Management Practice 3 Management Practice Level 3 Future Managers
Module 3: Strategic planning Management Practice Level 3 Future Managers
Module 3: Strategic planning <ul><li>After completing this module, you will be able to: </li></ul><ul><ul><li>Define and d...
1. Define and discuss the concept of strategic planning in managing business performance <ul><li>After completing this out...
1. Define and discuss the concept of strategic planning in managing business performance <ul><li>After completing this out...
1.1 Define the concept of strategic planning <ul><li>What is strategic planning? </li></ul><ul><ul><li>A process whereby t...
1.1 Defining the concept of strategic planning <ul><li>Points to remember: </li></ul><ul><ul><li>Strategic planning is not...
Activity 1 <ul><li>Divide into groups and discuss the reasons why the following businesses or companies have to do strateg...
1.2 Discuss the concept of strategic planning using examples <ul><li>Strategic plans </li></ul><ul><ul><li>Are designed to...
1.2 Discuss the concept of strategic planning using examples <ul><li>Tactical plans </li></ul><ul><ul><li>Are plans to imp...
1.2 Discuss the concept of strategic planning using examples <ul><li>Corporate strategy </li></ul><ul><ul><li>Focuses on t...
1.2 Discuss the concept of strategic planning using examples <ul><li>Decisions must be made about </li></ul><ul><ul><li>Wh...
1.2 Discuss the concept of strategic planning using examples <ul><li>Strategic planning is the process of: </li></ul><ul><...
1.2 Discuss the concept of strategic planning using examples <ul><li>Reasons for strategic planning: </li></ul><ul><ul><li...
1.2 Discuss the concept of strategic planning using examples <ul><li>Who should be included in the strategic planning proc...
1.3 Characteristics of strategic planning <ul><li>Characteristics of strategic planning </li></ul><ul><ul><li>Strategic pl...
1.3 Characteristics of strategic planning <ul><li>Characteristics of strategic planning </li></ul><ul><ul><li>It is future...
1.3 Characteristics of strategic planning <ul><li>Aspects of a good strategic plan </li></ul><ul><ul><li>A strategic plan ...
1.3 Characteristics of strategic planning <ul><li>Determine the relationship between the timing of a strategic plan and th...
Activity 2 – Strategic planning <ul><li>Visit a nearby business or an organisation and ask the own/manger questions concer...
1.4 The strategic planning process <ul><li>Goal formulation </li></ul><ul><li>Identifying current objectives and strategie...
1.4 The strategic planning process <ul><li>Goal formulation </li></ul><ul><ul><li>Reasons why managers are reluctant to se...
1.4 The strategic planning process <ul><li>Identifying current objectives and strategies </li></ul><ul><ul><li>The organis...
1.4 The strategic planning process <ul><li>Environment analysis </li></ul><ul><ul><li>What are our competitors’ weaknesses...
1.4 The strategic planning process Management Practice Level 3 Future Managers Micro environment Market environment Macro ...
1.4 The strategic planning process <ul><li>4. Resource analysis </li></ul><ul><ul><li>Which factors could promote or restr...
1.4 The strategic planning process <ul><li>5. Identification of strategic opportunities and threats: SWOT analysis </li></...
1.4 The strategic planning process <ul><li>6. Gap analysis </li></ul><ul><ul><li>A performance gap is the difference betwe...
1.4 The strategic planning process <ul><li>7. Strategic decision making </li></ul><ul><ul><li>Strategic alternatives shoul...
1.4 The strategic planning process <ul><li>8. Strategy implementation </li></ul><ul><ul><li>Programming  – the order in wh...
1.4 The strategic planning process <ul><li>9. Measurement and control of progress </li></ul><ul><ul><li>Progress has to be...
1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>Internal growth strategies...
1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>Internal growth strategies...
1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>External growth strategies...
1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>Corporate combinations </l...
1.6 Using procedures to facilitate implementation <ul><li>Procedures to facilitate strategy implementation include: </li><...
1.6 Using procedures to facilitate implementation <ul><li>Barriers to effective strategy implementation </li></ul><ul><ul>...
1.6 Using procedures to facilitate implementation <ul><li>Barriers to effective strategy implementation </li></ul><ul><ul>...
1.7 Organisation systems <ul><li>Formal and informal </li></ul><ul><li>Line organisation </li></ul><ul><li>Line-and-staff ...
1.7 Organisation systems <ul><li>Formal and informal </li></ul>Management Practice Level 3 Future Managers Formal Informal...
1.7 Organisation systems <ul><li>Line organisation </li></ul>Management Practice Level 3 Future Managers
1.7 Organisational systems <ul><li>Advantages of line organisation </li></ul><ul><ul><li>A simple and inexpensive (cheap t...
1.7 Organisational systems <ul><li>Disadvantages of line organisation </li></ul><ul><ul><li>Inflexible organisation struct...
1.7 Organisational systems <ul><li>Line-and-staff organisation system </li></ul>Management Practice Level 3 Future Managers
1.7 Organisational systems <ul><li>Using line-and-staff organisation effectively </li></ul><ul><ul><li>A good understandin...
1.7 Organisational systems <ul><li>Advantages of line-and-staff organisation </li></ul><ul><ul><ul><li>Expert advice is fr...
1.7 Organisational systems <ul><li>Disadvantages of line-and-staff organisation </li></ul><ul><ul><li>Unity of command can...
1.7 Organisational systems <ul><li>Functional organisation system </li></ul>Management Practice Level 3 Future Managers
1.7 Organisational systems <ul><li>Advantages of functional organisation </li></ul><ul><ul><li>Maximum specialisation is a...
1.7 Organisational systems <ul><li>Disadvantages of functional organisation </li></ul><ul><ul><li>Subordinates can be resp...
1.7 Organisational systems <ul><li>Project organisation </li></ul>Management Practice Level 3 Future Managers
1.7 Organisational systems <ul><li>Advantages of the project organisation system </li></ul><ul><ul><li>Employees involved ...
1.7 Organisational systems <ul><li>Disadvantages of the project organisation system </li></ul><ul><ul><li>Pure project gro...
1.7 Organisational systems <ul><li>Matrix organisation </li></ul>Management Practice Level 3 Future Managers Manage-ment P...
1.7 Organisational systems <ul><li>Advantages of the matrix structure </li></ul><ul><ul><li>The project manager has access...
1.7 Organisational systems <ul><li>Disadvantages of the matrix structure </li></ul><ul><ul><li>Project team members have t...
1.8 Reasons for choosing particular organisational structures <ul><li>What is the need of the organisation?  </li></ul><ul...
Activity 2 – Organisational structure <ul><li>Visit various businesses in your environment and ask management / owner abou...
Management Practice Level 3 Future Managers
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NCV 3 Management Practice Hands-On Support Slide Show - Module 3

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This slide show has been designed to complement the learner guide NCV 3 Management Practice Hands-On Training by Bert Eksteen, Alma van Rensburg & Elize Oosthuizen, published by Future Managers Pty Ltd. For more information visit our website www.futuremanagers.net

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NCV 3 Management Practice Hands-On Support Slide Show - Module 3

  1. 1. Management Practice 3 Management Practice Level 3 Future Managers
  2. 2. Module 3: Strategic planning Management Practice Level 3 Future Managers
  3. 3. Module 3: Strategic planning <ul><li>After completing this module, you will be able to: </li></ul><ul><ul><li>Define and discuss the concept of strategic planning in managing business performance </li></ul></ul>Management Practice Level 3 Future Managers
  4. 4. 1. Define and discuss the concept of strategic planning in managing business performance <ul><li>After completing this outcome, you will be able to: </li></ul><ul><ul><li>Define the concept of strategic planning </li></ul></ul><ul><ul><li>Discuss the concept strategic planning using examples </li></ul></ul><ul><ul><li>List the benefits of strategic planning for performance monitoring using examples from a business venture </li></ul></ul><ul><ul><li>Identify aspects of a good strategic plan, using examples </li></ul></ul><ul><ul><li>Determine the relationship between the timing of a strategic plan and performance of a venture </li></ul></ul><ul><ul><li>Determine the relationship between the timing of a strategic plan and performance of a venture using examples </li></ul></ul>Management Practice Level 3 Future Managers
  5. 5. 1. Define and discuss the concept of strategic planning in managing business performance <ul><li>After completing this outcome, you will be able to: </li></ul><ul><ul><li>Discuss and explain the role of the various organisational strategies in business performance </li></ul></ul><ul><ul><li>Determine the role of key elements – purpose, process, props, prototype – in the strategy/plan </li></ul></ul><ul><ul><li>Identify alternative organisational structures </li></ul></ul><ul><ul><li>Explain how key elements operate within each structure </li></ul></ul><ul><ul><li>Explain the advantages and disadvantages of all organisational structures, using examples from a business venture. </li></ul></ul><ul><ul><li>Discuss the reasons for choosing particular organisational structures in terms of a particular business venture </li></ul></ul><ul><ul><li>Provide examples of organisational structures for own context </li></ul></ul>Management Practice Level 3 Future Managers
  6. 6. 1.1 Define the concept of strategic planning <ul><li>What is strategic planning? </li></ul><ul><ul><li>A process whereby the organisation’s resources are reconciled with the threats and opportunities in the external environment </li></ul></ul><ul><ul><li>There are three key elements: </li></ul></ul><ul><ul><ul><ul><li>The courses of actions determined for obtaining goals </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The process of seeking key ideas as opposed to modifying existing company policies </li></ul></ul></ul></ul><ul><ul><ul><ul><li>How the strategy is formulated </li></ul></ul></ul></ul>Management Practice Level 3 Future Managers
  7. 7. 1.1 Defining the concept of strategic planning <ul><li>Points to remember: </li></ul><ul><ul><li>Strategic planning is not a once off </li></ul></ul><ul><ul><li>Strategic planning is not a process that is conducted at a one or two day planning session </li></ul></ul><ul><ul><li>Critical choices will need to be made </li></ul></ul><ul><ul><li>Strategic planning helps the demands and changes caused by the external environment </li></ul></ul>Management Practice Level 3 Future Managers
  8. 8. Activity 1 <ul><li>Divide into groups and discuss the reasons why the following businesses or companies have to do strategic planning in advance: </li></ul><ul><ul><li>Eskom </li></ul></ul><ul><ul><li>Transnet </li></ul></ul><ul><ul><li>South African Ports </li></ul></ul><ul><ul><li>Department of Transport </li></ul></ul>Management Practice Level 3 Future Managers
  9. 9. 1.2 Discuss the concept of strategic planning using examples <ul><li>Strategic plans </li></ul><ul><ul><li>Are designed to ensure the organisation is aligned to the changing external environment </li></ul></ul><ul><ul><li>Create a vision for the future of the organisation </li></ul></ul><ul><ul><li>Translate the mission statement into measurable long-term goals </li></ul></ul><ul><ul><li>Choose a strategy or strategies to attain the above </li></ul></ul>Management Practice Level 3 Future Managers
  10. 10. 1.2 Discuss the concept of strategic planning using examples <ul><li>Tactical plans </li></ul><ul><ul><li>Are plans to implement the strategic plans </li></ul></ul><ul><ul><li>Tactical plans across different functional areas must complement each other </li></ul></ul><ul><li>Operational plans </li></ul><ul><ul><li>Focus on the day-to-day operations of the company </li></ul></ul><ul><ul><li>Have a short-term focus </li></ul></ul><ul><ul><li>Must put the strategic and operational plans into simple, workable steps </li></ul></ul>Management Practice Level 3 Future Managers
  11. 11. 1.2 Discuss the concept of strategic planning using examples <ul><li>Corporate strategy </li></ul><ul><ul><li>Focuses on the organisation’s scope of activities and resource deployment </li></ul></ul><ul><li>Business strategy </li></ul><ul><ul><li>Determines how best to compete in a particular industry or market </li></ul></ul>Management Practice Level 3 Future Managers
  12. 12. 1.2 Discuss the concept of strategic planning using examples <ul><li>Decisions must be made about </li></ul><ul><ul><li>Which new or additional products will fit in with the existing product range </li></ul></ul><ul><ul><li>How existing activities should be altered to keep pace with the changing environment </li></ul></ul><ul><ul><li>How change and renewal in general will be implemented in the business </li></ul></ul>Management Practice Level 3 Future Managers
  13. 13. 1.2 Discuss the concept of strategic planning using examples <ul><li>Strategic planning is the process of: </li></ul><ul><ul><li>Analyzing the organisations external and internal environments </li></ul></ul><ul><ul><li>Developing a mission and a vision </li></ul></ul><ul><ul><li>Formulating overall goals </li></ul></ul><ul><ul><li>Identifying general strategies to be pursued </li></ul></ul><ul><ul><li>Allocating resources to achieve the organisations goals </li></ul></ul>Management Practice Level 3 Future Managers
  14. 14. 1.2 Discuss the concept of strategic planning using examples <ul><li>Reasons for strategic planning: </li></ul><ul><ul><li>Highly skilled workers who are technologically orientated and highly educated are replacing employees in manufacturing positions </li></ul></ul><ul><ul><li>Worldwide organisations are downsizing </li></ul></ul><ul><ul><li>Businesses have realised the importance of providing services as opposed to manufacturing products. </li></ul></ul><ul><ul><li>Employees are required to be more flexibly and undertake complex thinking because work has become and continues to become less predictable and routine </li></ul></ul><ul><ul><li>Employees have more interdependence than the past. They are required to understand the business, its goals and they are held accountable for business decisions and results </li></ul></ul>Management Practice Level 3 Future Managers
  15. 15. 1.2 Discuss the concept of strategic planning using examples <ul><li>Who should be included in the strategic planning process </li></ul><ul><ul><li>Board members </li></ul></ul><ul><ul><li>The leadership of the organisation </li></ul></ul><ul><ul><li>Staff and/or volunteers </li></ul></ul><ul><ul><li>Members of the organisation </li></ul></ul><ul><ul><li>Representative of the communities you serve </li></ul></ul><ul><ul><li>External stakeholders </li></ul></ul>Management Practice Level 3 Future Managers
  16. 16. 1.3 Characteristics of strategic planning <ul><li>Characteristics of strategic planning </li></ul><ul><ul><li>Strategic planning is an ongoing activity (a process); plans are developed and constantly reviewed after considering the environmental factors </li></ul></ul><ul><ul><li>Strategic planning has an extended to time-frame, usually more than five years. However, the time-frame depends on the type of industry and may be longer or shorter than five years </li></ul></ul><ul><ul><li>To management carries out strategic planning and it requires well-developed conceptual skills  </li></ul></ul><ul><ul><li>It focuses on the organisation as a whole, and not individual business units  </li></ul></ul>Management Practice Level 3 Future Managers
  17. 17. 1.3 Characteristics of strategic planning <ul><li>Characteristics of strategic planning </li></ul><ul><ul><li>It is future orientated  </li></ul></ul><ul><ul><li>It is concerned with the organisation’s vision, mission, long-term goals, and strategies  </li></ul></ul><ul><ul><li>Strategic planning aims at integrating all management functions  </li></ul></ul><ul><ul><li>Strategic plans look at reconciling the organisation’s resources with threats and opportunities in the external environment.   </li></ul></ul><ul><ul><li>The focus of strategic planning is on creating and maintaining a competitive advantage for the organisation </li></ul></ul>Management Practice Level 3 Future Managers
  18. 18. 1.3 Characteristics of strategic planning <ul><li>Aspects of a good strategic plan </li></ul><ul><ul><li>A strategic plan is an ongoing activity or process and is not just done for a fixed period </li></ul></ul><ul><ul><li>It requires well developed conceptual skills </li></ul></ul><ul><ul><li>It focuses on the organisation as a whole </li></ul></ul><ul><ul><li>It is time orientated </li></ul></ul><ul><ul><li>It is concerned with the organisation's vision, mission, long-term goals and strategies </li></ul></ul><ul><ul><li>It focuses on opportunities or threats that may be exploited or have to be dealt with </li></ul></ul>Management Practice Level 3 Future Managers
  19. 19. 1.3 Characteristics of strategic planning <ul><li>Determine the relationship between the timing of a strategic plan and the performance of a venture </li></ul><ul><ul><li>Management must constantly try to predict the future </li></ul></ul><ul><ul><li>Change must be made at the right time </li></ul></ul>Management Practice Level 3 Future Managers
  20. 20. Activity 2 – Strategic planning <ul><li>Visit a nearby business or an organisation and ask the own/manger questions concerning the strategic plan of the business or organisation: </li></ul><ul><ul><li>What is the goal of the organisation? </li></ul></ul><ul><ul><li>Is there a strategic (long-term) plan to support the goal? </li></ul></ul><ul><ul><li>What is the length of the strategic plan – how long (duration) will it take to achieve the goal – in years? </li></ul></ul><ul><ul><li>What resources are required for the organisation to achieve it’s goal? </li></ul></ul><ul><ul><li>Are the resources easily available or is it scarce resources? </li></ul></ul><ul><ul><li>What is the quality and cost of the resources required in the process? </li></ul></ul>Management Practice Level 3 Future Managers
  21. 21. 1.4 The strategic planning process <ul><li>Goal formulation </li></ul><ul><li>Identifying current objectives and strategies </li></ul><ul><li>Environment analysis </li></ul><ul><li>Resource analysis </li></ul><ul><li>Identification of strategic opportunities and threats </li></ul><ul><li>Gap analysis </li></ul><ul><li>Strategic decision making </li></ul><ul><li>Measurement and control of progress </li></ul>Management Practice Level 3 Future Managers
  22. 22. 1.4 The strategic planning process <ul><li>Goal formulation </li></ul><ul><ul><li>Reasons why managers are reluctant to set goals </li></ul></ul><ul><ul><ul><li>Managers may be unwilling to give up alternative goals </li></ul></ul></ul><ul><ul><ul><li>Managers may be afraid of failing </li></ul></ul></ul><ul><ul><ul><li>Managers may lack organisational knowledge </li></ul></ul></ul><ul><ul><ul><li>Managers may lack knowledge of the environment </li></ul></ul></ul>Management Practice Level 3 Future Managers
  23. 23. 1.4 The strategic planning process <ul><li>Identifying current objectives and strategies </li></ul><ul><ul><li>The organisation’s current strategy can be determined by asking questions such as:  </li></ul></ul><ul><ul><ul><li>What business are we in? </li></ul></ul></ul><ul><ul><ul><li>What business should we be in? </li></ul></ul></ul><ul><ul><ul><li>What does the business serve and how? </li></ul></ul></ul><ul><ul><ul><li>Why are we in business? </li></ul></ul></ul><ul><ul><ul><li>How do we do business? </li></ul></ul></ul><ul><ul><ul><li>Where are we leading? </li></ul></ul></ul>Management Practice Level 3 Future Managers
  24. 24. 1.4 The strategic planning process <ul><li>Environment analysis </li></ul><ul><ul><li>What are our competitors’ weaknesses and strategies? </li></ul></ul><ul><ul><li>What political, social, economic or technological changes are taking place the could hold threats or opportunities for the enterprise </li></ul></ul>Management Practice Level 3 Future Managers
  25. 25. 1.4 The strategic planning process Management Practice Level 3 Future Managers Micro environment Market environment Macro environment Vision Consumers Economical Mission Suppliers Political Goals and objectives Competitors Technological Resources Intermediaries Legislation Culture or climate Public Social International National
  26. 26. 1.4 The strategic planning process <ul><li>4. Resource analysis </li></ul><ul><ul><li>Which factors could promote or restrict the choice of future actions? </li></ul></ul>Management Practice Level 3 Future Managers
  27. 27. 1.4 The strategic planning process <ul><li>5. Identification of strategic opportunities and threats: SWOT analysis </li></ul>Management Practice Level 3 Future Managers
  28. 28. 1.4 The strategic planning process <ul><li>6. Gap analysis </li></ul><ul><ul><li>A performance gap is the difference between the objectives established in the goal formulation process and the results likely to be achieved if the existing strategy is continued </li></ul></ul>Management Practice Level 3 Future Managers
  29. 29. 1.4 The strategic planning process <ul><li>7. Strategic decision making </li></ul><ul><ul><li>Strategic alternatives should be chosen to close the performance gaps </li></ul></ul><ul><ul><li>Managers should evaluate the strategic alternatives </li></ul></ul><ul><ul><li>The chosen strategy should have a definite advantage over its rivals </li></ul></ul>Management Practice Level 3 Future Managers
  30. 30. 1.4 The strategic planning process <ul><li>8. Strategy implementation </li></ul><ul><ul><li>Programming – the order in which activities must take place to achieve goals </li></ul></ul><ul><ul><li>Scheduling – putting this to a time frame </li></ul></ul><ul><ul><li>Budgeting – calculating the finances required </li></ul></ul>Management Practice Level 3 Future Managers
  31. 31. 1.4 The strategic planning process <ul><li>9. Measurement and control of progress </li></ul><ul><ul><li>Progress has to be evaluated </li></ul></ul><ul><ul><li>Corrective measures should take place </li></ul></ul>Management Practice Level 3 Future Managers
  32. 32. 1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>Internal growth strategies </li></ul></ul><ul><ul><li>External growth strategies </li></ul></ul><ul><ul><li>Corporate combinations </li></ul></ul>Management Practice Level 3 Future Managers
  33. 33. 1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>Internal growth strategies </li></ul></ul><ul><ul><ul><li>Concentration growth strategy </li></ul></ul></ul><ul><ul><ul><li>Market development </li></ul></ul></ul><ul><ul><ul><li>Product development </li></ul></ul></ul><ul><ul><ul><li>Innovation </li></ul></ul></ul>Management Practice Level 3 Future Managers
  34. 34. 1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>External growth strategies </li></ul></ul><ul><ul><ul><li>Integration strategies </li></ul></ul></ul><ul><ul><ul><li>Diversification </li></ul></ul></ul><ul><ul><ul><li>Decline strategies </li></ul></ul></ul>Management Practice Level 3 Future Managers
  35. 35. 1.5 Select the overall strategy for the company <ul><li>Growth strategies </li></ul><ul><ul><li>Corporate combinations </li></ul></ul><ul><ul><ul><li>Joint ventures </li></ul></ul></ul><ul><ul><ul><li>Strategic alliances </li></ul></ul></ul><ul><ul><ul><li>Acquisitions </li></ul></ul></ul><ul><ul><ul><li>Institutionalising strategy </li></ul></ul></ul><ul><ul><ul><ul><li>Selective blend situation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Stable situation </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Reorientation situation </li></ul></ul></ul></ul>Management Practice Level 3 Future Managers
  36. 36. 1.6 Using procedures to facilitate implementation <ul><li>Procedures to facilitate strategy implementation include: </li></ul><ul><ul><li>Setting annual objectives </li></ul></ul><ul><ul><li>Management by objectives </li></ul></ul><ul><ul><li>Reward systems </li></ul></ul>Management Practice Level 3 Future Managers
  37. 37. 1.6 Using procedures to facilitate implementation <ul><li>Barriers to effective strategy implementation </li></ul><ul><ul><li>Environmental constraints </li></ul></ul><ul><ul><li>Internal constraints </li></ul></ul>Management Practice Level 3 Future Managers
  38. 38. 1.6 Using procedures to facilitate implementation <ul><li>Barriers to effective strategy implementation </li></ul><ul><ul><li>Internal constraints </li></ul></ul><ul><ul><ul><li>Inflexibility </li></ul></ul></ul><ul><ul><ul><li>Executive obsolescence </li></ul></ul></ul><ul><ul><ul><li>Disloyalty </li></ul></ul></ul><ul><ul><ul><li>Values, styles and traditions </li></ul></ul></ul><ul><ul><ul><li>Lack of CEO power </li></ul></ul></ul>Management Practice Level 3 Future Managers
  39. 39. 1.7 Organisation systems <ul><li>Formal and informal </li></ul><ul><li>Line organisation </li></ul><ul><li>Line-and-staff organisation </li></ul><ul><li>Functional organisation </li></ul><ul><li>Project organisation </li></ul><ul><li>Matrix organisation </li></ul>Management Practice Level 3 Future Managers
  40. 40. 1.7 Organisation systems <ul><li>Formal and informal </li></ul>Management Practice Level 3 Future Managers Formal Informal Structured Unstructured Rigid Elastic Defined Undefined Planned and permanent Spontaneous
  41. 41. 1.7 Organisation systems <ul><li>Line organisation </li></ul>Management Practice Level 3 Future Managers
  42. 42. 1.7 Organisational systems <ul><li>Advantages of line organisation </li></ul><ul><ul><li>A simple and inexpensive (cheap to set up) organisation system </li></ul></ul><ul><ul><li>Unity of command is possible and the number of subordinates reporting to one manager can visually shown </li></ul></ul><ul><ul><li>The authority and responsibility lines are clear and strictly vertical </li></ul></ul><ul><ul><li>It is stable </li></ul></ul><ul><ul><li>It is a stable organisation structure that ensures quick decision-making </li></ul></ul><ul><ul><li>Relationship problems are minimised </li></ul></ul>Management Practice Level 3 Future Managers
  43. 43. 1.7 Organisational systems <ul><li>Disadvantages of line organisation </li></ul><ul><ul><li>Inflexible organisation structure that impedes adaptation to change </li></ul></ul><ul><ul><li>A lack of specialist knowledge resulting in heads of departments being overloaded with a variety of tasks </li></ul></ul><ul><ul><li>Advisors become frustrated because they do not have enforceable authority </li></ul></ul><ul><ul><li>Dependence of multi-faceted heads of department who are difficult to replace </li></ul></ul><ul><ul><li>Too many management levels impeding communication </li></ul></ul><ul><ul><li>Each department is only busy with its own activities and there is hardly any co-ordination between departments </li></ul></ul>Management Practice Level 3 Future Managers
  44. 44. 1.7 Organisational systems <ul><li>Line-and-staff organisation system </li></ul>Management Practice Level 3 Future Managers
  45. 45. 1.7 Organisational systems <ul><li>Using line-and-staff organisation effectively </li></ul><ul><ul><li>A good understanding of and support for both line-and-staff functionaries are essential </li></ul></ul><ul><ul><li>Under no circumstances must staff functionaries give instructions to line functionaries; </li></ul></ul><ul><ul><li>Staff functionaries must be given the assurance of free opinion and advice without prejudice from line functionaries; </li></ul></ul><ul><ul><li>Line functionaries must take heed of advice and suggestions </li></ul></ul><ul><ul><li>Staff functionaries must be fully engaged in and form an integrating part of the business activities </li></ul></ul><ul><ul><li>A climate of mutual trust, recognition and support between line and staff functionaries must be created so that both parties will act to the benefit of the business </li></ul></ul>Management Practice Level 3 Future Managers
  46. 46. 1.7 Organisational systems <ul><li>Advantages of line-and-staff organisation </li></ul><ul><ul><ul><li>Expert advice is freely available to expand the knowledge of line functionaries </li></ul></ul></ul><ul><ul><ul><li>Specialisation is possible </li></ul></ul></ul><ul><ul><ul><li>Unity of command can be retained if applied correctly </li></ul></ul></ul><ul><ul><ul><li>Opportunity for the development of employees exist </li></ul></ul></ul>Management Practice Level 3 Future Managers
  47. 47. 1.7 Organisational systems <ul><li>Disadvantages of line-and-staff organisation </li></ul><ul><ul><li>Unity of command can be threatened if it is not applied correctly </li></ul></ul><ul><ul><li>Heads of department can be unhappy about the interference and actions of staff functionaries – they could feel threatened </li></ul></ul><ul><ul><li>Staff functionaries can easily feel dissatisfied, frustrated and useless if their advice is not taken seriously since they do not have enforceable authority and cannot influence unity of command </li></ul></ul><ul><ul><li>Staff functionaries can try to prove themselves unnecessarily by empire-building, unjustified investigations and lengthy reports; </li></ul></ul><ul><ul><li>Decision-making can be impeded if line managers do not first consult staff functionaries </li></ul></ul><ul><ul><li>Staff functionaries can adopt a too theoretical approach and consequently give line functionaries impractical advice </li></ul></ul><ul><ul><li>Salary expenses for the organisation increase </li></ul></ul>Management Practice Level 3 Future Managers
  48. 48. 1.7 Organisational systems <ul><li>Functional organisation system </li></ul>Management Practice Level 3 Future Managers
  49. 49. 1.7 Organisational systems <ul><li>Advantages of functional organisation </li></ul><ul><ul><li>Maximum specialisation is allowed while it forces line management to apply expert advice </li></ul></ul><ul><ul><li>Expert knowledge and skills are available and can be obtained immediately </li></ul></ul><ul><ul><li>Unity of command is maintained if applied correctly </li></ul></ul><ul><ul><li>There is little need for the rare, multi-faceted heads of department </li></ul></ul><ul><ul><li>There is flexibility in the use of staff from the functional department in which the project is based </li></ul></ul><ul><ul><li>Knowledge and expertise may be shared more freely between individuals in a functional department, resulting in more creativity within the project team </li></ul></ul>Management Practice Level 3 Future Managers
  50. 50. 1.7 Organisational systems <ul><li>Disadvantages of functional organisation </li></ul><ul><ul><li>Subordinates can be responsible to more than one supervisor. The principle of unity of command is thus affected while co-ordination is impeded </li></ul></ul><ul><ul><li>The tasks of heads of department are hindered by numerous prescriptions about specialised aspects outside their field of experience </li></ul></ul><ul><ul><li>Frequently, no one is given full responsibility for the project, so there is more possibility of failure </li></ul></ul><ul><ul><li>The project is not the central focus since the functional department has its own focus, which can result in a slow response to client needs </li></ul></ul>Management Practice Level 3 Future Managers
  51. 51. 1.7 Organisational systems <ul><li>Project organisation </li></ul>Management Practice Level 3 Future Managers
  52. 52. 1.7 Organisational systems <ul><li>Advantages of the project organisation system </li></ul><ul><ul><li>Employees involved in the project can give their undivided attention to the project </li></ul></ul><ul><ul><li>Communication is easier when team members are only required to communicate with other members of the team </li></ul></ul><ul><ul><li>Team members report directly to the project manager </li></ul></ul><ul><ul><li>The project manager has full authority over the project </li></ul></ul><ul><ul><li>A project team can develop a stronger sense of commitment </li></ul></ul><ul><ul><li>Decision-making is easier </li></ul></ul><ul><ul><li>Members co-opted to the project gain invaluable experience </li></ul></ul>Management Practice Level 3 Future Managers
  53. 53. 1.7 Organisational systems <ul><li>Disadvantages of the project organisation system </li></ul><ul><ul><li>Pure project groups tend to be inconsistent in the way they carry out policies and procedures </li></ul></ul><ul><ul><li>Rivalry can develop between the project members and the parent organisation </li></ul></ul><ul><ul><li>The concerns that project members feel can cause problems, since there might be uncertainty about their future once the current project is completed </li></ul></ul><ul><ul><li>When several projects are being worked on simultaneously, there can be duplication of effort in many areas </li></ul></ul>Management Practice Level 3 Future Managers
  54. 54. 1.7 Organisational systems <ul><li>Matrix organisation </li></ul>Management Practice Level 3 Future Managers Manage-ment Product A Product B Product C Research Produc-tion Sales
  55. 55. 1.7 Organisational systems <ul><li>Advantages of the matrix structure </li></ul><ul><ul><li>The project manager has access to all of the resources within each functional department </li></ul></ul><ul><ul><li>Team members still have their functional “home” once the project is completed, reducing anxiety and increasing motivation </li></ul></ul><ul><ul><li>Matrix organisations are generally flexible and can respond rapidly to change, the need for conflict resolution, and project needs </li></ul></ul><ul><ul><li>Policies and procedures can be developed independently for a project, but since representatives from administrative units of the parent organisation are involved, these policies are usually consistent with those of the parent firm; </li></ul></ul><ul><ul><li>When several projects are going at once, there is better use of company-wide resources </li></ul></ul><ul><ul><li>Authority and responsibility for achieving the overall project goal are shared </li></ul></ul><ul><ul><li>A better balance of time, cost, and personnel can be developed </li></ul></ul>Management Practice Level 3 Future Managers
  56. 56. 1.7 Organisational systems <ul><li>Disadvantages of the matrix structure </li></ul><ul><ul><li>Project team members have two bosses, the project manager and the functional manager, which can result in confusion, split loyalties, a division of authority, and unsuccessful completion of the project goal </li></ul></ul><ul><ul><li>There is more of a possibility of role ambiguity for managers as well as team members </li></ul></ul><ul><ul><li>The balancing of time, cost and performance can be an advantage, but it must also be monitored carefully so that the success of all projects is ensured </li></ul></ul><ul><ul><li>More time is needed initially to define policies and procedures </li></ul></ul><ul><ul><li>Multi-dimensional information and workflow can lead to confusion and complicate communication </li></ul></ul><ul><ul><li>Conflict can result if a functional manager’s goal differs from the overall project </li></ul></ul>Management Practice Level 3 Future Managers
  57. 57. 1.8 Reasons for choosing particular organisational structures <ul><li>What is the need of the organisation? </li></ul><ul><ul><li>  If there is a need for advice then a staff functionaries will be more advisable. Expertise can be added to the organisation with a line-and-staff structure </li></ul></ul><ul><ul><li>If the organisation focuses on specific functional tasks, for example, marketing of their product, then in that situation the functional organisation structure will be more convenient </li></ul></ul><ul><ul><li>When the organisation decides on a project then the project organisation structure will be more useful </li></ul></ul>Management Practice Level 3 Future Managers
  58. 58. Activity 2 – Organisational structure <ul><li>Visit various businesses in your environment and ask management / owner about: </li></ul><ul><ul><li>What organisation structure is used in the business? </li></ul></ul><ul><ul><li>Why are they using that structure? </li></ul></ul><ul><ul><li>Will they in the near future change the structure and for what reason? </li></ul></ul>Management Practice Level 3 Future Managers
  59. 59. Management Practice Level 3 Future Managers

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