amway full project

EXCEL BUSINESS ACADEMY (India’s Premium Techno Management B-School) AAA

“A CONCEPTUAL STUDY OF BUSINESS MANAGEMENTAND ORGANIZATION SYSTEM”

SUBMITTED BY Swapnil S.V. Reg No.ESB/2010/AUG/M No.ESB/2010/AUG/MBA/011 BA/011 Under the guidance of Prof. Yuvaraja S.E.

Excel Business Academy Ullal Main Road Bangalore.

STUDENT DECLARATION:


I hereby hereby declare declare that the project report entitled entitled “a conceptu conceptual al study study of business business management management and organization organization system –Amway.” Bangalore Bangalore has been done by me under the guidanc guidancee of Prof. Prof. Yuvaraj Yuvaraj,, Professo Professorr – MBA & PGPM, PGPM, Excel Excel Business Business Academy, Academy, and Bangalore. This project report has been submitted to Excel Business Academy, Bangalore as a part part of parti partial al fulfi fulfill llme ment nt for the award award of the the degree degree of Post Post Gradu Graduat atee Progr Program am in Management from Excel Business Academy, Bangalore. I also hereby declare that this project report has not been submitted at any time to any other institute or university for the award of any degree.

Place: Bangalore Date:

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/

Swapnil.


CERTIFICATE BY GUIDE

This is to certify that Swapnil V.S. bearing Reg No. ESB/2010/AUG/MBA/011, A student of 1st Trimester PGPM during the academic year 2010-2012 has successfully completed the project project report “a concept conceptual ual study study of business business management management and organiza organizatio tion n system system – Amway” Amway”.. Under Under the guidanc guidancee of Prof. Prof. Yuvaraja Yuvaraja S.E, Excel Excel Busines Businesss Academ Academy, y, in partial partial fulfillment fulfillment for the award of Post Graduate Graduate Program in Management Management from Excel Excel Business Business Academy, Bangalore. His character and conduct was good during the study.

Place: Bangalore Date:

/

/

Prof. Yuvaraja S. E.


ACKNOWLEDGEMENT The satisfaction and euphoria that accompany the successful completion of any task would be but incomplete without the mention of the people who made it possible, whose constant guidance and encouragement crowned our efforts with success. I consider it my privilege to express gratitude and thanks to the Management – Excel Business Academy, Bangalore for giving me the opportunity to conduct this study. I thank our Principal Prof. Prof. Thej Thejaswi aswi Naviloor Naviloor, for the encouragement and intellectual influence during the course of the project work. I wish wish to expres expresss my heart heartfel feltt grati gratitu tude de to Prof. Prof. Gurut Gurutej ej, Head – PGPM & Techno Management Management Studies; Prof. Shreya K Rao , Head – MBA & TPD and my Project Guide Prof. Yuvaraja S E. for their help and able guidance for the completion of the project

successfully. I am grateful to the Librarian of Excel Business Academy, for his support during my study. Last but not the least, I would also like to thank each and everyone especially especially all my friends for their cordiality & support during my project.

Date:

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Place: Bangalore

swapnil


TABLE OF CONTENTS: CHAPTER

CONTENTS

NO. 1

NO.

1.1 Meaning of Business 1.2 Meaning of Management 1.3 Meaning of Business Administration 1.4 Difference between Business Management & Business Administration 1.5 Types of Business

2

Organizational Sy System (General St Study)

2.1 Meaning of Organization 2.2 Types of Organization 2.3 Types of Ownership 2.4 Vision, mission & Goals of the company 2.5 Organization Structure & it’s Types 2.6 Functional Patterns – People, policies, systems, problems if any. 2.7 SWOT Analysis 3

PAGE

Organizational Sy System wi with re respect to to Am Amway:

3.1 Introduction 3.2 Vision, Mission & Goals of the Amway 3.3 Organizational Structure & Type of Amway 3.4 Type of Organization


3.5 Functional Patterns of Amway 3.6 Type of Ownership 3.7 SWOT Analysis 4

Summary of Findings & Conclusion

4.1 Findings 4.2 Conclusion 4.3 suggestion

LIST OF TABLES AND CHARTS:

TABLE

CONTENTS

1

Structure of Organization

2

Alticor and Amway Sales Growth: 1960 to 2008

3

Amway sell data since 1960 to 1999

PAGE NO.


Executive Summary: This executive summary summary will give you key facts concerning the Amway. Amway. These facts will help to find out how well the Amway opportunity can match your business goals. Let’s start from main component that is business. A business' purpose is to attract and keep customers. customers. Its one basic function function is to reliably solve customer problems. Management Management in all busin business ess areas areas and organ organiza izati tiona onall acti activit vities ies are are the acts acts of getti getting ng peopl peoplee toget together her to accomplish accomplish desired goals and objectives efficiently efficiently and effectively. effectively. Also Management is the act act or func functi tion on of putt puttin ing g into into prac practi tice ce the the poli polici cies es and and plan planss deci decide ded d upon upon by the the administration. Hence Administration makes the important decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the administration. The important factor important to study is Organization. It is the foundation upon which the whole structure of management is built. Organization is not an end it itself but a means to achieve an end. Whether an organization is good or bad depends on the fact as to how much efficiently and promptly it is in a position to achieve the objectives. Another important topic is A Business ownership should be structured according to the needs of the owners and potentially liability that the business could incur. Corporate vision describes aspirations for the future, without specifying the means that will be used to achieve those desired ends. Thee Miss Th Mission ion of organ organiza izati tion on should should repre represen sentt the broad broadest est perspe perspecti ctive ve of the the enterprise's mission. The major outcome of strategi of strategicc road-mapping road-mapping and strategic planning,


after gathering all necessary information, is the setting of goals for the organization based on its vision and mission statement. Thee most Th most impor importan tantt topic topic is an organi organiza zatio tiona nall struct structur uree is a mainl mainly y hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim. aim. Anal Analys ysis is by A SWOT SWOT Ex Exer erci cise se is a powe powerf rful ul tech techni niqu quee for for unco uncove veri ring ng and and understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats you face.

Thee Amwa Th Amway/ y/Am Amwa way y Globa Global, l, a subsid subsidia iary ry of Alti Alticor cor,, is marke marketi ting ng nutrit nutritio ional nal supplements, skin and personal care products, air and water purifiers and a line of home cleaning products. The products are sold through Independent Business Owners (IBO). The most effective strategy for this is direct marketing, today also known as attraction marketing. Using attraction marketing for Amway products is the fastest way to make steady retail profits. Amway already helped over 3 million people start on their path to success. They're attracted by the unlimited potential of the opportunity, the support of a corporation with 50 years of experience and compassion, a global community ready to offer support, and a premier compensation plan.


The Meaning of Business: Great quote on Worthwhile by Worthwhile by Mark Kaiser on the meaning of business: business: "The simplest definition of business is you solve a customer's problem and create sustainable profits over time. Anyone with vision should understand the problem they're solving. The problem with business today is that people think the meaning is about building a monument to you. The meaning of business is having an impact on people's lives." My definition is close: A business' purpose is to attract and keep customers. customers. It’s one basic function is to reliably solve customer problems... A business is a legal legally ly recogn recogniz ized ed organization designed designed to provide provide goods or services, services, or both, to consumers, consumers, business businesses es and governm governmenta entall entiti entities. es. Busine Businesses sses are predominant in capitalist economies. Most businesses are privately owned. owned. A business is typically formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main objectives the receipt or generation of financial returns in exchange for work for work and acceptance of risk of risk . Notable exceptions include cooperative enterprises and state-owned state-owned enterprises. enterprises. Businesses can also be formed not-for-profit or be state-owned. state-owned. The etymology etymology of "business" "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least least three three usages, usages, depending depending on the scope — the singular singular usage usage (above) (above) to mean mean a particular company or corporation, corporation, the generalized usage to refer to a particular market sector , such as "the music business" and compound forms such as agribusiness, agribusiness, or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition definition of business, like much else in the philosophy philosophy of business, business, is a matter of debate and complexity of meanings.

Meaning Of Management: Manag Managem ement ent is gener general ally ly define defined d as the art art and scien science ce of getti getting ng thing thingss don donee through others. This definition emphasizes that a manager plans and guides the work of other people. Some (cynical) individuals think that this means managers don’t have any work to do themselves. As managers have an awful lot of work to do. Management is the art and science


of getting things done through others, generally by organizing and directing their activities on the job. A manager is therefore therefore someone who defines, plans, guides, guides, assists, and assesses the work of others, usually people for whom the manager is responsible in an organization.

Management Define:

“The efficient and effective effective operation operation of a business, and study of this subject, is called management”. Thee main Th main bran branch ches es of mana manage geme ment nt are are fina financ ncia iall mana manage geme ment nt,, mark market etin ing g management, human resource management, strategic management, production management, operation management, service management and information technology management.

management1. The group of individuals of individuals who make decisions about how a business is run. run.

2. The initiation and maintenance of an investment portfolio. portfolio.

Management in all business areas and organizational activities are the acts of

getting people together to accomplish desired goals and objectives efficiently and effectively. Management Management comprises comprises planning, planning, organizing, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing accomplishing a goal. Resourcing encompasses encompasses the deployment deployment and manipulation manipulation of human of human resources, resources, financial resources, technological resources, and natural resources. resources. Because organizations organizations can be viewed as systems, systems, management can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity opportunity to 'manage' 'manage' oneself, a pre-requisite pre-requisite to attempting attempting to manage others Management can also refer to the person or people who perform the act(s) of management.

Basic functions of management: •

Planning: Deciding what needs to happen in the future (today, next week, next

month, next year, over the next 5 years, etc.) and generating plans generating plans for action. •

Organizing: (Implementation) making optimum use of the resources required to

enable the successful carrying out of plans.

EXCEL BUSINESS ACADEMY (India’s Premium Techno Management B-School) AAA •

Staffing: Job analyzing, recruitment, and hiring individuals for appropriate jobs.

•

Leading/Directing: Determining what needs to be done in a situation and getting

people to do it. •

Controlling/Monitoring: Checking progress against plans.

•

Motivation : Motivation is also a kind of basic function of management, because

without motivation, employees cannot work effectively. If motivation doesn't takes place in an organization, then employees may not contribute to the other functions (which are usually set by top level management).

Business Administration: Business administration consists of the performance or management of business operations and thus the making or implementing of major decisions. Administration can be defined as: “The universal process of organizing people and resources efficiently so as to direct activities toward common goals and objectives”. The word is derived from the Middle English word administracioun, administracioun, which is in turn derived from the French administration, itself derived from the Latin administratio — a compounding of ad ("to") and ministratio ("give service"). Administrator can serve as the title of the general manager or company secretary

who reports to a corporate board of directors. This title is archaic, but, in many enterprises, this function, together with its associated Finance, Personnel and management management information information systems services, is what is intended when the term "the administration" is used. In some organizational analyses, management is viewed as a subset of administration, specifically associated with the technical and mundane elements within an organization's operat operatio ion. n. It stands stands disti distinct nct from from execut executiv ivee or strat strategi egicc work. work. In other other organ organiz izati ationa onall analyses, administration can refer to the bureaucratic or operational or operational performance of mundane office tasks, usually internally oriented and reactive rather than proactive.


As business has become more complex, so too has the oversight of companies: their management, their growth strategies, their personnel issues, their taxes and the role that taxes play in corporate economic strategy. Advertising has grown to include multiple media outlets and and an asso assort rtme ment nt of targ target eted ed inte intere rest st grou groups ps:: new new cust custom omer ers, s, repe repeat at cust custom omer ers, s, stockholders, investors and new geographic markets. Marketing has become the term of choice for this entire strategically placed product exposure. Defi Definin ning g busin busines esss admi admini nistr strati ation on then then mean meanss defini defining ng oversi oversight ght roles roles for the the assortm assortment ent of interna internall specialt specialties ies that that every every business business of any size has come to include. include. Perhaps the best way to define business administration is to look at the types of courses offered in MBA curriculums and the specialties, or "majors," that one can opt for in an MBA program. For a large corporation, corporation, business administration is going to include international and global business, as well as strategy and economics. In this instance, the definition of business admini administ strat ratio ion n will will inclu include de requir requirem emen ents ts of cert certai ain n cultu cultural ral diffe differen rences ces and an acute acute understanding of the global economy and its current fluidity. Also included in business administration at this scale is the art and science of acquisition: when to buy a company or property and why. Business Business adminis administrat tration ion will will always always include include the intangi intangible ble quality quality of leadersh leadership; ip; Along with leadership comes the task of negotiation and conflict resolution, specifically with rega regard rd to pers person onne nel. l. Beha Behavi vior oral al psyc psycho holo logy gy play playss an impo import rtan antt role role in busi busine ness ss administration: administration: a misstep in an adversarial situation with a union can take a company under, as it did Continental Airlines Airlines some years ago. The definition of business administration administration will have to include marketing; you won't have a business to administer unless you sell your products. Ancillary to marketing is an understanding of the new tools available for product distribution, and that will involve understanding e-business and how it is rapidly evolving. Business administration includes an understanding of entrepreneurship: tax structures for small businesses along with personnel issues at that level, inventory and cash flow, and all the other small matters that make a big difference to a new or small business. A critical part of business administration is the awareness of risk. This might include the risk of launching a new product, and the costs involved; the risk of an acquisition, the risk of a competitive strategy, the company's exposure in opting for this health plan instead of that one. There are risks involved in other personnel decisions and this area is of tangible importance: company morale is a key to productivity and the resultant profitability. The definition definition of business administration administration includes whatever whatever knowledge is required to make all of these components work productively, if not in complete harmony.


Management vs. Administration: Manag Managem ement ent and admin administ istra ratio tion n may may seem seem the same, same, but there there are are diffe differe rence ncess between the two. Administration has to do with the setting up of objectives and crucial policies of every organization. What is understood by management, however, is the act or function of putting into practice the policies and plans decided upon by the administration. 1) Administration is a determinative function, while management is an executive function. 2) It also follows that administration makes the important decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the administration. 3) Administration is the top level, whereas management is a middle level activity. If one were to decide the status, or position of administration, one would find that it consists of owners owners who invest invest the capital, capital, and receive receive profits from an organiz organizatio ation. n. Managem Management ent consists of a group of managerial persons, who leverage their specialist skills to fulfill the objectives of an organization. 4) Adminis Administra trators tors are usually usually found found in governm government, ent, militar military, y, religiou religiouss and educati educational onal orga organi niza zati tion ons. s. Mana Manage geme ment nt is used used by busi busine ness ss ente enterp rpri rise ses. s. Th Thee deci decisi sion onss of an administration are shaped by public opinion, government policies, and social and religious factors, whereas whereas management decisions are shaped by the values, opinions and beliefs of the mangers. 5) In administration, the planning and organizing of functions are the key factors, whereas, so far as management is concerned, it involves motivating and controlling functions. When it comes comes to the type type of abili abilitie tiess requi required red by an admini administ strat rator or,, one one needs needs admi admini nistr strati ative ve qualitie qualities, s, rather rather than than technica technicall qualitie qualities. s. In managem management, ent, technica technicall abiliti abilities es and human human relation management abilities are crucial. 6) Administration usually handles the business aspects, such as finance . It may be defined as a system of efficiently organizing people and resources, so as to make them successfully pursue and achieve common goals and objectives. Administration Administration is perhaps both an art and a scien science. ce. Th This is is becaus becausee admini administ strat rator orss are ultim ultimate ately ly judge judged d by their their perfo perform rmanc ance. e. Administration must incorporate both leadership and vision.


7) Management is really a subset of administration, which has to do with the technical and mundane facets of an organization’s operation. It is different from executive or strategic work. Management deals with the employees. Administration is above management, and exercises control over the finance and licensing of an organization. Therefore, we can see that these two terms are distinct from one another, each with their own set of functions. Both these functions are crucial, in their own ways, to the growth of an organization. Summary:

1. Management is the act or function of putting into practice the policies and plans decided upon by the administration. 2. Administration is a determinative function, while management is an executive function. 3. Administration makes the important decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the administration. 4. Adminis Administrat trators ors are mainly mainly found found in governm government, ent, militar military, y, religio religious us and educati educational onal organizations. Management, on the other hand, is used by business enterprises.

Types of business: The following are the types of business,

1. Agriculture: Agricultur e is the production of food and goods through farming. Agriculture was the key key deve develo lopm pmen entt that that led led to the the rise rise of huma human n civi civili liza zati tion on;; with with the the husbandry of domesti domesticate cated d animals animals and plants plants (i.e. (i.e. crops crops)) creat creating ing food food surpl surpluse usess that that enabl enabled ed the the development of more densely populated and stratified societies. The study of agriculture is known as agricultural science. Agriculture is also observed in certain species of ant and termite.


Agriculture encompasses a wide variety of specialties and techniques, including ways to expand the lands suitable for plant raising, by digging water-channels and other forms of irrigation. Cultivation of crops on arable land and the pastoral herding of livestock on rangel rangelan and d rema remain in at the founda foundatio tion n of agric agricult ulture ure.. In the the past past centu century ry there there has has been been increasing concern to identify and quantify various forms of agriculture. In the developed world the range usually extends between sustainable agriculture (e.g. perm culture or organic agriculture) and intensive farming (e.g. industrial agriculture).

2. Mining: Mining is the extraction of valuable minerals or other geological other geological materials from the earth, usually from an ore body, vein or (coal) seam. Materials Materials recovered by mining include base metals , iron , uranium , coal, diamonds, limestone’s , oil shale , rock salt and potash . Any material that cannot be grown through agriculture processes, or created in a laboratory or factory, is usually mined. Mining in a wider sense comprises extraction of any non renewable resource (e.g., petroleum, natural gas, or even water).Mining of stone and metal has been done since prospecting for times. Modern mining processes involve e bodies, analysis of the Profit potential of a proposed mine, extraction of the desired materials and finally reclamation of the land to prepare it for other uses once the mine is closed. Thee natu Th nature re of mini mining ng proc proces esse sess crea create tess a pote potent ntia iall nega negati tive ve impa impact ct on the the environment both during the mining operations and for years after the mine is closed. This impact has led to most of the world's nations adopting regulations to moderate the negative effec effects ts of minin mining g opera operati tions ons.. Safe Safety ty has has long long been been a conce concern rn as well well,, thoug though h mode modern rn practices have improved safety in mines significantly

3. Finance: Fina Finance nce is the scienc sciencee of funds funds manag managem ement ent.. Th Thee gener general al area areass of finan finance ce are are business finance, personal finance, and public finance. Finance Finance includes savings money and often includes lending money. The field of finance deals with the concepts of time, money, and and risk risk and and how how they they are are inte interr rrel elat ated ed.. It also also deal dealss with with how how mone money y is spen spentt and and budgeted.One aspect of finance is through individuals and business organizations, which deposit money in a bank. The bank then lends the money out to other individuals or corporations for investment, and charges interest on the loans. Loans have become increasingly packaged for resale, meaning that investers buy the loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to investors for organizations such as companies, governments or charities. The investor can then hold the debt and collect the interest or sell the debt on a secondary market. market. Banks are the main facilitators of funding through the provision of credit, although private equity,


mutual funds, hedge funds, and other organizations organizations have become important important as they invest in various forms of debt. Financial Financial assets assets,, known as investments, investments, are financially managed with careful attention to financial risk management to control financial risk.

4. Intellectual property: Intellectual property (IP) is a term referring to a number of distinct types of

creations of the mind for which property rights are recognized—and the corresponding fields of law. Under intellectual property law, owners are granted certain exclusive property to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property inclu include de copyr copyrig ights hts,, trade tradema marks rks,, patent patents, s, indus industr trial ial right right and and trade trade secret secretss in some some jurisdictions. Although many of the legal principles governing intellectual property have evolved over centuries, it was not until the 19th century that the term intellectual property began to be used, and not until the late 20th century that it became commonplace in the United States. Thee Brit Th Britis ish h Stat Statut utee tee tee 1710 1710 is now now seen seen as the the orig origin in of copy copyri righ ghtt and and pate patent nt law law respectively.

5. Manufacturing: Manufacturing Manufacturing is the use of machines, tools and labor to make things for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as aircraft, automobiles, or sold to Wholesalers, who in turn sell them to retailers, who then sell them to end users – the “consumers”. Manufacturing takes turns under all types of economic system. In a free market economy, manufacturing manufacturing is usually directed toward the mass production of products for sale to consumer at a profit. Mode Mo dern rn manu manufa fact ctur urin ing g incl includ udes es all all inte interm rmed edia iate te proc proces esse sess requ requir ired ed for for the the pro produ duct ctio ion n and and inte integr grat atio ion n of a prod produc uct' t'ss comp compon onen ents ts.. Some Some indu indust stri ries es,, such such as semiconductors and steel manufacturers use the term fabrication instead.

6. Real estate: Real estate is a legal term (in some jurisdictions, such as the United Kingdom, Canada, Australia Australia , USA and Bahamas ) that encompasses land along with improvements improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location—immovable. Real estate law is the body of regulations and legal codes which pertain pertain to such matters under a particular jurisdiction jurisdiction and include things such as commercial commercial


and residential real property transactions. Real estate is often considered synonymous with real property (sometimes called realty), in contrast with personal property (sometimes (sometimes called chattel or personality under chattel law or personal property law). However, in some situations situations the term "real estate" refers to the land andfixtures and fixtures together, as distingu distinguishe ished d from "real prop propert erty y", refer referri ring ng to owners ownership hip of land land and appur appurten tenanc ances, es, including including anything of a permanent nature such as structures, structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Real property is typically considered to be Immovable property. The terms real estate and real property are used primarily in common law, while civil law jurisdictions law jurisdictions refer instead to immovable property.

7. Retailing: Retailing consists of the sale of goods or merchandise from a fixed location, such as a department stores, boutique, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities quantities from manufacturers or Importers, either directly or through a wholesaler , and then sells smaller quantities to the end-user . Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, individuals, such as a public utility, like electric power.

8. Transport: Transport or transportation is the movement of people and goods from one location to another. Mode of transportation includes air rail, road, water, cable, pipeline, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations. Transport infrastructure consists of the fixed installations necessary for transport, and may be roads , railways, airways airways,, waterw waterways, ays, canals, pipeline pipeliness and termin terminals als such as airport airports, s, rail rail stations stations,, bus stations, warehouses, trucking terminals, refueling depots (including fueling docks and fuel stations), stations ), and seaports. Terminals Terminals may be used both for interchange of passengers and cargo and for mainten maintenance ance.. Vehicle Vehicless traveli traveling ng on these these network networkss may include include automob automobiles iles,, bicycles, buses, trains, trucks, people, helicopters, and aircrafts. Operations deal with the way the vehicles vehicles are operated operated,, and the procedur procedures es set for this this purpose purpose includi including ng financin financing, g, legalities and policies. In the transport industry, operations and ownership of infrastructure can be either public or private, depending on the country and mode.


Meaning of Organization: Organization is the foundation upon which the whole structure of management is built. Organization is related with developing a frame work where the total work is divided divided into into managea manageable ble componen components ts in order order to facilita facilitate te the achievem achievement ent of objectives or goals. Thus, organization is the structure or mechanism that enables living things to work together. In a static sense, an organization is a structure or machinery manned by by grou group p of indi indivi vidu dual alss who who are are work workin ing g toge togeth ther er towa toward rdss a comm common on goal goal.. Alik Alikee 'management', the term 'organization' has also been used in a number of ways. broadly speaking, An organization is a social arrangement which pursues collective goals, controls its own performance, performance, and has a boundary separating separating it from its environment. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon. In the social sciences, organizations are the object of analysis for a number of disciplines, such such

as

soci sociol olog ogy, y, economics, economics, politi political cal

science, science, psychology, psychology,

management, management,

and

organizational communication. In more specific contexts, particularly for sociologists, the term "institution "institution"" may be preferred. The broader analysis of organizations is commonly referred to as organizational studies, studies, organizational behavior or organization analysis. A number of different theories and perspectives exist, some of which are compatible, •

Organization Organization – process-related: process-related: an entity is being (re-)organized (re-)organized (organization as task or action).

•

Organization – functional: organization as a function of how entities like businesses or state authorities are used (organization as a permanent structure).

•

Organization – institutional: institutional: an entity is an organization (organization as an actual purposeful structure within a social context)

The 'organization' 'organization' is used in four different senses: as a process, as a structure of relationship, relationship, as a group of persons and as a system, as given below: 1)Organization as a Process: In this first sense, organization is treated as a dynamic process

and a manager managerial ial activit activity y which which is essenti essential al for planning planning the utilizatio utilization n of company company's 's resources, plant and equipment materials, money and people to accomplish the various objectives.


organization refers 2) Organization as a Framework of Relationship: In the second sense organization to the structure of relationships and among position jobs which is created to release certain objectives. The definitions of Henry, Urwick, Farland, Northcourt, Lansburgh and Spriegel Breach, Davis, Mooney and Reily etc., come under this group. For example: According to Mooney and Reily, "Organization "Organization is the form of every human association association for the attainment attainment of a common purpose." 3) Organization as a Group of persons: In the third sense, organisation is very often

viewed as a group of persons contributing their efforts towards certain goals. Organization begins when people combine their efforts for some common purpose. It is a universal truth that an individual is unable ability and resources. Barnard has defined 'Organization' as an identifiable group of people contributing their efforts towards the attainment of goals. 4) Organization as a System: In the fourth sense, the organization is viewed as system.

System concepts concepts recognize that organizations organizations are made up of components each of which has unique properties, capabilities capabilities and mutual relationship. relationship. The constituent constituent elements of a system are linked together in such complex ways that actions taken by one producer have far reaching effect on others. In short short,, organ organizi izing ng is the deter determi mini ning, ng, groupi grouping ng and arrang arrangin ing g of the the vario various us activities deemed necessary for the attainment of the objectives, the assigning of people to those activities, the providing of suitable physical factors of environment and the indicating of the relative authority delegated to each individual charged with the execution of each respective activity.

Definitions of Organization: Different authors have defined organization in different ways. The main definitions of organization are as follows: •

According to keith Davis, "Organization may be defined as a group of individuals, large of small, that is cooperating under the direction of executive leadership in accomplishment of certain common object."

•

According According to Chester I. Barnard, Barnard, "Organization is a system of co-operative co-operative activities of two or more persons."


Accor Accordin ding g to Lo Louis uis A. Alle Allen, n, "Orga "Organiz nizati ation on is the the proces processs of identi identify fying ing and grouping grouping the work to be perform performed, ed, defining defining and delegati delegating ng responsi responsibili bility ty and authority, and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives."

•

Accor Accordin ding g to Moo Moone ney y and and Rail Railey ey,, "Orga "Organiz nizat ation ion is the form form of every every human human association for the attainment of a common purpose." Social unit of people systematically arranged and managed to meet a need or to

pursue collective goals on a continuing basis. All organizations have a management structure that determines determines relationships between functions and positions, and positions, and subdivides and delegates delegates roles, roles, responsi responsibil bilitie ities, s, and authority to carry carry out defin defined ed tasks. tasks. Organiz Organizatio ations ns are open systems in that they affect and are affected by the environment beyond their boundaries

Characteristics of Organization: 1) Outlining the Objectives: Born with the enterprise are its long-life objectives of prof profit itab able le manuf manufact acturi uring ng and selli selling ng its its produ product cts. s. Other Other objec objecti tives ves must must be established by the administration from time to time to aid and support this main objective. 2) Identifying and Enumerating the Activities: After the objective is selected, the managem management ent has to identify identify total task involved involved and its break-u break-up p closely closely related related component activities that are to be performed by and individual or division or a department. 3) Assigning the Duties: When activities have been grouped according to similarities and common purposes, they should be organized by a particular department. Within the department, the functional duties should be allotted to particular individuals. 4) Defining and Granting the Authority: The authority and responsibility should be well defined and should correspond to each other. A close relationship between authority and responsibility should be established. 5) Creating Authority Relationship: After assigning the duties and delegations of authority, authority, the establishment of relationship is done. It involves deciding who will act under whom, who will be his subordinates, what will be his span of control and what will will be his status status in the organiza organization tion.. Besides Besides these formal formal relati relationshi onships, ps, some some informal organizations should also be developed.

Significance of Organization: 1) It Facilitated Administration and management: Organization is an important and the

only tool to achieve enterprise goals set b administration and explained by management.


Sound organization increases efficiency, avoids delay and duplication of work, increases manager managerial ial efficie efficiency ncy,, increase increasess promptne promptness, ss, and motiva motivates tes employ employees ees to perform perform their their responsibility. 2) It Help in the Growth of Enterprise: Good organization is helpful to the growth,

expansion and diversifications of the enterprise. 3) It Ensures Optimum Use of Human Resources: Good organization establishes persons

with different interests, skills, knowledge and viewpoints. 4) It Stimulates Creativity: A sound and well-conceived organization structure is the source

of creative thinking and initiation of new ideas. 5) A Tool Tool of Achiev Achieving ing Obj Object ective ives: s: Organization is a vital tool in the hands of the

management for achieving set objectives of the business enterprise. 6) Prevents Corruption: Usually corruption exists in those enterprises which lack sound

organization. Sound organization prevents corruption by raising the morale of employees. They are motivated to work with greater efficiency, honesty and devotion. 7) Co-ordination in the Enterprises: Different jobs and positions are welded together by

structural relationship of the organization. The organizational process exerts its due and balanced emphasis on the co-ordination of various activities. 8) Eliminates Overlapping and Duplication or work: Over lapping and duplication of

work exists when the work distribution distribution is not clearly identified and the work is performed in a haphazard and disorganized way. Since a good organization demands that the duties be clearly assigned amongst workers, such overlapping and duplication is totally eliminated.

Significance of Sound /Good Organization: Orga Organi niza zati tion on is not not an end end it itse itself lf but but a mean meanss to achi achiev evee an end. end. Whet Whethe herr an organization is good or bad depends on the fact as to how much efficiently and promptly it is in a position position to achieve achieve the objectiv objectives. es. Thus, a sound or good or ideal ideal and result-ori result-oriente ented d organization must possess the following characteristics. 1) Realizati Organiza zati tion on is tool tool of achiev achieving ing object objectiv ives es of an Realization on of Obje Objectiv ctives: es: Organi enterprise. For this purpose, the organization should be divided in several department, sub-departments, branches and units etc. 2) Harmonious Grouping of Functions etc: For achieving the organization organization objectives there must be harmonious grouping of functions, jobs and sub-jobs in such a way so that there is action, consultation and co-ordination without any delay and difficulty.


3) Reasonable Span of Control: Another characteristic characteristic of organization organization is that it should have reasonable span of control. Ordinarily, a person (personnel) cannot control more than five or six subordinates. 4) Clear-cut Ther eree must must be clear clear-cu -cutt Clear-cut allocation allocation of Duties Duties and Responsib Responsibilitie ilities: s: Th allocation of duties and responsibilities in any scheme of sound organization. Every executive must know his scope of activities, the ideal number is three. 5) Promotion of Satisfaction: The most important element of any human organization is the the prom promot otio ion n of sati satisf sfac acti tion on of work worker ers. s. Man Man work workss in a grou group p or in an organization and hence the success or failure of any organization depends on as to how much the organization is in a position to provide satisfaction to individuals or group working under him. 6) Fullest Another importa important nt charact characteris eristic tic of an ideal ideal Fullest Utilizati Utilization on of Manpower Manpower:: Another organi organiza zatio tion n is as to how far far it is succe successf ssful ul in makin making g full fullest est and econo economi mical cal utilization of the available manpower. 7) Provi Another er impor importa tant nt of an ideal ideal Provisio sion n and Develo Developme pment nt and Expan Expansio sion: n: Anoth organi organiza zatio tion n is that that there there exist existss the the neces necessa sary ry provis provision ion for devel developm opmen entt and and expansion so that it is possible to expand and develop any organisation according to needs and requirements and necessary changes an alternatives may be made. 8) Coordination and cooperation: cooperation: In order to achieve the objectives of the enterprise, there there must be close close coordina coordinatio tion n and cooperation cooperation in the activities activities of everybod everybody y working in the organization. Further, there should also be active coordination and cooperation amongst the various departments an sub-departments. It will also assist in elimination the evil of red tapism. 9) Unity of Command: There must be unity of command. No one in any organization should report to more than one line supervisor, and everybody must know to whom he reports and who reports to him. No subordinate should get orders from more than one supervisor; otherwise it will lead to confusion, chaos and conflict. 10) Effective System of Communication: An ideal organization must possess effective system system of communi communicat cation. ion. The inter-co inter-commu mmunica nication tion system system should should be clear clear and easier and there should be no ambiguity at and level. 11) High Morale: Morale: An ideal organization is that in which the workers possess high morale. They work with full capacity, energy, enthusiasm, devotion and sincerity.


12) Flexibility: The last but not the least important characteristic of an ideal organization is that it should be flexible so that necessary changes changes an modifications in the the size of the organization as well as technology could be easily and conveniently effected.

Steps in the Process of Organization: Organiza Organizatio tion n means means identify identifying, ing, arrangin arranging g and integrat integrating ing differen differentt element elementss of organization into efficient working order. It requires the management to follow the following process of organization. •

Division of work

Thee main Th main func functi tion on is divi divide ded d into into subsub-fu func ncti tion onss and and entr entrus uste ted d to the the diff differ eren entt departmental heads. The result is the establishment of departments like Purchase, Sales, Producti Production, on, Account Accounts, s, Publici Publicity ty and Public Public relati relations. ons. The departm departments ents can be further further classified classified just as production department into (1) Planning (2) Designing, (3) Operations, (4) Production Control and (5) Repairs and Maintenance. The division of the work is based upon the fact that specialization is keynote of efficient organization. •

Grouping of Job and Departmentation

The second step is to group similar or related jobs into larger units, called departments, divisions or sections. Grouping process is called departmentation. The department may be based upon functions such as manufacturing, marketing and financing etc. Department may also be based on products, such as textiles, textiles, cosmetic, stationery etc. These departments departments may have different different sections sections as per require requiremen ment. t. Grouping Grouping jobs or Departm Departmenta entation tion aims aims at achieving coordination and facilitates unity of efforts. The departments are linked together on the basis of interdependence. interdependence. The divided task is assigned to specific individual individual or group of individuals who are supposed to be the most qualified and specialized persons for the task. •

Assigning duties

The work to be performed by every individual is clearly defined and made known to him. Everyone must know what he is required to do in order to avoid any misunderstanding, duplication or overlapping in the work.


•

Granting authorities and fixing responsibilities

Assigni Assigning ng of duties duties to individu individuals als must coincide coincide with with the appropri appropriate ate and relevan relevantt authorities. Every employee must know, what the authorities granted to him and for what and to whom he will be responsible, liable and accountable. •

Delegation of authority

Those Th ose who who are are made made respo responsi nsible ble for specif specific ic tasks tasks are are given given due author authorit ity. y. Both Both responsibility and authority go hand in hand together. Reasonable powers are delegated to heads and supervisory staff to enable them to do their work with ease and efficiency. •

Effective communication

Effective communication is the keynote of efficient organization. There should be proper arrangement of communication messages from executives to subordinates and vice-versa. Proper communication system establishes harmonious relationship between employees and enables execution of work in the right manner at the appropriate time and in an atmosphere of perfect mutual adjustment. •

Co-ordination of activities for common objectives

Business activity is a team work or the group activity, so the efforts of every employee must be co-ordinate effectively to achieve the common objectives of the enterprise.

Types of organization: 1) Static Organizations: Organizations:


Static Static Organi Organizati zations ons have fixed fixed practice practices, s, fixed fixed size. size. Like Like static static equatio equations, ns, these these organizations have no variables. Time doesn't change them significantly. They persist until some new organization occupies their niche.

2) Dynamic Organizations:

Dynamic Dynamic Organizations Organizations have Fixed practices, variable size. Like dynamic equations, equations, these organizations vary in size over time, even though their underlying practices don't change much. They go through a single life cycle, each growing rapidly as it occupies its niche, and then declining declining as its competitors competitors implement implement better practices that steal away its clients.

3) Adaptive Organizations: Organizations:

Variable practices, variable size. Like complex adaptive systems, these organizations vary their practices, seeking the constant improvement that launches life cycle after life cycle, creating new products, services, and processes that hold on to clients generation after generation. They will soon motivate employees to climb adaptation curves by using ISOPs to fairly share the wealth that each innovation creates. ISOPs ensure that the innovator, the predecessors, and each shareholder in the corporation benefits. They will displace dynamic and static organizations in economic competition, so that within a generation, most people will have learned to expect continual improvement in their life experience. The fact that their ancestors once worked at the same job in the same way for an entire lifetime will seem almost as incredible as the fact that people used to stay at jobs they didn't thoroughly enjoy.

A Business Ownership: A Business ownership should be structured according to the needs of the owners and

potentially liability that the business could incur. The different types of business ownership are: 1) Limited Partnerships 2) A Corporation 3) Limited Liability Corporations


4) Sole Proprietorship and Partnership 5) Nonprofit Corporations 6) Cooperatives 7) Private Corporation:

1) Limited Partnerships: Partnerships:

This type of business organization is costly and complicated to prepare. It is not recommended for the average small business owner. Limited partnerships are usually created by one person or company who solicits investments from others. The people who invest are considered the limited partners. The general partner is in charge of the business's everyday operations. operations. They are personally personally liable for business dents. Limited partners have little control over daily business decisions or operations. Because Because of this they are not personally personally liable for business debts or claims. Limi Limited ted partne partnersh rships ips are are costl costly y and and compli complica cate ted d to set up and run, run, and and are not recommended for the average small business owner. Limited partnerships are usually created by one person or company, company, the "general partner," partner," who will solicit investments investments from others -who will be the limited partners. The general partner controls the limited partnership's day-to-day operations and is personally liable for business debts (unless the general partner is a corporation or an LLC). Limited partners have minimal control over daily business decisions or operations and, in retur return, n, they they are not perso persona nall lly y liabl liablee for busine business ss debts debts or claim claims. s. Consul Consultt a limi limite ted d partnership expert if you're interested in creating this type of business 2) A Corporation

The most significant benefit to forming a corporation is that it limits the owners' perso personal nal liabi liabilit lity y for busine business ss dents dents and and any any court court judgm judgmen ents ts agains againstt the the busin business ess.. A corporation is an independent legal and tax entity. This sets it apart from other types of businesses. The owners do not use their personal tax returns to pay tax on corporate profits because the corporation itself pays these taxes. Any money drawn from the corporation in the form of salaries, bonuses, etc is paid by the owners in their personal income tax returns. 3) Limited Liability Corporations

Limited Limited Liabili Liability ty Corporat Corporations ions provide provide their their owners owners just that, that, limited limited personal personal liability for business debts and claims. However, LLCs resemble partnerships when it comes to taxes. The owners of an LLC pay taxes on their shares of the business income on their


personal tax returns. This type of organization is good for business owners who either Could be sued by customers run the risk of piling up a lot of debt have substantial personal assets they want to protect. 4) Sole Proprietorship and Partnership

A sole proprietorship, or partnership, is the ideal ownership structure for an up and coming business or the average small business. They do not have to be registered with the state and go into effect as soon as one person goes into business with themselves or two or more people go into business together. Any business income is reported on the owner's personal income taxes. They are also personally liable for any business debts or court decisions against the business. Before you can decide on an ownership structure for your business, you must learn at least a little bit about how each structure works. Here's a brief rundown of the most common forms of doing business: For many new businesses, the best initial ownership structure is either a sole proprietorship or -- if more than one owner is involved -- a partnership. A sole proprietorship is a one-person business that is not registered with the state as a limited liability company (LLC) or corporation. You don't have to do anything special or file any papers to set up a sole proprietorship. You create one just by going into business for yourself. Legally, a sole proprietorship is inseparable from its owner. The business and the owner are one and the same. This means the owner of the business reports business income and losses losses on her her perso persona nall tax tax retur return n and is person personal ally ly liabl liablee for for any any busine businessss-re relat lated ed obligations, such as debts or court judgments. Similarly, a partnership is simply a business owned by two or more people that hasn't filed papers to become a corporation or a limited liability company (LLC). No paperwork needs to be filed to form a partnership. The arrangement begins as soon as you start a business with another person. As in a sole proprietorship, the partnership's partnership's owners pay taxes on their shares of the business income on their personal tax returns and they are each personally liable for the entire amount of any business debts and claims. Sole Sole propriet proprietorsh orships ips and partners partnerships hips make sense sense in a business business where personal personal liability isn't a big worry. For example, A small service business in which you are unlikely to be sued and for which you won't be borrowing much money for inventory or other costs. 5) Nonprofit Corporations

A nonprofit corporation is a corporation formed to carry out a charitable, educational, relig religiou ious, s, lite literar rary y or scient scientif ific ic purpos purpose. e. A non nonpro profit fit can raise raise much much-ne -neede eded d funds funds by receiving public and private grant money and donations from individuals and companies.


The federal and state governments do not generally tax nonprofit corporations on money they make that is related to their nonprofit purpose, because of the benefits they contribute to society. 6) Cooperatives

Some people dream of forming a business of true equals. an organization organization owned and operated democratically democratically by its members. members. These grassroots grassroots business organizers often refer to their businesses as a "group," "collective" or "co-op" but these are usually informal rather than legal labels. For example, a consumer co-op could be formed to run a food store, a bookstore or any other retail business. Or a workers' co-op could be created to manufacture and sell arts and crafts. 7) Private Corporation:

A business that is a legal entity created by the state whose assets and liabilities are separa separate te from from its its owners owners.. Whil Whilee there there are also also pub publi licc corpor corporati ations ons.. Who Who stock stock (and (and ownership) is traded on a public stock exchange. Most small businesses are (or at least start as) private corporations. corporations. A private corporation is owned by a small group of people who are typically involved in managing the business. Forming a corporation requires developing a legal document called the "Articles of Incorporation" and submitting them to the state in which the corporation wishes to reside. Advantages of a corporation include limited liability. An owner (stockholder) can only lose up to the amount s/he invested; unlimited lifespan. a corporation corporation is charted to last forever unless its articles of incorporation incorporation state otherwise; great sourc sources es of fundi funding; ng; and ease ease of trans transfer fer of owners ownership hip.. Disad Disadva vanta ntages ges inclu include de dou doubl blee taxation. The corporation, as a legal entity, must pay taxes, and then shareholders also pay taxes on any dividends received.


Company Vision: Corp Corpor orat atee visi vision on is a shor short, t, succ succin inct ct,, and and inspiring stat statem emen entt of what what the the organization intends to become and to achieve at some point in the future, often stated in competitive terms. Vision refers to the category of intentions that are broad, all-inclusive and forward-thinking. forward-thinking. It is the image that a business must must have of its goals before it sets out to reach them. It describes aspirations for the future, without specifying the means that will be used to achieve those desired ends. Warren Bennis, a noted writer on leadership, says: "To choose a direction, an executive executive must have developed a mental image of the possible and desirable future state of the organization. This image, which we call a vision, vision, may be as vague as a dream or as precise as a goal or a mission statement." Core values include: Safety – Safety serves as a barometer of our company’s overall success and is a specific

measure of our operating excellence.

Trust – Trust is the mutual respect for and confidence in people. Trust recognizes the

importance of individuals and appreciates their diverse opinions. Trust compels us to share information and encourage new ideas. It requires an open, honest, forthright manner.

Confidence – Self-confident people take initiative, handle the unexpected, stand behind

their convictions and support the efforts of others. They take bold, innovative, creative actions, capitalize on opportunities, make sound decisions quickly, and mobilize the best resources for rapid action.

Teamwork – Teamwork is personal involvement and collaboration in a team environment.

It includes setting a common goal in support of business objectives, making an individual commitment to the team’s success and recognizing the success of the team.

Accountability – Being accountable means every employee assumes ownership and

responsibility for his or her own work, regardless of the job they perform. Being accountable means making decisions and holding oneself responsible for the consequences of those choices.


Doing What’s Right – Doing what’s right is being honest, ethical, and having personal and

professional integrity. It means consistently treating all people fairly, delivering on promises, and taking personal responsibility for your actions.

Quality – Quality is the primary determinant of customer satisfaction and loyalty, and it

requires employees to continuously provide internal and external customers with the right product or service...done right...the first time. In today’s increasingly competitive business environment, better quality translates into better value for our customers and, subsequently, better value for their customers-and this is the very essence of competitive differentiation.

Mission: Most businesses have some form of mission statement ,whether they know it or not. For example, other names for a mission include: founder's philosophy, philosophy, statement of purpose, busine business ss philosop philosophy. hy. An organiz organizatio ation's n's mission mission describe describess its fundeme fundemental ntal purpose purpose and overall philosophy. A mission statement (what we are) is different than a vision statement (what we want to become). Mission statement: •

Provides thrust and direction to the organization.

•

Cornerstone of all strategic planning.

A mission statement is an organization's vision translated into written form. It makes concrete the leader's view of the direction and purpose of the organization. For many corporate leaders it is a vital element in any attempt to motivate employees and to give them a sense of priorities. A mission statement should be a short and concise statement of goals and priorities. In turn, goals are specific objectives that relate to specific time periods and are stated in terms of facts. The primary goal of any business is to increase stakeholder value. The most important stakeholders are shareholders who own the business, employees who work for the business and clients or customers who purchase products and/or services from the business. The mission statement should be a clear and succinct representation of the enterprise’s purpose for existence. It should incorporate socially meaningful and measurable criteria addressing concepts such as the moral/ethical position of the enterprise, public image, the target market, products/services, the geographic domain and expectations of


growth and profitability. The intent of the Mission Statement should be the first consideration for any employee who is evaluating a strategic decision. The statement can range from a very simple to a very complex set of ideas.

Specific:

The Mission Statement should represent the broadest perspective of the enterprise's mission. You may want to take the approach of being very specific. For instance, a Mission Statement for a fictitious airline could be worded as follows: Your mission statement is an opportunity to define your business at the most basic level. It should tell your company story and ideals in less than 30 seconds: who your company is, what you do, what you stand for, and why you do it. Do you want to make a profit, or is it enough to just make a living? What markets are you serving, and what benefits do you offer them? Do you solve a problem for your customers? What kind of internal work environment do you want for your employees? All of these issues may be addressed in a mission statement. Other ways to think about a mission statement as you begin to write one include: •

Answers the question, “What business are we in?”

•

Provides thrust and direction to the organization.

•

Must Mu st be mark market et-o -ori rien ente ted d (foc (focus usin ing g on the the prob proble lem m the the busi busine ness ss is solv solvin ing) g),, not product-oriented.

Basic guidelines in mission: •

Your mission statement is about you, your company, and your ideals.

•

Don’t “box” yourself in.

•

Keep it short.

•

Ask for input.

Goals: The major outcome of strategic of strategic road-mapping and strategic planning, after gathering gathering all necessary information, information, is the setting of goals for the organization based on its vision and mission statement. statement. A goal is a long-range aim for a specific period. period. It must be specific and realistic. Long-range goals set through strategic planning are translated into activities that will ensure reaching the goal through operational planning operational planning.. Some company Goals may be as follows:


To promote a profitable and sustainable business activity that meets the customers’ needs.

•

To increase the company's market share.

•

To gain the competitive edge.

•

To increase the company's role in relations to social responsibility.

•

To provide excellent customer service.

Structure of Organization: MANAGING DIRECTOR

QUALITY MANAGER

MAREKTING MANAGER

OPERATION MGR

FINANCE MANAGER

OFFICE ADIMINSTRTOR

PROJECT MANAGER

ESTIMATOR


BULDING CADETS

SITE FOREMEN

An organizational structure is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim. Organizations are a variant of clustered clustered entities entities. An organization can be structured in many different ways and styles, depending on their objectives objectives and ambience. ambience. The structure structure of an organization organization will determine determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, department, workgroup and individual. individual. Individuals in an organizational structure are normally hired under time-limited work contracts or work orders, orders, or under permanent employment contracts or program orders. In order to achieve the desired goals, sound and effective organizational structure is necessary. Organizational structure, as we know is the system of job positions, roles assigned to these positions and specifying authority, responsibility and task of every positions. The structure undoubtedly provides basic framework for executive and employees to perform their task smoothly. The following points must be taken into consideration while building organizational structure: •

Job design

Jobs should be designed in such a way, that job should have specified and defined task to be performed. Jobs should be designed in such fashion that every individual could contribute his maximum worth to the enterprise. The major and related activities of the jobs should also be specified. •

Departmentation Departmentation or Grouping of Identical Jobs

Identical Identical and similar similar jobs should be grouped together in a department department and placed under a depart departme menta ntall head. head. Such Such depar departm tmen entat tation ion will will help help in build building ing coordi coordinat natio ion n betw between een different different jobs and managers. Departments Departments can be established on different basis. It may have production, marketing and finance departments, if it is based upon functions. •

Span of Control

Under span of control, the number of employees and jobs managed by each manager is specified. The chain of command is also clearly stated. It is specified that who will report


who is the smooth performance of his duties. Effective span of control avoids overlapping, duplication and confusion in the work.

•

Delegation of Authority

In order to get the job done properly and smoothly, requisite authorities are granted to the managers. managers. Authority is the power to command command employees and instruct them to do a piece of work. work. The authority authority empowe empowers rs to know certain certain facts, facts, to enjoy enjoy privile privileged ged position position and command respect and obedience from employees. Delegation is no doubt, sharing task with requis requisit itee autho authorit rity y with with subord subordina inate tes. s. As such such the the mange mangerr mult multipl iplie iess himse himself lf throug through h delegation.

Organizational structures types: Pre-bureaucratic structures

Pre-bureaucratic Pre-bureaucratic (entrepreneurial (entrepreneurial)) structures structures lack standardization lack standardization of tasks. This structure is most common in smaller organizations and is best used to solve simple tasks. The structure is totally centralized. The strategic leader makes all key decisions and most communication is done by one on one conversations. It is particularly useful for new (entrepreneurial) business as it enables the founder to control growth and development. They are usually based on traditional domination or charismatic or charismatic domination in the sense of Max of Max Weber 's 's tripartite classification of authority. authority. Bureaucratic structures

Bureaucratic structures have a certain degree of standardization. They are better suited for more complex or larger scale organizations. They usually adopt a tall structure. Then tension between bureaucratic bureaucratic structures structures and non-bureaucratic non-bureaucratic is echoed in Burns and Stalker distinct distinction ion between between mechanisti mechanisticc and organic organic structur structures. es. It is not the entire entire thing thing about about bu burea reauc ucrat ratic ic struct structur ure. e. It is very very much much comple complex x and and usefu usefull for hiera hierarch rchic ical al struct structure uress organization, mostly in tall organizations. Post-bureaucratic

The term of post bureaucratic is used in two senses in the organizational literature. One generic and one much more specific. In the generic sense the term post bureaucratic is often used used to desc describ ribee a range range of ideas ideas devel develope oped d since since the 198 1980s 0s that that specif specific icall ally y contra contrast st themselves with Weber's ideal type bureaucracy. This may include total quality management, management,


culture management management and matrix management management,, amongst others. None of these however has left behind the core tenets of Bureaucracy. Hierarchies still exist, authority is still Weber's rational, legal type, and the organization is still rule bound. Heckscher, arguing along these lines, describes them as cleaned up bureaucracies, rather than a fundamental shift away from bureaucracy. Gideon Kunda, in his classic study of culture management at 'Tech' argued that “the essence of bureaucratic control - the formalization, codification and enforcement of rules and regulations - does not change in principle.....it shifts focus from organizational structure to the organization's culture”. Another smaller group of theorists have developed the theory of the Post-Bureaucratic Organization; provide a detailed discussion which attempts to describe an organization that is fundamentally not bureaucratic. Charles Heckscher has developed an ideal type, the post bureaucratic organization, in which decisions are based on dialogue and consensus rather than authority and command, the organization is a network rather than a hierarchy, open at the boundaries (in direct contrast to culture management); there is an emphasis on metadecision making rules rather than decision making rules. This sort of horizontal decision making by consensus model is often used in housing cooperatives, other cooperatives and when running a non-profit or community organization. organization. It is used in order to encourage participation and help to empower people empower people who normally experience oppression in groups. Emplo Employe yees es with within in the funct function ional al divis division ionss of an organ organiz izati ation on tend tend to perfor perform m a specialized set of tasks, for instance the engineering department would be staffed only with software engineers. This leads to operational efficiencies within that group. However it could also lead to a lack of communication between the functional groups within an organization, making the organization slow and inflexible. As a whole, a functional organization is best suited as a producer of standardized goods and services at large volume and low cost. Coordination and specialization of tasks are centralized in a functional structure, which makes producing a limited amount of products or services efficient and predictable. Moreover, efficiencies can further be realized as functional organizations integrate their activities vertically so that products are sold and distributed quickly and at low cost. For instance, a small business could start making the components it requires for production of its products instead of procuring it from an external organization. But not only beneficial for organization but also for employees faiths. Divisional structure

Also called a "product structure", the divisional structure groups each organizational function into a division. Each division within a divisional structure contains all the necessary


resources and functions within it. Divisions can be categorized from different points of view. There can be made a distinction distinction on geographical basis (a US division and an EU division) or on produ product/ ct/ser servi vice ce basis basis (diff (differe erent nt produc products ts for diffe differe rent nt custom customers ers:: hou househ sehold oldss or companies). Another example, an automobile company with a divisional structure might have one division for SUVs, another division for subcompact cars, and another division for sedans. Each division would have its own sales, engineering and marketing departments. Matrix structure

The matrix structure groups employees by both function and product. This structure can combine the best of both separate structures. A matrix organization organization frequently uses teams of employees to accomplish work, in order to take advantage of the strengths, as well as make up for the weaknesses, of functional and decentralized forms. An example would be a compan company y that that produc produces es two two produc products, ts, "produ "product ct a" and "produ "product ct b". Using Using the matr matrix ix structure, this company would organize functions within the company as follows: "product a" sales department, "product a" customer service department, "product a" accounting, "product b" sales sales departm department, ent, "product "product b" custome customerr service service departm department, ent, "product "product b" account accounting ing department. Matrix Matrix structur structuree is amongst amongst the purest purest of organiza organizatio tional nal structur structures, es, a simple simple lattic latticee emulating order and regularity demonstrated in nature. •

Weak/Functional Weak/Functional Matrix: A project manager with only limited authority is assigned

to oversee the cross- functional aspects of the project. project. The functio functional nal manager managerss maintain control over their resources and project areas. •

Balanced/Functional Balanced/Functional Matrix: A project manager is assigned to oversee the project.

Power is shared equally between the project manager and the functional functional managers. It brings the best aspects of functional and projectized organizations. However, this is the most difficult system to maintain as the sharing power is delicate proposition. •

manager is primarily responsible for the project. Strong/Project Strong/Project Matrix: A project manager is Functional managers provide technical expertise and assign resources as needed.

Among these matrixes, there is no best format; implementation success always depends on organization's purpose and function.

Common success criteria for organizational structures are: •

Decentralized reporting

•

Flat hierarchy

•

High transient speed


High transparency

•

Low residual mass

•

Permanent monitoring

•

Rapid response

•

Shared reliability

•

Matrix hierarchy

Functional Pattern: Following are the main departments in any organization: 1. Finance and accounts 2. Marketing and Sales 3. Human resource and administration 4. Technical / Operations Other departments depend on the size of the organization, like 1. Logistics 2. Procurement 3. Treasury department- sub dept of finance and accounts 1. Finance

The definition of finance is the provision of funds or loan supplied to an individual or company. Often this term is used for the study of economics and how money is controlled. It can be also defined as the management of funds and capital required by a business and private activities. Management of finance has also developed into a specialized branch within the financial sector and is carried out by finance managers.


Managing this involves dealing with the optimization and allocation of funds to various areas either by borrowing or by using those available from internal resources. The word Optimizing may sound strange but it refers to taking measures that minimize the cost of financing while simultaneously attempting to maximize the profits out of the employed finance. Bad debts are poor finance management where rules have not been followed; the result of this is depressed markets, low production and a cash crisis. It is for this very reason that finance managers are very careful with finance they agree too and where it is funded from.

It is not uncommon uncommon to hear finance managers referred referred to as bean counters as they are looking at immediate returns and initial costs against the potential at a later stage. Finance managers managers are the pessimists whereas whereas sales managers are the optimists who look to the future and not to the past! Often though, problems occur with small businesses who fail to see the distinction between a business loan and a personal one. Finance department goal and services:

The main goal of The Department is to provide the internal and external users of financial statements statements with relevant, relevant, accurate and timely information information and to guarantee that the required financial revision is closely adhered to in order to protect the assets of the company. The Depar Departm tmen entt takes takes care care of finan finance ce flow flow to ensur ensuree that that the the compa company ny operat operates es withi within n its its financial regulations and satisfies various external financial requirements. It also ensures that the corporate, financial records comply with internal and external audit. If to look through the activity of The Department, there can be picked out the following main services it renders: •

Payment of invoices and expenses

•

Income collection and salary management

•

Production and assignment of budgets, capital plans, and cash flow forecasts

•

Monitoring and managing financial plans

•

Auditing and reporting financial condition

2. Marketing:

Marketing means informing your potential clients about your products or service, and finding ways to establish and keep a customer base. Your target market is the specific group of people that consume your product or utilize your service. Advertising refers to the various media media used to convey convey you yourr message message.. Printed Printed adverti advertiseme sement, nt, radio radio air time, time, televisi television on


commercials commercials and the Internet are all part of advertising that conveys your business message to the public. Promotion refers to the various methods by which you convey your message to customers. When you communicate with the public, you're promoting your business. Many people will join business associations, or set up displays in malls and craft shows for promotional purposes. Marketing department tasks:

The Marketing office works to raise the awareness of the company and its prominence in the industry and market. The global aim of the department is promoting the product/service and increasing recognition of the company through researches and branding efforts. The departm department' ent'ss strength strengthss should should all be in proper proper understa understandin nding g of consume consumerr behavior behavior and efficient decision-making process. Typically, the major tasks of the marketing department are as follows: 1.

* Advertising & Communication

2.

* Direct marketing

3.

* Cond Conduc ucti ting ng rese resear arch ches es and and mark market et mana manage geme ment nt

4.

* Service Marketing

5.

* Mai Main ntainin ning im image age and and bran rand ma manag nagemen ment

6.

* Developing new product

7.

* Promoting an and professional sa sales

8.

* Retail management & technology.

3. Human resource:

Huma Human n resou resourc rces es is a term term used used to descr describe ibe the indiv individu idual alss who who comp compris risee the workforce of an organization, although it is also applied in labor economics to, for example, example, business sectors or even whole nations. Human resources is also the name of the function within an organization charged with the overall responsibility for implementing strategies and policies relating to the management of individuals (i.e. the human resources). This function title is often abbreviated to the initials 'HR'. HR'. The origins of the function arose in organiza organizatio tions ns that introduced introduced 'welfa 'welfare re managem management' ent' practic practices es and also in those those that that adopted adopted the princip principles les of 'scient 'scientific ific managem management' ent'.. From these terms terms emerged emerged a largely largely administrative management activity, co-coordinating a range of worker related processes and becoming known, in time as the 'personnel function'. Human resources progressively became the more usual name for this function, in the first instance in the United States as well as multinational corporations, reflecting the adoption of a more quantitative as well as


strategic approach to workforce management, demanded by corporate management and the greater greater competi competitive tiveness ness for limite limited d and highly highly skilled skilled workers workers.. The general general purpose purpose of Human Resource department is to establish proper staffing policy and implement it on practice. The main goals and tasks of HR department are: * organize appropriate system of staff selection and recruitment * organize system of effective staff training and development * ensure the competitiveness of the company within labor market * establish transparent system of staff assessment and promotion 4. Entrepreneurship: Entrepreneurship:

“Entrepreneurship is the act of being an entrepreneur, which is a French word meaning "one who undertakes an endeavor". Entrepreneurs assemble resources including innovations, finance and business acumen in an effort to transform innovations into economic goods.”As an experienced entrepreneur, entrepreneur, you are most likely aware that there are daily duties involved with ensuring your business is successful. Accounting: Includes budgets, payroll, financial planning, bill payments, and credit management. •

Adminis Administra tration: tion: Includes Includes sorting sorting and/or and/or reading reading mail mail and email, email, filing, filing, answeri answering ng inquiries, invoicing, bookkeeping, and purchasing.

•

Computer: Includes such things as keeping your website up to date, virus scanning, contact management, data entry, upgrading software and learning new software.

•

Correspondence: Includes writing advertisements, letters, press releases and articles.

•

Human Human Resource Resources: s: Includin Including g intervi interviewin ewing, g, hiring, hiring, firing, firing, training training,, motiva motivating ting and conflict-resolution.

•

Sales: Includes marketing, finding customers, client retention, promotions, advertising and special events.

SWOT analysis: SWOT SWOT analysi analysiss is a strategic strategic planning meth method od used used to eval evaluat uatee the the Strengths, Weaknesses, O pportunities, and Threats involved in a project or in a business venture. It

involves specifying the objective of the business venture or project and identifying the


internal and external factors that are favorable and unfavorable to achieve that objective. The technique is credited to Albert Humphrey, Humphrey, who led a convention at Stanford University in the 1960s and 1970s using data from Fortune 500 companies. A SWOT analysis must first start with defining a desired end state or objective. A SWOT analysis may be incorporated into the strategic planning model. Strategic Planning, has been the subject of much research.[ •

Strengths: attributes of the person or company those are helpful to achieving

the objective(s). •

attributes of the person or company that is harmful to achieving achieving Weaknesses: attributes the objective(s).

•

pport rtun unit itie ies: s: exte extern rnal al cond condit itio ions ns thos thosee are are help helpfu full to achi achiev evin ing g the the O ppo objective(s).

•

Threats: external conditions which could do damage to the objective(s).

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective objective is NOT attainable attainable a different different objective must be selected selected and the process repeated. The SWOT analysis is often used in academia to highlight and identify strengths, weaknesses, opportunities and threats. It is particularly helpful in identifying areas for development. •

What is SWOT Exercise?

A SWOT SWOT Exercis Exercisee is a powerful powerful technique technique for uncoveri uncovering ng and understa understandin nding g you your r Strengths and Weaknesses, and for looking at the Opportunities and Threats you face. •

Why SWOT? It helps you carve a sustainable sustainable niche in your market by taking the best advantage of

your resources, talents, capabilities and opportunities. SWOT builds alignment. SWOT is a ground up approach allowing everyone in the exercises exercises to have a voice thus, increasing buyin and resulting in a higher level of execution. In general, Strengths and Weaknesses are internal to your organization while Opportunities and Threats often relate to external factors. •

SWOT Benefits. What makes SWOT particularly powerful is that it helps you uncover opportunities

that you are well- placed to exploit. And by understanding understanding the weaknesses weaknesses of your business, you can manage and eliminate threats that could affect you negatively. Using the SWOT


framework to assess your strengths and that of your competitors’, you can analyze the competitive competitive landscape and develop a strategy that helps you differentiate differentiate yourself from your competitors, so that you can compete successfully in your market. •

SWOT Categories.

1) Product (what are we selling?) 2) Process (how are we selling it?) 3) Customer (to whom are we selling it?) 4) Distribution (how does it reach them?) 5) Finance (what are the prices, costs and investments?) 6) Administration (and how do we manage all this?) •

How can SWOT help me?

SWOT identifies critical-to-mission objectives. Once identified, strategy is then defined, ownership assigned and tasks executed that will get you to the next level in performance.

•

SWOT Results. : SWOT essentially tells you what is good and bad about a business or a particular

proposition. If it's a business, and the aim is to improve it, then work on translating: strengths (maintain, build and leverage) ,opportunities (prioritize and optimize) , weaknesses (remedy or exit) , threats (counter) into actions (each within one of the six categories) that can be agreed and owned by a team or number of teams. •

Origins of SWOT.

SWOT analysis analysis came from the research conducted at Stanford Stanford research Institute from 19601970. The background to SWOT stemmed from the need to find out why corporate planning failed. The research was funded by the fortune 500 companies to find out what could be done about about this this fail failure ure.. Th Thee Resea Researc rch h Team Team was was Mario Marion n Doshe Dosher, r, Dr Otis Otis Benep Benepe, e, Albe Albert rt Humphrey, Robert Stewart, and Birger Lie.


Type

Private.

Industry

Direct selling.

Founded

1959

Founder(s)

Rich DeVos Jay Van Andel

Headquarters

Ada, Ada, Michigan, Michigan, United States

Area served

Worldwide Chairman) Steve Van Andel (Chairman)

Key people

Doug DeVos (President) Al Koop (Chief Executive)

CFO) Russell Evan (CFO)

Revenue

USD 8.4 billion (2009)

Employees

13,000

Parent

Alticor


Introduction: manufacturer in the world that uses Amway is the largest direct selling company and manufacturer in network marketing marketing to sell a variety of products, primarily in the health, beauty, and home care markets. Amway was was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor under Alticor reported reported sales growth of 2.3%, reaching US$8.4 US$8.4 billion for the year ending December 31, 2009.Its product lines


include home care products, personal care products, jewelry, electronics, Nutrilite electronics, Nutrilite dietary supplements, water purifiers purifiers,, air purifiers, insurance and cosmetics. In 2004, Health & Beauty products accounted for nearly 60% of worldwide sales. Amway conducts business through a number of affiliated companies in more than ninety countries and territories around the world. It is ranked by Forbes as one of the largest private companies in the United States and by Deloitte as one of the largest retailers in the world.

Meaning and the History of Amway: What does the word Amway mean? Amway is an abbreviation abbreviation for "American "American Way". Great companies start with great ideas, and Amway is no exception. The idea came when two Nutralite® salesmen, Rich DeVos and Jay Van Andel were at the very top of a very successful MLM at the time; Nutralite was sold door to door. This was the 1950s, Nutralite was a single entity company, and by the end of the decade, Jay and Rich had built a respectable business of their own - approximately five thousand distributors were in their Both Mr. DeVos and Mr. Van Andel knew how to move product - build on relationships. But what was needed was a way to expand. A way that would allow them to multiply the efforts of what they alone could accomplish. In 1959, the American Way Association was formed. This would be the chance to grow and set the direction of a new entity. Rich and Jay immediately immediately set out to find an initial initial product to add to the line. They purchased the rights to Frisk, a household cleaner (which was later renamed Liquid Organic Concentrate or L.O.C.). In 1960, the American American Way Association, Association, now Amway, bought a controlling controlling share in the manufacturing manufacturing facility in Michigan Michigan where LOC was made. What this meant is that there were 3 companies all using the Amway name. The Amway Sales handled product and distribution, distribution, Amway Services did business related tasks (like insurance for distributors) distributors) and Amway manufacturing, which produced LOC. By 1964, the three arms of Amway were all merg merged ed into into a sing single le enti entity ty - Amwa Amway y Corp Corpor orat atio ion. n. Th Thee idea idea was was by hand handli ling ng the the manufacturing manufacturing and distribution of a product line, and then allowing a network of IBOs. This seemed like the only way to offer what Jay and Rich originally envisioned - a solid opportunity where anyone with motivation could excel, regardless of their background and status. This is a main part of Amway's business philosophy. Not just products and not just sales, but a way to a better life. Amway continued to grow under the co-ownership of Van Andel and Devos. In 1972, the pair purchased Nutralite outright - they now owned the company they had started as employees with.


Amway continued to expand, reaching past the borders of the US to offer the same opportunities in other countries: - Australia - 1971 - Europe and parts of Asia - 1974 - Japan - 1979 - Latin America - 1985 - China - 1995 - Africa - 1997 - India - 1998 - Russia - 2005 - Vietnam -- 2008 Critics argued that the model wasn't sustainable and that growth was mathematically limited. They cried, "Pyramid scheme!" Fifty years of steady growth has shown this criticism has no basis in fact. In 2008, Amway (now technically technically,, Amway Global) Global) reported sales sales of 8 billion. The company is in 58 markets worldwide and manufactures more than 450 products. Amway Global does business in more than 98 countries. Rich DeVos is still alive, although he has passed the Presidency of Amway to his son Dick. DeVos was named one of the richest men in America by Forbes magazine, with an estimated 4.2 billion dollars in personal wealth (2009). DeVos owns the Orlando Magic basketball team among other assets.Jay Van Andel passed away at age 80 in 2004. Mr. Andel's place at Amway Global is now held by his son Steve. At his death, Van Andel's net worth was estimated to be 2.4 billion dollars. The company is still thriving and still offers opportunity to individuals who have the desire to build their own business. business. MLM is a proven business model that produces massive success for individuals. Alticor and Amway Sales Growth: 1960 to 2008:

February 5th, 2009 by ibofightback Posted in Amway News


Amway global sales were reported at “estimated retail” until 2000 when the holding company of Alticor was formed. This means they’re valued assuming that they were all sold at the full retail price, not at the price they were sold to distributors/IBOs. Alticor reports actual revenue – sales at the base IBO price I’ve converted the figures so they can be properly compared. It’s important to be aware of this as many critics of the business (including some former Diamonds who you would think know about this) have in the past conveniently ignored the change in reporting standards and tried to claim Amway’s sales peaked in 1998. Note however that Alticor sales includes revenues from other sources such Access Business Group and Amway Grand Plaza. In 2007 this was reported as around $100 million, so by far the majority of the sales are through the Amway business opportunity. Amway Sales Data:


Year

Estimated Retail Sales

Year


Year


Year


1960 $0.5 million

1970 $120 million

1980 $1.1 billion

1990 $2.2 billion

1 96 1 ?

1971 $165 million

1981 $1.4 billion

1991 $3.0 billion

1 96 2 ?

1972 $180 million

1982 $1.5 billion

1992 $3.9 billion

1963 $21 million

1973 $210 million

1983 $1.13 billion

1993 $4.5 billion

1964 $25 million

1974 $230 million

1984 $1.2 billion

1994 $5.3 billion

1965 $38 million

1975 $250 million

1985 $1.2 billion

1995 $6.3 billion

1966 $40 million

1976 $300 million

1986 $1.3 billion

1996 $6.8 billion

1967 $50 million

1977 $375 million

1987 $1.5 billion

1997 $7.0 billion

1968 $65 million

1978 $500 million

1988 $1.8 billion

1998 $5.7 billion

1969 196 9 $85 milli million on

1979 197 9 $80 $800 0 mill million ion

1989 198 9 $1.9 $1.9 billi billion on

1999 199 9 $5.0 $5.0 bill billion ion

Amway Amway has grown grown fairl fairly y quickl quickly y since since its its incept inceptio ion. n. Its Its histo histori ricc sales sales data data at estimated estimated retail prices is provided below from 1959 to 2000 (in 2000 Amway switch switch over to Alticor. At its peak in 1997 Amway estimated retail sales worldwide at 7 Billion USD. With the foundi founding ng of Alticor , the report report meth methodo odolog logy y was was chang changed ed and the actua actuall sales sales to distributors instead of estimated retail sales (ERS) have been reported since 2001. Taking the sales data published in 2001 report into account, the ERS values are about 32% higher than sales to distributors. The actual sales to distributors are marked with *. Until 1999 sales were reported at Estimated Retail. This is approximately 32% higher than actual sales revenues from sales made to Amway distributors. VISION OF AMWAY: •

Helping people live better lives.

•

Showing where the business wishes to be in the future.

MISSION OF AMWAY: •

Through the partnering of Distributors, Employees, and the Founding Families and the support of quality products and service, we offer all people the opportunity to


achieve their goals through the Amway Sales and Marketing Plan. Broad over riding statement of purpose. •

To facilitate best business opportunities.

•

To deliver high-quality products to semi-urban and urban homes in diverse areas of insurance, home tech, home care, personal care, cosmetics and wellness.

GOAL OF AMWAY: •

The development of new business opportunities.

•

To increase the company's role in relations to social responsibility.

•

To provide excellent customer service.

Awards and Recognition: •

Presented the Millennium Outstanding Service Award 2000, by the Confederation for for the the Blin Blind d (AIC (AICB) B),, in reco recogn gnit itio ion n for for work work carr carrie ied d out out for for the the visu visual ally ly challenged.

•

The Indian Red Cross Society, Orissa awarded AOF a memento & certificate for conducting a mega-Blood Donation camp of 816 units on 4th May, 2003.

•

The Surat Raktdaan Kendra felicitated Amway India at their annual function on 5th Oct, 2003, for the largest number of donors at a Blood Donation Camp (BDC) held by any financial and commercial institution and industry. The Mayor of Surat Snehlata Chouhan - presented a trophy and a certificate of appreciation.

Social responsibilities performed by AMWAY:

•

One by One Campaign for Children

•

Amway Opportunity Foundation (AOF)

•

National Project for the Blind:

Project Sunrise: The objective is to identify one orphanage/institution at each location

where Amway has a modestly-large modestly-large office (52 cities). On-going assistance to be provided in education, healthcare and vocational training under the following heads: · Health care · Education and vocational training · Safe drinking water


· Children’s Day and AOF Day celebration with Amway staff & Amway

Amway Products:

Amway offers a range of exclusive, competitive brands that meet proven customer needs around the world. From nutritional supplements to water treatment, cosmetics to cleaning products, these brands are the solid foundation for a successful, independentRetail independentRetail business. Active Lifestyle • Artistry • Atmosphere • Beautycycle • Body Series • Boutique • Dish Drops • Eddie Funkhouser • Emma Page • eSpring • L.O.C. • Gensona • Glister • Glister • Hymm • iCook • LifeStyle LifeStyle Balanced Balanced Solutions Solutions • NAO Cosmetics • Moiskin Skin Care • Nutrilite • Nutriway • XS Energy • Ocean Essentials • Personalized Health • Peter Island • Protique • Positrim • Satinique • SA8 • Time Defiance • Tolsom • Trim Amway Personal Care Products

Nutrilite® Nutrilite® is the world’s leading brand of vitamin, mineral, and dietary supplements, grown harvested and processed on its own certified organic farms.

Artistry® is one of the world’s top five largest-selling prestige brands of facial skin care and colour cosmetics. Our scientists and formulators have developed the complete line of cosmetics,

All products of Attitude contain Skin Vitalising Complex that synergistically combine to cleanse, Replenish & Moisturise the skin making it soft & supple.


Dynami Dynamite' te'ss range range of male male groomin grooming g products products,, formula formulated ted interna internatio tionall nally y is designe designed d to deliver the ultimate grooming experience.

Glister Toothpaste is a revolutionary Multi-Action Toothpaste with Sylodent that offers seven benefits.

Persona Premium 3 in 1 Soap is a complete soap for the entire family promises refreshing confidence.

Satiniq Satinique ue Advance Advanced d Range Range with with unique unique Ceramid Ceramidee Infusion Infusion System System uses nature' nature'ss own renewing technology to rejuvenate, strengthen and protect your hair.

SA8 Gelzyme is India's only 3-in-1 laundry detergent which pretreats, cleans and softens.


G&H Range enriched with the goodness of Glycerine and Honey, deeply nourishes and hydrates the skin for a healthy glow.

LOC High Suds is a multipurpose household liquid cleaner.

Dish Drops is a concentrated hand dishwashing liquid with a powerful "Triadic Detergency System".

Great Great Value Value Product Product Range Range offers offers you Great Great Qualit Quality, y, Great Great Perform Performance ance,, Great Great Price Price and a Money Back Guarantee!

Amway’s competitors: 1) Direct competitors: •

AVON

•

MARY KAY

•

SUNRIDER

2) Indirect competitors: •

Local INDIAN companies.

•

Changing Political & Economic Atmosphere

•

Products used as samples to persuade relatives and friends to join Amway

•

Focus shifted from selling products to recruiting.

Organizational structure of Amway: Terms used in Amway: •

IBO/ABO/AIE-Independent IBO/ABO/AIE-Independent Business Owner/Amway Business Owner/Amway Independent Entrepreneur is a business partner of Amway who is authorized to


market and distribute products and services available available from Amway. Different names are used in different markets. •

Distributor - an older term for IBO

•

PV — Point Value is a value assigned to each product or service sold by Amway.

An IBOs monthly performance bonus bracket depends on total PV in a month. •

BV — Business Volume is typically the wholesale cost of the product or service sold

by Amway. Performance bonuses are multiplied by the groups total BV. •

Performance Performance bonus is the monthly bonus paid by Amway to IBO's. The higher the

PV, the greater the percentage earned. In North America the Performance bonus ranges from 3% to 25%. In other markets it ranges from 3% to 21%. In India it ranges from 6%-21%. •

Retail Retail Profit Profit is the markup earned by an IBO when they sell a product to a

consumer, either personally or through an Amway website. Recommended retail markup ranges from 20%-35%. •

Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's do

not get paid to sponsor. •

Upline is the term used to refer all the IBOs up in the line of sponsorship of an IBO.

•

sponsorship of an Downline is the term used to refer all the IBOs down in the line of sponsorship IBO. They are collectively also known as group

•

Leg refers to a personally sponsored IBO and all of their downline.

•

Silver Producer is an IBO who has reached the maximum bonus level for one

month. •

Gold Producer is an IBO who has reached the maximum bonus level for three

months. •

Platinum or direct is an IBO who has reached the maximum bonus level for six

months. months. In North North Americ Americaa a Platinu Platinum m is generati generating ng a minimu minimum m of approxim approximatel ately y $30,000 in sales volume per month. •

Emerald a distributor with at least three legs generating Silver Producer volume for

at least 6 months of a year. •

Diamond a distributor with at least six legs generating Silver Producer volume for at

least 6 months of a year. •

Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a year.


•

Independent Business Owner (IBO):

An IBO is, literally, an Independent Business Owner: an individual or individuals who own and operate their own business, which is powered by Amway North America, formerly Quixtar. IBOs are the CEOs CEOs of their own businesses, and they make many of the same daily business decisions other business executives make. As independent business men and women, IBOs decide how active to be in their business, what products to sell and at what prices, who to sponsor, what hours to keep, and other important decisions. IBOs are independent contractors; they are not employees of Amway North America or Amway Corporation. As independent business owners, IBOs are free to make decisions many others in business are not free to make. •

Independent Business Owners Association International (IBOAI) :

The IBOAI (IBOA International or Independent Business Owners Association International) is a trade association representing Independent Business Owners affiliated with Amway North America, formerly Quixtar. It is the primary advocacy organization for IBOs in North America. A trade association is an organization of business people who share common interests or concerns, and who educate and represent their members. The IBOAI (or IBOA International) is one example. Role of the IBOAI Board:

The IBOAI Board is the representative body of the Association acting on behalf of all IBOs. With IBO input, support, and participation, the IBOAI Board listens to ideas, proposes improvements, and advises Amway on the best way to move the business forward. Working closely with Corporate staff, the Board advises Amway on every facet of the business, from products and promotions to operations and business guidelines, as it has for 50 years. Together, they bring positive change to this business, to keep it moving forward and make certain the business is better for every generation.

2010 IBOAI Board and Governance & Oversight Committee: •

Steve Woods, Chairman

•

Brad Duncan, Vice Chairman

•

Bob Andrews, Past Chairman

Other important directors: 1. Alberto Aguilera


2. Glen Baker 3. Mike Bundy

4. John Crowe 5. Howie Danzik

6. Jim Dornan 7. Jody Dutt 8. Kanti Gala 9. Bert Gulick 10. Leif Johnson 11.Shivaram Kumar 12. Pedro Lizardi 13. Doug Weir 14. Doyle Yager 15. Dan Yuen

IBOs are never alone. They have a sponsor, a line of sponsorship, and the IBOAI – their primary advocacy organization – behind them all the way.

Organization type and Business Opportunity: The Amway is private co operative organization. The Amway Sales and Marketing Plan put you in control, allowing you the flexibility to work where and when you want, giving you time for family and friends as well as the opportunity to earn a good income. It adapts easily to your needs and ambitions, and grows with them, offering you all the personal support and assistance you require to become the Business Owner you want to be. With Amway you are Connected to the global leader in multilevel marketing, marketing, with over 40 years of experience, Supported by great products and people who will help you succeed, and finally In Control of your life.

Sales and Marketing Plan:

The Amway Sales and Marketing Plan is a low risk, low start-up cost business opportunity that is open to everyone. It allows you to build your business through retailing products and sponsoring other people who, in turn, can retail products and offer the business opportunity to others. By passing your sales and marketing knowledge to your developing team, you not only build your own business network but also enable others to build one of their own.


Marketing strategy:

A strategy is a plan of action designed to achieve the goals of the organisation. In creating a marketing strategy for the Super Concentrated Cleaning System, Amway needed to set out the key objective objectivess it wanted to achieve. achieve. The following following objectives objectives for the brand were set:

•

To increase distribute or profitability and productivity by providing a new and exciting business opportunity

•

To optimize consumer convenience and value through enhanced product differentiation with this exclusive and revolutionary cleaning system

•

To provide innovative and unique products to enhance the image of Amway Home Care.

A New Strategy of Amway:

•

Agreement with the government and company

•

resumed operations

•

Goods will be sold in retail outlets and through

•

sales representatives

•

Income of sales distributors will be based on direct selling done by them

•

Same Distribution centers served as retail outlets for the company

•

Localization of employees

•

Localization of production and Raw Material

•

Localization of research and development

•

Transparency and Credibility of company’s management

Functional pattern of Amway: Following are the main departments of Amway: 1. Finance and accounts. 2. Marketing and Sales. 3. Human resource and administration. Amway Global provides you with support like:


Customer care: If you have a question about anything - like registration, renewal,

Business, or product information - our Customer Care Associates can help you. •

Business management: You can manage your business, check customer Volume,

order products, and renew your business, all at Amway Global.com. •

products,, and we'll do the rest, like process process the Order management: You sell the products order, manages your customer accounts, and handles the shipping details.

•

Training: Online, video, and instructor-led training are some of the ways we can

share with you the knowledge to grow a successful independent business. •

Marketing: We support your sales efforts with DVDs, online sites, Magazines,

brochures, and free websites you can personalize. And we help Build awareness of your your prod produc ucts ts and and bran brands ds with with nati nation onal al adve advert rtis isin ing, g, prom promot otio ions ns,, and and even eventt sponsorship. Amway believe that quality improvement happens when people come together. This core belief is what all AOF initiatives are based upon and it holds true time and again. With a passionate and vigorous workforce ready to contribute their bit to the well-being of society, volunteering becomes a way of life in Amway. The 550,000 Amway distributors and 450 full-time employees are all considered AOF volunteers. At 56 Amway offices across India, AOF AOF has has form formed ed a team team of 6 or more more dist distri ribu buto tors rs and and empl employ oyee eess to form form a Lo Loca call Implementation Implementation Committee Committee (LIC). LIC takes ownership of being the face of Amway’s Amway’s CSR at the location. They identify potential partners, form a project, and implement this with other volunteers. The LIC also plays a lead role in raising funds they wish to utilize. The beauty of this system is that the LIC raises the funds, and then decides how best to utilize this in their town or city.

Strategic analysis to overcome problems: Today it is a global business that, along with its parent and sister companies, directly employs 10,000 people worldwide. The business also operates strategically at a Global, European and National level. Amway (UK) began operations in 1973 and has its own distribution and Product Selection Centers. Amwa Amway y has has help helped ed mill millio ions ns of peop people le arou around nd the the worl world d to star startt thei theirr own own independent business, through which they engage in person-to-person marketing. This type of direct selling involves matching matching a consumer's consumer's needs with the goods and services on offer. The better the match, the more lasting the relationship between the seller and the buyer.

Ownership of Amway:

IBOs and Customers:


Amway services the needs of both Independent Business Owners and customers. IBOs build businesses that allow them to earn income based on sales made resulting from their efforts. To launch an Amway-powered business, individuals must register with an existing IBO. Customers pay no fee to shop from a large selection of products and learn from expert advice on health, beauty, home care, and other topics. Products are shipped to their homes and covered by Amway's Amway's Customer Satisfaction Satisfaction Guarantee. Guarantee. Customers must register with the identification number of their servicing IBO. If a new registrant Does not have a servicing IBO, Amway will assign them one..

Personal Referrals:

Unlike most other companies, Amway's sales are not the result of advertising. The biggest chunk of Amway's marketing budget goes directly to rewarding IBOs for sales volume resulting from their efforts. Those efforts include registration of new Ibos, Members, and Client Clients, s, resulti resulting ng in product product sales. sales. Amway' Amway'ss tiered tiered compensa compensatio tion n plan rewards rewards the movement of product through an IBO's sales organization and their ability to train others to create their own successful organizations. organizations. When people visit Amway's Amway's site, it is the result of a personal referral by an IBO -not as a result of some advertisement they saw on TV. Personal referrals have proven to be much more effective. Only 8% of respondents in the Edel Ed elma man n 200 2005A 5Annu nnual al Trust Trust Barom Baromet eter er study study indic indicat ated ed that that infor informa matio tion n obtai obtained ned in advertising was credible, while 42% trusted information obtained from family, friends, and colleagues.

Buzz Marketing:

Alticor pioneered buzz marketing marketing through its person-to-person referral model. Some companies companies spend millions millions on strategies strategies intended to get people to spread the word about their products. Through its Independent Business Ownership Plan, Am-way does the same by rewarding IBOs for spreading the word about the business opportunity and the exclusive products available through Amway. This is a much targeted market spend, since IBOs are rewarded only when their efforts actually result in product sales.

Business Systems:

IBOs employ many different approaches to build their businesses, typically involving training systems, motivational meetings and tools, and time-tested tactics to approach people and interest them in the business opportunity and products. When a person registers with


Amway, it typically is the result of having been approached by an IBO already involved in one of several large organizations that provide training and support to IBOs. Often, a new IBO IBO also also will will choos choosee to atte attend nd option optional al and volunt voluntar ary y trai trainin ning g sessi sessions ons or purcha purchase se professional professional development materials materials provided by that organization - all covered by a money back guarantee.

Independence:

The beauty of Amway's business model is that there can be as many ways of pursuing the business as there are IBOs. If you're into health, you can focus on Nutrilit supplements and XS Energy Drinks.

SWOT analysis of Amway: STRENGTH: •

Based on direct selling operations. Hence it can be A home based business. Every can participate in business. It’s easy to get admission in Amway with easy rout like intent.

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Training to staff.

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Functions are performed by IBOs.

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Organize meetings and events time to time.

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Have good customer service system.

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Backed by a 100% Customer Product Refund Policy produce faith and reselling attitude in customers.

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Quality Products that Inspire Confidence. Almost no risk of money as world class quality Minimal start up costs gives strong base to the initiation of business. So everyone can participate in business. The person who wants do something can be make profit with investment of low cost. Products are easy to sell.

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A business business with nationa nationall and internat internationa ionall scope scope gives gives more opportunit opportunity y to the costumers.

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The possibility of financial security and freedom of time to enjoy life.

WEAKNESS: •

More power to IBOs gives critical structure to organization.

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Initially high entry cost leads to somewhat restrictions for business development.


Rumors for direct selling operations.

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Focus shifted from selling products to recruiting.

OPPURTUNITIES: •

Setup a manufacturing plant in all countries leads to better platform for company.

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Population of INDIA gives better opportunity to company to receive more profit.

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As the company name itself gives reliance and faith for the customer and buyer produce greater opportunity for marketing which leads to decrease in total expenditure of company.

THREATS: •

Too much freedom to IBOs.

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Change in government policy may affect to the profit and freedom of company.

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Compet Competitor itorss like AVON, MARY KAY; KAY; SUNRID SUNRIDER ER creates creates lot of competi competition tion in market which leads to strong marketing competition in market.


Finding: I’ve written about Amway based entirely on factual, confirmable sources. If you’re researching researching Amway, especially on the Internet, chances are you’ve encountered encountered people who claim Amway is some kind of scam business, it’s illegal, the products are poor quality, or some other information that has made you think twice about being involved. Skim through these finding and decide for yourself whether those kinds of opinions really have a lot of credibility in the face of all of these facts. Have all these major companies and organizations organizations that have recognized Amway for excellence been conned? For fifty years? Or perhaps the opinions you read on the internet have been formed from limited or even no experience experience – from encountering encountering some new or inexperienced inexperienced Amway rep that never bothered to learn how to act professionally or properly explain the concept, and probably never did much more than dabble for a few months. Or perhaps the experience was with just one of dozens and dozens of different Amway affiliated affiliated organizations, each with different different ways of doing things that may not all appeal to everyone? Or perhaps their opinions driven by business interests working or being paid by competitors or potential competitors to Amway?

CONCLUSION:


Amway is which is one of the largest direct selling company in the world. The main objectives of Amway are to profit there distributers by eliminating the middlemen and provide the products to the distributers in cheaper price. The products of Amway are world class product quality. They are made up of natural a thing that’s why they are good for health and environment. Amway covers covers a wide range of products from beauty care. Health care, to clothing, and daily use products etc. the products are costly as compared to other branded products available available in market but if we compare the quantity while using the products require less amount and thus can be used for longer time. Successful business today depends upon a company's ability to quickly adapt to changes in the marketplace. At Amway, they pride it selves on knowledge of the dynamic networking market that is quickly becoming central to modern business. This knowledge, and its willingness to act upon it, has enabled us to become one of the industry's technological leaders. Through they continued pursuit of new product ideas, and by consistently refining our existing product line, they have become one of the top providers of cutting-edge networking products in the global market. If you're looking for high quality products and solid customer support at rock-bottom prices, then choosing Amway really does make sense.

SUGGESTIONS:

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Trial packs should be used because customer must have to introduce the product. Once customer gets idea about product he comes to know advantages of products.

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The products should be cheap the home delivery system takes at least two days to deliver the products so the delivery should be instant.

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There must be multiple options for purchasing the products for distributers like online, tale and instant purchasing.


In every city, the Amway office should be situated in such a location so that it is in reach of all distributers.

Bibliography:

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Annexure: Amway India plans 170 new branches by 2013

Eyes 25% y-o-y growth for the next five years. Amway India Enterprises Enterprises Pvt Ltd, a major direct selling FMCG Company Company in the country, is planning to open 170 new branches across the country in the next three years (by the year 2013). The company is also eyeing 25 per cent year-on-year growth for the next five years. Presently, the company has 130 branches across the country. The company offers 115 products in five categoriescategories- Personal care, Home care, Nutrition Nutrition & Wellness, Wellness, Cosmetics and Great Value products. Nutrition & Wellness segment contributes around 50 per cent of Amway India’s total turnover. "With an aim to strengthen our network base, we are planning to increase the number

of touch points (branches) up to 300, by adding 170 new branches across the country in the next two-three years. We are also planning to launch 6 to 8 new products every year," William S. Pinckney, MD & CEO, Amway India, said at a press conference during plant visit of reporters to its Baddi facility in Himachal Pradesh.


With an aim to meet the market demand, the company has just tripled the capacity at its contract manufacturing facility in Baddi (Himachal Pradesh) at an investment of Rs. 55 crore. Amway’ y’ss focu focuss in the the past past 2-3 2-3 year yearss was was to impr improv ovee cons consum umer er acce access ss and and "Amwa awareness, which paid off handsomely. We have grown from Rs. 799 crore in 2007 to Rs. 1407 in 2009 crore over the past three years, essentially as the quality of the Amway pick-up centre’s has undergone a sea change, and are more experiential for the consumers. We are eyeing 25 per cent year-on-year growth for the next five years," Pinckney said.

amway full project

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