KEY ASPECTS OF CORPORATE ORGANIZATION OPERATING

POLICIES AND CONTROL

Organization
Organizations can be grouped into one of six major categories:
(1) One-man Operation Most organization start this way. This single
manager may formulate vague strategies and plans, make all decisions on
the basis of experience and limited first-hand knowledge, and issue orders
to all operating personnel.
(2) Father-son or manager Assistant Either one or more sons, or one or
more assistant, are used to multiply the efforts of the the boss, who
retains all authority and responsibility and makes all the decisions.
(3) Functional organizations favors significant growth in many direction
for its introduces the concept of delegation of authority and sanctions the
use of professional management. The functional managerssuch as the
financial manager, the purchasing manager, the production manager, the
personnel manager, etc.make all of the necessary and required
operating services.
(4) Functional organization, but with a central headquarters and
geographical dispersion This type of organization is an extension of
the third form just described but permits manufacturing or sales
operations in two or more locations.
(5) Multi-divisional Firm this type permits the firm to cope with disparate
product lines because it has separate divisions for each product line
and/or for each geographical location.
(6) Conglomerate where the central headquarters only maintains financial
control over a number of wholly-owned companies. This is a typical form
of organization where each unit has a different product line and marketing
system.

Operating Policies
Operating policies acts as a lubricant for the effective, efficient, and smooth
operation of the organization.
Policies are often confused with the rules and procedures.
(1) POLICY: A verbal, written or implied guide setting up boundaries and
directions within which
managerial decisions should take place.
Hence, a policy is a guide to decision-making.
(2) RULE: A prescribed course of action which must be followed. Hence, a
rule is a guide to individual action.

(3) PROCEDURE: A sequence of related tasks that make up the chronological

sequence and the establish way of performing the work to be done.
Hence, it is also a guide to action.
Advantages:
(1) Support Continuity
(2) Greatly promote delegation of authority
(3) Promote consistency and reduce arbitrary bases for decisions.
Disadvantages:
(1) Highly confidential and, if distributed among many people, would soon be
available to competitors.
(2) Their effectivity remain even long after they have become obsolete
(3) May permit insufficient discretion to the decision-maker
2 basis sets of operating policies:
(1) General policies are applicable at all levels and in all parts of
organization
(2) Functional policies developed for each functional area of management

Managerial Control Organizations

All other efforts of management are wasted unless a very determined effort is made
to control the many aspects of the operating of the firm.
1. Process of managerial control may be thought of as a four-step process:
(1) Setting the standard of the performance present no great difficulty if
management has developed an operational plan. The standards of
performance will be based on that plan, on the policies, objectives and
strategies which were part of the earlier phases of the management cycle.
(2) Measurement of performance may be done at different levels, depending
upon the companys organization and the activity being monitored.
(3) An information system must be established - to get these reports quickly
into the hands of the individual who must compare actual performance
against the predetermined standard and decide whether or not corrective
action is required.
(4) Promt, corrective action without such action, the control process merely
produces a historical record, the process of corrective action itself is a two
process:

First the individual who has control responsibility must determine

the cause of the discrepancy between actual and desired
performance.
Then he must decide on the best corrective action.

2. Management Information system -

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