Higher Business Management

1
Higher Business Management

• Unit 2
• Learning Outcome 1
• Internal Organisation

2
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
3
Organisation by Function
2 departments found mainly in large organisations
4 main departments found in most organisations
Regarded as typical and associated with a
centralised organisational structure
4
Organisation by Function

• Advantages
• Efficient use of resources
• Staff specialisation
• Career progression
• Centralised decisions
• Good communications within the department
• Team motivation
• Problems sharing and solving

• Disadvantages
• Departmental rivalry
• Poor communication between departments
• Slow response to external factors
• Slow decision-making
• Over specialised workforce
• Difficult to pinpoint problems

5
Organisation by Product/Service
Each division has its own functional staff
Generally associated with large multi-national
organisations
Find other examples of this!
6
Organisation by Product/Service

• Advantages
• Each division can focus on its own market segment
• Each divisions performance can be measured
• Healthy competition between divisions
• Allows flexibility - can close down or sell off
  loss-making divisions
• Co-operation between divisions can reduce costs -
  eg shared transport for the whole group

• Disadvantages
• Duplication of functions may be wasteful
• Competition may de-motivate a poorly performing
  division
• Loss of control by central management over
  divisional managers

7
Organisation by Customer

• Advantages
• Can cater for specific customer needs
• The market can be segmented

• Disadvantages
• Can be inefficient if a division is too small
  (insufficient customers)
• Loss of control by senior management over
  divisional managers

8
Organisation by Area

• Advantages
• Can serve the needs of local people more easily
• Improved communications - on the spot
• Healthy competition between regions

• Disadvantages
• Duplication of resources
• Loss of control by senior management over area
  managers

9
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

10
Line/Staff Groupings

• Line Departments
• Hierarchical system
• Superior - subordinate relationships
• Clear lines of authority
• Can be very long chains of command leading to
  slow actions

• Staff Departments
• Examples - Human Resources, Finance, Research
  Development, Strategic Planning
• Specialist advice but often have no authority
• Many companies out-source staff activities

11
The Marketing Function
Marketing is the management process responsible
for identifying, anticipating and satisfying
customer requirements profitably.

• The Marketing Mix
• Product
• Price
• Promotion
• Place

12
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

13
The Finance Function

• Financial Accounting
• Management Accounting
• Financial Reporting

14
The Operations Function

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

15
Forms of Organisational Structure

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

16
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