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Writing Business Plans/ESSENTIALS OF MANAGEMENT

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Question
Why do most small companies use functionally organized departments?

Answer
Why do most small companies use functionally organized departments?
Organizational Structures
The aim of any business is to maximize profit. In order to do this there must be
division and specialization of labour. This implies that different people come together
in order to create a product that has value to consumers. Hence, the activities of
different people involved in a business must be coordinated. So there is a need for an
organizational structure that brings this coordination about. People in an organization
must know
(1) What their activity is and where it fits into the product as a whole;
(2) What their roles is, what responsibilities they have and to whom they are
answerable.
The need to delegate
Any organizational structure, which implies the combination of activities, is
impossible without delegation. It is especially necessary in a large organization to
delegate decision-making. The obvious problem is that in opposition to this
imperative to delegate is the equally important need to coordinate all activities.
Delegation does mean that the manager loses a measure of control. It is important
that the overall shape of the organization is maintained. A great deal of management
theory is focused on this issue for example, the concept of a mission statement for
the company so that everyone knows where the company as a whole is heading and
can take responsible decisions accordingly.
Delegation also means empowerment it means that subordinates have a more
enriching work experience.
Structures
Departmentalization
Business organisations are generally divided into specific departments personnel,
purchasing, production, sales, finance, distribution are examples. None of these
departments can function properly without the other departments.
In large companies there must be departmentalization. This means, activities must be
coordinated by organizing them into departments. A company obviously faces the
problem of how best to organize its departments. The solution must depend on each
company, its market and also culture. Any departmental organization means that
there can be conflict between departments and a loss of communication. It also
means that the company loses the benefit of organizing one way by organizing in
another.
Departments can be orgainised by
(1) function for example, personnel, production, marketing;
(2) product
(3) territory (geographical region)
(4) market segment or customer
(5) time for example, by shift
(6) numbers that is, to produce teams of a specific size
(7) equipment
However, the usual choice facing a company is whether to organize by function, or by
product.
Organisation by function or product?
When a business organisation is divided into specific departments each performing a
specific function personnel, purchasing, production, sales, finance, distribution
this is known as a functional approach.
SMALL ORGANIZATION PREFER FUNCTIONAL STRUCTURE.
-it is easy to set up.
-it is well defined in functions.
-Reduces duplication of activities
-Encourages technical expertise
-it has workable perspectives.
-it is easy to coordinate
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Writing Business Plans

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Leo Lingham

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Questions could cover business analysis, business planning, business development, strategic planning, corporate planning, corporate development, manpower planning etc

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18 years working managerial experience in business planning,
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24 years in management consulting covering business planning,strategic planning, marketing planning, product planning,
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BESTBUSICON Pty Ltd--PRINCIPAL

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MASTERS IN SCIENCE

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