Chapter 13 Designing an Entrepreneurial Organization.

Chapter 13

Designing an Entrepreneurial

Organization

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Learning Objectives

• Describe how businesses are organized• Explain how to identify the appropriate

business site• Discuss the critical issues related to organizing

people


Organization: Understanding the Way the Business Works

• Organizational structure:– Finding the best fit

• Contextual factors (environment, technology, market)

• Design factors (strategy and models)

• Structural factors (complexity, formalization)


Organization: Understanding the Way the Business Works (continued)

• Identifying business processes:– Design the process map/flowchart that

traces how information flows through the business

– Mapping leads to better decisions• Number of people to hire• Amount of equipment to purchase• Type of facility for working• Type of organizational structure to employ


The Virtual Enterprise

• A virtual organization is a “business without walls”

• A temporary network of independent companies, suppliers, customers, even erstwhile rivals—linked by information technology to share skills, cost, and access to one another’s markets

• Its goal is to deliver highest-quality product at the lowest possible cost in a timely manner.


The Virtual Organization (continued)

• The virtual organization: – Outsources in a virtual world– Forms a network of strategic alliances– Keeps virtual employees and strategic

partners linked


Location: Find the Appropriate Business Site

• Choosing the region, state, and community• Economic base• Financial incentives• Demographics


Location: Find the Appropriate Business Site (continued)

• Choosing a retail site– The trade area– Competition and character– Accessibility



• Choosing the service/wholesale site• Choosing the manufacturing site

– Access to suppliers– Cost of labor– Access to transportation– Cost of utilities

• The Lease–Build–Buy decision



• Alternatives to conventional facilities– Incubators– Shared space– Mobile locations– Temporary tenant agreements


Figure 13.3: Traditional Line and Staff Organizational Chart for a Simple Manufacturing Plant


Common Leadership Traps

• Isolating him or herself from the rest of the start-up team

• Always having the one “right” answer • Keeping people on board who are not up to the

needs of the company• Taking on too much too soon• Setting unrealistic expectations • Not building support


People: Organizing Start-up Human Resources

• Hiring the right people– Functions to fill– The employee search– Interviews

• Human resource leasing


Managing Employee Risk

• Risk management is a set of policies and their associated decision-making processes that reduce or eliminate risks associated with having employees.


Planning for Ownership and Compensation

• The major issues:– How much of the company to sell to potential

stockholders?– How much to pay key managers?


Compensating with Stock

• An investor does not need to be an equal partner

• Hire talent rather than give away ownership• Use cash for bonuses not stock


Founder’s Stock

• Known as Rule144 stock• Stock is issued to the first shareholders of the

corporation• Restricted by SEC rules


Issuing Stock Whenthe Company Is Capitalized

• Alternatives to equity incentives• Deferred compensation plans• Bonus plans• Capital appreciation rights• Profit-sharing plans

Chapter 13 Designing an Entrepreneurial Organization.

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Transcript of Chapter 13 Designing an Entrepreneurial Organization.