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Introduction to Business

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Introduction to Business ­MGT 211
VU
Lesson 42
BUSINESS ORGANIZATIONS
Basically, an organization is a group of people intentionally organized to accomplish an
overall, common goal or set of goals. Business organizations can range in size from two
people to tens of thousands.
There are several important aspects to consider about the goal of the business organization.
These features are explicit (deliberate and recognized) or implicit (operating unrecognized,
"behind the scenes"). Ideally, these features are carefully considered and established, usually
during the strategic planning process. (Later, we'll consider dimensions and concepts that are
common to organizations.)
Vision --- Members of the organization often have some image in their minds about how the
organization should be working, how it should appear when things are going well.
Mission --- An organization operates according to an overall purpose, or mission.
Values --- All organizations operate according to overall values, or priorities in the nature of
how they carry out their activities. These values are the personality, or culture, of the
organization.
Strategic Goals --- Organizations members often work to achieve several overall
accomplishments, or goals, as they work toward their mission.
Strategies --- Organizations usually follow several overall general approaches to reach their
goals.
Systems and Processes that (Hopefully) Are Aligned With Achieving the Goals
Organizations have major subsystems, such as departments, programs, divisions, teams, etc.
Each of these subsystems has a way of doing things to, along with other subsystems; achieve
the overall goals of the organization. Often, these systems and processes are define by plans,
policies and procedures.
How you interpret each of the above major parts of an organization depends very much on
your values and your nature. People can view organizations as machines, organisms, families,
groups, etc. (We'll consider more about these metaphors later on in this topic in the library.)
Organizations as Systems (of Systems of Systems)
Organization as a System
It helps to think of organizations are systems. Simply put, a system is an organized collection
of parts that are highly integrated in order to accomplish an overall goal. The system has
various inputs which are processed to produce certain outputs that together, accomplish the
overall goal desired by the organization. There is ongoing feedback among these various parts
to ensure they remain aligned to accomplish the overall goal of the organization. There are
several classes of systems, ranging from very simple frameworks all the way to social
systems, which are the most complex. Organizations are, of course, social systems.
Systems have inputs, processes, outputs and outcomes. To explain,
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Introduction to Business ­MGT 211
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Inputs --- to the system include resources such as raw materials, money, technologies and
people. These inputs go through a
Process --- where they're aligned, moved along and carefully coordinated, ultimately to
achieve the goals set for the system.
Outputs --- are tangible results produced by processes in the system, such as products or
services for consumers. Another kind of result is outcomes, or benefits for consumers, e.g.,
jobs for workers, enhanced quality of life for customers, etc. Systems can be the entire
organization, or its departments, groups, processes, etc.
Feedback comes from, e.g., employees who carry out processes in the organization,
customers/clients using the products and services, etc. Feedback also comes from the larger
environment of the organization, e.g., influences from government, society, economics, and
technologies.
Each organization has numerous subsystems, as well. Each subsystem has its own
boundaries of sorts, and includes various inputs, processes, outputs and outcomes geared to
accomplish an overall goal for the subsystem. Common examples of subsystems are
departments, programs, projects, teams, processes to produce products or services, etc.
Organizations are made up of people -- who are also systems of systems of systems -- and on
it goes. Subsystems are organized in an hierarchy needed to accomplish the overall goal of
the overall system.
The organizational system is defined by, e.g., its legal documents (articles of incorporation, by
laws, roles of officers, eta.), mission, goals and strategies, policies and procedures, operating
manuals, eta. The organization is depicted by its organizational charts, job descriptions,
marketing materials, eta. The organizational system is also maintained or controlled by
policies and procedures, budgets, information management systems, quality management
systems, performance review systems, eta.
Standard Planning Process is Similar to Working Backwards Through the System
Remember how systems have input, processes, outputs and outcomes? One of the common
ways that people manage systems is to work backwards from what they want the system to
produce. This process is essentially the same as the overall, standard, basic planning process.
This process typically includes:
a) Establishing overall goals (it's best if goals are defined in measurable terms, so they usually
are in terms of outputs) (the overall impacts of goals are outcomes, a term increasingly used in
nonprofits)
b) Associating smaller goals or objectives (or outputs?) along the way to each goal.
c) Designing strategies/methods (or processes) to meet the goals and objectives
d) Identifying what resources (or inputs) are needed, including who will implement the methods
and by when.
Methods to the Madness: Systems Theory and Chaos Theory (Optional Reading)
NOTE: A person need not understand systems or chaos theory to start and run an
organization. A basic understanding, though, sure helps when dealing with the many kinds of
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Introduction to Business ­MGT 211
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typical issues that face members of organizations. Information at the following link is geared to
give the reader a taste of what systems theory is about, and then refer the reader to more
information if they are interested.
Thinking About Organizations as Systems --- Use functional structures when the organization
is small, geographically centralized, and provides few goods and services.
When the organization experiences bottlenecks in decision making and difficulties in
coordination, it has outgrown its functional structure. Use a divisional structure when the
organization is relatively large, geographically dispersed, and/or produces wide range of
goods/services. Use lateral relations to offset coordination problems in functional and
divisional structures. When the organization needs constant coordination of its functional
activities, then lateral relations do not provide sufficient integration. Consider the matrix
structure. To adopt the matrix structure effectively, the organization should modify many
traditional management practices.
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Table of Contents:
  1. INTRODUCTION:CONCEPT OF BUSINESS, KINDS OF INDSTRY, TYPES OF TRADE
  2. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:THE ECONOMIC ENVIRONMENT
  3. BUSINESS ORGANIZATION:Sole Proprietorship, Joint Stock Company, Combination
  4. SOLE PROPRIETORSHIP AND ITS CHARACTERISTICS:ADVANTAGES OF SOLE PROPRIETORSHIP
  5. PARTNERSHIP AND ITS CHARACTERISTICS:ADVANTAGES AND DISADVANTAGES OF PARTNERSHIP
  6. PARTNERSHIP (Continued):KINDS OF PARTNERS, PARTNERSHIP AT WILL
  7. PARTNERSHIP (Continued):PARTNESHIP AGREEMENT, CONCLUSION, DUTIES OF PARTNERS
  8. ORGANIZATIONAL BOUNDARIES AND ENVIRONMENTS:ETHICS IN THE WORKPLACE, SOCIAL RESPONSIBILITY
  9. JOINT STOCK COMPANY:PRIVATE COMPANY, PROMOTION STAGE, INCORPORATION STAGE
  10. LEGAL DOCUMENTS ISSUED BY A COMPANY:MEMORANDUM OF ASSOCIATION, CONTENTS OF ARTICLES
  11. WINDING UP OF COMPANY:VOLUNTARY WIDNIGN UP, KINDS OF SHARE CAPITAL
  12. COOPERATIVE SOCIETY:ADVANTAGES OF COOPERATIVE SOCIETY
  13. WHO ARE MANAGERS?:THE MANAGEMENT PROCESS, BASIC MANAGEMENT SKILLS
  14. HUMAN RESOURCE MANAGEMENT:Human Resource Planning
  15. STAFFING:STAFFING THE ORGANIZATION
  16. STAFF TRAINING & DEVELOPMENT:Typical Topics of Employee Training, Training Methods
  17. BUSINESS MANAGERíS RESPONSIBILITY PROFILE:Accountability, Specific responsibilities
  18. COMPENSATION AND BENEFITS:THE LEGAL CONTEXT OF HR MANAGEMENT, DEALING WITH ORGANIZED LABOR
  19. COMPENSATION AND BENEFITS (Continued):MOTIVATION IN THE WORKPLACE
  20. STRATEGIES FOR ENHANCING JOB SATISFACTION AND MORALE
  21. MANAGERIAL STYLES AND LEADERSHIP:Changing Patterns of Leadership
  22. MARKETING:What Is Marketing?, Marketing: Providing Value and Satisfaction
  23. THE MARKETING ENVIRONMENT:THE MARKETING MIX, Product differentiation
  24. MARKET RESEARCH:Market information, Market Segmentation, Market Trends
  25. MARKET RESEARCH PROCESS:Select the research design, Collecting and analyzing data
  26. MARKETING RESEARCH:Data Warehousing and Data Mining
  27. LEARNING EXPERIENCES OF STUDENTS EARNING LOWER LEVEL CREDIT:Discussion Topics, Market Segmentation
  28. UNDERSTANDING CONSUMER BEHAVIOR:The Consumer Buying Process
  29. THE DISTRIBUTION MIX:Intermediaries and Distribution Channels, Distribution of Business Products
  30. PHYSICAL DISTRIBUTION:Transportation Operations, Distribution as a Marketing Strategy
  31. PROMOTION:Information and Exchange Values, Promotional Strategies
  32. ADVERTISING PROMOTION:Advertising Strategies, Advertising Media
  33. PERSONAL SELLING:Personal Selling Situations, The Personal Selling Process
  34. SALES PROMOTIONS:Publicity and Public Relations, Promotional Practices in Small Business
  35. THE PRODUCTIVITY:Responding to the Productivity Challenge, Domestic Productivity
  36. THE PLANNING PROCESS:Strengths, Weaknesses, Threats
  37. TOTAL QUALITY MANAGEMENT:Planning for Quality, Controlling for Quality
  38. TOTAL QUALITY MANAGEMENT (continued):Tools for Total Quality Management
  39. TOTAL QUALITY MANAGEMENT (continued):Process Re-engineering, Emphasizing Quality of Work Life
  40. BUSINESS IN DIGITAL AGE:Types of Information Systems, Telecommunications and Networks
  41. NON-VERBAL COMMUNICATION MODES:Body Movement, Facial Expressions
  42. BUSINESS ORGANIZATIONS:Organization as a System
  43. ACCOUNTING:Accounting Information System, Financial versus Managerial Accounting
  44. TOOLS OF THE ACCOUNTING TRADE:Double-Entry Accounting, Assets
  45. FINANCIAL MANAGEMENT:The Role of the Financial Manager, Short-Term (Operating) Expenditures