Structures Understanding Business Higher Business Management 1 Ways

Structures Understanding Business Higher Business Management 1

Ways to Structure By function: By product or activity: By place: By customer: By process: • Arranging the business according to what each section or department does • Organising according to the different products made • Geographical or regional structure • Where different customer groups have different needs • Where products have to go through stages as they are made

Functional Structure Managing Director Company Secretary Sales Marketing Human Resources Finance R and D Operations Recruitment Warehouse Manager Training Quality 3

Functional Structure Advantages § Specialisation – each department focuses on its own work § Accountability – someone is responsible for the section § Clarity – know your and others’ roles Disadvantages § Closed communication could lead to lack of focus § Departments can become resistant to change § Coordination may take too long § Gap between top and bottom

Product/Service Structure

Product/Service Structure Organisation by Product/Activity Advantages § Expertise can develop in dealing with each product/service § Managers can easily identify how each product is performing § Decisions can be more responsive to changes in the business environment Disadvantages § Duplication of functions (e. g. different sales force for each division) § Divisions may find themselves competing with each other § Lack of central control over each separate division

Place Structure Organisation by Place

Place Structure Organisation by Place Advantages § Serve local needs better § More effective communication between firm and local customers § Better knowledge of local staff Disadvantages § Conflict between local and central management § Duplication of resources and functions

Organisation Structures Charts Hierarchical Structure Managing Director Senior Managers Middle Managers Workers

Organisation Structures Charts Matrix Structure Marketing Sales R&D Project HR Production Finance 10

Organisation Structures Organisation Charts Entrepreneurial Finance R&D Production MD Marketing Sales 11

Organisation Structures § Centralised § Important decisions are made at the head office § Very little delegation § Easier to promote a corporate image § Decentralised § Important decisions made by managers § Employees are motivated and empowered

Structure Key Terms Some Key Terms Authority Span of control Chain of Command • the right to make decisions and carry out tasks • the number of people a superior is responsible for • the relationship between different levels of authority in the business Hierarchy Delegation Empowerment • shows the line management in the business and who has specific responsibilities • authority to carry out actions passed from superior to subordinate • giving responsibilities to people at all levels of the business to make decisions Line relationship • vertical line on an organisation chart Functional relationship • horizontal line on an organisation chart