Chapter 1

A business provides goods and/or services with the main goal of making a profit. Profit is the
difference between revenue and expenses. The person who risks time and money to manage
and start a business is named an entrepreneur. Entrepreneurs might risk losing time and
money on a business. The reward of taking risks is profit. On the contrary, if the company has
done not so well, this occurs in a loss (expenses > revenues).

Secondly, there is another type of organization, called a non-profit organization. Its goal is
not to make a personal profit for its owners or organizers. Besides the entrepreneur, the
stakeholders have a great interest in the development and profit of the company as well.
Stakeholders are, for example, customers, employees, stockholders, and bankers. The
challenge is to balance the needs of the stakeholders as best as possible. A decision of
management can be ‘outsourcing’. This means that several functions are assigned outside
organizations. This can be an example of conflict between stakeholders and management in a
company (employment versus maximum profit).

Quality of life is the general well-being of a society in terms of education, health care, safety,
and political freedom. The standard of living is the number of goods and services people can
buy with the money they own. These are important factors that can create satisfaction/joy and
determine the level of quality in your life.

Running a business can increase the standard of living as well as the quality of life. First of
all, businesses can increase the level of wealth/quality of life because they provide
employment for people. Secondly, tax is being paid by employees as well as by businesses.
The government uses this money to build hospitals and for example schools. The wealth that
businesses generate and the taxes that they pay, may help everyone in their communities.
Which can lead to an increased quality of life.

Several factors of production are considered that is the “building stones” of a company:

● Land: Natural resources

● Labour: Workers
● Capital: Everything that is used for production (i.e., tools, machines) except for
money
● Entrepreneurship: People who are willing to take risks and invest time/money in a
business
● Knowledge: Determining wants and needs, and responding to them efficiently

The business environment consists of surrounding factors that either develop or hinder
business:

1. The global business environment: The global business environment is very important
because it surrounds all other environmental influences (economic and legal etc). Two
major environmental changes in the last years have been the increase of free trade
among nations and the growth of international competition.
 2. Economic and legal environment: The government can influence the level of risk of
starting a business and can therefore increase entrepreneurship and wealth in a
country. This is done by: keeping taxes and regulations to a minimum, allowing
private ownership establishing a tradable currency, eliminating corruption
establishing laws that enable people to create contracts that are enforceable in court
3. Technological environment: good technology must be available and easily accessible.
The use of the internet, bar codes, or databases can improve productivity significantly.
On top of that, using technology can increase your responsiveness to customers. For
example, bar codes can be used to display what products a consumer bought. This
information is inserted into a database. A database is an electric storage file where
information is kept about customers and their past purchases. Companies trade
database information to know what the local population wants.
4. Social environment: Businesses have to respond to demographic changes because
they can affect business and can lead to new opportunities and threats. On top of that,
businesses must hire a diverse workforce that represents the diversity of the customers
and what they want. Finally, the changing situations of families have a major effect on
businesses as well. If you are a single parent, for example, it cost a lot of effort to
work full-time and raise a family. Therefore, businesses must take such things into
account and offer special programs.
5. Competitive environment: If a business wants to stay competitive, it must meet
stakeholders’ and employees’ wishes. On top of that, it is important that the products
or services exceed customers’ expectations. These days, an important goal for many
companies is offering high-quality products at competitive prices with excellent
customer service. Restructuring the organization and emphasizing on empowerment
of frontline workers is also a part of customer service. It is not allowed to make
mistakes in products (zero defects).

To meet the needs of customers, empowerment can be used. Empowerment is when you give
employees more freedom, authority, and responsibility to do their work. E-commerce is
purchasing and selling of goods and services over the internet. It can be divided into two
major types of transactions: Business-to-consumer(B2C) and Business-two-business (B2B).

Technology is everything that makes business processes more effective, efficient, and
productive. That are for example software programs, phones, and computers. You reach the
highest efficiency if you use the least amounts of recourses when producing goods and
services. Effectiveness is producing the desired result that you wanted to have. The third
factor, productivity is the amount of output you generate, given the amount of input.
Goods are concrete products (which you can touch) such as a bike or for example pizza.
However, services are intangible. Examples of services are education or treatment in a
hospital.

Chapter 2

Economics
* Economics is the social science that studies the distribution, production, and consumption
of goods and services. Some economists have the perception that economics is the allocation
of ‘scarce’ resources. They think that there are only limited resources available which have to
be cautiously divided among people, primarily by the government. Economics can be divided
into two branches. Macroeconomics deals with the economy of a country as a whole, whereas
microeconomics analysis the behavior of individuals and organizations in certain markets.
 * Neo-Malthusians believe that there will be too many people on earth and there will not be
sufficient resources and food. They think that the cure for poverty is birth control and
adoption.

On the contrary, Adam Smith did not believe that resources had to be divided among
individuals. He created a vision that when there were more resources created, wealth would
increase and the lives of everyone would improve. Adam Smith’s theory says that people do
not automatically, consciously set out to help others. Instead, they are working for
themselves. However, the effort that everyone puts in individually to improve their situation,
will lead to a better social and economic situation for everyone.

- Capitalism The population under free-market capitalism has 4 basic rights:

1. The right to own a business and to keep the profit they gain
2. The right to private ownership (Individuals can sell, buy, and use things, etc.)
3. The right to have freedom of competition (businesses need laws and regulations, etc.
contracts laws which make sure that people stick to their word.
4. The right to have freedom of choice

Capitalism is an economic and social system in which the means of production and
distribution are owned privately. The price of a product or service is determined by demand
and supply. If the quantity demanded is high and the quantity supplied is low, the prices
increase and vice versa. The equilibrium point is the point where the quantity demanded, and
quantity supplied is the same.

One of the most significant characteristics of capitalism is competition. These are the distinct
types:

Perfect competition Monopolistic competition Oligopoly Monopoly

- The market consists of a - The market consists of a - It is a - There are no competitors.

lot of suppliers lot of suppliers heterogeneous
product - Producer determines the
- It is a homogeneous - It is a heterogeneous price
(uniform) product (sản product (the product is seen - Market consists of
phẩm đồng nhất) as different by consumers) only a few suppliers - Transparent market

- The market is easily - The market is easily - The market is not - Market is difficult to
accessible (dễ dàng tiếp cận) accessible. easily accessible; it accessible
is difficult to entry
- The market is fully - The market is not
transparent (minh bạch) transparent. Product
differentiation is a
- You cannot determine the commonly used strategy in
price; you only have an monopolistic competition.
influence on the quantity (Khác biệt hóa sản phẩm là
that you produce. một chiến lược thường được
 sử dụng trong cạnh tranh
độc quyền)

A free-market economy like capitalism may have many advantages. For example, people may
work themselves out of poverty or there is more competition between companies. However, it
also has its disadvantages. For example, companies tend to move their production to
countries which have cheap labor costs. On top of that, the inequity can increase in a free-
market economy because there will be a greater difference between poor and wealthy people.
-Socialism

Another economic system is called socialism. Socialism is based on the perception that most
businesses must be owned by the government. The government’s task is to equally distribute
the profit of governmental businesses and the profit of taxes paid by privately owned
businesses, among the people. A command economy exists if the government, to a large
extent, determines what goods and services will be produced in that country, who will get
them and how the economy will grow.

- Advantages of socialism:

More social equality than in capitalism

Free education and social programs are paid with the profit of governmental businesses and
taxes of private businesses.
Employee benefits such as longer vacations and fewer working hours because of
governmental restrictions
- Disadvantages of socialism:
Less profit for entrepreneurs because of higher taxes
Less entrepreneurship because of higher taxes and more governmental restrictions
Fewer innovations because of fewer rewards
Brain “drain”: Socialist countries lose their brightest entrepreneurs to capitalistic countries
because of lower taxes and higher income.
-Communism

Communism is an economic and political system in which the government determines almost
everything. They make economic decisions and own the major factors of production. There is
little personal freedom, entrepreneurship is not allowed and therefore competition does not
exist in a communist country. The government decides what and how much to produce.
Therefore, production is not based on supply and demand.

Today, most countries allocate their resources partly to the government and partly to the
market. This is called a ‘mixed economy”.
Key Economic Indicators

- Unemployment Rate: The percentage of people who are at least 16, unemployed, and do not
have found a job within the prior four weeks.

- Consumer price index (CPI): The CPI measures if there is a general rise in the prices
(inflation) or a general decline of the prices (deflation) over a month.

- Producer Price Index (PPI): The PPI measures the changes in wholesale prices.

- Gross Domestic Product (GDP): The total value of all goods and all services that were
produced in one year. The Business Cycle: periodic falls and rises that arise in economies
over

- Recovery: economic growth is increasing again, after this, there will be another economic
boom.

- Fiscal policy: The intervention of the government to keep the economy stable. The
government can intervene by changing taxes and government spending.

- National debt: The total deficits of the government.

- Monetary policy: The management of money supply and the interest rates.

Chapter 5
Partnership
A partnership is a legal form of business with at least two or more owners.
Types of partnership:
- Limited partnership: Partnership between one or more general partners and one or more
limited partners. A limited partner is an owner who invests money in the business but does
not have any management responsibility or liability for losses beyond the system. Limited
liability means that limited partners are not responsible for the debts of the business beyond
the investment made into the company. A limited partnership is specially designed to help
raise money.
- General partnership: All the owners share in operating the business. All the owners are
equally responsible and liable. The three elements of any general partnership are common
ownership, sharing profits and losses, and sharing the right to get involved in managing the
business. A general partner is an owner who has unlimited liability and is active in managing
the firm. Every firm consists of at least one general partner.
- Master limited partnership (MLP): Acts like a corporation on the stock market but is taxed
like a partnership. It avoids corporate income tax.
- Limited liability partnership (LLP): A partnership that limits the partners’ risk of losing
their personal assets to only their own performances and omissions and to the performances
and omissions of people under their supervision. This means that if a partner may be trade
you, you won’t lose all your personal assets, as in a general partnership.
Advantages:
- More financial resources
- Sharing management and combined knowledge
- Longer survival
- No special taxes: Owners pay the normal income tax
Disadvantages:
- Unlimited liability: each general partner is liable for the debts of the firm, no matter who
caused those debts. Partners can lose their homes, cars, etc.
- Sharing profits: possible conflicts
- Disagreements among the partners
- More difficult to end (terminate)
Sole proprietorship
This is a business that is owned and usually managed, by one person. On top of that, it is the
most common form of business ownership.
Advantages:
- You are your own boss
- Starting and ending a sole proprietorship is easy
- No special taxes: You just pay the normal income tax; however, this depends on which
country you live.
- Pride of ownership: You deserve all the credit for taking risks and providing demanded
goods and services.
- Legacy for future generations (business owners have something to leave behind for future
generations)
- You don’t have to share your profit
Disadvantages:
- Limited financial resources
- Unlimited liability (this is the responsibility of business owners for all of the debts of the
business) the companies’ debts, are your debts.
- Management difficulties: Not everything can be done efficiently by one person. On top of
that, it is difficult to attract skilled employees because you can’t compete with the benefits
offered by big companies.
- Overwhelming time commitment: hard to have time for anything else in life. It is a way of
life.
- Few fringe benefits: You can’t take a paid vacation, no sick leave, and health insurance you
have to pay yourself as well.
- Limited growth: Because all creativity, funding, and know-how comes from one person
- Limited life span: When the owner dies, retires, or becomes incapacitated the company
often ends to exist
Corporation
A corporation is a legal entity with the power to act and to have liability separate from its
owners. A conventional (c) corporation is a state-chartered legal entity with the power to act
and to have liability separate from its owners as well.
Advantages of a conventional corporation (C-corporation):
- There is a separation of ownership from management: the stockholders/owners have some
say in who runs the corporation, but they have no control over the daily operations.
- Limited liability (Ltd.) means that the owners of the company are responsible for losses
only up to the amount they invest
- Size: Because they have the chance to raise large amounts of money to work with,
corporations can build, for example, modern factories with the latest equipment available.
- Perpetual life of the company: The death of one or more owners does not terminate the
corporation because corporations are separate from those who own them.
- Furthermore, it is easy to change ownership, you just have to sell your stock.
- Easy to attract talented employees: by offering nice benefits such as stock options.
- More money for investment: To raise money a corporation can sell ownership(stock) to
everyone who is interested and borrow money from individual investors through issuing
bonds. And last, corporations can borrow money from financial institutions.
Disadvantages of a conventional corporation (C-corporation):
- Initial high cost: incorporation costs a lot of money and involves expensive lawyers and
accountants.
- Extensive paperwork: The tax laws force a corporation to prove all the deductions and
expenses are legitimate. Corporations therefore must process many forms.
- Double taxation: First the corporation pays tax on the income and then the stockholders pay
tax on the dividends.
- Two tax returns for individual incorporates: If an individual incorporates, he or she must file
both an individual tax return and a corporate tax return.
- Size: Sometimes corporations become too inflexible and too limited to respond quickly to
market changes.
- Difficult to terminate: In the sense that it is hard to terminate a whole corporation.
- Possibility of conflict with the board of directors: If the stockholders elect a board of
directors that disagrees with the present management. It is also possible for people to
incorporate their businesses. The main reasons for doing so are the special tax advantages and
the limited liability.
S corporations are created by the government and are taxed like sole proprietorships or
partnerships. A company that wants to become an S corporation has to fulfill these criteria:
- The shareholders have to be individuals or estates and some of them have to be citizens or
permanent residents of the USA.
- Have no more than 100 shareholders
- The company should have only one class of outstanding stock
- The company is not allowed to have more than 25 percent of the income derived from your
passive resources such as rents, royalties, interest, etc. The limited liability companies (LLC)
This type of ownership is similar to the S-corporation but does not have special demands.
Advantages:
- Limited liability: personal assets are protected
- Choice of taxation: taxed as partnerships or as a corporation
- Flexible ownership rules: LLCs don’t have to comply with ownership restrictions as S
corporations do.
- Flexible distribution of profit and losses: profit does not have to be distributed in a
proportion to the money each person invests.
- Operating flexibility: LLCs do not have to be that precise in describing how the company
operates (file written resolutions, annual meetings, etc)
Disadvantages:
- Limited life span: LLCs are required to formulate dissolution dates in the articles of
organization. By death: LLCs dissolve automatically.
- No stock: LLC ownership is not transferable. LLC members need the approval of the other
members to sell their interests. (S corporations and regular corporations can sell shares.)
- Fewer incentives: you cannot use stock options as a stimulus for employees
- Taxes: LLC members must pay self-employment taxes on profits. The difference in
comparison with an s corporation is that they pay the self-employment tax on salary but not
on the entire profit.
- Paperwork: More than sole proprietors, less than corporations. Corporate Expansions
Merger: When two firms form/become a new company. There are several types of mergers:
- Vertical mergers: When the two companies which operate in different stages of related
businesses become one.
- Horizontal mergers: When two companies that operate in the same stage of related
businesses become one.
- Conglomerate mergers: When two companies that operate in different businesses become
one. The major purpose of a conglomerate merger is to diversify business operations and
investments.
Acquisition: When a company purchases obligations and property of another company.
A leveraged buyout (LBO): When a group of people or an individual buys all the stock of a
company and takes a firm privately.
Franchise
A franchise is an arrangement in which a person buys the right to use a business name and to
sell its products in a certain area. If you want to start a franchise in another country, you have
to make sure you adapt to the country’s culture. The person who buys a franchise is called a
franchisee. The person who sells the idea to the franchisee is called the franchisor.

Advantages:
- Personal ownership: your store, you are your own boss, enjoy incentives and profits.
- A nationally recognized name
- Financial advice and assistance
- Lower failure rate:
- Management and marketing assistance: A franchisee has several benefits. First, they possess
a nationally recognized franchise with an already established reputation. Secondly, they get
assistance in all phases of operation such as promotion and a choosing location.
Disadvantages
- Franchise fees can be very high
- Management regulations: you have to obey limitations and orders.
- Share of profits
- Coattail effect: If other franchisees fail, you could be forced out of business.
- Restrictions on selling
- Fraudulent franchisors
Chapter 7
The Internet, the rapid technological changes, and the growing global market created the need
for a new type of management. Managers no longer have to act like a ‘boss’ in the old-
fashioned sense of the word. They are more open to the employees’ input. The interaction
between employees and management makes new innovations possible. Authority becomes
more and more decentralized, and the main tasks of the managers are guiding, training,
supporting, and motivating workers to make customers happy. Also, teamwork has become
one of the most important tasks.
Management: is the process used to accomplish organizational goals through planning,
organizing, leading, and controlling people and other organizational resources.
The four main tasks of modern managers are explained shortly:
1. Planning: As a manager, you have to anticipate trends and determine the best strategies
and tactics to achieve organizational goals. Besides, the manager has to emphasize common
values in order to reach common goals.
2. Organizing: This is a management function that includes designing the structure of the
organization and creating conditions and systems in which everyone and everything work
together to achieve the objectives and goals of the organization.
3. Leading: This means that the manager has to create a vision for the organization and
communicate, guiding, train, coaching, and motivate others to work effectively to achieve the
organization’s objectives and goals.
4. Controlling: A management function that involves establishing clear standards to
determine whether an organization is progressing toward its goals and objectives, rewarding
people for doing a good job, and taking corrective action if they are not.
Planning
A company needs common values to reach common goals. That is why it is important to have
a clear organizational vision. The vision explains why the organization exists and where it’s
trying to head. Goals are broad, long-term accomplishments to reach a vision. Goal setting is
often a team process because goals need to be mutually agreed on by workers and
management. The objectives are specific, short-term statements that say how the company
will achieve its goals. A company often outlines its fundamental purposes such as vision,
goals, or objectives in the mission statement.
A mission statement should include:
(1) long-term survival
(2) the organization’s self-concept
(3) company philosophy and goals
(4) customer needs
(5) social responsibility
(6) the nature of the company’s product or service
The following questions can help to define a mission:
- How is it now?
- What do we want?
- How can we realize that?
To complete a mission, the company has to analyze strengths, weaknesses, opportunities, and
threats (SWOT analysis) and plan ahead carefully. The company begins such a process with
an analysis of the business environment in general. Then it identifies the strengths and
weaknesses. As a result of the environmental analysis, it identifies opportunities and threats.
Which forms of planning are there?
1) Strategic planning: determines the major goals of the organization. It provides the basics
for the policies, procedures, and strategies for obtaining and using resources to achieve these
goals. In this context, policies are broad guides to action and strategies determine the best
way to use resources.
2) Tactical planning: the process of developing detailed, short-term statements about what
is to be done, who is to do it, and how it is to be done. On top of that, it involves setting
annual budgets and deciding on other details and activities necessary to meet the strategic
objectives. Tactical planning is mostly done by managers at lower levels of the firm. On the
contrary, strategic planning is done by the top managers of the organization.
3) Operational planning: the process of setting work standards and schedules necessary to
implement the firm’s tactical objectives. Strategic planning looks at the firm as a whole. On
the contrary, operational planning focuses on specific supervisors, managers, and individual
employees.
4) Contingency planning: In case the primary plans fail, you have to have some backup
plans. This describes the process of preparing those backup plans.
- Making decisions
The decision-making process goes according to the seven D’s:
1) Define the situation: What is the current status of the business and market?
2) Describe and collect needed information
3) Develop alternatives: Make more than one plan
4) Develop agreements among those involved: What are the demands of everyone
involved?
5) Decide which alternative is best: How can you reach all demand?
6) Do what is indicated: Start to put your plans into action.
7) Determine if you made the right decision: Do a follow-up
Problem-solving techniques are (1) brainstorming, and (2) PMI. PMI is making a list of all
the pluses for a solution in one column and the minuses in another. Finally, the implications
stand in the third column.
Organizing
There are three levels of management. First, top management develops strategic planning.
Second, middle management is responsible for tactical planning and controlling. Third, the
supervisory management is directly responsible for supervising workers and evaluating their
daily performance. The employees do not have managerial possibilities. They are called
“non-supervisory”.
A manager must have three types of skills. He/she has to have technical skills. This means
that he/she has the ability to perform tasks in a specific discipline. Second, he/she has to have
human relations skills. This means that you have to communicate with your people and
motivate them. Finally, conceptual skills involve the ability to picture the organization as a
whole and the relationships among its various parts.
A function that becomes increasingly important is staffing. This is a management function
that includes hiring, retaining, and motivating the best people available to accomplish the
company’s objectives. With international trade, management has become global and people
from different generations, strengths, sexual orientations, abilities, and religions, etc work
together in a firm. This requires the ability to manage diversity. Besides that, management
has to take into consideration the needs and demands of the stakeholders (stakeholder-
oriented management).
Leadership
For executives, it is not enough to manage a company. They have to be leaders. The manager
plans and organizes. On the contrary, an executive has to give the employees a vision and
makes the employees understand the corporate values and ethics of that company. On top of
that, a leader’s most important job may be to transform the way the company does business
so that it’s more effective and efficient.
There are different kinds of leadership:
- Autocratic: The manager takes decisions without consulting others. Effective in
emergencies.
- Participative (democratic) leadership: Managers and employees collaborate to make
decisions.
- Free-rein leadership: Managers set the objectives but leave employees the freedom how to
accomplish them. Often used with working with professionals.
Empowerment means giving employees the authority and responsibility to respond quickly to
the requests of customers. Enabling is the term used to describe giving workers the education
and tools they need to make decisions. Directing is the opposite of empowerment. You give
explicit instructions to workers, telling them exactly what to do and how to meet the goals
and objectives of the company.
Knowledge management tries to find the right information, keeps the information in a readily
accessible place, and makes the information known to everyone in the firm.
Controlling
1. Establish clear performance standards (ties planning -to control function. No standards,
no control)
2. Monitor and record actual performances (results)
3. Compare results against standards and plans (therefore the standards need to be clear,
otherwise you can’t record or compare the employee’s performances with them)
4. Communicate results to the employees (they have to know if they’re doing good or bad)
5. If needed, take corrective action. (And provide positive and negative feedback)
A new development is looking at customer satisfaction as a measurement of success. This is
often combined with the more traditional standards: profit and return on investment.

Chapter 8
During the period of mass production, the first organization theories emerged.
Mass production: Production in large quantity à economy of scale: the production cost of a
company goes down as it produces more. This is possible because they buy the materials in
large quantities.
Traditional organization concept
Summary of the principles of organization theory elaborated by Henri Fayol and Max Weber
10. Unity of command: every worker has only one boss
11. Hierarchy: the chain of command with one decision-making person at the top of the
organization
12. Division of labor: the work has to be divided among individuals or departments
13. Authority: You have to obey the orders that are given by someone higher in the
hierarchy
14. Degree of centralization: part of the decisions is made by the top managers and the
other decision-making is delegated to lower-level managers
15. Communication channels: employees of a firm reach each other easily; this stimulates
efficiency and productivity
16. Order: employees and materials are put in the right place
17. Equity: a manager should treat employees with fairness and respect
18. Esprit de corps: create common values and goals within a company
19. Subordination of individual interest to the general interest: individual goals are less
important than the goals set in a team
20. Bureaucracy: determine rules and procedures, be consistent in applying them, and keep
records
21. Clear job description: staffing and promotion based on qualifications
Global competition, new technologies, and changing customer demands in a capitalist society
require the reorganization of a company.
Traditional versus modern organization concepts
1) Centralized versus decentralized authority: Centralized authority keeps the decision-
making process at the level of the top managers. Decentralized authority gives managers and
employees the authority to make decisions. The act of delegating responsibility is called
empowerment.
2) Tall versus flat organization structure: A tall organization structure consists of many
layers of managers, a lot of paperwork, and therefore slower communication. This means
more control, more costs, and less empowerment than in the flat organization structure. A flat
organizational structure consists of fewer layers of manager but a broader span of control
(one manager supervises more people) than in a tall organization structure. This means less
control, fewer costs, and more empowerment. These companies are more able to adapt to
changes because their communication goes faster.
3) Traditional versus modern management structures
TRADITIONAL STRUCTURES:
Line organization: workers correspond directly to a manager at the higher level on the chain
of command who acts on the behalf of a top-manager
Line-and-Staff organization: more interaction between line personnel (authority who makes
decisions and gives commands) and staff personnel (give advice to line personnel but have no
influence on the decision-making process)
MODERN STRUCTURES:
Matrix organizations: Line personnel and staff personnel cooperate. A manager “borrows”
experts from departments to organize a temporary team (responding directly to the manager)
in order to create a new product/service. The experts remain part of the Line-and-Staff
organization, the have two bosses.
Self-Managed Teams: Experts from different departments work together on a long-term basis
and they are empowered to make decisions on their own.
4) Traditional versus inverted organization
Traditional organization: chief executive manager on top of the pyramid makes decisions and
gives commands; hierarchy and chain of command
Inverted organization: chief executive manager is on the bottom of the pyramid; he supports
(with pieces of training) and assists (with transparency) the empowered frontline workers
5) Formal versus informal organization
Formal organization: structure of the company regarding authority, responsibility, and
position
Informal organization: system of relationships within an organization
Other organizational tools and techniques
Departmentalization: the division of labor in groups. There are different ways to
departmentalize:
Separation by function (production, design, accounting, finance, marketing, human resource)
Separation by product
Separation by customer group (customers, institutions, manufacturers, commercial users)
Separation by geographical location
Separation by process (peeling, cooking, cutting, serving)
On the one hand workers in labor, groups specialize and develop skills in depth but on the
other hand, there is a lack of communication between the departments and solution: matrix
organizations and self-managed teams
Virtual Corporation: Virtual corporation is a temporary, network organization made up of
replaceable firms that join the network and leave it if needed.
Networking
Communication technology is used to link companies with workers and other companies.
The employees of one firm are linked by an intranet. This is a database that registers the
functions and assignments of everyone in the firm. The different firms are linked by an
extranet. This makes sure that the people of the different firms know what the others are
doing à transparency (electronic information that is shared and facilitates collaboration) and
communication in real-time (the moment something happens) are possible
4) Organizational/corporate culture: Widely shared values within an organization that lead
to unity within the workers and identification with the firm to achieve common goals
5) Benchmarking and Core Competencies: Benchmarking means comparing one company’s
services to another company and learning from the competitor in order to improve their own
services and products. Core competencies are functions that are done by a company because
it does as well as or better than the competitors if other companies do tasks better than the
company it outscores tasks (delegates tasks)