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101 lect4 organising

This document discusses organization structure and the factors that influence structure design. It covers dividing work into functions and divisions, coordinating work through various methods, and contrasting mechanistic and organic structures. The document emphasizes that an organization's structure should fit contingencies like strategy, technology, environment, size, and lifecycle to maximize performance. Effective performance depends on managers designing a structure that matches these contextual factors.

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PGDBA 101 Strategic Leadership and Management Skills TOPIC 6: ORGANISING DR DOUG NISBET
Slide 10.2 Chapter 10 Organisation structure • Structure and performance • Elements in structure: the design options • Dividing work into functions and divisions • Coordinating work: alternative ways • Mechanistic and organic structures • Learning organisations • Cases and examples – Oticon, Multi-show, BAE, Roche, Pixar, Monsanto David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.3 Structure and performance Figure 10.1 Alternative structures and performance David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.4 Why study structure? • Evidence that a company’s structure affects whether it adds value to resources – For example, how to divide and coordinate tasks • Current structure reflects assumptions • Knowledge enables us to question – Assumptions in a structure, and its context – Alternatives available – Limitations of any structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.5 Structure and performance? • As a business grows, those running it divide the work and coordinate the parts – they create a structure within which people work • When an organisation is not performing well, managers often change the structure • Reflect the belief that structure affects performance – Clarifies expectations and enables monitoring – Avoids confusion and waste of poor structure What kind of structure works best? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.6 Designing a structure • Structure is how work is divided, supervised and coordinated • It defines the responsibilities of divisions, departments and people – What they are expected to do • Summarised in an organisation chart: compare Multi-show Events and BAE factory David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.7 Structure of a unit in a large business Figure 10.2 The structure within a BAE aircraft factory (www.baesystems.com) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.8 Developing structure in a small business Figure 10.3 The organisation structure at Multi-show Events David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.9 Vertical structure – how centralised? What decisions can people at different levels in the vertical hierarchy take? • Centralisation (those at the centre make most decisions) and its opposite, both have advantages and disadvantages (Table 10.2) • A shifting balance, reflecting – Attempts at rational analysis – Managers’ career interests – Siemens (see p.362) What degree of centralisation works best? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.10 Grouping work into functions and divisions Figure 10.5 Five types of structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.11 Horizontal structure – five ways • Functional (see BAE Systems) – Common professional or other expertise (Figure 10.2) • Divisional – Products, customers (Figure 10.7) or geography • Matrix – In functional groups, work on divisional tasks • Teams – Members work on distinct tasks and link with others • Networks – Organisation as broker between independent units David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.12 Contrasting structures in nursing Figure 10.7 Task and named-nurse structures David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.13 Coordinating work If divide work, then need to coordinate it by: • Direct supervision • Hierarchy • Standard inputs or outputs • Rules and procedures • Information systems (see Siemens) • Direct personal contact What method of coordination works best? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.14 Mechanistic and organic structures Table 10.4 Characteristics of mechanistic and organic systems Source: Based on Burns and Stalker (1961) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.15 Contrasting forms • Burns and Stalker identified alternative forms • Each appropriate to certain conditions – Mechanistic – stable – Organic – unstable • Fit with conditions led to high performance • Later work (Lawrence and Lorsch 1967) focused on differences between units within the same organisation • Related differences to contingencies David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.16 Contingencies – strategy – For example, cost leadership or differentiation – what structure to encourage relevant behaviour? • Cost leadership requires efficiency – a functional structure? • Differentiation needs innovation – matrix or team- based? – Monsanto an example of a company whose innovative business is supported by a highly organic structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.17 Strategies and structures Figure 10.8 Relationship between strategies and structural types David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.18 Contingencies – technology What structure best supports technologies used to transform inputs, in manufacturing or services? • For example, production line or custom-made? • For example, information systems enable different ways of delivering services, and prompt a search for new structures to support relevant behaviour? • Chapter 18 (Managing Operations and Quality) shows other ways of designing transformation processes using different technologies David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.19 Contingencies – business environment What structure best supports people as they cope with different environments? • Burns and Stalker (1961) contrasted – Rayon plant (stable market, few changes) with – Small electronics companies (volatile, uncertain market, many changes) • Lawrence and Lorsch (1967) showed that firms face many environments with different needs – How to link differently structured departments? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.20 Environment and structure Figure 10.9 Relationship between environment and structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.21 Contingencies – size and life cycle What structure best supports an organisation as it grows (number of staff)? • Birth – informal, little division of labour, organic • Youth – decisions shared more widely, specialists employed • Mid-life – extensive division of responsibility, with rules for coordination • Maturity – mechanistic, perhaps divisions, selling some units that no longer fit Problem of managing the transitions David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.22 Contingencies or management choice? • Contingency – Effective performance depends on managers adopting a structure suited to the key contingencies of the environment in which it is operating • Management choice – Managers have greater degree of choice over the structures they adopt • Standards of performance not always rigorous • Preferred choices may have limited effect on performance • Political interests and ambitions shape choice • Implications for role of managers? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.23 Learning organisations Figure 10.10 Clusters of learning organisation features Source: Pedler et at. (1997) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.24 Integrating themes Sustainable performance Local autonomy may permit bad practice, or use local knowledge to design good practice Governance and control Financial crises routine lead to calls for tougher controls – but most failing companies have them Internationalisation Bartlett and Ghoshal (2002) show the dilemmas firms face in designing international structures David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.25 Conclusion • Ideas of – Vertical and horizontal structures – Coordination – Mechanistic and organic forms • Provide ways to analyse current practice • Practice reflects managers’ assumptions (and personal and career interests) • Are they right for the context, what alternatives may work better and what are their limitations? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.26 The HRM territory Figure 11.1 Map of the HRM territory Source: Beer et al. (1984). Reproduced with permission from Professor Michael Beer David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.27 Guest (1987) HRM policies and outcomes Table 11.1 Policies for supporting HRM and organisational outcomes Source: Guest (1987), p. 503 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.28 Four propositions in HRM theory Guest (1987) identified four propositions of a theory of HRM • Integration – Linking HRM policies and strategy will enhance performance • Commitment – will lead employees to be more satisfied, perform better, stay longer and be willing to change • Flexibility – in both structures and employees will make it easier to change with conditions • Quality – high quality staff, suitably managed, will deliver high quality results David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.29 HRM philosophy External fit Internal fit • Link between wider • Consistency of HRM strategy and HRM policies strategy • For example, • For example, different teamworking is approaches for low cost supported by reward and differentiation systems strategies David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.30 Fit between HRM, structure and context Figure 11.2 Fit between HRM, strategy, structure and environment David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.31 Chapter 12 Information systems and e-business • Why study IS and e-business? • Convergence transforms how people add value • Value depends on technology and organisation • Operating and management systems • Applications – enterprise resource planning, customer relations, knowledge and e-business • IS and the tasks of managing • Cases and examples: – Google, SelectMinds, Renault, Iris, Nestlé David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.32 Why study IS and e-business? • Managing depends on information (Fig. 12.1) • Steady increase in power of computing systems • IS moved from background to foreground tasks • Convergence of data, voice and visual systems is changing business and public services • Effective use of IS to support strategy depends on managing organisational issues. David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.33 Management depends on information Figure 12.1 The role of Information systems in Organisations Source: Boddy et al. (2005) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.34 Managing new opportunities to add value Technological developments enable managers to: Use IS in established organisations to add value to data – Figure 12.3 AND Producers and consumers to co-create value – Figure 12.2 Value depends on managing technology AND organisation – Figure 12.4 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.35 Stages in using the Internet Figure 12.3 Stages in using the Internet David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.36 Co-creation (or Wikinomics) Figure 12.2 Traditional delivery and customer participation David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.37 Computer-based IS Figure 12.4 The elements of a computer-based IS Source: Boddy et al. (2009a) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.38 Data, information and knowledge • Data – Recorded descriptions of things and events • Information – Processed data that means something to the person receiving it • Knowledge – A property of people which guides their action – embodies experience and learning • Relate to inputs, transformation and outputs – Enables people to add value to resources David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.39 Operating and management systems Figure 12.5 Types of information system David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.40 E-commerce and e-business Internet allows companies to coordinate processes with others, regardless of distance • E-commerce – Selling goods or services over the Internet (Google) • E-business – Integration, through the Internet, of all processes of an organisation, from its suppliers through to its customers (Nestlé shows the challenges) • Common applications: CRM, ERP and KM David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.41 How the Internet changes the links Figure 12.6 Reinventing the supply chain David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.42 Customer relationship management (CRM) Figure 12.7 Communications methods and message David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.43 Management issues of CRM systems Potential benefits: • Gather customer data swiftly • Identify most and least valuable customers • Increase loyalty by providing customised offers • Reduce costs of maintaining and securing customers • See Tesco (Part 6 case) for their Clubcard scheme Possible disadvantages: • Hard to implement – require changes to many other systems David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.44 Enterprise resource planning (ERP) systems Figure 12.8 Anatomy of an enterprise system David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.45 Management issues of ERP systems • Potential benefits – Integrate customer and financial information – Standardise manufacturing processes and reduce inventory – Improve information for management decisions across sites – Link suppliers and customers online • Difficulties include – Generic systems may diminish uniqueness – Promote centralisation – is that suitable? – Complex to implement – many fail David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.46 Knowledge management systems • Potential benefits – Improve way an organisation creates, captures and uses knowledge – Relates to inputs, transformation and outputs – Examples of BP and Buckman Labs • Difficulties include – Most valuable knowledge is tacit (shared understanding, often unwritten): IS best suited to explicit, codified knowledge – Do rewards structures encourage people to share knowledge? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.47 IS, strategy and organisation Figure 12.9 How information systems can change competitive forces: Porter’s model Source: Adapted and reprinted by permission of Harvard Business Review. Exhibit adapted from Strategy and the Internet, Harvard Business Review, vol. 79, no. 3, pp. 63–78 by M. E. Porter, Copyright © 2001 by Harvard Business School Publishing Corporation; all rights reserved David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.48 Integrating themes Sustainable performance Wide use of IS is part of the problem (cause waste), and part of the solution (reduce waste) Governance and control Weill and Ross (2005) show the value of developing effective IS governance systems Internationalisation IS enables the growth of global trade – but managers also need to take account of national cultures when introducing cross-border systems David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.49 Conclusion • Developing technologies have moved IS from the background to the foreground of managing • Focusing on the technical aspects of computer- based systems will usually add less value than attending to the strategic, human and organisational aspects • Models presented enable you to question whether the assumptions behind a proposal are right for the context, to explore alternatives and to recognise limitations David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.50 Chapter 13 Managing change and innovation • Episodes or constant feature of managing? • Initiating change – interaction with context • Four models of change • Driving and restraining forces • Forms and sources of resistance • Innovation • Cases and examples – Vodafone/Ericsson, GKN, Dupont, Philip Morris David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.51 An overview of the themes Figure 13.1 A model of the change process David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.52 Why study change? • Managers frequently change aspects of their organisation to improve performance • Alternative ways of managing change reflect assumptions about its nature • Models enable you to question – Whether the approach being used is suitable for the context – What alternatives may work better in that situation? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.53 Change and managing • Many see disruption at centre of role – Focus on inputs, transformation and outputs • External environment main driver – Customers, shareholders, competition: see Siemens • Vodafone case typical – Significant, will affect many people, unfamiliar territory • Models and perspectives to gain insight into the activity and to think critically about proposals David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.54 Interaction of change and context • External changes threaten a performance gap – Results not meeting expectations • Performance imperatives – Flexibility, innovation AND efficient operations • Depend on making internal changes – When people perceive elements of the internal context obstruct external expectations – Figure 13.2 and examples in Table 13.1 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.55 The internal context Figure 13.2 Elements of the internal context of management David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.56 Interaction of change and context (Continued) • People interpret contexts and shape project – Influenced by local/personal and corporate interests • People initiate project to change context – Changing one or more elements in Figure 13.2 • Those changes become the new context – Elements in Figure 13.2 affect capacity for change • Culture, technology etc. – ‘receptive and non-r. contexts’ (Pettigrew, 1992) • Continuous interpretation and interaction between context and successive change projects David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.57 History and levels • Present context a result of previous decisions – Past, and potential futures, affect how people interpret proposals • Context has several levels – For example, corporate, divisional, work unit – Change at one level may have unintended effects at other levels (negative or positive) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.58 Models of change – life cycle • Change goes through a series of steps • Success depends on managing these efficiently – Objectives, responsibilities, deadlines, budgets, monitor – Focus on planning and control • Many established tools and techniques – Figure 13.3 and Figure13.4 • A rational process – Suited to which types of project or conditions? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.59 Planning tools Figure 13.3 A simple bar chart David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.60 The life cycle illustrated Figure 13.4 A project life cycle Source: Lock (2007) p. 8 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.61 Models of change – emergent • Change takes place in an uncertain context, and unrealistic to expect outcomes to be close to plan • Success depends on – Learning during the project – Adapting to changing conditions – Managing interest groups • Plan, but be ready to change • See emergent perspective on strategy (Chapter 8, including IKEA example (p.230)) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.62 Models of change – participative • Change relies on those affected being willing to cooperate with the change • Success depends on – Developing ownership and commitment – Consulting widely for ideas – Seeking consensus • A democratic process – Suited to which conditions? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.63 Models of change – political • Change often threatens established interests, who will oppose it • Success depends on – Building power sources – Creating alliances and coalitions – Manipulating information to support position • A political process – Suited to which conditions? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.64 Kurt Lewin – driving and restraining forces Figure 13.5 Driving and restraining forces David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.65 Resistance to change • How people react to change affects, and is affected by, those promoting it – From strong support to strong opposition • To analyse resistance, – Problems with content of change – see Table 13.3 – Problems with process – see ‘models of change’ David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.66 Innovation • Innovation is the process through which new ideas, objects, behaviours and practices are created developed and implemented • Incremental innovations are small changes in a current product or process which brings a minor improvement • Radical innovations are large game changing developments that alter the competitive landscape David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.67 Systems view of innovation Figure 13.6 Systems view of innovation David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.68 Sources of innovation Figure 13.7 Sources of innovation David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.69 The Process of innovation Figure 13.8 A model of the innovation process Source: Based on Tidd and Bessant (2009) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.70 The 4 Ps of innovation • Product innovations are changes or enhancements to the features of the things that the organisations sells • Process innovations are changes in the processes that create the product that is sold or deliver the service that the customer buys • Position innovations are changes in the way that the product of service offering is targeted • Paradigm innovations are changes in how companies frame what they do David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.71 Organisational support factors • Strategy – innovation is explicitly called for in the corporate strategy • Structure – roles and jobs are defined to aid in innovative behaviour • Style – management empowers the workforce to behave innovatively • Support – IT systems are available to support innovative behaviour David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.72 Integrating themes Sustainable performance The search for this offers opportunities to innovators who can find ways to reduce waste Governance and control Financial crises show the dangers of innovation, when not balanced by governance systems Internationalisation Companies want to encourage local innovation, but need to ensure this does not lead to wasteful duplication within the business David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Slide 10.73 Conclusion • External and internal forces driving change • Managing it depends on having a model of the process – such as the interaction model • Four perspectives offer complementary models – which is best for the situation • Innovation can be used as a tool to enhance what the company offers to the market David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
Learning Objectives • To understand the input-output model and the internal and external environments of a business organisation; • To be aware of the different types and legal forms of business organisation and their benefits and drawbacks • To understand the various roles within management • To understand the management tasks of planning, organising, leading and controlling and how these can be achieved through the various dimensions of internal and external context.
A Model of Business Management Environment
The Input-output Model Add Value Transformation Input Output Process Create Waste
Classifying Businesses • Size – Small, medium, large • Type of Industry – Primary, secondary, tertiary • Sector – Private, public • Legal Status – Sole trader, partnership, limited company For information and statistics about Ugandan Business follow this link to the Ugandan Bureau of Statistics website( if you based in another country search for an equivalent site): http://www.ubos.org
Legal Forms of Business – Private Sector • Sole Trader • Partnership • Limited Companies – Private (Ltd) – Public (Plc) • Co-operative Societies - Uganda Co-operative Alliance - http://www.uca.co.ug
Franchising, Licensing and Joint Ventures • Franchising: – is an arrangement where one party (the franchiser) sells the right to another party (the franchisee) to market its product or service; – Franchise Expo: http://www.franchiseexpo.co.uk/ – The Franchise Business: http://www.franchisebusiness.co.uk/ – Franchise Direct (Ugandan Franchises): http://www.franchisedirect.com/internationalfranchises/uganda/217/ – The UK Franchise Directory: http://www.theukfranchisedirectory.net/match/franchises.php?gclid=CKKD5- 2WuqYCFYUe4Qoden-FHA • Licensing: – is a firm in one country (the licensor) that authorises a firm in another country (the licensee) to use its intellectual property (e.g. patents, copyrights, trade names, know-how) usually in return for royalty payments. • Joint Venture: – is a jointly owned and independently incorporated business venture involving more than one organisation; – ranges from two companies joining together in the same domestic market, to joint private/public sector ventures between participants from different countries.
Public Sector Organisations Public sector organisations: • Central government departments (e.g. departments in charge of pension, education, healthcare, defence, transport, etc.); • Local authorities; • Non-departmental public bodies or quangos (e.g. Uganda Wildlife Authority); • Central government trading organisations (e.g. Posta Uganda) http://www.ugapost.co.ug/ • Public corporations (e.g. Uganda Printing and Publishing Corporation http://www.uppc.co.ug/ • Public Service Commission (Uganda): http://psc.go.ug/ • Ministry of Public Service (Uganda): http://www.publicservice.go.ug/
Public Corporations • Public corporations: – Are statutory bodies, incorporated (predominantly) by a special Act of Parliament; – They have a separate legal identity from the individuals who own them and run them. – They are governed by the government department which oversees its operations. • Nationalised Industry: – Private companies taken into state ownership • Privatised state industries: – Are those industries that were turned into public limited companies. Examples in Uganda included Ugandan Airlines privatisation which was not a success and National Insurance Corporation (NIC) • Golden share: – Government influence in public corporations,
Legal Structures - implications • Implications in private sector: – The degree of personal control over operational and strategic business decisions; – The degree of personal liabilities; – The degree of power and/or autonomy in decision making; – The cost of establishing the business; – The legal requirements concerning the provision of public information; – The taxation position; – Commercial needs, including access to capital; – Business continuity.
Functional Specialisation in Management • Company Managers – Chief Executive Officers (CEO); Managing Director; Proprietor • General Managers – Subsidiary; Division • Functional Managers – Line Managers (branch; team; department) – Staff Managers (HR; Accounts; Safety: Purchasing ) • Project Managers – Cross-functional teams
Management Hierarchies • Operators • Supervisors • First Line Managers • Middle Managers • Senior Managers • Directors
Influencing - Mintzberg Monitor Informational Disseminator Spokesperson Interpersonal Figurehead Leader Liaison Entrepreneur Decisional Disturbance handler Resource allocator Negotiator
Managing Tasks
Internal Context (or Environment)
Critical Thinking Critical thinking…… ‘involves our recognising the assumptions underlying our beliefs and behaviours. It means we can give justifications for our ideas and actions. Most, important, perhaps it means we try to judge the rationality of these justification…..by comparing them to a range of varying interpretations and perspectives’ SOURCE: Brookfield (1987) in Boddy (2011), p26.
Process of Critical Thinking • ANALYSIS • Identifying and challenging assumptions • Recognising the importance of context • Imagining and exploring alternatives • Seeing limitations • SYNTHESIS • Making conclusions • Decision-making
Recommended Texts BODDY, D (2011) Management – an introduction (5th Edition) Harlow:Prentice Hall Chapter 1 WORTHINGTON, I and BRITTON, B (2009) The Business Environment (6th Edition) Harlow:Prentice Hall Chapters 10, 11, 12

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101 lect4 organising

  • 1.
    PGDBA 101 Strategic Leadershipand Management Skills TOPIC 6: ORGANISING DR DOUG NISBET
  • 2.
    Slide 10.2 Chapter 10 Organisation structure • Structure and performance • Elements in structure: the design options • Dividing work into functions and divisions • Coordinating work: alternative ways • Mechanistic and organic structures • Learning organisations • Cases and examples – Oticon, Multi-show, BAE, Roche, Pixar, Monsanto David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 3.
    Slide 10.3 Structure and performance Figure 10.1 Alternative structures and performance David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 4.
    Slide 10.4 Why study structure? • Evidence that a company’s structure affects whether it adds value to resources – For example, how to divide and coordinate tasks • Current structure reflects assumptions • Knowledge enables us to question – Assumptions in a structure, and its context – Alternatives available – Limitations of any structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 5.
    Slide 10.5 Structure and performance? • As a business grows, those running it divide the work and coordinate the parts – they create a structure within which people work • When an organisation is not performing well, managers often change the structure • Reflect the belief that structure affects performance – Clarifies expectations and enables monitoring – Avoids confusion and waste of poor structure What kind of structure works best? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 6.
    Slide 10.6 Designing a structure • Structure is how work is divided, supervised and coordinated • It defines the responsibilities of divisions, departments and people – What they are expected to do • Summarised in an organisation chart: compare Multi-show Events and BAE factory David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 7.
    Slide 10.7 Structure of a unit in a large business Figure 10.2 The structure within a BAE aircraft factory (www.baesystems.com) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 8.
    Slide 10.8 Developing structure in a small business Figure 10.3 The organisation structure at Multi-show Events David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 9.
    Slide 10.9 Vertical structure – how centralised? What decisions can people at different levels in the vertical hierarchy take? • Centralisation (those at the centre make most decisions) and its opposite, both have advantages and disadvantages (Table 10.2) • A shifting balance, reflecting – Attempts at rational analysis – Managers’ career interests – Siemens (see p.362) What degree of centralisation works best? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 10.
    Slide 10.10 Grouping work into functions and divisions Figure 10.5 Five types of structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 11.
    Slide 10.11 Horizontal structure – five ways • Functional (see BAE Systems) – Common professional or other expertise (Figure 10.2) • Divisional – Products, customers (Figure 10.7) or geography • Matrix – In functional groups, work on divisional tasks • Teams – Members work on distinct tasks and link with others • Networks – Organisation as broker between independent units David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 12.
    Slide 10.12 Contrasting structures in nursing Figure 10.7 Task and named-nurse structures David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 13.
    Slide 10.13 Coordinating work If divide work, then need to coordinate it by: • Direct supervision • Hierarchy • Standard inputs or outputs • Rules and procedures • Information systems (see Siemens) • Direct personal contact What method of coordination works best? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 14.
    Slide 10.14 Mechanistic and organic structures Table 10.4 Characteristics of mechanistic and organic systems Source: Based on Burns and Stalker (1961) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 15.
    Slide 10.15 Contrasting forms • Burns and Stalker identified alternative forms • Each appropriate to certain conditions – Mechanistic – stable – Organic – unstable • Fit with conditions led to high performance • Later work (Lawrence and Lorsch 1967) focused on differences between units within the same organisation • Related differences to contingencies David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 16.
    Slide 10.16 Contingencies – strategy – For example, cost leadership or differentiation – what structure to encourage relevant behaviour? • Cost leadership requires efficiency – a functional structure? • Differentiation needs innovation – matrix or team- based? – Monsanto an example of a company whose innovative business is supported by a highly organic structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 17.
    Slide 10.17 Strategies and structures Figure 10.8 Relationship between strategies and structural types David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 18.
    Slide 10.18 Contingencies – technology What structure best supports technologies used to transform inputs, in manufacturing or services? • For example, production line or custom-made? • For example, information systems enable different ways of delivering services, and prompt a search for new structures to support relevant behaviour? • Chapter 18 (Managing Operations and Quality) shows other ways of designing transformation processes using different technologies David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 19.
    Slide 10.19 Contingencies – business environment What structure best supports people as they cope with different environments? • Burns and Stalker (1961) contrasted – Rayon plant (stable market, few changes) with – Small electronics companies (volatile, uncertain market, many changes) • Lawrence and Lorsch (1967) showed that firms face many environments with different needs – How to link differently structured departments? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 20.
    Slide 10.20 Environment and structure Figure 10.9 Relationship between environment and structure David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 21.
    Slide 10.21 Contingencies – size and life cycle What structure best supports an organisation as it grows (number of staff)? • Birth – informal, little division of labour, organic • Youth – decisions shared more widely, specialists employed • Mid-life – extensive division of responsibility, with rules for coordination • Maturity – mechanistic, perhaps divisions, selling some units that no longer fit Problem of managing the transitions David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 22.
    Slide 10.22 Contingencies or management choice? • Contingency – Effective performance depends on managers adopting a structure suited to the key contingencies of the environment in which it is operating • Management choice – Managers have greater degree of choice over the structures they adopt • Standards of performance not always rigorous • Preferred choices may have limited effect on performance • Political interests and ambitions shape choice • Implications for role of managers? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 23.
    Slide 10.23 Learning organisations Figure 10.10 Clusters of learning organisation features Source: Pedler et at. (1997) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 24.
    Slide 10.24 Integrating themes Sustainable performance Local autonomy may permit bad practice, or use local knowledge to design good practice Governance and control Financial crises routine lead to calls for tougher controls – but most failing companies have them Internationalisation Bartlett and Ghoshal (2002) show the dilemmas firms face in designing international structures David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 25.
    Slide 10.25 Conclusion • Ideas of – Vertical and horizontal structures – Coordination – Mechanistic and organic forms • Provide ways to analyse current practice • Practice reflects managers’ assumptions (and personal and career interests) • Are they right for the context, what alternatives may work better and what are their limitations? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 26.
    Slide 10.26 The HRM territory Figure 11.1 Map of the HRM territory Source: Beer et al. (1984). Reproduced with permission from Professor Michael Beer David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 27.
    Slide 10.27 Guest (1987) HRM policies and outcomes Table 11.1 Policies for supporting HRM and organisational outcomes Source: Guest (1987), p. 503 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 28.
    Slide 10.28 Four propositions in HRM theory Guest (1987) identified four propositions of a theory of HRM • Integration – Linking HRM policies and strategy will enhance performance • Commitment – will lead employees to be more satisfied, perform better, stay longer and be willing to change • Flexibility – in both structures and employees will make it easier to change with conditions • Quality – high quality staff, suitably managed, will deliver high quality results David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 29.
    Slide 10.29 HRM philosophy External fit Internal fit • Link between wider • Consistency of HRM strategy and HRM policies strategy • For example, • For example, different teamworking is approaches for low cost supported by reward and differentiation systems strategies David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 30.
    Slide 10.30 Fit between HRM, structure and context Figure 11.2 Fit between HRM, strategy, structure and environment David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 31.
    Slide 10.31 Chapter 12 Information systems and e-business • Why study IS and e-business? • Convergence transforms how people add value • Value depends on technology and organisation • Operating and management systems • Applications – enterprise resource planning, customer relations, knowledge and e-business • IS and the tasks of managing • Cases and examples: – Google, SelectMinds, Renault, Iris, Nestlé David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 32.
    Slide 10.32 Why study IS and e-business? • Managing depends on information (Fig. 12.1) • Steady increase in power of computing systems • IS moved from background to foreground tasks • Convergence of data, voice and visual systems is changing business and public services • Effective use of IS to support strategy depends on managing organisational issues. David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 33.
    Slide 10.33 Management depends on information Figure 12.1 The role of Information systems in Organisations Source: Boddy et al. (2005) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 34.
    Slide 10.34 Managing new opportunities to add value Technological developments enable managers to: Use IS in established organisations to add value to data – Figure 12.3 AND Producers and consumers to co-create value – Figure 12.2 Value depends on managing technology AND organisation – Figure 12.4 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 35.
    Slide 10.35 Stages in using the Internet Figure 12.3 Stages in using the Internet David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 36.
    Slide 10.36 Co-creation (or Wikinomics) Figure 12.2 Traditional delivery and customer participation David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 37.
    Slide 10.37 Computer-based IS Figure 12.4 The elements of a computer-based IS Source: Boddy et al. (2009a) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 38.
    Slide 10.38 Data, information and knowledge • Data – Recorded descriptions of things and events • Information – Processed data that means something to the person receiving it • Knowledge – A property of people which guides their action – embodies experience and learning • Relate to inputs, transformation and outputs – Enables people to add value to resources David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 39.
    Slide 10.39 Operating and management systems Figure 12.5 Types of information system David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 40.
    Slide 10.40 E-commerce and e-business Internet allows companies to coordinate processes with others, regardless of distance • E-commerce – Selling goods or services over the Internet (Google) • E-business – Integration, through the Internet, of all processes of an organisation, from its suppliers through to its customers (Nestlé shows the challenges) • Common applications: CRM, ERP and KM David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 41.
    Slide 10.41 How the Internet changes the links Figure 12.6 Reinventing the supply chain David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 42.
    Slide 10.42 Customer relationship management (CRM) Figure 12.7 Communications methods and message David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 43.
    Slide 10.43 Management issues of CRM systems Potential benefits: • Gather customer data swiftly • Identify most and least valuable customers • Increase loyalty by providing customised offers • Reduce costs of maintaining and securing customers • See Tesco (Part 6 case) for their Clubcard scheme Possible disadvantages: • Hard to implement – require changes to many other systems David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 44.
    Slide 10.44 Enterprise resource planning (ERP) systems Figure 12.8 Anatomy of an enterprise system David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 45.
    Slide 10.45 Management issues of ERP systems • Potential benefits – Integrate customer and financial information – Standardise manufacturing processes and reduce inventory – Improve information for management decisions across sites – Link suppliers and customers online • Difficulties include – Generic systems may diminish uniqueness – Promote centralisation – is that suitable? – Complex to implement – many fail David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 46.
    Slide 10.46 Knowledge management systems • Potential benefits – Improve way an organisation creates, captures and uses knowledge – Relates to inputs, transformation and outputs – Examples of BP and Buckman Labs • Difficulties include – Most valuable knowledge is tacit (shared understanding, often unwritten): IS best suited to explicit, codified knowledge – Do rewards structures encourage people to share knowledge? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 47.
    Slide 10.47 IS, strategy and organisation Figure 12.9 How information systems can change competitive forces: Porter’s model Source: Adapted and reprinted by permission of Harvard Business Review. Exhibit adapted from Strategy and the Internet, Harvard Business Review, vol. 79, no. 3, pp. 63–78 by M. E. Porter, Copyright © 2001 by Harvard Business School Publishing Corporation; all rights reserved David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 48.
    Slide 10.48 Integrating themes Sustainable performance Wide use of IS is part of the problem (cause waste), and part of the solution (reduce waste) Governance and control Weill and Ross (2005) show the value of developing effective IS governance systems Internationalisation IS enables the growth of global trade – but managers also need to take account of national cultures when introducing cross-border systems David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 49.
    Slide 10.49 Conclusion • Developing technologies have moved IS from the background to the foreground of managing • Focusing on the technical aspects of computer- based systems will usually add less value than attending to the strategic, human and organisational aspects • Models presented enable you to question whether the assumptions behind a proposal are right for the context, to explore alternatives and to recognise limitations David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 50.
    Slide 10.50 Chapter 13 Managing change and innovation • Episodes or constant feature of managing? • Initiating change – interaction with context • Four models of change • Driving and restraining forces • Forms and sources of resistance • Innovation • Cases and examples – Vodafone/Ericsson, GKN, Dupont, Philip Morris David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 51.
    Slide 10.51 An overview of the themes Figure 13.1 A model of the change process David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 52.
    Slide 10.52 Why study change? • Managers frequently change aspects of their organisation to improve performance • Alternative ways of managing change reflect assumptions about its nature • Models enable you to question – Whether the approach being used is suitable for the context – What alternatives may work better in that situation? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 53.
    Slide 10.53 Change and managing • Many see disruption at centre of role – Focus on inputs, transformation and outputs • External environment main driver – Customers, shareholders, competition: see Siemens • Vodafone case typical – Significant, will affect many people, unfamiliar territory • Models and perspectives to gain insight into the activity and to think critically about proposals David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 54.
    Slide 10.54 Interaction of change and context • External changes threaten a performance gap – Results not meeting expectations • Performance imperatives – Flexibility, innovation AND efficient operations • Depend on making internal changes – When people perceive elements of the internal context obstruct external expectations – Figure 13.2 and examples in Table 13.1 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 55.
    Slide 10.55 The internal context Figure 13.2 Elements of the internal context of management David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 56.
    Slide 10.56 Interaction of change and context (Continued) • People interpret contexts and shape project – Influenced by local/personal and corporate interests • People initiate project to change context – Changing one or more elements in Figure 13.2 • Those changes become the new context – Elements in Figure 13.2 affect capacity for change • Culture, technology etc. – ‘receptive and non-r. contexts’ (Pettigrew, 1992) • Continuous interpretation and interaction between context and successive change projects David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 57.
    Slide 10.57 History and levels • Present context a result of previous decisions – Past, and potential futures, affect how people interpret proposals • Context has several levels – For example, corporate, divisional, work unit – Change at one level may have unintended effects at other levels (negative or positive) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 58.
    Slide 10.58 Models of change – life cycle • Change goes through a series of steps • Success depends on managing these efficiently – Objectives, responsibilities, deadlines, budgets, monitor – Focus on planning and control • Many established tools and techniques – Figure 13.3 and Figure13.4 • A rational process – Suited to which types of project or conditions? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 59.
    Slide 10.59 Planning tools Figure 13.3 A simple bar chart David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 60.
    Slide 10.60 The life cycle illustrated Figure 13.4 A project life cycle Source: Lock (2007) p. 8 David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 61.
    Slide 10.61 Models of change – emergent • Change takes place in an uncertain context, and unrealistic to expect outcomes to be close to plan • Success depends on – Learning during the project – Adapting to changing conditions – Managing interest groups • Plan, but be ready to change • See emergent perspective on strategy (Chapter 8, including IKEA example (p.230)) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 62.
    Slide 10.62 Models of change – participative • Change relies on those affected being willing to cooperate with the change • Success depends on – Developing ownership and commitment – Consulting widely for ideas – Seeking consensus • A democratic process – Suited to which conditions? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 63.
    Slide 10.63 Models of change – political • Change often threatens established interests, who will oppose it • Success depends on – Building power sources – Creating alliances and coalitions – Manipulating information to support position • A political process – Suited to which conditions? David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 64.
    Slide 10.64 Kurt Lewin – driving and restraining forces Figure 13.5 Driving and restraining forces David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 65.
    Slide 10.65 Resistance to change • How people react to change affects, and is affected by, those promoting it – From strong support to strong opposition • To analyse resistance, – Problems with content of change – see Table 13.3 – Problems with process – see ‘models of change’ David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 66.
    Slide 10.66 Innovation • Innovation is the process through which new ideas, objects, behaviours and practices are created developed and implemented • Incremental innovations are small changes in a current product or process which brings a minor improvement • Radical innovations are large game changing developments that alter the competitive landscape David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 67.
    Slide 10.67 Systems view of innovation Figure 13.6 Systems view of innovation David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 68.
    Slide 10.68 Sources of innovation Figure 13.7 Sources of innovation David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 69.
    Slide 10.69 The Process of innovation Figure 13.8 A model of the innovation process Source: Based on Tidd and Bessant (2009) David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 70.
    Slide 10.70 The 4 Ps of innovation • Product innovations are changes or enhancements to the features of the things that the organisations sells • Process innovations are changes in the processes that create the product that is sold or deliver the service that the customer buys • Position innovations are changes in the way that the product of service offering is targeted • Paradigm innovations are changes in how companies frame what they do David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 71.
    Slide 10.71 Organisational support factors • Strategy – innovation is explicitly called for in the corporate strategy • Structure – roles and jobs are defined to aid in innovative behaviour • Style – management empowers the workforce to behave innovatively • Support – IT systems are available to support innovative behaviour David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 72.
    Slide 10.72 Integrating themes Sustainable performance The search for this offers opportunities to innovators who can find ways to reduce waste Governance and control Financial crises show the dangers of innovation, when not balanced by governance systems Internationalisation Companies want to encourage local innovation, but need to ensure this does not lead to wasteful duplication within the business David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 73.
    Slide 10.73 Conclusion • External and internal forces driving change • Managing it depends on having a model of the process – such as the interaction model • Four perspectives offer complementary models – which is best for the situation • Innovation can be used as a tool to enhance what the company offers to the market David Boddy, Management: An Introduction, 5th Edition, © Pearson Education Limited 2011
  • 74.
    Learning Objectives • Tounderstand the input-output model and the internal and external environments of a business organisation; • To be aware of the different types and legal forms of business organisation and their benefits and drawbacks • To understand the various roles within management • To understand the management tasks of planning, organising, leading and controlling and how these can be achieved through the various dimensions of internal and external context.
  • 75.
    A Model ofBusiness Management Environment
  • 76.
    The Input-output Model Add Value Transformation Input Output Process Create Waste
  • 77.
    Classifying Businesses • Size – Small, medium, large • Type of Industry – Primary, secondary, tertiary • Sector – Private, public • Legal Status – Sole trader, partnership, limited company For information and statistics about Ugandan Business follow this link to the Ugandan Bureau of Statistics website( if you based in another country search for an equivalent site): http://www.ubos.org
  • 78.
    Legal Forms ofBusiness – Private Sector • Sole Trader • Partnership • Limited Companies – Private (Ltd) – Public (Plc) • Co-operative Societies - Uganda Co-operative Alliance - http://www.uca.co.ug
  • 79.
    Franchising, Licensing andJoint Ventures • Franchising: – is an arrangement where one party (the franchiser) sells the right to another party (the franchisee) to market its product or service; – Franchise Expo: http://www.franchiseexpo.co.uk/ – The Franchise Business: http://www.franchisebusiness.co.uk/ – Franchise Direct (Ugandan Franchises): http://www.franchisedirect.com/internationalfranchises/uganda/217/ – The UK Franchise Directory: http://www.theukfranchisedirectory.net/match/franchises.php?gclid=CKKD5- 2WuqYCFYUe4Qoden-FHA • Licensing: – is a firm in one country (the licensor) that authorises a firm in another country (the licensee) to use its intellectual property (e.g. patents, copyrights, trade names, know-how) usually in return for royalty payments. • Joint Venture: – is a jointly owned and independently incorporated business venture involving more than one organisation; – ranges from two companies joining together in the same domestic market, to joint private/public sector ventures between participants from different countries.
  • 80.
    Public Sector Organisations Publicsector organisations: • Central government departments (e.g. departments in charge of pension, education, healthcare, defence, transport, etc.); • Local authorities; • Non-departmental public bodies or quangos (e.g. Uganda Wildlife Authority); • Central government trading organisations (e.g. Posta Uganda) http://www.ugapost.co.ug/ • Public corporations (e.g. Uganda Printing and Publishing Corporation http://www.uppc.co.ug/ • Public Service Commission (Uganda): http://psc.go.ug/ • Ministry of Public Service (Uganda): http://www.publicservice.go.ug/
  • 81.
    Public Corporations • Public corporations: – Are statutory bodies, incorporated (predominantly) by a special Act of Parliament; – They have a separate legal identity from the individuals who own them and run them. – They are governed by the government department which oversees its operations. • Nationalised Industry: – Private companies taken into state ownership • Privatised state industries: – Are those industries that were turned into public limited companies. Examples in Uganda included Ugandan Airlines privatisation which was not a success and National Insurance Corporation (NIC) • Golden share: – Government influence in public corporations,
  • 82.
    Legal Structures -implications • Implications in private sector: – The degree of personal control over operational and strategic business decisions; – The degree of personal liabilities; – The degree of power and/or autonomy in decision making; – The cost of establishing the business; – The legal requirements concerning the provision of public information; – The taxation position; – Commercial needs, including access to capital; – Business continuity.
  • 83.
    Functional Specialisation in Management • Company Managers – Chief Executive Officers (CEO); Managing Director; Proprietor • General Managers – Subsidiary; Division • Functional Managers – Line Managers (branch; team; department) – Staff Managers (HR; Accounts; Safety: Purchasing ) • Project Managers – Cross-functional teams
  • 84.
    Management Hierarchies • Operators • Supervisors • First Line Managers • Middle Managers • Senior Managers • Directors
  • 85.
    Influencing - Mintzberg Monitor Informational Disseminator Spokesperson Interpersonal Figurehead Leader Liaison Entrepreneur Decisional Disturbance handler Resource allocator Negotiator
  • 86.
  • 87.
  • 88.
    Critical Thinking Critical thinking…… ‘involvesour recognising the assumptions underlying our beliefs and behaviours. It means we can give justifications for our ideas and actions. Most, important, perhaps it means we try to judge the rationality of these justification…..by comparing them to a range of varying interpretations and perspectives’ SOURCE: Brookfield (1987) in Boddy (2011), p26.
  • 89.
    Process of CriticalThinking • ANALYSIS • Identifying and challenging assumptions • Recognising the importance of context • Imagining and exploring alternatives • Seeing limitations • SYNTHESIS • Making conclusions • Decision-making
  • 90.
    Recommended Texts BODDY, D(2011) Management – an introduction (5th Edition) Harlow:Prentice Hall Chapter 1 WORTHINGTON, I and BRITTON, B (2009) The Business Environment (6th Edition) Harlow:Prentice Hall Chapters 10, 11, 12

Editor's Notes

  • #75 We return to the basic input-output model in the Boddy textbook which I would like you to review and fully understand.We also want you to be aware of the different types and legal forms of business organisation to be able to define their particular benefits and drawbacks.We expect you to understand the various roles that managers adopt and link this to your own experience to become more consciously aware of how managers influence to achieve results.Within the model we expect you to be able to understand the various takes and contexts within which we manage.
  • #76 What we’ve got here is our business organisation represented by the circle in the middle. On the left into our organisation come Inputs such as people, finance and materials. Within the organisation we transform these resources using different processes to create Outputs such as goods and services. What do we do within this process and why do we do it? What is it we create? Look at the last sentence on p7 of the core text to get the answer.And all this goes on within an external environment influenced by such things as politics, economics, laws and social norms.We then sell our outputs within markets and get feedback from these markets and our customers. This may make us change our inputs, transformation process or outputs in line with new customer or market requirements. This is called using market feedback. Modern supply chains in supermarkets such as Tesco rely on accurate and spedy market feedback captured at point of sale.
  • #77 Do you remember that I introduced this model, that you can find in the core text, in the introductory presentation to the module. I asked the question:What do we do within this model and why do we do it?What is that we create?I directed you to find the answer within the first chapter of the key text on p7. Did you find it?The answer was add value. When we combine our input resources using a transformation process the output is of greater value than the sum of the inputs. You may have said that the objective was to make profit. You wouldn’t be too far wrong in that answer. But it ignores the processes that take place in the not-for-profit sector – these processes still add value.We can break down our inputs into tangible resources (physical assets such as people, materials and machines) and intangible resources (things like information, reputation and knowledge).Looking at the transformation process – there are many different types of process. For example a Nissan automobile plant will be highly automated with significant investment in in machinery (fixed capital). On the other hand a social work service would be less systematised and highly client-focused. In the social work case the significance of the people and their ‘ways of working’ are highly important. The skills, procedures and systems that they use send how they use them are defined as competencies. In the automobile plant the capital investment in the machinery and how it controls the process will be more important than the staff competencies.
  • #78 We can classify business organisations by a number of different dimensions:Size:this is fairly straightforward. It is usually measured by number of employees. Small companies employing less than 100 employees accounts for around 98% of businesses in the UK, whilst large businesses are only about 0.3% of that total number of businesses. If we looked at turnover that would be a different story. You can find out more about the situation for Ugandan business in the Ugandan Bureau of Statistics website via the hyperlink. In UK Tesco Plc was UK’s largest business by turnover. What is the equivalent in Uganda?Type: at an industry level we classify into primary industry (using direct natural resources such as farming and mining; secondary (manufacturing, construction, energy) and tertiary (service industries). Sector: private or publicLegal status: the different legal ways that you can set up a business.
  • #79 Sole Trader: this is the simplest form of business. It is owned by one individual but it may in some cases employ other people. It is the most popular form of business organisation in the UK with around 80% of businesses. It has the advantage of being easy to set up, but the disadvantage of having unlimited personal liability for the debts of the businessPartnership: like the sole trader the business does not have a legal personality of its own and hence there is unlimited personal liability both personally and jointly It come into being when two or more people establish a business. Benefits include more sharing of responsibilities and tasks, ability to specialise and increased finance. Downsides can be disagreements between partners and the unlimited personal liability.Private Limited Companies: in law a limited company has a legal identity in its own right (it’s distinct form the people that own it).This means that property and assets are owned by the company not the individuals. The company will be owned by the members (shareholders) and the individual's liability is limited to the amount invested in the business. A private limited company must have a minimum of 2 shareholders and its shared cannot be offered to the public. Most private companies are SMEs, although there are some notable exceptions to this rule. Can you find an example of a large private company? Companies can also be limited by Guarantee. The Companies Act (1961) provide the regulations for private and public limited companies in Uganda. Public Limited Companies: these have an authorised share capital and have the right to sell shares to the public. They require to have a certificate from the Registrar of Companies and a memorandum which states it to be a public company. A Plc is required to make its accounts available for public inspection.Co-operatives: the worlds largest is the UK Co-operative Group which in 2011 employed 120,000 people, had 5.5m members and around 4,800 retail outlets. The Uganda Co-operative Alliance was formed in 1961 to act as an apex body of the co-operative movement in Uganda
  • #80 These approaches to business organisation fall on top of the existing legal structures. They are ways of carrying out a business venture that reduces some of the risks faced by the entrepreneur. Franchising: this had grown significantly in recent years. In this the franchisor sells the right to the franchisee to market its product or service. The parties could due any of the legal forms already discussed. The most prevalent franchises are the fast food outlets, the first Kentucky Fried Chicken franchise in East Africa started in Nairobi in 2011. The franchisor helps with a package containing all the elements to start-up the business and ongoing fees are paid form royalties, training etc.Licensing: usually used when a firm in one country authorises a firm in another country to use it intellectual property (patents, copyrights, trade-names, know-how) in return for royalty payments.Joint Venture: popular with international companies (e.g. oil and gas joint ventures between Ugandan/EU/US private companies and other countries’ national oil and gas state-owned companies).
  • #81 The range of public sector organisations noted in this slide will be familiar to most of you and require little explanation.
  • #82 Public corporations: these are run like private businesses but are owned by the state. They are incorporated by an Act of Parliament. Prominent examples in Uganda include the Uganda Printing and Publishing Corporation and National Water. The banking crisis has seen the effective nationalisation of various banks in the UK which were seen as ‘too large to fail’ from the point of view of the damage to the economy, these include Royal Bank of Scotland, Lloyds Group and Northern Rock. Other countries have considerably different attitudes and have much larger public sectors than the UK. Governments influence publicly owned corporations by financing and owning them; reviewing their operations; running these organisations through a board of management appointed by the Secretary of State; agreeing strategic objectives, investments, and reorganisations. Nationalised Industry: due to the economic liberalisation policies implemented by the Ugandan government beginning in the late 1980s, the Uganda Development Corporation (UDC) was wound up in 1998, before being re-established in 2008. It is responsible for facilitating the industrial and economic development of Uganda and forms an investment arm of the Ugandan Government, working alongside the Uganda Development Bank (UDB).Privatised State Industries: the Ugandan government followed the trend that had been happening in the UK by embarking on a privatisation policy in 1991. Privatisation is where state-owned corporations are sold into the private sector.Golden Share : Governments often influence privatised corporations through the existence of a golden share in a privatised state industry which effectively gives the government a veto in certain vital areas of decision making.
  • #83 The are significant implications when you make a choice of a legal form of business. The sorts of variables are noted on this slide.You need to review this based on the additional topic notes and the textbook.In general terms the forms at the sole trader/partnership end have upsides of simplicity to set up and operate but downsides related to personal liability. Private and public liability companies limit liability but the formalities and regulations are greater, particularly in a Plc. Along with the formalities , the costs are thus significantly greater if you do a start-up in this form.
  • #84 As businesses expand and grow there is the opportunity and need for specialisation of management tasks. Specialisation allows the growth of expertise and the ability to be more efficient. The outline in this slide is relatively self-explanatory I have included line managers in the section functional managers as this is the way it is treated in the core text. It could be argued, however, that line managers are just a lower level of general manager. Project managers are these that essentially manage a team to a specific outcome, usually across different disciplines and functions. In most businesses this is for a short-term objective. But there are certain industries that are regularly managed on a project basis such as construction and many oil and gas projects.
  • #85 The idea of a management hierarchy will be familiar to you all. At the bottom of the hierarchy there is more direct operational work and as we work up the hierarchy there is more ‘managerial’ work, including the supervision of others and at even higher stages the management of others. At lower levels the managers are mainly concerned with the internal environment, whilst at the higher level the external environment is more of a concern.
  • #86 Informational rolesIn these roles Mintzbeg sees managers dealing with seeking out, receiving and disseminating information.Interpersonal rolesInterpersonal roles arise from a manager’s authority within an organisation. These include figurehead, leadership and liaison roles.Decisional rolesThese roles relate to the important managerial role of decision-making. They range form the more creative entrepreneurial decisions, to problem-solvers, negotiators and the most common resource-allocator role.
  • #87 PlanningThis includes forecasting future needs, planning and scheduling resources to meet these needs and developing performance objectives. We shall deal with this within a later theme and you will develop a Business Plan as one of your coursework assignments.OrganisingThis includes the creation of a structure for the organisation. The organisational task links with the learning that you will do in Human Resource Management (HRM), but it also involves organisational issues such as Information Systems and the management of change.LeadingThis includes influencing people, generating commitment and motivation and communicating throughout the organisation. All of these will be directed at the planning, organisation and controlling.ControllingThis deals with monitoring progress against the plan and taking corrective action where necessary. Control can be against operational performance measures. Management accounts and monitoring costs against budgets is a fundamental control task.
  • #88 ObjectivesThis is where we want to get to or what we want to achieveFinanceWe require financial resources to undertake our transformation process. We require fixed capital in our machinery and working capital to deal with the amount of money we need to run the business until our customers pay us. We need to buy materials up front and pay wages weekly or monthly. PeopleWe require people to apply their knowledge and skills to the transformation process.Business ProcessesThere are a range of different processes types such as mass production, batch production, jobbing and service processes such as mass services, service shops and professional services. StructureThis is how we organise the business and divide up the work. TechnologyThis includes such differences as large or small scale production, the extent that we automate and the use of such things as Computer Aided Design (CAD).PowerHow we arrange the span of control and distribute responsibility for decisions.CultureThis relates to beliefs, underlying values and cultural norms. It may influence the things we do and how we do them.
  • #89 Critical thinking is an important part of management and it is the approach that we use in Management Education. We may not always have to justify our decisions at work, but in an academic degree we have to justify our assertions and conclusions. In academic work we do this by citing references from informed sources in support and not just providing out own opinions.
  • #90 The process of critical thinking has two stages – analysis and synthesis.Analysis means looking at something in a systematic way. It involves identifying and challenging assumptions. In other words not just accepting ‘we always did it that way’, but questioning things that no longer seem valid and challenging these approaches.Critical thinkers are aware that ideas and methods that work in one context will not necessarily transfer successfully to another.Critical thinkers can imagine alternative actions and explore whether alternative solutions might work better.Critical thinking also recognise and alert others to limitations ad look for evidence for approaches used or theories propounded.So we must have a systematic way of examining the management of business organisations. Anyone can take an engine apart, but it takes a skilled engineer to put it together properly so that it works better. So having done systematic analysis we should due better able to come to valid conclusions – this is what we call synthesise. In Management we call it effective decision-making.
  • #91 These chapters in the core text and the supplementary text will assist in deepening your understanding of this topic. The core text also provides a number of short case examples of the ideas in practice. In the core text, look at the Review Questions – can you answer them?As modern managers we want to become ‘reflective practitioners’. This means in relating what you have just learned to your own experience. Look at the section in the core text about critical reflection.There are more resources in www.pearsoned.co.uk/mymanagementlab