Chapter 16: Organizing the business operation

Question 1

Describe: limited liability company

Answer 1

Limited Company (Aktiebolag): Funded by capital from multiple owners who hold shares in the company.

Question 2

Describe: sole proprietorship

Answer 2

Sole Proprietorship (Enskild firma): Operated by a single individual. The business assets are directly linked to the owner’s personal assets.

Question 3

Describe: limited partnership

Answer 3

One partner has unlimited liability (general partner), while others have limited liability, risking only their investment (limited partners).

Question 4

Describe: partnership

Answer 4

A partnership (handelsbolag) is a business structure where two or more individuals or entities share ownership, responsibilities, and liabilities equally.

Question 5

Describe: economic association

Answer 5

A cooperative where members work together to achieve common economic goals, sharing profits and responsibilities

Question 6

Describe: non-profit association

Answer 6

Nonprofit Association (Ideell förening): Operates through various types of activities to support its cause, such as charities or sports clubs.

Question 7

Describe: consortium

Answer 7

Consortium (Konsortium): A group of individuals or companies collaborating on a project requiring capital. It is not a separate legal entity but is governed by an agreement dividing financial rights and responsibilities among members.

Question 8

What is an organization?

Answer 8

• structured group of people working together to achieve common goals, which can include companies, non-profits, and other entities
• performs tasks in a structured manner.

Question 9

How are the conditions of an organization affected by its external environment? Use examples.

Answer 9

An organization can be influenced by its environment through various traditions, norms, and external demands. For example, a court is expected to make accurate decisions, and its reputation may vary based on its performance in the eyes of the public and stakeholders.

Question 10

How are the conditions of an organization affected by its type of operations? Use examples.

Answer 10

The nature of a business, such as its technical content and production volume, affects the organization’s conditions by determining how it is structured. For example, a small organization, like an artist, may have a large scope of activities, while a large organization, like a hospital, might have a smaller operational focus.

Question 11

What is an organizational structure?

Answer 11

system that defines how tasks, roles, and responsibilities are arranged and coordinated within a company.

Question 12

Describe various means of coordinating and managing the activities carried out in a larger company.

Answer 12

• establishing organizational roles
• creating rules
• setting norms and values.

Question 13

Describe: mutual adjustment

Answer 13

Coordination occurs through direct communication between involved parties, who adjust their actions based on interactions.

Question 14

Describe: direct supervision

Answer 14

A single individual oversees and directs tasks, ensuring orders are followed.

Question 15

Describe: standardization of work processes

Answer 15

Coordination is managed by detailing the work content through rules and instructions (which may be integrated into technical tools like computer systems.)

Question 16

Describe: standardization of “output”

Answer 16

Coordination is based on clearly defined work results, such as those produced by an assembly line.

Question 17

Describe: standardization of knowledge and skills

Answer 17

Coordination relies on ensuring that participants have specific training or qualifications, allowing for smoother coordination without starting from scratch each time.

Question 18

What is a formal and informal organizational structure and how do these affect each other in a company?

Answer 18

The formal organizational structure is the intentional way tasks are divided and coordinated to achieve company goals efficiently. It includes job descriptions, procedures, and instructions.

The informal organizational structure involves daily interactions such as personal contacts, friendships, training, and shared interests among employees.

Both structures coexist and influence each other within the organization.

Question 19

Describe: position

Answer 19

A position in an organizational chart represents a specific role or job within a company. It shows where an individual fits within the overall structure of the organization and often includes details about their responsibilities and who they report to.

Question 20

describe: authority

Answer 20

Each position has defined authorities or powers that are to be exercised, and a position encompasses multiple authorities

Question 21

describe: delegating responsibility

Answer 21

A position holder can delegate tasks to subordinates, but cannot transfer the responsibility for the authority.

Question 22

describe: functional structure

Answer 22

Common in industrial companies. Tasks are divided into main areas (e.g., product development, manufacturing, sales). Employees develop expertise in these areas, creating specialized departments that work towards long-term skill development.

Question 23

describe: product structure

Answer 23

Used when a company produces significantly different products. Each product line has its own departments for purchasing, production, and sales, requiring specialized skills in each product area.

Question 24

describe: customer structure

Answer 24

Departments are organized by customer categories (e.g., corporate clients vs. consumers). This simplifies customer interactions by reducing the number of contact points.

Question 25

describe: geographic structure

Answer 25

Structure is based on the physical locations of workplaces. This can lead to dispersed company parts across regions or countries, allowing for local specialization and proximity to markets.

Question 26

What is vertical specialization?

Answer 26

various stages of manufacturing a product are divided and performed in different locations, often across multiple countries. For example, one country might produce raw materials, another might handle assembly, and yet another might focus on final packaging and distribution.

Question 27

What is span of control? What are the advantages of a broad and narrow span of control, respectively?

Answer 27

span of Control: Refers to the number of direct subordinates or units a manager oversees. A wide span of control allows for greater standardization, similarity in tasks, increased autonomy, and reduced vertical communication disruptions. A narrow span of control is beneficial when there is a high need for managerial oversight, mutual adjustment to handle tasks, or when the manager has additional responsibilities beyond their managerial role.

Question 28

Describe: line organization

Answer 28

Each employee reports to one superior, creating a clear chain of command, typically led by the CEO. It’s straightforward but can be rigid.

Question 29

Describe: line-staff organization

Answer 29

An extension of the line organization where additional specialist roles (staff) are added to support each manager. These specialists, such as those in occupational health or legal affairs, provide expertise but do not have direct authority over the line staff. This model is often used at higher management levels.

Question 30

Describe: functional supervision

Answer 30

In this structure, the leadership is divided among various functional specialists. Employees receive instructions from different functional managers, each overseeing specific areas of expertise, such as marketing, finance, or production.

Question 31

describe: liaison roles

Answer 31

Assigning an employee to manage communication between departments, facilitating direct contact and creating a bridge between them.

Question 32

describe: standing committees

Answer 32

Regularly scheduled meetings with representatives from different departments to discuss and resolve shared issues, such as a management team comprising leaders from various departments.

Question 33

describe: temporary teams

Answer 33

Forming ad hoc teams to address specific issues or projects, like handling unusual problems or managing a company relocation.

Question 34

describe: project organization

Answer 34

Temporary setup for specific projects (e.g., product launches), disbanding after completion.

Question 35

describe: matrix structures

Answer 35

Multiple reporting lines for projects and functions, blending structures for flexibility and resource allocation.

Question 36

What is conflict of goals within an organization?

Answer 36

Goal conflicts occur when different objectives within an organization clash. For example, the marketing manager may aim to offer a wide variety of products to satisfy customers, while the production manager might prefer a limited range of high-quality products to streamline manufacturing. Such conflicts can arise from differing internal priorities or external pressures, affecting how goals are set and pursued.

Question 37

describe: networks

Answer 37

Developing relationships and connections both within the company and with external entities to enhance collaboration and information flow.