acca f1/cat fab : section b (business organisation, structure & strategy)
TRANSCRIPT
Informal Organisation
Social relationships and groupings.
The ‘grapevine’, ‘bush telegraph’, or informal communication which by-passes the formal reporting channels and routes.
Behavioural norms and ways of doing things, both social and work-related, which may circumvent formal procedures and systems. New members must ‘learn the ropes’ and get used to ‘the way we do things here’.
Power/influence structures, irrespective of organizational authority: informal leaders are those who are trusted and looked to for advice.
Benefits of informal
organisation
Co-operation
Knowledge sharing
Speed
Responsiveness
Employee commitment
Managerial problems of informal organization
Social groupings may act collectively against organizational interest, strengthened by collective power and information networks.
The grapevine is notoriously inaccurate and can carry morale-damaging rumours.
Can become too important in fulfilling employees’ needs.
Informal work practices may ‘cut corners’, violating safety or quality assurance measures.
• compliance
• Internalisation
• Counter-conformity
Individuals may react to group norms in a variety
of ways.
• The issue is not clear-cut
• The individual lacks support for his own attitude
• The individuals is exposed to other members of the group
Some circumference which put strong pressure
on the individual.
• Identification
• Sanctions
Norms may be reinforced in various ways.
STRATEGIC APEX
OPERATING CORE
MIDDLE LINE
TOP MANAGEMENT
Operation / operation
process- MintzbergProfessor of Management Studies, McGill University, Canada
Ensures the organization follows its missionSTRATEGIC APEX• Direct supervision-there’s one person issue instruction
People directly involved in the process of obtaining inputs and converting them into outputs
OPERATING CORE
• Standardisation of skills-in which different work is coordinated by virtue of related training the workers have received
Converts the desires of the strategic apex into the work done by the operating coreMIDDLE LINE• Standardisation of outputs-achieves coordination by specifying results of different work
Analysers, Planners, Personnel analystsTECHNOSTRUCTURE• Standardisation of work processes-achieves coordination by specifying the work process of people carrying out interrelated tasks
Ancillary services, do not plan/standardize productionSUPPORT STAFF• Mutual adjustment-achieves coordination by the simple process of informal communication
DEPARTMENTATION
FUNCTIONAL
FUNCTIONALInvolves grouping together people who do similar tasks
ADVANTAGES
- Expertise is pooled thanks to the division of work into specialist areas.- Its avoid duplication and enables economies of scale- Its facilitates the recruitment, management and development of functional
specialists- It suits centralised business
DISADVANTAGES
- Focuses on internal processes and inputs- Communication problems may arise between different function- Poor co-ordination- Create vertical barriers to information and work flow
ADVANTAGES- There is local decision-making at the point of contact
between the organisation and its customers e.t.c- It may be cheaper to establish area factories/offices
than to service markets from one location
DISADVANTAGES- Duplication and possible loss of economies if scale
might arise- Inconsistency in methods/ standards may develop
across different areas
PRODUCT
Every product is handled by separate management team and the problems faced in the development of a product are carried out by single group of employees working
in that unit
ADVANTAGES- Accountability- Specialisation- Co-ordination
DISADVANTAGES- It increases the overhead costs and
managerial complexity of the organisation- Different product divisions may fail to share
resources and customers
CUSTOMER
An organization may organise its activities on the basis of types of
customer, or market segment
Departmentation by customer is commonly associated with sales
department and selling effort, but it might also be used by a jobbing or
contraction firm where a team of managers may
be given the responsibility of liasingwith major customers
DIVISIONALISATION
DEFINITION : division of a business into autonomous
regions or product businesses , each with own revenue ,
expenditures and asset purchase programmes , and therefore each with its own profit and loss responsibility
Divisional structure :• Some activities are decentralized to
business units or regions
A subsidiary company under
the holding company
A strategic business unit (SBU)
within the larger company, with its
own objectives
Aprofit centreor investment centre withi a
single company
DIVISION
KEY CONDITIONS
EXCESSIVE MANAGEMENT SUPPORT
LARGE ENOUGH TO SUPPORT
PROPER DELEGATED AUTHORITY
‘ARM’S LENGTH’ TRANSACTION SCOPE AND CHALLENGE
POTENTIAL FOR GROWTH
ADVANTAGES AND DISADVANTAGES
ADVANTAGES
• Attention below ‘top level’
• Reduce unprofitable products and activities
• Greater attention to efficiency , lower costs and higher profit
• More authority to junior managers
• Reduce number of levels of management
DISADVANTAGES
• Impossible to identify completely independent products / market
• Limited discretion can be used
• More resource problem
HYBRID STRUCTURE
Involve a mix of functional departmentation , ensuring specialized attention to key functions , example of elements :
• Product organization
• Customer organization
• Territorial organization
THE SIMPLE STRUCTURE / ENTREPRENEURAL STRUCTURE
• The strategic apex exerts a pull to centralize , leading to the simple structure.
• The strategic apex wishes to retain control over decision-making.
• Characteristics :-
1. Wide span of control
2. No middle line
3. Minimal hierarchy
4. No technostructure
5. Imply little formalization / standardization of behaviour
MATRIX AND PROJECT ORGANISATION
ADVANTAGES
• Greater flexibility of people , workflow and decision making , tasks and structure
• Inter-disciplinary co-operation
• Motivation and employee development
• Market awareness
• Horizontal workflow
DISADVANTAGES
• Dual authority
• Conflicting demands / ambiguous roles
• Cost increases
• Slower decision-making
NEW ORGANISATIONFLAT
STRUCTURES
‘HORIZONTAL STRUCTURES’‘CHUNKED’ AND
‘UNGLUED’ STRUCTURES
OUTPUT-FOCUSED STRUCTURES
‘JOBLESS’ STRUCTURES
VIRTUAL ORGANISATION
HOLLOW ORGANISATION
MODULAR ORGANISATION
BOUNDARYLESS ORGANISATION
THE SHAMROCK ORGANISATION
SPAN OF CONTROL
Number of subordinates responsible to a superior
Factors influence: Managers capabilities Nature of the manager’s workload
More non-supervisory work: Narrow the span of control Greater the delegation of authority to
subordinates
TALL AND FLAT ORGANISATION
TALL
FOR:
Narrow control spans
Small groups enable team members to participate in decision
Assist management training and career planning
FLAT
FOR:
More opportunity for delegation
Relatively cheap
Speed up communication
DELAYERING
Reduction of number of management levels from bottom to top
Why:
Information technology
Empowerment
Economy
fashion
OUTSOURCING AND OFFSHORING
Outsourcing:
Contracting out of specified operation or services to an external vendor
Sending work to an external organization
Offshoring:
Involve sending work overseas
To make cheaper labour in overseas markets
SHARED SERVICES APPROACH
Single services centre to provide support function
For delivering the service to agreed
service levels
AIMS:• To enable better
use of resources (lower cost)
CORPORATE STRATEGIES
Definition of CORPORATE : the general direction of the whole organization
CHARACTERISTICS
SCOPE OF ACTIVITIES
ENVIRONMENT
RESOURCES
VALUES
TIMESCALE
COMPLEXITY
CORPORATE STRATEGY
BUSINESS STRATEGY
BUSINESS STRATEGY
BUSINESS STRATEGY
Strategic Business Unit ( SBU )
SBU SBU
FUNCTIONAL STRATEGIES
R & D OPERATIONS MARKETING HRM IT / IS FINANCE
STRATEGIES INVOLVING MANY FUNCTIONS
BUSINESS STRATEGY
Definition of BUSINESS : how the organization or its SBUs tackle particular markets
Definition of BUSINESS STRATEGY : how an organization approaches a particular product market area
FUNCTIONAL / OPERATIONAL STRATEGIES
FUNCTIONAL AREA
PRODUCTION
FINANCE
HUMAN RESOURCES MANAGEMENT
INFORMATION SYSTEMS
R & DMARKETING
THE ANTHONY HIERARCHY
STRATEGIC MANAGEMENT
TACTICAL MANAGEMENT
OPERATIONAL MANAGEMENT
CENTRALISATION
CENTRALISED ORGANISATION : one in which authority concentrated in one place
TWO ways perceptions :
• GEOGRAPHY
• AUTHORITY
ADVANTAGES AND DISADVANTAGES OF CENTRALISATION
PRO CENTRALISATION
• EASIER TO CO-ORDINATE
• WIDER VIEW OF PROBLEMS
• BALANCE INTERESTS OF DIFFERENT FUNCTIONS
• HIGH QUALITY OF DECISIONS
• CHEAPER
• QUICKER CRISIS DECISIONS
• STANDARDISED ORGANISATION-WIDE ( policies , procedures , documentation )
PRO DECENTRALISATION
• AVOIDS OVERBURDENING
• IMPROVES MOTIVATION
• GREATER AWARENESS OF LOCAL PROBLEMS
• FASTER DECISION MAKING AND RESPONSE
• DEVELOP SKILLS
• SEPARATE SPHERES OF RESPONSIBILITY
• COMMUNICATION TECHNOLOGY