Date post: | 16-Apr-2017 |
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Internal Organisations
Higher/Int 2 Business Management
2009-2010
Organisation?• Relationships between people
form the structure
• A name which gives a corporate identity
• Resources are organised to achieve objectives
Importance?• Defines how the organisation operates
• Role(s) of individuals & authority
• Relationships between people
• Channels activities towards the goals
• Best use of scarce resources
Large Business• Impossible for one person to make
all the decisions
• Put people in charge of their expert areas eg accountant for finance
Who makes which decisions?
Who is responsible
for what?
Grouping of Activities
There are lots of options available!
Functional Grouping• Activities are grouped into departments
based on similar skills, expertise and resources used:– Marketing– Operations– Human Resources– R&D– Administration
• Size depends on importance to organisation eg 1 or 2 customers = smaller marketing dept
Functional GroupingAdvantages
• No duplication of resources
• Become experts in field
• Career paths developed
• Communication and cooperation
• Teamworking
• Decision-making improved
Disadvantages
• Loyalty to department vs organisation
• Communication barriers
• Slow to respond to change
• Decision-making time consuming
• One problem vs >1 department
Product/Service Grouping
• Grouped around product or service offered
• Each product requires specialist knowledge and expertise
Product/Service Grouping
Advantages
• Self-contained units
• Expertise develops
• Which parts are doing well?
• Quicker response to external changes
Disadvantages
• Duplication of resources
• Difficult to share research or equipment
• In competition with other divisions
Customer Grouping• Putting the needs of customers
first
• eg suppliers for oil companies create teams which work closely with the oil companies in their offices and on the platforms
Customer GroupingAdvantages
• Price/promotion suit customer
• Customer loyalty develops
• Quick response to changing needs
Disadvantages
• Expensive – staff costs
• New group for new customer eg ecommerce
• Duplication of resources
Place/Territory Grouping• Organised by geographical region
• eg North-East Scotland and Midlands group
Needs of customer in that area
Place/Territory GroupingAdvantages
• Local offices = local knowledge
• Language and cultural differences
• Accountable for success/failure in area
• Customer loyalty
• Responsive to customer needs
Disadvantages
• Administration is time consuming
• Staff change = loss of personal contact
• Duplication …
Technology Grouping
• Grouped around the technical requirements of the product
• eg car manufacturers – workers in the paint area need to focus on the high skill to ensure defects in finish are kept to a minimum
• They do not need to learn other skills – easier to train more staff
Advantages
• Increased sophistication in production process
• Problems with technology easily identified
Disadvantages
• Specialist training required
• Industries tend to be capital-expensive - expense
Technology Grouping
Line/Staff GroupingDividing the organisation into
• line departments (generating revenue)
and
• staff departments (providing specialist support for the whole organisation eg Finance and Human Resources)
Combinations of Groupings
A business may use more than one type of grouping to organise its business
eg geographically and then functionally
Types of Organisation Structures
• Hierarchical – Traditional tall pyramid structure
• Flat – Pyramid with few management levels
• Entrepreneurial – decisions made by a few people at the core
• Matrix – used for project work
• Decentralised – control and decision-making delegated
• Centralised – control and decision-making lies with senior management
Types of Organisation Structures
Task:
Research the different structures available and prepare a display to illustrate the key ideas of each structure.
• Organisation Charts• Choosing Formal Structure• Relationshi Definitions• Changes in Structure• Empowerment• Corporate Culture
CongratulationsYou have completed
Internal Organisations
in
Higher/Int 2 Business Management