Ch 2 Flashcards
Organizational Structure
A framework defining authority and responsibility, ensuring clear task delegation for achieving objectives.
Line Organization
Vertical authority flow from the top to bottom, with one superior per employee
Line Organization Advantages
Simple authority, fast decisions.
Line Organization Disadvantages
Required experienced manager, limited innovation.
Functional Organization
Activities grouped by function (eg marketing, finance)
Functional Organization Advantages
Expert advice from specialized staff.
Functional Organization Disadvantages
Multiple managers, conflicting instructions, slow decisions.
Line and Staff Organization
Combining line functions (sales, service) and staff functions (support roles).
Line and Staff Advantages
Quick decisions with expert support, improved communication.
Line and Staff Disadvantages
Potential conflicts and extra costs.
Formalization
Directing activities towards objectives, influenced by complexity of goals.
Authority and Responsibility
Clear definitions crucial to avoid frustration, ensuring effective job performance.
Job Descriptions
Outlining titles, responsibilities, and performance expectations; prevents role ambiguity.
Sole Proprietorship
Business owned by one person, with all personal liability.
Partnership
Business owned by multiple people, liability varies.
Corporation
Distinct legal entity offering limited liability and potential tax advantage.
Operating Affiliations
Collaborative forms, not legal structures, for reaching marketing/sales goals.
Express Authority
Clearly defined powers in agency contracts; verbal or written.
Implied Authority
Powers inferred from precedent, even if not documented.
Apparent Authority
Authority a third party believes exists based on insurer actions.
Insurance Brokerage Structure
The legal and operating form that defines and insurance brokerage.
