MGT502 GDB 2 Solution Feb 2015

Scenario: Mr Shahzad intends to launch a new marketing agency here in Pakistan. As the start of the business, he needs to establish a proper structure for the organization clarifying all the staff and jobs required to be performed and also how these jobs and individuals would be connected with each other. This step differs from organization to organization, depending upon the type of business or industry in which a business intends to operate. These things may differ in application but certain concepts are universal and found in every organization in either one way or other. These include Span of Control, centralization or decentralization and degree of formalization.  

Question: Discuss how Span of Control, centralization or decentralization and degree of formalization would be applied in a newly established marketing agency/firm? Support your answer with logical arguments.

Solution:  Span of Control:The number of subordinates that a manager or supervisor can directly control. This number varies with the type of work: complex, variable work reduces it to six, whereas routine, fixed work increases it to twenty or more.
Centralization: Centralized organizations can be extremely efficient regarding business decisions. Business owners typically develop the company’s mission and vision, and set objectives for managers and employees to follow when achieving these goals.

Decentralization:Decentralized organizations utilize individuals with a variety of expertise and knowledge for running various business operations. A broad-based management team helps to ensure the company has knowledgeable directors or managers to handle various types of business situations.