Essay 1 write a detailed note on a simple

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ESSAY 1. Write a detailed note on a simple organizational structure. ANS: A simple organizational structure is typical of new ventures. This structure is often associated with family-owned businesses, where the founder is the family patriarch and the founder’s children and other relatives hold key positions. However, the simple structure can often hinder growth because the founder is limited in his/her ability to address numerous firm details, as well as a host of other growth- related problems. The classic problem for an entrepreneur is when and how to move away from this simple form to a more complex structure. A key reason that entrepreneurial firms are so successful is that they are typically small enough that the founder/CEO is not an isolated entity but someone the employees know intimately. One would expect, in fact, for the founder/CEO to know all of the employees relatively well in a new entrepreneurial firm, which makes the employees feel they are part of a team. In turn, the founder/CEO knows the business’s details well enough that he/she can closely monitor all expenses and actions to ensure that the business achieves all of its goals. However, as the business grows and gains more customers and employees, a simple structure can result in the founder/CEO being overwhelmed with details and being unable to focus on all of the key elements. While better coordination of the organization may result when a growing firm moves away from the simple structure, there are also costs. The more elaborate structure results in a greater distance between employees and the founder/CEO since there is now a layer of management that reports to the founder/CEO. Most employees will now report to those managers, not the founder/CEO directly. Additionally, the close monitoring of items such as expenses may no longer occur. PTS: 1 DIF: Moderate REF: p.407-409 OBJ: 1 NAT: AACSB: Tier 1 Reflective Thinking; Tier 2 Strategy 2. What is a functional organizational structure? ANS: As a firm grows it may find that it needs greater coordination; under these conditions, a firm often will move to a functional organizational structure. In this structure, the firm organizes itself around the organization’s major functions. These functional areas correspond to majors that students can take in business schools. For example, students can major in marketing, accounting, finance, and production —and these areas are the key functional areas of a firm. The benefits of a functional structure include
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