RISK MANAGEMENT

ORGANISATION, BUSINESS, MANAGER refreshing course

COURSE 1

Contents:

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3.

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General issues on organisation, business, manager Factors determining their evolution New evolution tendencies of organisations and business Manager and business ethic responsibility

1. General Issues on Organisation, Business, Manager. The Organisation as a System Systems are generally universal in the outer space, in the physical and biological reality and in the social life. Social systems are as a rule, organisations. Any organisation is a system, but not every social system is an organisation. The organisation is an open system, adaptable as it is a constitutive part of some larger systems which it interacts with in a harmonized relationship through the process of management. Moreover, the organisation has its own degree of autonomy, a self-functioning management: the organisation can be understood only by being regarded as an open system whose internal processes are interrelated to the environment. The organisation is a hierarchical system where a precise labour division functions whereas the individuals have clearly different statuses and roles. One of the basic functions of organisations is the existence of a hierarchical structure of management, respectively of a collective or some teams that function by being managed by differently ranked managers. Conclusions: a. Organisations, as complex social systems, consist of elements that need to operate in a concentrated manner in order to get the organisational efficiency. This implies that organisations should be analysed both from their capacity to integrate organisational variables to human factors and from their means to react in an adequate manner to the influence of the external environment. b. The systemic analysis of the organisation as a result of applying the general theory of systems at the level of the social, offers a new perspective on the interpersonal relations and on the human being environment relationship as well.

Entrepreneur: The notion of entrepreneur comes from the French word entreprendre meaning to undertake, to start doing smth, to engage into smth. In time, this notion has had different meanings. The entrepreneur is a person who initiates and does an action, assuming all risks associated to innovation in exchange of material or personal satisfactions. This definition underlines four essential aspects of the entrepreneur. First, he is the person who initiates and does an action. He is an initiator in his field, the largest field being the economic one. Second, the entrepreneur assumes risks derived from his action. These risks can be financial, mental or social. Third, the entrepreneur is an innovator. He always makes new combinations of the existing things. Last, the entrepreneur can have satisfactions in his work. There can be material, psychological, moral and social satisfactions.

Accepted definitions of business In economics, the business represents the social science of managing people so as they would organise and maintain a collective productivity that should fulfil the creative and productive aims that usually generate profit. The etymology of the word business regards the stage of being busy, at individual level and at the community or society level as well. Therefore, being busy means doing a profitable and commercially viable work. The word business has at least three uses, depending on its aim (the above mentioned) general use, the unique meaning referring to a private company or corporation and the generalised meaning regarding a specific market segment, as in the case of registered business, computer business or business community community of product and service suppliers. In a narrow meaning, a business can be an entity legally recognised as an economic company having its individuals organised according to their expertise and abilities of social and technological innovation. Within predominantly capitalist economies, a business is formed only with the aim of making profit and increasing the personal wealth of its owners.

Manager: A specialist in the field of management, an administrator of the enterprise, the person applying the management principles and techniques, hence implied in managing an organisation but having authority in using, combining and coordinating its human, financial, material and informational resources with the aim of getting the desired (aimed) results.

General scheme of a management process

INPUTS
PROCESSES OUTPUT ENVIRONMENT

CUSTOMERS COMPETITORS

GUVERNMENT SUPPLIERS

Managers role: Mintzberg established 10 managerial roles grouped in three fields: interpersonal, informational and decisional. The interpersonal role refers to the relations the manager has with the others. He has three definite roles: representative figure because of his formal authority and symbolic figure representing the organisation, leader, the manager unifying the needs of the organisation and those of personnel under his management, and link, referring to horizontal relations which are very important for the managerial activity. The manager must maintain a complete network of relationships and contacts outside the organisation. In the informational field, managerial activities imply collecting, emitting and transmitting information, so the manager has three informational roles: monitor, transmitter and spokesperson. He is the key person who monitors everything that takes place within the organisation, receiving information about internal and external environments and transmitting to the others.

A business has two fundamental aims or objectives: Survival to resist on the market an indefinite period of time, confronting with its competition, unions, authorities, fighting its own inefficiencies, evaluating risks and insuring against them. Gain or profit to maximize the advantages of the business holder entrepreneurs, stockholders or owners. A real business represents the transformation of the entrepreneurs work, imagination, risk and capital into sustainable profit that the society or the customers shall pay back in exchange of their satisfaction of needs. The intelligent business comprises a broad series of applications and technologies used for collecting, stocking, analyzing and ensuring the access to data with the aim of helping users of different companies make better decisions regarding their business. The applications of an intelligent business include the decisional activities regarding the support system, questionnaires and reports, online analysis processes (OLAP), statistical analyses, forecasts and data.

TAXONOMY OF ORGANISATIONS a) according to their specific aim productive aim industrial organisations service-producing organisations educational aim educational organisations leisure aim cultural organisations artistic organisations

b) according to the criterion of the first beneficiary (Blau, Scott, 1962) the 1st beneficiary is a member of the organisation political parties unions religious sects the 1st beneficiary is the owner industrial companies trading companies banks the 1st beneficiary is the customer service-organisations: hospitals, schools the 1st beneficiary is the public taken at a broad scale (national organisations) army police

Factors influencing the efficiency of organisational structure

Influencing factors: - company size - environment - technology

Strategy

Organisational structure: - functional - divisional - hybrid - matrix

Organisational aims: - efficiency - efficacy

According to some economists, the types of structures that are the most efficient to adapt to companies are: functional and hierarchic-functional structures are the most adequate to companies which operate in stable and easily predictable environments and whose products, beneficiaries and markets are not very different; divisional structures are indicated to very large companies whose differentiation is present in more strategic segments and whose external environment is very dynamic, thus the flexibility of their structures is a need; matrix structures correspond better to large companies, with very different degree, encountering complex and uncertain situations of the environment that impose them a high capacity of information processing, rapid adapting and technical experience without sacrificing scale economy, as for example, multinational companies.

2. FACTORS Globalisation and at the same time, the increase of competition existing on all the markets of the world, imposes to organisations to show flexibility and adopt structures adequate to every market. For multinational companies, their organisational structure is designed according to the specific existing situation and to the direct or indirect influence of environmental factors, as for example: environment dynamics and density, differentiation degree of the companys business and their volume dispersed in third countries, number of subsidiaries abroad, their participation share in the companys activity as well as the globalisation level of different business fields.

Increase of technical progress rhythm, phenomenon that demands the construction of flexible structures ensuring the accommodation to rapid technological and process changes. Thus, by its basic features, technological complexity and technological interdependence, it leads to a differentiated organisational structure (unique production, small series production, mass production) respectively to a high degree of information and material exchange among the subunits of the organisation. Demographic changes are reflected especially on workforce as there have been modified the structure of people, the number of untraditional workers (with cooperation contract, suppliers/sellers partnerships) being predominant. These changes strengthen the concept of virtual organisation that either consists of employees who never directly meet but work through technology, or the members of a team are not to be employed by the same organisation or to work within the same geographical area.

4. MANAGER AND BUSINESS ETHIC RESPONSIBILITY

Definition of business ethics. The simplest definition is correctly operating" at the workplace. However, business ethics is more complicated than the capacity to discern between the correct and the wrong action. It is different from the personal morality or corporate social responsibility; it is about managerial discipline. Business ethics refers to the control on companys behaviour so as it should frame within companys values or what is called managerial values. Business ethics implies making decisions and assuming their impact on stockholders as well as on managers, employees, customers or local community. Although different business cultures have appeared and they operate on different contexts, there are enough analogies among small Romanian and Western-European companies. These resemblances can be an argument that social responsibility is not only a feature of multi-national companies, but an elementary condition of the economic game on an open market.