Organisation Structure

Hierarchy type Organisational Structure Flat type Organisational Structure

Pros and Cons of Different Structures This depends on the business type, size and structure used Let’s look at a functional structure: Chief Executive Board of Directors Production Marketing Accounts Personnel IT

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

An Example of Organisation by Product/Activity Hewlett Packard Imaging and Printing Group Personal Systems Group Enterprise Systems Group HP Services HP Financial Services

Organisation by Product/Activity Advantages Disadvantages Clear focus on market segment helps meet customers’ needs Positive competition between divisions Better control as each division can act as separate profit centre Duplication of functions (eg different sales force for each division) Negative effects of competition Lack of central control over each separate division

Hewlett-Packard’s Headquarters Worldwide Organisation by Area Hewlett-Packard’s Headquarters Worldwide Hewlett Packard Americas Houston, Texas Europe, Middle East, Africa Geneva, Switzerland Asia Pacific Hong Kong

Organisation by Area Advantages Disadvantages Serve local needs better Positive competition More effective communication between firm and local customers Conflict between local and central management Duplication of resources and functions

Illustrating Structures 1 The Pyramid Traditional view of organisations Decisions pass down formal channels from managers to staff Information flows up formal channels from staff to management

Illustrating Structures 2 Entrepreneurial Key worker Key worker Quick to act but pressure on decision makers One or two people make decisions Most small businesses have this structure Decision maker Great reliance on key workers supporting decision makers Key worker Key worker

Illustrating Structures 3 Matrix Marketing Production Finance Project A Project teams created Staff with specialist skills Project B

Illustrating Structures 4 Independent Not suited to most businesses due to lack of control Dr A Dr B Support systems to professionals such as doctors Dr C Dr D

More on Business Structure Centralisation Decentralisation Managers keep control Decisions are made in the interests of the whole business Costs can be cut by standardising purchasing and so on Strong leadership Empowering and motivating Freeing up senior managers’ time Better knowledge of those closer to customers Good staff development