Company and Organization: Structure, Functions, Management

Theme 1: Company and Organization

Company: An institution where a diverse group of people transform resources into goods and/or services to meet needs and obtain benefits. It must be understood as a technical, economic, social, and political decision-making unit.

Organization: A group of people with the means and/or adequate resources, functioning through a set of established rules and procedures to achieve a particular purpose. They require physical, financial, technological, and human resources.

Difference: Firms are a type of organization that differ from others because, although they may have other purposes, profit is necessary for their creation and maintenance.

Functional Subsystems:

• Procurement: Responsible for decisions relating to the purchasing and storage of raw materials.
• Human Resources: Responsible for the recruitment, motivation, development, and deployment of workers in the company.
• Financial: Responsible for decisions regarding the allocation of financial resources.
• R+D+i: Promotes, analyzes, and conducts research on materials, processes, and/or products to better meet the needs of current and potential customers.
• Trade: Analyzes and connects the company with its clients.
• Production: Transforms inputs into final products/services.
• Management: Manages relations with the enterprise environment and coordinates the activities of other subsystems.

Theme 2: Ownership, Management, and Governance

Property: The person or group of people who legally own the title to the enterprise. Owners contribute money and/or goods necessary for its implementation. In the case of SMEs, the owner usually runs the company, but as it grows, it becomes necessary to hire experts in different areas.

Management: May fall on the owner or others may do so in their name (managers), who have the authority to:

• Set goals and make timely decisions to achieve them.
• Direct and coordinate the work of others.

Entrepreneurs: If the owners exercise the leadership and management of the company, they are called entrepreneurs.

Government: Studies the mechanisms that owners can use to exercise control over the company to align the interests of managers with their own.

Business Administration:

• Management: Integrating the different parts of the company with each other, as well as integrating the company with its environment.
• Planning: Setting general business goals and determining the broad lines of action to achieve them.

Planning and Control

Plan: A written document that specifies the courses of action that will guide the company. Plans are specified in objectives to fulfill:

1. Company's Mission: Expression of what the company wants to be in terms of its role in society (ideological or general, concrete or particular).
2. Objectives: Aims to achieve company-wide, long-term, based on both its mission and the current and future environment.
3. Targets or Operational Objectives: To realize the general goals and make them operational.
4. Actions: Set of rules, guidelines, recommendations, or procedures that are defined so that the operating base of the organization complies with the intended.

Control: Keeping the company on track to achieve the objectives.

Organization and Structures

Organization: Designing the right organizational structure to achieve the objectives identified in planning.

Structures:

• Linear:
  • Features: Highly specialized, direct supervision, high centralization.
  • Advantages: Economies of scale, experience effect, certainty, and stability.
  • Drawbacks: Little flexibility, little autonomy of the units, difficulty with global vision.
• Divisional:
  • Features: Decentralized, creating divisions.
  • Advantages: Allows for delegation and decentralization, making it a flexible, clear allocation of responsibilities for each division.
  • Disadvantages: Difficulty of coordination between divisions, duplication of resources and tasks, risk of opportunistic behavior.