Quiz 6: Organizing
The advantages of keeping the business as a sole proprietorship are that the income will only be taxed twice, that the owner will be in complete control of the business, and that there are fewer laws and regulations affect sole proprietorships. The disadvantages of keeping the business as a sole proprietorship are that the owner will have full liability for any debts the business incurs, that the owner cannot go to the public to raise funds via selling equity of the business, and that if the owner dies, the business will cease to exist.
PD has poses 3 organizing question to identify its key activity. The 3 questions are 1. In what department or area required an excellence in order to achieve company's goal. 2. In which department, when underperformed would endanger the results 3. Different values important for the company Case 1: Consider the case of Export Company where it has different department which consists of Accounts, Export, Banking, HR Admin and Marketing. Each and every department or area is required to achieve company's goal because all departments are interdependent. Export department is the most important department because it requires coordinating as well as taking care of all documents. So any problem in export department would create problems for company. In Export Company, it is necessary to have good morale, ethics and passion to achieve goal of the company. Case 2: The other case can be taken as manufacturing unit. Production and Procurement department is very important and it requires proper planning and coordinating to achieve the Company's goal. Underperform is not acceptable in production department as it would pampered other department. Quality check, high morality, environment protection, ethics etc. are some of the values necessary in manufacturing unit. Case 3: Restaurant is the service industry which consists of very less department. It requires human resource which should drive excellent service to their customer. Hence Cooking department should be good otherwise the restaurant will lose its customer. Basic antiques, honesty, pleasant smile is important in this business. Case 4: IT industry consists of various departments such as research and developers, testing, coding department, etc. Coding is the most important department because they are considered to be heart of IT industry. Any glitches in coding would affect the entire software system. Calm, intelligent, ethics, high morale, etc. is require in this company.
Functional departments are present in most organizations, for example, finance departments, engineering departments, human resources departments, etc. These departments are created to handle different activities that the business must perform in order to keep itself alive. Most organizations should adopt functional departments, unless there is a strong impetus to create cross-functional teams to handle the challenges faced by the business. A geographic department is required whenever a business encounters significant differences in the geographical areas that it operates. These departments will be required to ensure that the business operates successfully despite differences in location. For example, many businesses have departments that handle the affairs of the company in the different continents it operates in, such as the Asia department or the Europe department. Departmentation by customer makes sense when the needs of the different customers served by the business are vastly different. For example, a company that creates products for use by the military or by civilian households will most likely have to form departments based on the customer. The logic for departmentation by product is similar to the logic for departmentation by customer. If the company creates products with very different target audiences, each of these products should have separate departments that handle their operations. Departmentation by process makes sense when a specific activity that requires a large number of resources has to be carried out routinely. For example, before computers become widespread, some companies had process departments dedicated entirely to running their mainframe computers.