1.2: adminsitrative management

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)

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