Chapter 2 - Organizing Flashcards
1
Q
3 Elements of effective organization within the brokerage.
A
- Creating organizational structure.
- decide which organization structure to use. - Defining employee relationships.
- clarify authority and responsibility. - Establishing position descriptions.
- title, purpose, primary responsibilities, and scope of position.
2
Q
3 Forms of organizational structure
A
- Line organization
- Functional organization
- Line and staff organization
3
Q
3 Advantages of line organization
A
- Simplicity
- Clear delegation of authority
- Quick decision making
4
Q
3 Disadvantages of line organization
A
- Line managers must be fully knowledgeable in a wide range of areas for efficient decision making.
- Power concentrated at top, senior management makes all decisions.
- Limits employees growth by stifling innovation.
5
Q
Line organization
A
- Authority concentrated at top, flows vertically downward.
- Responsibility flows upward.
- Each subordinate has one person to report to.
- Best suited for small brokerage where senior management personally directs activities.
6
Q
Functional organization
A
- Activies grouped together by function.
- Departmentalized.
- Departments are headed by specialists with authority over the area.
- AKA Matrix System
- Created to overcome weakness of line organization (ie. too many activities, too few managers)
- Difficult to implement properly.
7
Q
2 Advantages of functional organization
A
- Provides employees with expert advice.
2. Decisions made by management specialist.
8
Q
3 Disadvantages of functional organization
A
- Employees have several bosses, resulting in conflicting instructions.
- Slow decision making.
- Too many managers distracts employees from serving clients.
9
Q
Line and staff organization
A
- Combines strengths of line/functional organization.
- Best suited for large corporations.
10
Q
3 Advantages of line and staff organization
A
- Authority is clearly defined.
- Readily available expert advice results in quick decision making.
- Encourages co-operation and communication on all levels.
11
Q
3 Legal forms of organization
A
- Sole propietorships.
- Partnerships.
- Corporations.
12
Q
3 Advantages of sole proprietorship
A
- Right to all profits.
- Easy to start.
- Simple decision making.
13
Q
3 Disadvantages of sole proprietorship
A
- All liability rests with owner.
- Expertise limited to owner.
- Business lives and dies with owner.
14
Q
General or Limited Partnership.
A
- General Partnership: all owners have same rights/obligations.
- Limited Partnership: At least one general partner and one limited (silent) partner.
- liability of silent partner is restricted to the amount of the investment.
15
Q
4 Advantages of partnerships
A
- Broader expertise.
- Liability shared.
- Business carries on after death.
- Earning “all the profits”.