BOM Assignment Full
BOM Assignment Full
BOM Assignment Full
1. Vertical structure
1.0 Introduction
A vertical organization structure is one that relies on managers to command and control their
employees' work. A business owner is typically at the top of a vertical chain of command
(Bianca, 2018).
The vertical organization is a well-defined leadership at the top of the organization whose
influence filters down to middle managers and department heads. The firm, which connects
buyers and sellers in the tech industry, further notes that in vertical organizations, middle
managers assign work to employees within their departments. When they complete the work,
it goes right back up the chain until it reaches a manager with sufficient authority to approve
the work, which is then moved outside its original department to other areas of the company
for quality assurance or production. (Rishipal, 2004)
Not surprisingly, Ford Motor Company was a firm that for decades operated under a strictly
vertical hierarchy. Henry Ford dictated that the company would sell only Model Ts, telling
employees that customers could choose any color, so long as it was black. For the first half of
the 20th century, vertical organizations utilized a command-and-control project-management
style (Bianca, 2018).
Today, vertical organizations more commonly use a "waterfall methodology," which allows
work to flow through different departments until it reaches an endpoint. The waterfall method
leaves room for some innovation within departments, but still limits the amount of
collaboration between different departments and types of workers.
As the name implies, this method involved a senior figure within the company assigning work
with very specific guidelines and little room for deviation. If this structure sounds
authoritarian, that’s because it is, but during its heyday, it was implemented for good reason.
(Teeboom, 2018)
Verticle structural dimensions
1.1 Authority
Vertically structured, or "tall" organizations have a chain of management, usually with a CEO
at the top making decisions and then delegating authority to lower-level managers (Patrick,
2011).
(Bateman & Snell, 2015) both agree that authority is the legitimate right to make decisions and
to tell other people what to do. Normally each boss has an authority to give an order to a
subordinate. Usually, in the small organizations, the owner of the organization manages it
and has the final authority. Sometimes the owner hires a manager to run the business and its
staffs.
The owner gives the manager an authority and the resources he needs to perform his duties
but is accountable to the owner.
Formal position authority is generally the primary means of running an organization. An order
that a boss gives to a lower-level employee is usually carried out.
The formal authority structure of the organization from the top down, beginning with the
board of directors, the chief executive officer and finally goes down to the top management
team.
Board of Directors In corporations, the owners are the stockholders. But because there are
numerous stockholders and these individuals generally lack timely information, few are
directly involved in managing the organization. Stockholders elect a board of directors to
oversee the organization.
The owner and managers of a small business may need the expertise of a board of directors at
least as much as a large company does. Some owners set up a board of advisers, such as
owners of noncompeting companies, retired executives, and perhaps their banker or
accountant. In a study by the University of Windsor was found that privately owned
companies were more profitable during the recent recession if they had a board of directors
that included people from
outside the company. One important reason was their ability to be more objective about what
the company could do during difficult times (Bateman & Snell, 2015).
Chief Executive Officer The authority officially vested in the board of directors is assigned
to a chief executive officer (CEO), who occupies the top of the organizational pyramid. The
CEO is personally accountable to the board and to the owners for the organization’s
performance. In some corporations, one person holds all three positions of CEO, chair of the
board of directors, and president (Bateman & Snell, 2015).
Top Management Team Increasingly, CEOs share their authority with other key members of
the top management team. Top management teams typically are composed of the CEO,
president, chief operating officer, chief financial officer, and other key executives. Rather
than make critical decisions on their own, CEOs at some companies regularly meet with their
top management teams to make decisions as a unit (Bateman & Snell, 2015).
Referent Power
Referent power is derived from the interpersonal relationships that a person cultivates with
other people in the organization. People possess reference power when others respect and like
them. Referent power arises from charisma, as the charismatic person influences others via
the admiration, respect and trust others have for him/her. Referent power is also derived from
personal connections that a person has with key people in the organization's hierarchy, such as
the CEO.
With informal authority, the holder becomes an informal leader within of an organization.
They play a critical role in the effectiveness of the organization and seem that they are more
powerful than the formal authorities. Clever managers are aware of informal authority as a
major factor that can help or hamper them to achieve their organizational goals.
Normally, If the structure of the organization is tall, then the span of control is narrow and
there may be ineffective, inaccurate and incomplete communication which could lead to
decreased morale, increased executive payroll, and red-tapism.
When the work and authority are divided amongst many subordinates and a manager
supervises and controls a small group of people, then a narrow span of control exists. It adds
more layers or levels of management and so leads to the tall organization (zeepedia.com).
When the work is more complex and requires tight control and supervision, there a narrow
span of control is helpful; messages can be distorted; coordination is difficult to achieve;
communication gaps can come; the more overhead cost of supervision and no quick response
to environmental changes.
1.4 Delegation
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. A delegation of Authority means the division of authority
and powers downwards to the subordinate. Delegation is about entrusting someone else to do
parts of your job (Maste, 2010). How is it delegated?
Firstly, the manager assigns the responsibility or task to the subordinate to do. He asks his
subordinate to perform a particular task in a given period of time. Then, he gives the
necessary authority to complete the task like; to use the company’s resources, to deal with
external parties, to lead others.
Finally, there is an accountability. The delegation creates an obligation on the subordinate to
accomplish the task assigned to him by the superior. The delegator has to ensure the
completion of assigned work. Authority flows downward whereas accountability flows
upward.
1.5 Decentralization
Decentralization is a type of organizational structure in which daily operations and decision-
making responsibilities are delegated by top management to middle and lower-level managers
within the organization, allowing top management to focus more on major decisions. For a
small business, growth may create the need to decentralize to continue efficient operations
(Joseph, 2018).
Decentralization offers several advantages, though relinquishing control may be difficult for a
business owner accustomed to making all the decisions.
Empowering Employees
Employees can be empowered by having more autonomy to make their own decisions, giving
them a sense of importance and making them feel as if they have more input in the direction
of the organization. It also allows them to make better use of the knowledge and experience
they have gained and implement some of their own ideas. Empowered employees can cut the
"red tape" of an organization by taking the initiative to get the job done with a minimum of
managerial approvals.
Relieving the Burden
Decentralizing takes some of the burdens of daily business operations of the business owner.
When the owner allows others to perform such tasks as hiring new employees or ordering
supplies, this frees her up to spend more time on big-picture items, such as planning for
expansion or meeting with important clients. Though it can be hard for some owners to allow
this type of flexibility, the rewards can be substantial for both employees and business
owners.
Ease of Expansion
For a growing business, decentralization can facilitate the process of expansion. For example,
if expansion results in opening a new business unit in a different geographic area,
decentralization allows the new unit to operate as an independent entity, meaning it can react
more easily to the specific needs of the area, such as deciding to sell products that appeal to
the local market.
Part B: practicing the vertical structure
Al-Faraj is experienced about traveling and tourism. Although they have been focusing on
traveling since then for some reasons, they always keep in their mind to enhance the tourism
service if other variables that are related to tourism change. Such as security, Environmental,
socio-economic and political. Now, it has four branches across the country and employs 38
staffs permanently altogether. Its headquarter is in KM4 Junction, Wadajir, Mogadishu,
Somalia. It is a really small organization, that is structured as a “Top-Down organization”.
2.1 Vision
The vision of the business is ‘To become the best-known travel and tourism agency in
Somalia during the next 10 years’.
2.2 Mission
The mission of the business is ‘To provide customized services and develop long-term
relationships with customers based on trust, knowledge, and integrity’.
2.3 Authority
The formal authority structure of Al-Faraj travel agency is from top to down. It begins from
the CEO and goes down to the managers.
The owner of the organization is also the CEO and has the ultimate authority. He gives the
managers; business manager and accounting manager some authorities to run the business.
They are personally accountable to the owner for the performance of the organization.
Although they have authorities, they can not make critical decisions on their own without
being informed the CEO.
In this organization, there is an informal authority- the expert power of course. Al-Faraj travel
and tourism agency has been operating since 20005 and some of its staffs have been with
them since then. They believe that they have a very high level of knowledge and skills that
other employees or even the managers of the organization do not have. Sometimes, they are
appointed to train new staffs and take part meetings among the CEO and the managers by
representing other staffs. They see themselves that they are the backbone of the organization.
The authority is not being used effectively this organization. No one else in the organization
has a sufficient authority apart from the CEO. In addition to, he doesn’t meet with the
management teams regularly to make decisions as a unit. High-potential employees decide to
quit the job voluntarily because they are not empowered and their views are not heard.
2.4 Hierarchy
There are few hierarchical levels in this organization. Alfaraj travel and tourism agency has
this form of hierarchy framework.
Reservations
Bookkeeper
and Ticketing
Cashier
It has a simple hierarchy, with a boss that is essentially the CEO and a few employees. The
owner is at the top and employees are at the bottom.
The CEO runs the entire show and makes the big decisions based on the business's direction
and actions. He responsible for making decisions that will ultimately increase revenue and
make the business profitable and viable. The managers; business manager and accounting
manager are accountable for the CEO of the company. They handle the daily workforce tasks
by assigning duties to employees and holding them accountable for their performance. They
employ and train new employees under the CEO.
Employees are a vital part of the organization. They are responsible for the organization’s
day-to-day operations. The employees have a very specific task to complete, and their
responsibilities are clearly defined. They are not responsible for oversight and decision
making against an entire department or organization. The owner of the organization is
responsible for every aspect of the business. This organization, one level of the hierarchy
makes a decision and instructs the next levels.
The optimum span of control for this organization is to be wider, around ten. Because
employees do routine and low complexity tasks which require less supervision than jobs that
are complicated. Another issue is, employees are more experienced and require less training
and direction. Al-Faraj should also consider the skills and competencies of managers and
supervisors. when the subordinates are enough competent to complete the allotted work
easily, the manager will not be required to give more attention to them and more subordinates
can be supervised. The mangers of Al-Faraj are competent enough, they can easily supervise a
large number of employees and span of control can be wider.
2.6 Delegation
This organization is a sole proprietor and the owner is thinking of managing everything by
himself. The owner of this business is not thinking of delegating authorities to others. It might
not even occur to him as an option. But there comes a time in every business’s success story
when the workload becomes too much for a person.
The employees of A-Faraj don't know whom to answer to, other than their overworked owner.
They are more likely to complete tasks to the fullest of their ability. The authority of this
organization runs from top to bottom. Delegation creates an opportunity to develop and grow
the organization, as well. But this organization never grows. It looks like the same size it was
a decade ago. It means no more positions become available, no more management positions
are created, and those people that are qualified and innovative within the organization cannot
rise to fill those positions.
I don't think the low-level managers are delegated to sufficient authority and responsibility.
Owner tries to do everything on his own. He gives the managers; business manager and
accounting manager some authorities to run the business. For instance, Customer Service
Activities – he gives them some authorities and responsibilities to resolve customer
complaints, handle issues and giving information on service inquiries. They are personally
accountable to him for what they did and how they did it.
Although they are delegated to specific tasks, they can not make critical decisions on their
own without being informed the CEO.
These tasks are performed well and they would like to be empowered. Managers commonly
prefer to have more authority over day-to-day decisions and operations to do more and change
the organization.
2.7 Decentralization
In this organization the decision-making process is centralized. All decisions and processes
are handled strictly the owner. Managers and employees lower in the chain of command are
limited to in the decision-making processes.
Decisions regarding everyday operations and processes are generally decided upon by upper-
level executives or the business owner. The decision-making powers are retained in the CEO,
and all other offices receive commands from the main office.
Decision-making process is usually slower in hierarchical structures because responsibility
and authority are concentrated.
For example, managers and employees rely on the information communicated to them from
the top, they have to wait and be patient until it arrives. A simple decision may take days,
weeks or even sometimes months.
There will be a loss in man-hours if there are delays in relaying the records. It means that the
employees will be less productive if they need to wait long periods to get guidance on their
next activity.
In this organization, an individual decision-making process is practiced. All the decisions in
the organization are in the hand of the owner. No one else has a contribution to it. All other
staffs have to implement quickly what the owner dreamt last night and they are controlled
whether they have implemented or not.
Part C:
3.1 Evaluation
3.1.1Authority
authority is the legitimate right to make decisions and to tell other people what to do.
Normally each boss has an authority to give an order to a subordinate. Usually, in the small
organizations, the owner of the organization manages it and has the final authority.
Sometimes the owner hires a manager to run the business and its staffs. The owner gives the
manager an authority and the resources he needs to perform his duties but is accountable to
the owner.
The formal authority structure of Al-Faraj travel agency is from top to down. It begins from
the CEO and goes down to the managers. The owner of the organization is also the CEO and
has the ultimate authority. He gives managers some authorities to run the business and they
can not make critical decisions on their own without being informed the CEO. In this
organization, The authority is not being used effectively this organization. No one else in the
organization has a sufficient authority apart from the CEO.
Al-Faraj travel and tourism agency has a simple hierarchy there are few hierarchical levels in
this organization. The boss who is essentially the CEO and a few employees. The owner is at
the top and employees are at the bottom.
The CEO runs the entire activities and makes the biggest decisions based on the business's
direction and actions. He is responsible for making decisions that will ultimately increase
revenue and make the business profitable and viable. The managers; business manager and
accounting manager are accountable for the CEO of the company. They handle the daily
workforce tasks by assigning duties to employees and holding them accountable for their
performance. They employ and train new employees under the CEO. This organization, one
level of the hierarchy makes a decision and instructs the next levels. Employees who see no
chance of promotion may leave to find better opportunities elsewhere.
The hierarchical structure of this organizations is bad and needs to be improved.
The number of subordinates that each supervisor directs in Al-Faraj is narrow, nearly four. Al
Faraj travel and tourism agency is suspicious of about expanding its span of control. If it
extends to a larger number, the owner of the business worries of losing control over its
operations. Thus, he prefers to manage lots of people directly, rather than delegating tasks to
middle managers, and not being involved in key decisions for the business. The subordinates
are less competent, the CEO has to give more time for supervision and span of control is
narrow.
The span of control which Al-Faraj practices fit into tall organizations like Al-Faraj. The
owner of this organization worries of losing control over its operations if he expands it. But
there are other factors that should be considered in order to keep your span of control wide or
narrow such as the size of the organization, nature of work, skills of the supervisors and
employees experience.
3.1.4 Delegation
A manager alone cannot perform all the tasks assigned to him. In order to meet the targets, the
manager should delegate authority. A delegation of Authority means the division of authority
and powers downwards to the subordinate. Delegation is about entrusting someone else to do
parts of your job.
This organization is a sole proprietor and the owner is thinking of managing everything by
himself. The owner of this business is not thinking of delegating authorities to others. It might
not even occur to him as an option. But there comes a time in every business’s success story
when the workload becomes too much for a person.
This organization is not practiced delegation effectively. The authority of this organization
runs from top to bottom and it is harmful to the organization.
3.1.5 Decentralization/centralization
Decentralization is a type of organizational structure in which daily operations and decision-
making responsibilities are delegated by top management to middle and lower-level managers
within the organization, allowing top management to focus more on major decisions. For a
small business, growth may create the need to decentralize to continue efficient operations.
3.2.4 Delegation
The owner of Al-Faraj should learn how to delegate. Whether it’s to cover for a sick day,
hard-earned holiday or another cause of absence. It will save his time, help him achieve more
and it will allow him to produce higher quality work in critical areas as opposed to spreading
himself over multiple projects. It’s good for team building too, and one way to encourage
better staff retention is to involve his employees in the business to a greater extent.
3.2.5 Decentralization
For now, the owner should keep it centralize but if it grows, he should change the structure
from centralizing to decentralizing. The centralized structure is good for small businesses but
when the business is big, decentralized is nicer.
3.3 Conclusion
All in all, organizational structure is very important in every organization. Each business has
some goals to achieve and these goals can be achievd to combine much effort and plenty of
resources. Managing these resources require to design an efective organizational structure.
Without structure, there’s very little clarity and focus; nobody knows whom to report to and
responsibilities are no clear.
References
Bateman, T., & Snell, S. (2015). management. New York: McGraw-Hill Education.
Gupta, A. (2010, Jan 10). Organization’s size and span of control. Practical Management.
Teeboom, L. (2018, October 17). Differences Between Horizontal & Vertical Organizations.
chron.com.
www.orgchartpro.com. (2017, may 19). The span of Control And Organizational Structure.