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
                       authority.”
                                               Edgar Schein



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                  Organisation by Function

                                    Typical Organisation Chart


                                       Board of Directors


           Marketing     Human        Finance     Operations      R&D        Admin
                        Resources


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

                    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
                            Product/Service
                                           Organisation into "Divisions"


                                                     Burton
                                                     Group


   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
                  Product/Service
                       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
                                                   managers



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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
                           competition
                           between regions
BM Unit 2 - LO1                                                      8
                  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
                           process

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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
                                                  authority
                          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
                        profitably.”
                        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
                       organisation.”
                          Recruitment
                          Training
                          Appraisal
                          Collective bargaining
                          Employment legislation
                          Personnel records
BM Unit 2 - LO1                                                 12
                  The Finance Function


                          Financial Accounting

                          Management Accounting

                          Financial Reporting




BM Unit 2 - LO1                                    13
                  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
                  Structure

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

BM Unit 2 - LO1                                             15
                  Aspects of Organisational
                  Structure

                          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
BM Unit 2 - LO1                                                  16
        Hierarchical
                          Each level represents a
                           level of authority
                          Fewer staff at top
                          Has clearly defined
                           relationships
                          Communication and
                           decision making can be a
                           slow process

BM Unit 2 - LO1                                       17
          Flat
          Respond to fast changing
           markets
          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
          organisation.
BM Unit 2 - LO1                                             18
                         Matrix
            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


BM Unit 2 - LO1                                                    19
     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



BM Unit 2 - LO1                                                   20
                           Organisation Culture
                 Influences attitudes of staff
                 Influences stakeholders

              For example, wearing a uniform
                 is part of the corporate
                 image.




BM Unit 2 - LO1                                   21
                  Organisation Culture
                  • shop layout and colour
                      schemes
                  • staff dress
                  • staff attitudes towards
                      customers
                  • available food and portion size
                  • quality of food




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                  Organisation Culture -
                  Schein
                  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

BM Unit 2 - LO1                                         24
                    Corporate Culture


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




BM Unit 2 - LO1                                      25
                  Corporate Culture is
                  developed through:
                     Ideals and principles of the
                      founder, owners or senior
                      management
                     Use of symbols, logos,
                      uniforms, shop layouts and
                      examples of outstanding
                      employees




BM Unit 2 - LO1                                      26
                  Empowerment
                     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.

BM Unit 2 - LO1                                           27
                  Empowering staff may
                  lead to:
                     Employees being more motivated
                      and productive (as work not being
                      checked)
                     Increased pay and training for
                      staff
                     Enhanced promotion prospects
                     Decisions being made quicker
                     Staff developing greater skills
                     Organisation becoming more
                      streamlined and efficient
BM Unit 2 - LO1                                       28
                  An organisation benefits
                  from empowerment by
                  having:
                     Good decisions taken quickly
                     Staff being more flexible and
                      motivated
                     Improved productivity
                     Improved competitiveness
                     More ideas on how to solve
                      problems
                     Improved communication as fewer
                      managers are required
BM Unit 2 - LO1                                     29
                  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-
                      making
                     Remaining staff may not trust
                      organisation (if
                      delayered/downsized)
                     Can be costly to train staff to
BM Unit 2 - LO1       make decisions                        30

								
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