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Internal Organisation

Higher Business Management

What is an organisation
Types of organisational groupings

What is an organisation?
A group of people working towards
a defined set of goals and

Types of Organisational

Functional Grouping Departments where staff have similar skills & expertise. human resources and operations. finance. and do similar jobs. What other functional areas might there be? . Functional grouping usually consists of marketing.

Functional Grouping Chief Executive Board of Directors Human Production Marketing Accounts IT Resources .

Functional Groupings +/- Advantages Disadvantages Staff with similar Organisation may skills kept become too large together May be unresponsive to change Allows specialisation Departmental competition may Clear emerge organisational Departments may put structure own interests before Staff know formal organisation’s .

a TV company may have a Sports division.Product/Service Grouping Divisions/departments where each deals with a different product or product range. a Film division and a Music division. Virgin and General Electric are examples of Product/Service . E.g. Each division has its own functional staff.

Product/Service Grouping Hewlett Packard Imaging and Personal Enterprise HP Financial HP Services Printing Group Systems Group Systems Group Services .

Product/Service Grouping +/- Advantages Disadvantages Each division self. Duplication of contained resources/ tasks/ Each division more personnel responsive to changes Divisions may be competing with Incentive for staff to perform better each other Can identify products under performing .

E. May be a different division for Retail. Doctors Surgery.g. Trade. Overseas and for Mail Order. Clydesdale .Customer Grouping Customer groups are divisions dealing with different types of customers.

Customer Grouping .

marketing builds due to & finance personal service Staff turnover Quicker to erodes personal respond to service benefits customer needs .Customer Groupings Advantages Disadvantages Each division able Can be expensive to give a service due to greater suited to its own staff costs type of customer Duplication of Customer loyalty admin.

Scotland division. West. Example: Nestle. South. North. Water Boards . For example. each dealing with a geographic area.Place/Territory Grouping Staff divided into divisions.

Place/Territory Grouping Hewlett Packard Americas Europe. Africa Asia Pacific Houston. Texas Geneva. Switzerland Hong Kong . Middle East.

but not by American ones. regional. Place/Territory Grouping +/- Advantages Disadvantages Allows the Again. Why? . duplication organisation to of effort cater for different local. national tastes More responsive to customer needs Such groupings are used often by European firms.

Only suitable for large organisations with different products and production processes. . Retail Internet) and Ford (Bodywork. Paints) are example of this. Glass. Plastics.Technology Grouping Manufacturing companies group its business activities according to technological or production processes. WH Smith (Wholesale.

Technology Grouping Advantages Disadvantages Increased Specialist training specialisation required Teething Capital-intensive problems or technological problems identified easily .

.Line/Staff Grouping Core Activities LINE Support Activities STAFF This grouping divides into line departments involved in generating revenue (ie sales) and staff departments providing whole firm support (Finance. HRM).

Recap… What is an organisation Types of organisational groupings Functional Product/Service Customer Place/Territory Technology Line/Staff .

Today… Levels of Management Span of Control Hierarchy Matrix Entrepreneurial Centralisation Decentralisation .

S u p e r v is o r s There is another A s s is t a n t s way we can view the same .Levels of Management C h ie f E x e c u t iv e This is how we B o a r d o f D ir e c t o r s would normally see an organisation S e n io r M a n a g e r s structure. M a n a g e rs This is an organisation chart J u n io r M a n a g e r s of a business.

Organisation Pyramid Chief Executive Board of Directors Senior Managers Managers Junior Managers Supervisors Assistants .

Span of Control Span of Control means the number of people who report to a manager Manager Manager Employees Employees Narrow span of control Wide span of control .

Hierarchical Structures Hierarchical structures can either a tall or flat structure Tall Flat .

Tall Structures Many levels of management Managers will have narrow span of control Management posts usually specialised Clearly defined roles .

Cost/Benefit Analysis of Tall Structures Benefits Costs Easier for managers Many layers of to supervise staff communication More promotion Slow decision- opportunities making Employees will know High labour costs immediate boss due to many levels Clear lines of of management responsibility and Workers may have communication little freedom or responsibility .

Flat Structures Few levels of management Managers have wider spans of control Faster communications Quicker decision- making .

Cost/Benefit Analysis of Flat Structures Benefits Costs Employees have more Employees have authority and greater workload responsibility Employees may Better communication need training for between managers and multi-tasks workforce Fewer promotion Decision-making is opportunities quicker If span of control is Communication too wide people may channels less feel isolated or complicated ignored .

Software . and Manager W W would report to the Project Manager and their own Functional Manager. Matrix Structure A project team Marketing Finance created to carry out a Manager Manager specific task. i n g e t c e Team members come rk a n Project a r F i n rfrom different M e e o rk o rk functional areas.

Matrix Structures +/- Advantages Disadvantages Increased Expensive to have experience many teams Motivation and Co-ordination job satisfaction problems Good for tackling Confusion as to complex problems who reports to whom Lack of supervision and confusion is thought to have led to Nick Leeson’s demise of Barings Bank .

normally the owner .Entrepreneurial Structure Small businesses use this structure Decisions made by a few people.

Entrepreneurial Structure Advantages Disadvantages Decisions made Difficult to use in quickly large businesses Staff know who Can create a they are heavy workload accountable to for decision- Decision-maker makers does not need to Can stifle other consult staff staff’s initiative .

Centralisation Control and decision-making lies with top HQ management in Head Office (HQ) .

Centralisation Advantages Disadvantages Decisions can be Slower decision- made for whole making organisation Slower Easier to promote communication corporate image Less room for staff initiative .

day- to-day tasks .Decentralisation Control and decision-making is delegated to HQ departments Relieves senior management from routine.

Decentralisation Advantages Disadvantages Motivates staff Decisions may Empowers staff differ from other branches Decision-making quicker Transfer of staff Decisions can may lead to match local needs confusion due to different practices Less supervision .

Definitions Chain of Command Unity of Command Span of Control .

Recap… Levels of Management Span of Control Hierarchy Matrix Entrepreneurial Centralisation Decentralisation .


Today… Factors affecting organisation structure Definition of relationships Delayering Downsizing .

Factors Affecting Organisation Structure Size of organisation Technology used Market firm operates in Staff skills within organisation Products/services made or supplied by organisation .

exist with people on the same level of management Staff Relationships – exist with people who have skills which support the firm as a whole rather than individual departments Informal Relationships – exist as .Definitions Line relationships – exist when a member of staff is in charge of another member of staff Functional relationships .

Delayering What happens? Effect on Org. Levels of Chart management are Flatter structure reduced (move from tall to flat Fewer structure) management Wider spans of posts control Increased worker Savings in responsibilities management wages .

Downsizing What happens? Effect on Org. Staff ‘laid-off’ Chart Wages (labour Greater workload costs) are for departments reduced Some posts will disappear Workers have more duties .

Recap… Factors affecting organisation structure Definition of relationships Delayering Downsizing .

Today… What is Culture? Culture Definitions Cultural Evidence Importance of Culture How to develop a strong corporate culture Advantages of a strong corporate culture .

Identify 3 cultures you know. . Give evidence that they exist.What is Culture? Define what you think culture means.

Or “the (often unwritten) code affecting attitudes.Culture Definitions Way of life Ethos Traditions Ambience Customs Atmosphere Norms Culture is: “the way things are done around here”. decision-making and management style” .

beliefs and norms relating to the organisation that are shared by all staff .Culture Definition The values.


Japanese Work Customs Low employee turnover Promotion based on longevity Socializing among employees Group tasks and rewards Bottom-up consensus for decisions .

Think of your local school What is the visible evidence of its culture? Academic or vocational? Uniform? Discipline? Homework? Approachable SMT? .

they lagged behind.Importance of Corporate Culture Peters & Waterman (1982) observed US and Japanese firms to see the differences between each. but when it came to shared values and the other things hard to measure. . The US firms compared favourably with the Japanese on strategy and structure.

Corporate Culture Think of an organisation you know. What can you tell about its culture as an outsider looking in? .

Respect for others 2. Sense of community 3. Hard work .The HP Way Hewlett Packard’s success was not deemed to be related to quality or service but to internal issues: 1.

Southwest Airlines For 5 years in a row they were the only US airline to make a profit Southwest put this down to: Hiring – look for positive people Demeanour – treat everyone like a human being .

symbols Ideals and principles of organisation (a mission statement) Reward schemes for employees Code of conduct for employees (attitudes and beliefs) Advertising (promote their corporate values) Teambuilding among employees .How to develop a strong corporate culture… Use of uniforms. logos.

Advantages of a strong corporate culture Increased staff loyalty Less turnover of staff (saves in training costs too) Increased staff motivation Increased awareness by the public All employees know their role and responsibilities within the organisation .

Recap… What is Culture? Culture Definitions Cultural Evidence Importance of Culture How to develop a strong corporate culture Advantages of a strong corporate culture .

Explain why schools need PTs to be in charge of individual departments What decisions can they make for their departments? .Schools have Principal Teachers in charge of departments.

Your local supermarket will have very different departments in store from those mentioned above. What will its departments be? .

and justify your choice .Identify one organisation which would have a large Human Resources department.

Describe what you understand by functional grouping What are the main advantages and disadvantages of a functional grouping? .

and briefly describe what they do Explain how each of the functional departments interacts with. each other . and is dependent on.Identify the main functional activities of organisations.

The Virgin Group provides a wide variety of goods and services. Identify as many of their products as you can. and then describe what advantages and disadvantages Virgin have in grouping this way .

Insurance companies will group their organisation around the different categories of customers they have. house insurance etc. motor insurance. such as life assurance. and what the drawbacks of such grouping would be. Describe why insurance companies will do this. .

Shell exploration and production has facilities all around the world. Explain why it would group geographically. describing the benefits and drawbacks of such a grouping .

retail operations and Internet sales. Explain why W H Smith could be described as grouping around different technologies used in different processes. .W H Smith organises activities around 3 areas: wholesale operations.

and those which could be described as support.Think of the school… Identify those activities which could be described as core. .

Describe what you understand by a flat structure (include diagrams) Identify the advantages and disadvantages of such a structure Explain the meaning of the terms empowerment and delayering .

Describe what you understand by
a matrix structure
Identify the advantages and
disadvantages of this type of
Explain the meaning of the term

Describe what you understand by
an entrepreneurial structure
Identify the advantages and
disadvantages of this type of

Describe what you understand by
a centralised structure
Identify the advantages and
disadvantages of this type of

Describe what you understand by
a decentralised structure
Identify the advantages and
disadvantage of this type of

and describe the factors that made this the best choice A) a national supermarket chain B) a supplier of drilling equipment to a single oil company in Aberdeen C) a small graphic design business .Look at the following examples and then decide what type of structure would best suit them.

Explain why organisation charts are useful Explain what is meant by span of control .

Identify the areas decided upon by managers (SMT) and those by the pupils What actions could a school take to improve its culture? .Describe the culture of the school.

Explain why organisations may feel they have to change Describe what you understand by the term outsourcing .

Why would trade unions work against attempts to downsize an engineering business? .

Explain what is meant by delayering Give an example of an organisation which has delayered What are the benefits and costs of delayering? .