administrative management: how an organization is organized to accomplish its objectives

primary organizational structures

hierarchical and flat organizations

• hierarchical organizations

  • nested system (tiered administrative hierarchy)

  • the basic structure of most organizations

    • everyone has a manageable amount of work

    • the CEO is not directly responsible for each and every employee; work and coordination is dispersed among multiple levels of managers

• flat organizations

  • the CEO is directly responsible for all employees

  • coordination between branches of an organization (eg. finance and marketing) is much more streamlined

  • really only works for small organizations

pros and cons of hierarchical and flat organizations

• hierarchical (primarily larger organizations)

  • pros

    • can move up through ranks/promotions, gives purpose/end goal to employees (incentives and career advancement)

    • different departments clearly handle different spheres

  • cons

    • changes take forever to work through each level of administration — extremely slow reaction time

    • compartmentalized — every department is separate from each other, so there is very little alignment between branches which can lead to a major lack of efficiency

• flat (primarily smaller organizations)

  • pros

    • easier to have momentum and react quickly

    • more simple, streamlined alignment with other branches, which is good for consumers and internal coordination (likely more efficient overall)

    • employees have exposure to big picture, purpose

  • cons

    • employees may be stuck at one level (little room for promotion)

the role of greed

profit is determined by two different theories: stockholder theory and stakeholder theory

• stockholder theory

  • maximize value for stockholders (direct owners/investors)

  • company’s actions are excusable as long as profit is made/maximized

    • eg. can fire mass amounts of employees to maximize profit

• stakeholder theory

  • maximize value for stakeholders (direct owners/investors and indirect stakeholders)

    • non-stockholder stakeholders may be employees, management, customers, society, the overall economy, and the industry (this is not an exhaustive list)