management organisation exam
AA-
Aboutorganizations.pptxMANAGEMENT OF ORGANIZATIONS ABOUT ORGANIZATION
prof. dr hab. Tadeusz Oleksyn, 2020
WHAT IS ORGANIZATION
There are two meanings of the word organization:
(1) Enterprise or (other) institution; organization as noun (in noun meaning): organization -
factory (Ford or Toyota Motor Motor), organization – University (MIT, AEH), organization – International Labour Office,
Bundeswehra, La Strada, Amazon.
(2) Organization as the second function of management; organization as verb, in
verb meaning – as organizing: we are organizing a new team, a new business
partners, a new technological lines, outsourcing or insourcing, ect.
Both of these meanings are quite different and very important.
The quality and class of the organization determine the strenght of the firms, the state and – to a large extent – the prosperity of society.
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TYPES OF ORGANIZATIONS
All entities – social units - are organizations: One – man firm is an organization. Small firm with less than 10 employees is an organization. Medium – size firm* is organization. Organizations are great companies, giant global enterprises, every shop, small village school and a big one in the metropolis, elite and mass universities, pharmacy, ministry, great army and a little police station, ect. We can say, that everything is an organization. This is short and useful term.
We have two basic types of organizations:
- enterprises, doing business (this is the shortest possible definition of them);
- the rest of organizations, which are not enterprises; here we have various
entities financed from the budget, non profit sector, NGOs, different
foundations, and more.
* A company with10 to 49 employees, together with the owner. 3
ENTERPRISES / FIRMS / COMPANIES / UNDERTAKINGS
Poland is a medium – sized European country and we have 4 million firms. There are hundreds of millions of enterprises around the world.
Enterprises are the material basis for everything: economy, living standard of indywidual familes and whole society. They earn money for the local budgets and for the state. We have enterprises in majority sectors and branches: agriculture, industry, construction, transport, in various types of services, finance and insurance, trade, enterteinment, culture and art, sport, tourism, ect.
In antiquity and the Middle Ages there were no enterprises. There were craft workshops only.
The first new type enterprise was probably the Medici Bank (1397 – 1494) in Italy.
Thanks to its, the Medici family became the richest family in Florence / Firenze,
later in all over Italy and probably over Europe. The principle of double
accounting, commonly used in the world today, was invented in this bank.
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ENTERPRISE brilliant invention, need of freedom
One of the greatest Polish economists Edward Lipiński (1888 – 1986)* claimed, that the enterprise was one of the most brilliant (genious) humanity’s inventions. This invention has developed our civilization.
There are 7,6 billion people on the Earth (in 1900 – 1,7 bilion). It would be
impossible without efficient, effectiv and professional enterprises. So, we owe a
lot to companies.
The most important features of the enterprsise are the next:
(1) Autonomy and freedom. Autonomy and flourish of enterprises isn’t possible
without free country and free society, without a market economy, without
free and honest competition. It’s impossible in conditions of authoritarian
regimes, corruption, crime development, low culture and bad customs.
* Also an activist of the freedom and democratic opposition during the authoritarian regime PRL, co-founder of the
Worker’s Defense Committee and the Social Self Defense Committee
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ENTREPRENEURS – FREE CREATORS or subordinates of power?
Ludwig von Mises (1881 – 1973), a leading representative of the Austrian school of economics, pointed out the huge difference between a free entrepreneur in the free country and a man subordinate authority.
Entrepreneur in liberal democracy and marked oriented economy has great freedom of action and the big drive force. This freedom is limited only by law – not very comlicated and rather stable – and by good business customs (only sometimes violated).
However, in an authoritarian and especially totalitarian system, entrepreneurs become very dependent on despotic and arbitrary power.
In fascist and Nazi systems, entrepreneurs were broughtto the role of governmental officials carryng out orders.
In the communist system, their fale was much worse becouse they were mostly killed as „enemies of the people” or taken to Gulags, often together with their families. Is this only history now?
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FEATURES OF THE ENTERPRISE CONTINUATION
In classical definitions of enterprise the following features were reported additionally:
- legal, organizational, teritorial and economic separation;
- owned human, material and non - material resources.
Nowadays it’s often difficult to say where an enterprise starts and where its ends. Employees are working at costumers, home, hotels, trains, plans, ect.
Some enterprises have not material resourses, no permanent employees. It’s difficult to say where their headquarters is.
Virtual and flexible enterprises are developing as well as network enterprises, outsourcing and insourcing.
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ENTERPRISE - THE ROLE OF PROFIT
Profit is essential for existence and development of enterprise, for investmen and A company that does not make a profit for some time must fail, go bankrupt.
In some societes Marxism and communist ideology have developed a negative attitude towards profit. It was portrayed as a result of capitalist labour exploitation. Such attitudes are still presented today, although communist ideology collapsed almost everywhere in the world.
Konosuke Matsushita, founder and CEO of the firm Panasonic, believed that making a profit is the moral duty of every entrepreneur. His arguments were as follows: Every entrepreneur takes more than he gives. He takes clean air and water and returns dirty. He uses natural resources, many of which are not renowable. He used electricity and all infrastructure that he has not created. If an enterpreneur takes so much and is unable to provide profit, which is also needed the state and society, he should resign from being an entrepreneur. He should give a chance to someone else, who will make better use of all these resources.
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ENTERPRISE – MAKING A FAIR PROFIT
Profit should be achieved fairly. There seems to be no needed to explain, why. This is obvieus – as a rule.
In practice, however, different interpretations of what is fair are possible.
Example 1: There is no doubt, that the company should care for the good
of all stakeholders. However, it is not quite clear, who the stakeholders is. It is
also unclear how to precisely harmonize the interest of every stakeholder.
Example 2: All or almost all want justice. But views of what is fair and
what is not fair are very different. Even worse, it can’t be agreed.
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AUTONOMY OF ENTERPRISE
Autonomy of entrepreneurs and enterprises is a necessary condition in business. Entrepreneurs and managers are people well versed in the reality of customers expectations, market economy and competition. Their competences in this respect are higher than competence of state or local officials. Thus enterpreneurs and managers should have far – reaching decision – making powers.
Liberal democracy is much better system for economic freedom and standard of living than authoritarian and totalitarian systems. This is question not only competences, but understanding the meaning of time, too. „ Time is money”it’s a motto of businessmen and businesswomen, no politicians or officials.
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ENTERPRISE – RISK MANAGEMENT AND WORK
Risk management is especially important and difficult issue in the enterprises. Every kind of actiivity is connected with some level of risk. The risk occures at the work of a doctor, soldier, policeman, sportsman, politician, ect. But these people have rather a high level of social safety. If there is not war, the state is not in crisis, they can count on their salaries paid from the budget. Their employment is rather stable, too.
People from the enterprises sector have not so high level of social safety. If they don’t sell their goods and services, they have no money. If this situation continues, they will lose their jobs. And entrepreneur lose his capital, his factory, his money.
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