Company structure

In business organization structure means the relationship between positions and people who hold the positions. Organization structure is very important because it provides an efficient work system as well as a system of communication.

Most companies are made up of three groups of people: the shareholders (who provide the capital), the management and the workforce.

The management structure of a typical company is shown in this organization chart.

At the top of the company hierarchy is the Board of Directors, headed by the Chairperson or President. The Board is responsible for policy decisions and strategy. It will usually appoint a Managing Director or Chief Executive Officer, who has to overall responsibility for the running of the business. Senior managers or company officers head the various departments or functions within the company, which may include the following:

Marketing

Sales

Public Relations

Information Technology or IT

Personnel or Human Resources

Finance

Production

Research and Development or R& D

Historically, line structure is the oldest type of organization structure. The main idea of it is direct vertical relationship between the positions and tasks of each level, and the positions and tasks above and below each level. For example, a sales manager may be in a line position between a vice-president of marketing and a salesman. Thus a vice-president of marketing has direct authority over a salesman. This chain of command simplifies the problems of giving and taking orders.

When a business grows in size and becomes more complex, there is a need for specialists. In such a case administrators may organize staff departments and add staff specialists to do specific work. These people are usually busy with services, they are not tied in with the company product. The activities of the staff departments include an accounting, personnel, credit and advertising. Generally, they do not give orders to other departments. Here is anexample of the organizational chart of the company:

International business styles

The characteristics of management often vary according to national culture, which can determine how managers are trained, how they lead people and how they approach their jobs.

The amount of responsibility of any individual in a company depends on the position that he or she occupies in its hierarchy. Managers, for example, are responsible for leading the people directly under them, who are called subordinates. To do this successfully, they must use their authority, which is the right to take decisions and give orders. Managers often delegate authority. This means that employees at lower levels in the company hierarchy can use their initiative that is make decisions without asking their manager.

Exercise 6. Say if the following statements are true or false:

1. Organization structure means the relationship between positions and people who hold the positions.

2. Most companies are made up of four groups of people.

3. The Board of Directors is at the top of the company hierarchy.

4. Managing Directorhas to overall responsibility for the running of the business.

5. Line structure is comparatively new type of organization structure.

6. Managers never delegate authority.

Exercise 7. Answer the questions:

1. Why is organization structure very important?

2. What is the Board responsible for?

3. What departments does usually a company include?

4. What is the main idea of the line structure?

5. What is a staff department?

6. What are managers responsible for?

Exercise 8. Describe the structure of the company according to the chart: