grouped.
 2. PRODUCT – all activities related to a
particular product or product group are put
together.
 3. LOCATION - activities are grouped based
on a particular geographic area.
 4. CUSTOMER - grouping of activities in
accordance to the needs of various customers.
 Functional Departmentalization

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

 Product Departmentalization

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

Geographical Departmentalization

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

 Customer Departmentalization

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

 DECENTRALIZATION OF
AUTHORITY

The extent of distribution of

power from management to
subordinates determines
whether an organization is
centralized or decentralized.
 DELEGATION

When a part of power is

assigned to a subordinate.
It involves the granting of
responsibility , authority and
accountability
Issues with delegating:
Fear that subordinates don’t really
know how to do the job
Fear that a subordinate might show
up the manager by doing well
Desire for control
Lack of delegating ability
 RESPONSIBILITY

Duty to do the job.

 Continuation….

AUTHORITY
Power to do the job.
ACCOUNTABILITY
Obligation to do the
job.
 Continuation…
 DECENTRALIZATION OF
AUTHORITY
Lower level managers hold significant
decision making authority.
 CENTRALIZATION OF AUTHORITY
Top managers hold most decision
making authority
THERE ARE SEVERAL FACTORS WHICH
REQUIRE DECENTRALIZATION OF THE
ENTERPRISE
 1. External environment of the enterprise
- If is complex and unpredictable lower
management should be allowed to make the
decisions.
- Another is it the decisions are not risky then it can
be delegated to the lower levels of management.
- If the lower level management is competent in
decision makings skills, top management is
encouraged to decentralize authority.
LINE AND STAFF AUTHORITY

 LINE OF AUTHORITY- authority passes from

the highest level to the lowest level.
Examples :
The vice-president reports directly to the
president.
The managers report directly to the vice-
president.
The supervisors report directly to the
managers.
There is direct responsibility in line authority.
 Continuation…
 STAFF AUTHORITY - it is not part of
the chain command.
- its job is to provide, support,
advice and expertise to line authority.
- they have no accountability.
Examples :
The presidential adviser or assistant
is a staff position.
 Continuation…
 LINE AND STAFF OFFICERS – are needed for
the efficient operations of the enterprise.
 LINE MANAGERS - make the decisions.
 STAFF MANAGERS - assist in the making of
decisions.
* In some cases staff managers can
make decisions and can issue directives.
Example:
can decide the nature of the contract. But he
cannot change the price of a product.
 Sample ….
President

-----------------Consultant

Marketing Manager Production Manager Fin Mgr

 ------------Line Authority
 ---------- Staff Authority
 Continuation….
 JOB DESCRIPTION
 It should specify the details of the
work to be performed by the person holding the
position.

 JOB SPECIFICATION
 These identity the requirements
needed by the person applying for a job
included might be skills experience, education
and so on.
 Span of Management
 The number of subordinates who report to
a particular manager
A wide span of management exists when a
manager directly supervises a very large
number of employees.
A narrow span of management exists when a
manager directly supervises only a few
subordinates

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

 Span of Management: Wide Span
and Narrow Span

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

Forms of Organizational Structure

Line
Line-and-staff
Multidivisional
Matrix

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

 Line Structure

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

 Line-and-Staff Structure

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved

An Example of Multidivisional Structure:
The Walt Disney Company
CEO

Walt Disney Walt Disney Consumer

Attractions Studios Products

Motion Disney
TV Animation
Pictures Channel

Walt Magic
Tokyo Euro-
Disney Kingdom
Disneyland Disney
World CA

Software
Disney Disney Catalog
Licensing Publishing and
Stores Music Marketing
Education

Magic Disney-
Epcot
Kingdom MGM
Center Source: The Walt Disney Company Annual Report
FL Studios
 The Matrix Structure

Copyright © 2006 by The McGraw-Hill Companies, Inc. All rights reserved