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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