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Internal Organisation

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  • 1. Internal Organisation Higher Business Management Higher BM (Revised)
  • 2. What is an organisation? A group of people working towards a defined set of goals and objectives. Higher BM (Revised)
  • 3. Types of Organisational Grouping Functional Product/Service Customer Place/Territory Technology Line/Staff Higher BM (Revised)
  • 4. Functional Grouping Departments where staff have similar skills & expertise, and do similar jobs. Functional grouping usually consists of marketing, finance, human resources and operations. What other functional areas might there be? Higher BM (Revised)
  • 5. Functional Grouping Chief Executive Board of Directors Human Production Marketing Accounts IT Resources Higher BM (Revised)
  • 6. Functional Groupings +/- Disadvantages Advantages Organisation may Staff with similar become too large skills kept together May be unresponsive to Allows specialisation change Clear organisational Departmental structure competition may emerge Staff know formal Departments may put relationships own interests before organisation’s Higher BM (Revised)
  • 7. Product/Service Grouping Divisions/departments where each deals with a different product or product range. E.g. a TV company may have a Sports division, a Film division and a Music division. Each division has its own functional staff. Virgin and General Electric are examples of Product/Service grouping. Higher BM (Revised)
  • 8. Product/Service Grouping Hewlett Packard Imaging and Personal Enterprise HP Financial HP Services Printing Group Systems Group Systems Group Services Higher BM (Revised)
  • 9. Product/Service Grouping +/- Advantages Disadvantages Each division self- Duplication of contained resources/ tasks/ Each division more personnel responsive to changes Divisions may be Incentive for staff to competing with each perform better other Can identify products under performing Higher BM (Revised)
  • 10. Customer Grouping Customer groups are divisions dealing with different types of customers. May be a different division for Retail, Trade, Overseas and for Mail Order. E.g. Doctors Surgery, Clydesdale Bank Higher BM (Revised)
  • 11. Customer Grouping Higher BM (Revised)
  • 12. Customer Groupings Advantages Disadvantages Each division able to Can be expensive give a service suited due to greater staff to its own type of costs customer Duplication of Customer loyalty admin, marketing & builds due to finance personal service Staff turnover Quicker to respond erodes personal to customer needs service benefits Higher BM (Revised)
  • 13. Place/Territory Grouping Staff divided into divisions, each dealing with a geographic area. For example, South, West, North, Scotland division. Example: Nestle, Water Boards Higher BM (Revised)
  • 14. Place/Territory Grouping Hewlett Packard Americas Europe, Middle East, Africa Asia Pacific Houston, Texas Geneva, Switzerland Hong Kong Higher BM (Revised)
  • 15. Place/Territory Grouping +/- Advantages Disadvantages Allows the Again, duplication of organisation to cater effort for different local, regional, national tastes More responsive to customer needs Such groupings are used often by European firms, but not by American Higher BM (Revised) ones. Why?
  • 16. Technology Grouping Manufacturing companies group its business activities according to technological or production processes. Only suitable for large organisations with different products and production processes. WH Smith (Wholesale, Retail Internet) and Ford (Bodywork, Glass, Plastics, Paints) are example of this. Higher BM (Revised)
  • 17. Technology Grouping Advantages Disadvantages Increased Specialist training specialisation required Teething problems Capital-intensive or technological problems identified easily Higher BM (Revised)
  • 18. Line/Staff Grouping Core Activities LINE Support Activities STAFF This grouping divides into line departments involved in generating revenue (ie sales) and staff departments providing whole firm support (Finance, HRM). Higher BM (Revised)
  • 19. Levels of Management C h ie f E x e c u t iv e This is how we would normally see an B o a r d o f D ir e c t o r s organisation structure. S e n io r M a n a g e r s This is an organisation chart of a business. M a n a g e rs There is another way J u n io r M a n a g e r s we can view the same organisation. S u p e r v is o r s A s s is t a n t s Higher BM (Revised)
  • 20. Organisation Pyramid Chief Executive Board of Directors Senior Managers Managers Junior Managers Supervisors Assistants Higher BM (Revised)
  • 21. Span of Control Span of Control means the number of people who report to a manager Manager Manager Employees Employees Narrow span of control Wide span of control Higher BM (Revised)
  • 22. Hierarchical Structures Hierarchical structures can either a tall or flat structure Tall Flat Higher BM (Revised)
  • 23. Tall Structures Many levels of management Managers will have narrow span of control Management posts usually specialised Clearly defined roles Higher BM (Revised)
  • 24. Cost/Benefit Analysis of Tall Structures Benefits Costs Easier for managers to Many layers of supervise staff communication More promotion Slow decision-making opportunities High labour costs due to Employees will know many levels of immediate boss management Clear lines of Workers may have little responsibility and freedom or communication responsibility Higher BM (Revised)
  • 25. Flat Structures Few levels of management Managers have wider spans of control Faster communications Quicker decision- making Higher BM (Revised)
  • 26. Cost/Benefit Analysis of Flat Structures Benefits Costs Employees have more Employees have authority and responsibility greater workload Better communication Employees may need between managers and training for multi-tasks workforce Fewer promotion Decision-making is quicker opportunities Communication channels If span of control is too less complicated wide people may feel isolated or ignored Better team spirit Higher BM (Revised)
  • 27. Matrix Structure A project team created to Marketing Finance carry out a specific task. Manager Manager Team members come ing e from different functional t nc ke ina ar Project r areas, and would report F M r rke to the Project Manager ke or Wo Manager W and their own Functional Manager. Software Development follow Matrix structures Higher BM (Revised)
  • 28. Matrix Structures +/- Advantages Disadvantages Increased Expensive to have experience many teams Motivation and job Co-ordination satisfaction problems Good for tackling Confusion as to who complex problems reports to whom Lack of supervision and confusion is thought to have led to Nick Leeson’s demise of Barings Bank Higher BM (Revised)
  • 29. Entrepreneurial Structure Small businesses use this structure Decisions made by a few people, normally the owner Higher BM (Revised)
  • 30. Entrepreneurial Structure Advantages Disadvantages Decisions made Difficult to use in quickly large businesses Staff know who they Can create a heavy are accountable to workload for decision-makers Decision-maker does not need to consult Can stifle other staff staff’s initiative Higher BM (Revised)
  • 31. Centralisation Control and decision-making lies with top management in HQ Head Office (HQ) Higher BM (Revised)
  • 32. Centralisation Advantages Disadvantages Decisions can be Slower decision- made for whole making organisation Slower Easier to promote communication corporate image Less room for staff initiative Higher BM (Revised)
  • 33. Decentralisation Control and decision-making is delegated to departments HQ Relieves senior management from routine, day-to-day tasks Higher BM (Revised)
  • 34. Decentralisation Advantages Disadvantages Motivates staff Decisions may differ from other branches Empowers staff Transfer of staff Decision-making may lead to quicker confusion due to Decisions can match different practices local needs Less supervision Higher BM (Revised)
  • 35. Definitions Chain of Command Unity of Command Span of Control Higher BM (Revised)
  • 36. Factors Affecting Organisation Structure Size of organisation Technology used Market firm operates in Staff skills within organisation Products/services made or supplied by organisation Higher BM (Revised)
  • 37. Definitions Line relationships – exist when a member of staff is in charge of another member of staff Functional relationships - exist with people on the same level of management Staff Relationships – exist with people who have skills which support the firm as a whole rather than individual departments Informal Relationships – exist as friendships between workers who may have no formal contact in the workplace. Higher BM (Revised)
  • 38. Delayering What happens? Effect on Org. Chart Levels of Flatter structure management are Fewer management reduced (move from posts tall to flat structure) Increased worker Wider spans of responsibilities control Savings in management wages Higher BM (Revised)
  • 39. Downsizing What happens? Effect on Org. Chart Staff ‘laid-off’ Greater workload for departments Wages (labour costs) are reduced Some posts will disappear Workers have more duties Higher BM (Revised)
  • 40. What is Culture? Define what you think culture means. Identify 3 cultures you know. Give evidence that they exist. Higher BM (Revised)
  • 41. Culture Definitions Way of life Ethos Traditions Ambience Customs Atmosphere Norms Culture is: “the way things are done around here”. Or “the (often unwritten) code affecting attitudes, decision-making and management style” Higher BM (Revised)
  • 42. Culture Definition The values, beliefs and norms relating to the organisation that are shared by all staff Higher BM (Revised)
  • 43. Cultural Evidence ARTEFACTS VALUES BELIEFS Higher BM (Revised)
  • 44. Think of your local school What is the visible evidence of its culture? Academic or vocational? Uniform? Discipline? Homework? Approachable SMT? Higher BM (Revised)
  • 45. McKinsey 7-S Framework Higher BM (Revised)
  • 46. McKinsey 7 S Framework Strategy – planning of objectives Structure – way firm is organised Systems – rules & procedures in place Style – management style Staff – people of the organisation Skills – ability of staff and organisation as whole Shared Values – what the organisation believes in. It’s culture. Higher BM (Revised)
  • 47. Importance of Corporate Culture Peters & Waterman (1982) observed US and Japanese firms to see the differences between each. The US firms compared favourably with the Japanese on strategy and structure, but when it came to shared values and the other things hard to measure, they lagged behind. Higher BM (Revised)
  • 48. Corporate Culture Think of an organisation you know. What can you tell about its culture as an outsider looking in? Higher BM (Revised)
  • 49. The HP Way Hewlett Packard’s success was not deemed to be related to quality or service but to internal issues: 1. Respect for others 2. Sense of community 3. Hard work Higher BM (Revised)
  • 50. Southwest Airlines For 5 years in a row they were the only US airline to make a profit Southwest put this down to: Hiring – look for positive people Demeanour – treat everyone like a human being Higher BM (Revised)
  • 51. How to develop a strong corporate culture… Use of uniforms, logos, symbols Ideals and principles of organisation (a mission statement) Reward schemes for employees Code of conduct for employees (attitudes and beliefs) Advertising (promote their corporate values) Teambuilding among employees Higher BM (Revised)
  • 52. Advantages of a strong corporate culture Increased staff loyalty Less turnover of staff (saves in training costs too) Increased staff motivation Increased awareness by the public All employees know their role and responsibilities within the organisation Higher BM (Revised)