Organisation structures

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Organisation structures

  1. 1. <ul><li>All businesses have to organise what they do </li></ul><ul><li>A clear structure makes it easier to see which part of the business does what </li></ul><ul><li>There are many ways to structure a business </li></ul>
  2. 2. 4 - Organizational Theory A functional structure is the bedrock of horizontal differentiation. It is the first “structure” that organizations adapt as they grow. Functional Structure Research and Development Sales and Marketing Manufacturing Materials Management Finance CEO
  3. 3. <ul><li>By function: arranging the business according to what each section or department does </li></ul><ul><li>By product or activity: organising according to the different products made </li></ul><ul><li>By area: geographical or regional structure </li></ul>
  4. 4. <ul><li>Authority – the right to make decisions and carry out tasks </li></ul><ul><li>Span of control – the number of people a superior is responsible for </li></ul><ul><li>Chain of Command – the relationship between different levels of authority in the business </li></ul><ul><li>Hierarchy – shows the line management in the business and who has specific responsibilities </li></ul><ul><li>Delegation – authority to carry out actions passed from superior to subordinate </li></ul><ul><li>Empowerment – giving responsibilities to people at all levels of the business to make decisions </li></ul>
  5. 5. <ul><li>Let’s look at a functional structure: </li></ul>Production Marketing Accounts Personnel IT Board of Directors Chief Executive
  6. 6. <ul><li>Advantages </li></ul><ul><li>Specialisation – each department focuses on its own work </li></ul><ul><li>Accountability – someone is responsible for the section </li></ul><ul><li>Clarity – know your and others’ roles </li></ul><ul><li>Disadvantages </li></ul><ul><li>Closed communication could lead to lack of focus </li></ul><ul><li>Departments can become resistant to change </li></ul><ul><li>Coordination may take too long </li></ul><ul><li>Gap between top and bottom </li></ul>
  7. 7. Imaging and Printing Group Personal Systems Group Enterprise Systems Group HP Services HP Financial Services Hewlett Packard
  8. 8. 4 - Organizational Theory Divisional structure — a structure in which functions are grouped together according to the specific demands of products, markets, or customers. The type of divisional structure selected is driven by the specific type of control problem experienced.
  9. 9. <ul><li>Advantages </li></ul><ul><li>Clear focus on market segment helps meet customers’ needs </li></ul><ul><li>Positive competition between divisions </li></ul><ul><li>Better control as each division can act as separate profit centre </li></ul><ul><li>Disadvantages </li></ul><ul><li>Duplication of functions (e.g. different sales force for each division) </li></ul><ul><li>Negative effects of competition </li></ul><ul><li>Lack of central control over each separate division </li></ul>
  10. 10. Hewlett-Packard’s Headquarters Worldwide Americas Houston, Texas Europe, Middle East, Africa Geneva, Switzerland Asia Pacific Hong Kong Hewlett Packard
  11. 11. <ul><li> Advantages </li></ul><ul><li>Serve local needs better </li></ul><ul><li>Positive competition </li></ul><ul><li>More effective communication between firm and local customers </li></ul><ul><li> Disadvantages </li></ul><ul><li>Conflict between local and central management </li></ul><ul><li>Duplication of resources and functions </li></ul>

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