The manager must analyze how the firm is organized and, as part of the planning process, determine if that organizational structure should be modified or replaced. The way the business is organized is fundamental to communication, delegation of authority, risk management, and decision making. The whole point of organization and organizational charts is to make the operation run smoothly and efficiently. When a business is organized correctly, everyone understands his job and has the authority and training to do it. The lines of communication move information to the decision makers or managers.
Every decision made by a manager is based on information.
The business organization dictates information flow. Note that in each example there is a two-way flow. The more completely the business mission and goals are understood by each staff member in the organization, the greater is the opportunity for the vision to be attained. These examples of organizational charts illustrate different chains of command and the lines of communication and authority. In Figure 3, power is still concentrated, but there is communication and coordination.