HBM Internal Organisations CMD


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HBM Internal Organisations CMD

  1. 1. Internal Organisations Higher/Int 2 Business Management 2009-2010
  2. 2. Organisation? <ul><li>Relationships between people form the structure </li></ul><ul><li>A name which gives a corporate identity </li></ul><ul><li>Resources are organised to achieve objectives </li></ul>
  3. 3. Importance? <ul><li>Defines how the organisation operates </li></ul><ul><li>Role(s) of individuals & authority </li></ul><ul><li>Relationships between people </li></ul><ul><li>Channels activities towards the goals </li></ul><ul><li>Best use of scarce resources </li></ul>
  4. 4. Large Business <ul><li>Impossible for one person to make all the decisions </li></ul><ul><li>Put people in charge of their expert areas eg accountant for finance </li></ul>Who makes which decisions? Who is responsible for what?
  5. 5. Grouping of Activities There are lots of options available!
  6. 6. Functional Grouping <ul><li>Activities are grouped into departments based on similar skills, expertise and resources used: </li></ul><ul><ul><li>Marketing </li></ul></ul><ul><ul><li>Operations </li></ul></ul><ul><ul><li>Human Resources </li></ul></ul><ul><ul><li>R&D </li></ul></ul><ul><ul><li>Administration </li></ul></ul><ul><li>Size depends on importance to organisation eg 1 or 2 customers = smaller marketing dept </li></ul>
  7. 7. Functional Grouping <ul><li>Advantages </li></ul><ul><li>No duplication of resources </li></ul><ul><li>Become experts in field </li></ul><ul><li>Career paths developed </li></ul><ul><li>Communication and cooperation </li></ul><ul><li>Teamworking </li></ul><ul><li>Decision-making improved </li></ul><ul><li>Disadvantages </li></ul><ul><li>Loyalty to department vs organisation </li></ul><ul><li>Communication barriers </li></ul><ul><li>Slow to respond to change </li></ul><ul><li>Decision-making time consuming </li></ul><ul><li>One problem vs >1 department </li></ul>
  8. 8. Product/Service Grouping <ul><li>Grouped around product or service offered </li></ul><ul><li>Each product requires specialist knowledge and expertise </li></ul>
  9. 9. Product/Service Grouping <ul><li>Advantages </li></ul><ul><li>Self-contained units </li></ul><ul><li>Expertise develops </li></ul><ul><li>Which parts are doing well? </li></ul><ul><li>Quicker response to external changes </li></ul><ul><li>Disadvantages </li></ul><ul><li>Duplication of resources </li></ul><ul><li>Difficult to share research or equipment </li></ul><ul><li>In competition with other divisions </li></ul>
  10. 10. Customer Grouping <ul><li>Putting the needs of customers first </li></ul><ul><li>eg suppliers for oil companies create teams which work closely with the oil companies in their offices and on the platforms </li></ul>
  11. 11. Customer Grouping <ul><li>Advantages </li></ul><ul><li>Price/promotion suit customer </li></ul><ul><li>Customer loyalty develops </li></ul><ul><li>Quick response to changing needs </li></ul><ul><li>Disadvantages </li></ul><ul><li>Expensive – staff costs </li></ul><ul><li>New group for new customer eg ecommerce </li></ul><ul><li>Duplication of resources </li></ul>
  12. 12. Place/Territory Grouping <ul><li>Organised by geographical region </li></ul><ul><li>eg North-East Scotland and Midlands group </li></ul>Needs of customer in that area
  13. 13. Place/Territory Grouping <ul><li>Advantages </li></ul><ul><li>Local offices = local knowledge </li></ul><ul><li>Language and cultural differences </li></ul><ul><li>Accountable for success/failure in area </li></ul><ul><li>Customer loyalty </li></ul><ul><li>Responsive to customer needs </li></ul><ul><li>Disadvantages </li></ul><ul><li>Administration is time consuming </li></ul><ul><li>Staff change = loss of personal contact </li></ul><ul><li>Duplication … </li></ul>
  14. 14. Technology Grouping <ul><li>Grouped around the technical requirements of the product </li></ul><ul><li>eg car manufacturers – workers in the paint area need to focus on the high skill to ensure defects in finish are kept to a minimum </li></ul><ul><li>They do not need to learn other skills – easier to train more staff </li></ul>
  15. 15. <ul><li>Advantages </li></ul><ul><li>Increased sophistication in production process </li></ul><ul><li>Problems with technology easily identified </li></ul><ul><li>Disadvantages </li></ul><ul><li>Specialist training required </li></ul><ul><li>Industries tend to be capital-expensive - expense </li></ul>Technology Grouping
  16. 16. Line/Staff Grouping <ul><li>Dividing the organisation into </li></ul><ul><li>line departments (generating revenue) </li></ul><ul><li>and </li></ul><ul><li>staff departments (providing specialist support for the whole organisation eg Finance and Human Resources) </li></ul>
  17. 17. Combinations of Groupings <ul><li>A business may use more than one type of grouping to organise its business </li></ul><ul><li>eg geographically and then functionally </li></ul>
  18. 18. Types of Organisation Structures <ul><li>Hierarchical – Traditional tall pyramid structure </li></ul><ul><li>Flat – Pyramid with few management levels </li></ul><ul><li>Entrepreneurial – decisions made by a few people at the core </li></ul><ul><li>Matrix – used for project work </li></ul><ul><li>Decentralised – control and decision-making delegated </li></ul><ul><li>Centralised – control and decision-making lies with senior management </li></ul>
  19. 19. Types of Organisation Structures <ul><li>Task: </li></ul><ul><li>Research the different structures available and prepare a display to illustrate the key ideas of each structure. </li></ul>
  20. 20. <ul><li>Organisation Charts </li></ul><ul><li>Choosing Formal Structure </li></ul><ul><li>Relationshi Definitions </li></ul><ul><li>Changes in Structure </li></ul><ul><li>Empowerment </li></ul><ul><li>Corporate Culture </li></ul>
  21. 21. Congratulations <ul><li>You have completed </li></ul><ul><li>Internal Organisations </li></ul><ul><li>in </li></ul><ul><li>Higher/Int 2 </li></ul><ul><li>Business Management </li></ul>