In this section you will review the basic concepts of a business organisation, particularly with respect to the nature of the business, its mission, goals and objectives, and business environment. You need a very good understanding of the nature and characteristics of the business of an organisation before you can address the important issues of its business planning and Management Information Systems strategic planning processes.
Every organisation has a purpose. This course does not assume that the purpose underlying all organisations is profit-related, as many non-profit or charitable organisations exist. Nevertheless, an organisation can be defined as a socio-technical system whereby people work coherently to accomplish specific goals that evolve from the organisation’s purpose. From a systems approach, organisations are open systems. Which means that they interact with the surrounding environment.
For example, take a religious group in which the members have a common goal of discussing their beliefs and perhaps promoting them to non-members. The members comprise the social component of the organisation. The members gather regularly in the meeting room that serves as a catchment area for all people with a common aim. They interact with each other not only in the religious activities but also socially. They develop their friendship, and they share a common vision in seeing the group grow. In addition, the leaders of the group may aim at providing community leadership through organising other branches. The meeting rooms, notices, literature and activities represent the technical components of the organization.
An organisation’s purpose leads logically to a vision and a mission statement of the way in which the organisation plans to realise its stated purpose, and business organisations in particular usually set certain goals and objectives to guide their operations. For instance, the purpose underlying a software vending organisation is to sell software, but the vision of the software seller may be to become the most profitable company in the software industry. This will be achieved through top quality programmes and after-sales service (the mission).
Goals or aims are general statements that say what is going to be done to serve the mission. Following on from these, the objectives are more specific statements usually set out in ways that allow us to measure them — and so see whether we have got there or not. For instance, a mission might be to outsell the competitors in 2009; an objective might be to increase sales by 10% each month in 2009. A business organisation has a set of goals and objectives to be achieved. Hence, a business organisation should be structured in the most effective and efficient way to fully utilise its resources — capital, human resource, and knowledge in products and services, and both external and internal information — to achieve its strategic goals. Organisations can be structured in many ways, and there are many ways in which communication networks (and communication is the ‘glue’ that holds an organization together) can operate within them.
The structure of an organisation is usually depicted by its organisation chart, which identifies its management structure according to the organisational units, locations, functions and their reporting relationships. You find the (formal) reporting relationships or chain-of-command within the organisation from the organization chart. You can see from the organisation chart whether an organisation is a centralized organization (tall structure) or decentralised organisation (flat structure).
1. Decision-making authority is usually tightly controlled by top management in a centralised organisation, but decision making itself is often delegated to middle or lower management who are constrained by often exhaustive policy and procedure packages. Not all organisational decisions must be made every time at the top level — top management pre-empts this need through delegation and regulation of certain types and levels of decision.
2. While decision making is often delegated to middle-level or lower-level management in a decentralised organisation that does not mean that the top management does not make decisions. In fact, coordinating decision making in flat organisations is essential, as no part can become ‘greater’ than the whole. Decisions in the units of a decentralised organisation must be kept in line with the purpose, vision, mission, goals and objectives of the entire organisation. You may observe, however, that the departments in many flat organisations often operate in a ‘tall’ mode, as many middle managers seem uncomfortable with decentralization.
What has been briefly described above represents some of the formal characteristics of organisations, but apart from formal structure and organisation, informal organizations based on personal interactions and relationships among employees (which are not shown by the organisation chart) also exist. An informal communication network called the grapevine, which carries gossip and other information throughout an organisation, often supports this.
This has been a very brief snapshot of organisations. Rather than a still camera, perhaps the right instrument for capturing the dynamic nature of organisations would be a video camera. Organisations and the business environment in which they fight to achieve their purpose are not static. The purpose, vision, mission, goals, objectives, organisational structure, chain of command, and especially personnel (managers and subordinates) can change in response to changes in the environment. In a healthy business organisation, the only constant is change — in ways of responding to the business environment at least.