Business Management

COBMA1-11

Eduvos (Pty) Ltd (formerly Pearson Institute of Higher Education) is registered with the Department of Higher Education and Training as a private higher education institution under the
Higher Education Act, 101, of 1997. Registration Certificate number: 2001/HE07/008
Week 6: Lessons
Introduction

In these lessons, you will:

- Sharpen your understanding on how businesses organize resources
- Learn about the key functional areas in business

The learning outcome that will be covered by this lesson include:

• Learning outcome 3 – Analyse the management functions and tasks and the application of these in a business.
• Learning outcome 4- Analyse the main functional areas of business

The assessment criteria that will be covered by this lesson include:

• A further look at Assessment criteria 3.2 – Analyse the management tasks of planning and organizing.
• Assessment criteria 4.6 - Describe the nature of the four functions of business.
 What will be covered
during this week’s lessons?

The organising process

Week 6 Importance of organising

Lessons
Principles of organising

Organisational structures
 What will be covered
during this lesson?

Week 6
Lessons 1
The organising process
 Organising is the way in which organisations develop,
implement and monitor the business activities and use
resources required to produce products and services.

Organising is a process in which organisations:

• Structure activities,
• Allocate resources and responsibilities to individuals
Overview

• Delegate task and authority.

• Assign resources to specific tasks
• clarify responsibilities through job description, business charts and
lines of authority
• Set up clear communicate & reporting channels
• Align process processes and systems to achieve optimal
productivity and organisational goals
The importance of organising?
The organising function allows managers:

To set up structures

Manager & employees be accountability
Establish good channels of communication within the
organisations
Allocate resources to different tasks
Improves teamwork and synergy
Principles of organizing

Organising is a complex activity consisting of a number of different tasks affecting

departments across the organisation. Key principles of organizing include:

Co-ordination – an activity that links and integrates various levels of management

department across the organization with the following key areas
• Chain of command: organizational structure showing the level of authority within
the organization
• Unity of command: Employees have only one reporting line
• Span of control: Number of employees reporting to a manager
Continue
Job design - This combining of individual tasks to form jobs that enable the
organisation to achieve its objectives.
• Specialisation Narrowing down activities uncomplicated and repetitive
routines
• Job enrichment is much more time-consuming for managers because
employees tasks have increased as well as the level of
• Rotation Employees swap positions and do something different
• Enlargement Managers give employees more duties and responsibilities
Continue
Delegation: Assigning task to/activities to by superiors to subordinates
and happens across the organization with an objective of reducing the
workload of managers.
• Decentralisation: Powers and authority systemically delegated down
the chain
• Centralisation: Managers retain the chain of command
 Principles of organizing –authority and
responsibility
Line authority: exerted directly by managers to their immediate
Authority is subordinates. E.g. from sales manager to sales consultants
assigning to
individuals that Staff authority: Authority at mid level management where functional
hold either a managers can assist or advise employees
coordinating or
Line and staff authority: Line and staff authority collaborate to ensure
managerial role
line departments are successful.
in an
organisation Functional authority: Makes use of specialized skills and gives
with employees employees the responsibility to ensure line departments are successful
reporting
directly to them. Project authority: Horizontal lines of authority may stretch across
various departments and depends on the type of project being managed.
Activity 1: The organising process

(1) This is a group activity.

(2) There should be +- 5 students per group.
(3) Discuss how you would organize your study process in order to achieve distinctions during your first block of studies
 Possible feedback

• Ideal Feedback from students:

• Discussions around allocation of resources
e.g. study time per module
• Co-ordination of study activities to facilitate
transition from one study task to another
• General Hints:
Pages 136 - 138 in the Textbook.
 What will be covered
during this lesson?

Week 6
Lessons 2 Organisational
structures
The organizational
structure
• Organisational structure involves the
development of structures that support the
strategies and operational plans of the
business.

• It assist the employees in knowing who in the

organisation is responsible for which division.

• As business expands, it becomes complex and

difficult owners to supervise all employees in
the organization.

• Hence, the creation of divisions or

departments to handle the operations of the
business.
The following types of
departmentalization can be
adopted by organisations:

Functional Product
departmentalisation departmentalisation

Location Customer
departmentalisation departmentalization

Matrix Divisional
departmentalization departmentalization
Functional departmentalisation
 Departments are created by grouping employees according to their areas of expertise and
resources required, e.g. purchasing, finance, marketing, etc.
 This is the most basic and widely used form of department.
 Functional areas report directly to the managing executive
• Advantage: promotes skill specialisation (no individual is responsible for an entire
function)
• Disadvantage: Focus moves from organisational goals to departmental issues

General
manager

Marketing Finance Production Purchasing

manager manager manager manager
Location departmentalisation
 Divides an organisation according to the places/geographical areas where work is carried out
 All the functions for a particular area are grouped together at one location
 Commonly used by organisations that produce and sell goods and services in different geographical
regions
• Advantage: each manager is aware of the local customer’s problems
• Disadvantage: all the major functions are duplicated

Group president
and CEO

Group regulatory
Chief financial
Example using the MTN group and corporate
officer
affairs officer

Chief operations
officer

Vice president Regional vice Regional vice

CEO MTN South
Middle East & president; West & president Southern CEO MTN Nigeria
Africa
North Africa Central Africa & East Africa
Product departmentalisation
 Group together all activities related to a particular product
 Each major product line is under the control of a manager who is a specialist in that product
 Used when a business expands product line
 Example: A business sells a range of different items like cleaning products, frozen foods, beverage and
cereals
• Advantage: managers and employees focus on one product
• Disadvantage: the use of resources is relatively in efficient

Managing
Director

Momentum care Momentum

Momentum life Momentum Momentum
& home financial
insurance Healthcare multiply
insurance planning
 Customer departmentalisation
 Used by organizations to target specific sector of the market
 Used when a business structures itself according to the type of customer, e.g. residential,
international
• Advantage: enables managers to clearly identify the business key customers
• Disadvantage: must be pressure to meet too many specialised needs

Pioneer foods

Wholesale
Essential foods Groceries International accounts
managers
 Matrix departmentalization
 Employees report to more than one manager(complex structure)
 Often used by large organizations
 Often used in projects where employees have more than one manager at a time
 Once project is complete employees return to original functions

CEO

Marketing mgr Operations mgr HRM Financial Mgr Purch Mgr

Project manager A

Project manager B

Project manager C
Divisional organizational structure
Structure in used in organisations with distinctive activities managed as separate
entities.
Focuses on the acquisition of more businesses rather than on the operational and
strategic activities

CEO

Wimpy
Mugg & Bean Wimpy Purch Mgr

Human Resource Human Resource

Purchasing Manager Manager Manager Purchasing Manager

Operations & operations & production

Marketing Manager Production manager Marketing Manager

Financial Manager Financial Manager

Class Activity 2

(1)Imagine that you and your four friends would like to create a waste management
company after graduation .
(2)Design an organizational structure for your business after giving it a name
(3)How would you assign responsibilities and allocate resources to each of you (you and
your four friends) including any employees?
 Possible feedback

Activity –Ideal Feedback from student:

Discussions around setting up an organizational structure
suitable for a waste management company that perhaps
serves customers in different locations (e.g. location &
customer departmentalization)

Discussions around the reporting structures in terms of

authority and responsibilities

General Hints:
• Pages 139 - 142 in the Textbook.
Activity 3: Discussion

(1)This activity is a group activity.

(2)In groups of + - 5
(3) What in your opinion would influence organizing processes?
Case Study

The Vuleka App is helping over 5000 spaza shop

owners become more competitive

Source: Engelbrecht, W. H. & van Greunen, C. 2021. Business

Management. Back to basics.Cape Town, South Africa: Juta and
Company ( Pty) Ltd

Read the case study on pages 144 - 145 and answer the questions
on page 145.
Discuss answers in small groups and share main discussion points
with the class.
What Happens Next?
•Next week you will:
•Deepen your understanding of controlling the business
•Learn about the types and levels of control
•Learn about the areas of a business that should be controlled
•Learn how to measure performance
•Identify the characteristics of a good control system.