An Entrepreneur Employs 20 People, Which He Personally Supervises

question 126

Essay

An entrepreneur employs 20 people, which he personally supervises.However, the company will likely employ over 200 people in production, sales, engineering and administration within a few years due to the growing success of the company's new products.The entrepreneur likes the current structure and wants to avoid other forms of departmentalization.Explain to the entrepreneur why his company would be more effective through forms of departmentalization as it grows larger.

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Definitions:

Milton Friedman

An influential American economist known for his strong advocacy of free-market capitalism and for his role in the Chicago School of Economics.

John Maynard Keynes

A British economist whose theories on the importance of government intervention in economies during downturns led to the development of Keynesian economics.

Marginal Propensity

The ratio of the change in an economic agent's consumption as a result of a change in income, influencing saving and spending habits.

Save

To allocate income or resources for future use instead of immediate consumption, often by placing it in some form of a bank account or investment.