Organizing is critical in agribusiness and business management
The phase of the management process known as organizing is defined as “the process of establishing organized uses for all resources within the management system.” By designating which resources should be used for specific activities and when, where, and how they should be used, organizing establishes and maintains sensible linkages between human, material, financial, and information resources. As a result of the organizing process, an organizational structure with well-defined roles and duties is produced. The organizational structure establishes the relationships between the many components, factors, and operations inside an organization.
The following factors are the most crucial ones that must be considered when developing organizational structure:
- Environment: Environment-related events may have an impact on behavior and organizational structure within the business. Complexity (measured by the number of factors influencing organizations, their variety, and intensity of influence on business), stability (measured by the rate of changes over time, the similarity of changes, and the possibility of foresight and comprehension), and uncertainty (measured by the rate of changes over time, variety of changes, and the possibility of foresight and comprehension) are the environment’s most significant characteristics that determine the organizational structure of the enterprise (related to the availability of relevant information for rational decision-making).
- Technology: Technology makes it possible to translate organizational inputs into outputs and is a key factor in determining an organization’s internal efficiency. Technology is the combination of technical manufacturing tools, the skills and knowledge required to operate the tools, and the labor-intensive work activities required for the transformation process. There are three categories of enterprises based on the relationship between an enterprise’s technical complexity and its structural characteristics:
- In businesses that produce one-off items or small quantities of goods – technology is ubiquitous, the technological process is subject to frequent changes, and such a method of production is characterized by a low degree of centralization, a limited number of hierarchy levels, informal meetings, and verbal communication, which suggests an organic organizational structure.
- Large-lot and mass production businesses have routine activities, complicated technological processes that are difficult to change, a high degree of specialization and standardization, and more hierarchy levels in organizational structures. This implies a bureaucratic model of organizational structure, especially when taking into account a high degree of formalization and regular distribution channels.
- Businesses with continuously processing production—where operations and procedures are synchronized, production is highly automated, technical complexity is at the highest level, centralization is low, communication is verbal, and formalization is at a low level—have an organic organizational structure.
- Strategy: An enterprise develops its strategy, which denotes a specific organizational structure, as the framework for achieving its goals, starting from its internal potentials, chances, and risks to the environment. The idea of organizational structure has changed as a result of the strategy that has been chosen in that the relationship between the two is reciprocal, meaning that the organizational structure also affects the strategy.
- Size: The relationship between an enterprise’s size (as determined by its workforce, installed power, total revenue, capital investment value, and other criteria) and organizational structure is extremely obvious. Specifically, when an organization matures, its organizational structure does as well, becoming more complicated.
- Aggregation types: The need to regulate, coordinate, and communicate results in the necessity for aggregation during the organizational structure process, which entails linkages on both a vertical and horizontal axis. Vertical aggregation is appropriate for big businesses with a complex hierarchical structure as well as for businesses with a routine technological environment and a stable and simple environment. Vertical aggregation aims to facilitate top-bottom coordination in the workplace through various layers of management structure, tight control, and two-way communication. However, horizontal coordination of activities is necessary due to the unstable environment and sophisticated technology. In order to achieve internal and external efficiency of an integrated totality, vertical aggregating with formal authority and horizontal aggregating, as its complement, are used.
Up until the 1970s, the evolution changes model ruled. The organization adjusts itself to the changing environment through ongoing, gradual, and partial adjustments since the changes are continuous and of medium intensity. This model of change suggests that modest adjustments must have cumulative impacts over a long period of time in order to cause large changes, and this is how to convert quantity into quality. The approach is predicated on the idea that things are moving forward, which means that small adjustments result in advancement or a greater level of organization. The changes in this paradigm are not impromptu; instead, they are planned and created at the top and implemented from the top down. Although they have been developed and improved, the core organizational tenets have not altered. The evolution model only contains a small number of well-known organizational change projects. The literature and management practice created a model of discontinued balance towards the tail end of the 1970s, and this paradigm has dominated management practice ever since. The paradigm has featured periodic, radical, and transformative adjustments in addition to persistent incremental ones. The underlying presumption is that because environmental changes are so significant, an organization cannot keep up with them through gradual, long-term adjustments that only affect the organizational model as it currently exists without facilitating environmental adaptation. Only drastic, comprehensive, and intensive adjustments can give adaptability. The time of revolution, when the firm makes some major changes to strategy and organizational model, alternates with the period of evolution when the enterprise achieves relative stability via only small modifications. Cumulative progress and modifications are excluded from the discontinued balance model. In this instance, the quantity of changes does not necessarily correspond to their quality, and there is no reason to believe that the situation will be better after the modifications – it will undoubtedly be different. This model’s changes occur naturally and are achieved both from top to bottom and from bottom to top, with psychosocial variables playing a crucial part in these changes. In this paradigm, there are two stages in the process of change: “unfreezing” (a system must unfreeze before it can change), and “freezing” (after changing, the system must be stabilized in the new state).
Support for organizing with management accounting information:
The internal financial reporting system of a business is largely determined by its organizational structure. Accounting provides information about the operation of the business as a whole as well as the effectiveness of its organizational components. On the flip hand, accounting can have an impact on an organizational structure in the sense of making it better.
All activities are categorized into the following groups using Porter’s value chain concept:
Inbound logistics, operations, outbound logistics, marketing and sales, and service are examples of primary activities that directly convert inputs into outputs.
The provision of infrastructure, technological development, human resource management, and other support services that are required to carry out primary tasks.
All of the business operations and value-adding activities in the value chain are divided into three areas for the purpose of designing the organizational structure. The following activities are involved in the creation and realization of products: product creation, technology development, product platform development, and operations. The following activities are involved in the provision of the flow of materials, components, and products from production (back part of the value chain) to market (front part of the value chain): product distribution, the purchase and storage of raw materials, and product distribution.
In every process, there are two fundamental approaches to gaining an edge over the competition:
(1) Focus is the ability of the organization to leverage the particularity of the market segment defined by the product, territory, or customer, and
(2) Leverage is the ability of the organization to harness the benefits of resource concentration and scale economies.
Depending on how it is structured, a business process can gain leverage or focus. There are two criteria for organizing activities in business processes along the value chain of an enterprise:
(1) Similarity – all activities with similar characteristics are grouped together in business processes, they are under one authority, and they coordinate with other activities through hierarchical control of managers; and
(2) Output – all activities in business processes that are focused on a single output are grouped together, they are under one authority, and they are coordinated with other activities through the hierarchy control of managers.
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