Chapter two

The language of business

 Con…
• Introduction:
• What is organization?
• Organization is a group of people, structured
in a specific way to achieve a series of shared
goals, vision and mission.
• Mission: the organizations reason for
existence
• Vision: the long dream of the organization
 Management
• Management is the process of attaining
organizational goals in an effective and
efficient way thought functions of
management.
 levels of management:
• three levels of management:
• Top management
• Middle management
• Lower management
 Goals of the organization
• Goals of the organization
• Goal is a desired future state that the
organization attempts to realize
• Strategic goals: they pertain to the
organization as a whole rather than to specific
divisions or departments.
• Strategic goals are often called official goals
because of they are stated intentions of what
the organization wants to achieve.
 Con….
• Tactical goals: these goals apply to a middle
managers and describes what major subunits
must do in order for the organization to
achieve its overall goals
• Operational goals: the specific results
expected from departments, work groups, and
individuals are operational goals within the
organization
 Criteria for effective goals
• Specific and measurable: this occurs when
possible goals should be expressed in
quantitative terms, such as increasing profits by 2
percentage
• Cover key result areas: goal can’t be set for every
aspect of employee behavior or organizational
performance, if they were their pure number
would render them meaningless, instead of
managers should identify a few key result areas
 Con….
• Challenging but realistic: goals should be challenging
but not unreasonable difficulties, for example one
newly hired manager discovered that his staff would
have to work 100 hours a week to accomplish
everything expected to them. When a goals are
unrealistic, they set employee up for failure and lead to
decreasing of employee morale and commitment.
• Defined time period: goals should specify the time
period over which they will be achieved. And a time
period is deadline starting the date on which goal
attainment will be measured
 Con….
• Linked to reward: the ultimate impact of goals
depends on the extent to which salary
increase, promotions and a word are based on
goal achievement.
• That means people who attain goal should be
rewarded and failure of the goal attainment is
due to the factors outside the employee
control.
 Organizing
• Organizing is the deployment/use of
organizational resources to achieve strategic
goals.
• Organizing is very important because of it
flows from strategy because it defines what to
do, while the organizing defines how to do it.
 The organizing process:
• There are five important of organizing process
and they are as flows:
• Reflect on plans and organizational goals
• Establish a major tasks
• Divide the major tasks in to sub tasks
• Allocate the resources and directives for that
subtasks
• Evaluate the results of implemented ongoing
results
 Purpose of organizational structure:
• The set of formal tasks assigned to individuals
and departments
• Formal reporting relations, including the lines
of authority, decision responsibilities, number
of hierarchical levels, and span of managers
control,
• The design of systems to ensure effective
coordination of employees across
departments.
 Work simplification
• Work simplification sometimes called division
of labor is the degree to which organizational
tasks are subdivided in to
• For instance the separation of production
tasks in to bottling, quality control, and
maintenance, employees with each
department perform only the tasks relevant to
their specialized functions
 Chain of Command:
• Chain of command is an unbroken line of
authority that links all persons in an organization
and shows who reports to whom. And it is
associated with two underling principles.
a) Unity of command that means each employee is
held accountable to only one supervisor.
b) Scalar principle means clearly defines lines of
authority in the organization that includes all
employees
 Authority, Responsibility and
Delegation:
• Authority is vested in organizational position,
not people: mangers they have authority
because of the position they hold, and other
people in the same positions would have the
same authority. top to low
• Authority flows down the vertical hierarchy:
• Authority is accepted by subordinates:
 Responsibility:

• Responsibility: is the duty to perform the

typically mangers are assigned authority equal
or appropriate with his/her responsibilities.
When the managers have responsibility for
task outcomes but little authority, the job is
possible but it is difficult
 Accountability:
• Accountability: means that the people with
authority and responsibility are subject to
reporting and justifying tasks out comes to those
above them in the chain of command.
Subordinate must be aware of that they are
accountable for a task and accept the
responsibility and authority of performing it
• Delegation: is the process of managers use to
transfer authority and responsibility to
appositions below them in the organizational
hierarchy.
 Span of management:

• Span of management: is the number of

employees reporting to supervisor, and
sometimes called span of control, this
characteristics of structure determines how
closely a supervisor can monitor subordinates.
 Business Strategies

• strategy is a plan of action designed to achieve a long-

term or overall aim.
• Strategy is the art of planning and directing overall
military operations and movements in a war
• Objectives of strategy
• Product development strategies
• Market development strategies
• Direct investment.
• Organizational development ( manpower, financial and
material development)
 Types of strategy
• Grand strategy: is the general plan of major
actions by which a firm intends to achieve its
long-term goals. And it falls into three general
categories and they are
• Growth: this is the way we can promoted
internally by investing in expansion or
externally by acquiring additional business
divisions, and internal can include
development of new or changed product
 Con….
• Retrenchment: means that the organization
goes through a period of forced decline by
either shrinking current business units of
selling off to liquidating entire business
• Stability: same times are called pause strategy
and that means that the organization wants to
remain the same size or grow slowly.
 Con….
Global strategy: in today’s global corporation,
senior executives they try to formulate logical
strategies to provide synergy among
worldwide operations full filing for common
purpose.
Globalization: is the way of the organization
standardized product design and advisement
strategies though the entire world.
 Levels of strategy
• Corporate level strategy: the level of strategy
concerned with the question WHAT BUSINESS WE ARE?
And it pertain business as whole and the combination
of business units that make the corporate entity.
• Business-level strategy: the level of strategy concerned
with the question HOW DO WE COMPETE? And it
pertains to each business unit or product line within
the organization.
• Functional-level strategy: the level of strategy
concerned with question how do we support the
business level strategy ?and it pertains the all levels of
the organization and it is major departments.
 Con….
• Competitive strategy
• Differentiation strategy: it is a type of competitive with
which the organization seeks to distinguish its products or
services form a competitors. And this method have very
strong marketing abilities and reward employee innovation
and corporate reputation quality or technological change
• Cost leadership: is the type of the competitive which the
organization aggressively, seeks efficient facilities, cuts cost
and employs cost control to be more efficient than
competitors.
• Focus strategy: is the type of Competitive that emphasizes
concentration on specific regional market or buyer group.
 There are three forms of
Organizations
– Sole proprietorship,
– Partnership, and
– Corporation
 Con…
• A Sole proprietorship is owned by one
individual. represents ownership by one
person.
– business firms, 70% are sole proprietorships.
– Advantages
• Ease in organizing
• Low cost of organizing
– Disadvantage : Limited source of financial
resources
 Con…
• A partnership is owned by two or more
individuals
• Advantages
– More financial resources than a proprietorship.
– Additional management skills.
• Disadvantage
• Unlimited liability
• A corporation is owned by shareholder, who have
limited liability; legally, they can only lose their
investment in the company.
 Con….
• A corporation is organized under state or
federal statutes as a separate legal entity.
• Advantage :The ability to obtain large
amounts of resources by issuing stocks.
• Disadvantage
• Double taxation
 Types of Business
– Services Business
– merchandise Business
– Manufacturing Business
• Services Business : these Business provide services rather than
products to customers
• A service type of business provides intangible products (products
with no physical form). Service type firms offer professional skills,
expertise, advice, and other similar products
• They are known as "buy and sell" businesses.
• They make profit by selling the products at prices higher than their
purchase costs.
• A merchandising business sells a product without changing its form.
 Value Chain of a Business
• A value chain is the way a business adds value
for its customers by processing inputs into
product or service
Business Products or Customer
Inputs Processes Services Value
 Business Stakeholders

• A business stakeholder is a person or entity having an

interest in the economic performance of the business
Types of stakeholders
Internal and external stakeholders
• Identifying business opportunities
• Essentially, entrepreneurs recognize an opportunity
and turn it into a successful business.
• An opportunity is a favorable set of circumstances that
creates a need for a new product, service, or business
 Observing Trends

• The first approach to identifying opportunities

is to observe trends and study how they
create opportunities for entrepreneurs to
pursue.
• The most important trends to follow are
economic trends, social trends, technological
advances, and political action and regulatory
changes
 Con….
• Solving a Problem
• The second approach to identifying
opportunities is to recognize problems and
find ways to solve them.
• These problems can be recognized by
observing the challenges that people
encounter in their daily lives and through
more simple means, such as intuition,
serendipity, or chance