copyright © glencoe/mcgraw-hill slide 1 of 16 business management real-world applications &...

Copyright © Glencoe/McGraw-Hill Slide 1 of 16

BUSINESS MANAGEMENTReal-World Applications & Connections

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SectionSection 13.2Creating an Organizational Structure

In this section: Sometimes managers help create the organizational structure of their company. This section discusses:

• Factors Affecting Organizational Structure• Organizing a Company into Departments• Understanding the Role of Company Leadership



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What You’ll Learn

• The different ways in which companies organize their departments.• Why a company’s structure needs to change as the company

grows.• The role of the chief executive officer.• The role of the board of directors.



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Why It’s Important

Managers both help create and work within organizational structures.



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Key Terms

• committee

• chief executive officer

• board of directors



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Factors Affecting Organizational Structure

• Size

• Type of Service or Product

A job design describes the work an individual or group of individuals is supposed to perform. It has two parts:



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Organizing a Company into Departments

• Organizing Departments by Work Functions

• Organizing Departments by Product

• Organizing Departments in Other Ways



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Organizing Departments by Work Functions

• Production—the actual creation of a company’s goods or services.• Marketing—product development, pricing, distribution, sales, and

advertising.• Finance—maintains financial statements and obtains credit so

company can grow.• Human resources—hires employees and places them in

appropriate jobs.



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Understanding the Role of Company Leadership

Three examples of leadership roles in organizational structures include:

1. Committees2. Chief Executive Officer3. Board of Directors



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Committees

Guidelines for choosing and managing a committee are:

• clearly define the committee’s function• establish authority figures within a committee• set clear goals for members to attain• decide on the limits of a committee’s power



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Chief Executive Officer

The chief executive officer (CEO) is the top executive in a company. Along with other senior managers, the CEO:

• sets the company’s objectives

• makes decisions about meeting the company’s objectives

• determines who fills senior management positions

cont.



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Chief Executive Officer cont.

• develops the company’s long-term strategies

• attends the company’s annual stockholders’ meeting and answers questions about the company’s activities

• takes charge of the company in a crisis

• works with the board of directors



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Board of Directors

The role of the board of directors includes:

• being the legal representative of a company’s stockholders (a company’s owners)

• approving the most important decisions made by the company’s CEO

• examining all major decisions to ensure that they are in the best interest of the company’s stockholders



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Fact and Idea Review1. What are the three organizational stages a company will go

through?2. Name two different ways a company can organize its

departments.3. Explain some of the duties of a chief executive officer.4. What is the difference between an inside board member and an outside board member?5. How can a manager increase committee efficiency?

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