Business and Management Internal by hqk29252


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									                  Higher Business Management

                            Unit 2
                      Learning Outcome 1
                     Internal Organisation

BM Unit 2 - LO1                                1
                  An Organisation

                       “An organisation is the rational
                       co-ordination of a number of
                       people for the achievement of
                       some common explicit purpose
                       or goal through the division of
                       labour and a hierarchy of
                                               Edgar Schein

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                  Organisation by Function

                                    Typical Organisation Chart

                                       Board of Directors

           Marketing     Human        Finance     Operations      R&D        Admin

                  4 main departments found in most               2 departments found
                            organisations                           mainly in large

                    Regarded as “typical” and associated with
                      a centralised organisational structure

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                  Organisation by Function

                       Advantages                  Disadvantages
                          Efficient use of           Departmental rivalry
                           resources                  Poor communication
                          Staff specialisation        between departments
                          Career progression         Slow response to
                          Centralised decisions       external factors

                          Good communications        Slow decision-making
                           within the department      Over specialised
                          Team motivation             workforce

                          Problems sharing and       Difficult to pinpoint
                           solving                     problems

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                            Organisation by
                                           Organisation into "Divisions"


   Debenhams              Burton          Dorothy                 Evans       Topshop          Principles
                        (Menswear)        Perkins                          (and Topman)   (Principles for Men)

                           Each division has its own functional staff

                  Generally associated with large multi-national organisations

                                     Find other examples of this!

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                  Organisation by
                       Advantages                           Disadvantages
                          Each division can focus on          Duplication of
                           its own market segment               functions may be
                          Each division’s performance          wasteful
                           can be measured                     Competition may de-
                          Healthy competition                  motivate a poorly
                           between divisions                    performing division
                          Allows flexibility - can close      Loss of control by
                           down or sell off loss-making         central management
                           divisions                            over divisional
                          Co-operation between                 managers
                           divisions can reduce costs -
                           eg shared transport for the
                           whole group

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                  Organisation by Customer

                       Advantages              Disadvantages
                          Can cater for          Can be inefficient
                           specific customer       if a division is too
                           needs                   small (insufficient
                          The market can be       customers)
                           segmented              Loss of control by
                                                   senior management
                                                   over divisional

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                  Organisation by Area

                       Advantages               Disadvantages
                          Can serve the           Duplication of
                           needs of local           resources
                           people more easily      Loss of control by
                          Improved                 senior management
                           communications -         over area
                           on the spot              managers
                          Healthy
                           between regions
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                  Organisation by Technology

                          Used in the manufacturing sector
                           where different technological
                           processes are involved in a
                           diverse range of products
                          Scope for specialisation of the
                           workforce and simplified training
                           within the same manufacturing

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                  Line/Staff Groupings

                       Line Departments       Staff Departments
                          Hierarchical          Examples - Human
                           system                 Resources,
                          Superior -             Finance, Research
                           subordinate            & Development,
                           relationships          Strategic Planning

                          Clear lines of        Specialist advice
                           authority              but often have no
                          Can be very long      Many companies
                           chains of              out-source staff
                           command leading        activities
BM Unit 2 - LO1            to slow actions                             10
                  The Marketing Function

                        “Marketing is the management process
                        responsible for identifying, anticipating
                        and satisfying customer requirements
                        The Marketing Mix
                           Product
                           Price
                           Promotion
                           Place
BM Unit 2 - LO1                                                     11
                  The Human Resource Function

                       “HR is concerned with people at work
                       and with their relationships within an
                          Recruitment
                          Training
                          Appraisal
                          Collective bargaining
                          Employment legislation
                          Personnel records
BM Unit 2 - LO1                                                 12
                  The Finance Function

                          Financial Accounting

                          Management Accounting

                          Financial Reporting

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                  The Operations Function

                       The Production Process
                          Inputs - raw materials and labour
                          Process - making the goods
                          Outputs - products/services

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                  Forms of Organisational

                          Hierarchical (tall) structures
                          Flat structures
                          Matrix structures
                          Entrepreneurial structures
                          Centralised structures
                          Decentralised structures

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                  Aspects of Organisational

                          Organisation charts
                          Span of control
                          Line/functional/staff relationships
                          Formal and informal structures
                          Organisational culture
                          Recent trends in structure
                          Delayering
                          Down-sizing
                          Management roles/responsibilities
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                          Each level represents a
                           level of authority
                          Fewer staff at top
                          Has clearly defined
                          Communication and
                           decision making can be a
                           slow process

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          Respond to fast changing
          Less levels of management
          Higher span of control
           (empowerment to staff)
          Less rivalry
          De-layering is when an organisation reduces the
          levels of management, thus, FLATTENING the
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            Business involved in number of large projects
            Or few large customers
            Teams are formed from all functional depts
            Each member has own specialist skills
            Possibility of multi-skilling
            No hierarchy in teams
            Expensive!
            No economies of scale and could lead to duplication

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     Entrepreneurial Structure
        Small businesses
        1 or 2 main decision makers – usually owners
        Heavily relies on key decision makers – if
         unavailable, decisions can’t be made
        If the small business grows, it is likely that it will
         change it’s structure to share workload

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                           Organisation Culture
                 Influences attitudes of staff
                 Influences stakeholders

              For example, wearing a uniform
                 is part of the corporate

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                  Organisation Culture
                  • shop layout and colour
                  • staff dress
                  • staff attitudes towards
                  • available food and portion size
                  • quality of food

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                  Organisation Culture -
                  Artefacts: Physical layout of
                     shop/office/factory, dress code/uniform.

                  Values: Principles upon which people base
                     their behaviour.

                  Underlying assumptions: The source
                    from which all the values and behaviour
                    spring (such as the original or existing
                    owners or managers).

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                  Organisation Culture
  More and more in today’s business world
    corporate culture is recognised as a positive
    force. It can motivate staff and lead to an
    organisation where everyone understands their
    individual roles and obligations. It is also seen
    as a major influence in external recognition
    especially from consumers.

  P154 Core Notes

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                    Corporate Culture

                  Is the values, beliefs and norms
                       relating to the company or
                   organisation that are shared by all
                                 its staff.

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                  Corporate Culture is
                  developed through:
                     Ideals and principles of the
                      founder, owners or senior
                     Use of symbols, logos,
                      uniforms, shop layouts and
                      examples of outstanding

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                     Giving staff responsibility for their
                      own work and decision-making by
                      delegation, transfer of
                      responsibility and greater access
                      to information.

                     This often occurs when a
                      business delayers or downsizes.

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                  Empowering staff may
                  lead to:
                     Employees being more motivated
                      and productive (as work not being
                     Increased pay and training for
                     Enhanced promotion prospects
                     Decisions being made quicker
                     Staff developing greater skills
                     Organisation becoming more
                      streamlined and efficient
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                  An organisation benefits
                  from empowerment by
                     Good decisions taken quickly
                     Staff being more flexible and
                     Improved productivity
                     Improved competitiveness
                     More ideas on how to solve
                     Improved communication as fewer
                      managers are required
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                  Empowerment may NOT
                  be successful because:
                     Not all staff may want to be
                      involved in decision-making
                     Managers may be unwilling to
                      give up responsibility of decision-
                     Remaining staff may not trust
                      organisation (if
                     Can be costly to train staff to
BM Unit 2 - LO1       make decisions                        30

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