Management Structures AOS 2: Internal Environments of LSOs Business Management

AREA OF STUDY 2 – Internal Environments of LSOs Corporate Culture Definition Elements of corporate culture Real vs. Official Management’s role in developing How can it be changed or improved? Management Structures Bureaucracy definition Changes in organisational structure (flat) Horizontal vs. Vertical structure Functional, divisional and matrix structures Representing structures in diagrams Pros & Cons of each structure Organic Structures Management Roles, Skills & Styles Definitions Planning SWOT Analysis Good leadership Controlling Management Styles: definitions, pros, cons, example Situational Approach Management skills: delegation, communication etc Competencies Skills & Styles Policy Development & Ethics Macro pressures on policy Operating pressures on policy Internal pressures on policy Steps in policy development Policy evaluation Ethics & CSR AREA OF STUDY 2 – Internal Environments of LSOs  ☐ ☐ ☐ ☐

Homework Check Nike Worksheet

Quick recap. Levels of Planning

Levels of Objectives Strategic (long term) objectives – 2-5 years, set by senior management. Tactical (medium term) objectives – 1-2 years, set by departmental (middle) managers. Operational (short term, day-to-day, up to a month) objectives, set by front-line managers for their work team.

Types of Objectives Financial objectives: Related to the financial objectives of an organisation, eg: profit maximisation, sales growth, improving market share, increasing productivity. Service objectives: Related to an organisations desire to provide a service, eg: service to customers or the community Social and ethical responsibility objectives: Relates to the organisation being a corporate citizen, eg: Body Shop’s support of animal rights, Ronald McDonald House. Environmental objectives: Related to an organisations responsible resource use and environmental effects of their activities, eg: waste and emission reduction.

Management Structures Organisational (or Management) structure is how the work tasks are distributed in an organisation. It highlights roles, responsibilities, the chain of command and the lines of communication within an organisation. Structure – refers to the different parts of an organisation and the relationships between those parts. The structure of an organisation follows strategy of the organisation, i.e. if management changes strategy, we would expect changes in structure. The formal structure of an organisation is depicted in an organisational chart. Read text pg 48, 49 & 50

Management/Organisational Structures TOP LEVEL MANAGEMENT (MANAGING DIRECTOR AND SENIOR MANAGEMENT) MIDDLE MANAGEMENT LOWER LEVEL OR FRONTLINE MANAGERS (SUPERVISORS) OPERATIONS LEVEL OF PERSONNEL (WORKERS) Read text pg 48, 49 & 50 There is a more detailed diagram on page 46

Hierarchical (traditional) Structure Types of Management Structures Hierarchical (traditional) Structure A typical structure is hierarchical in nature, due to the top-down reporting relationship. Top – Board of Directors, MD or CEO – responsible for the management of the organisation as a whole, and for ensuring it meets its objectives. It deals with strategic issues (big picture) Middle – carry out instructions of senior managers and supervise lower (frontline) management. Are responsible for tactical decision making. Lower (frontline) – supervise the workers, more ‘hands-on’, day-to day operations. Operations (workers) – perform day-to day operational tasks of the business. In recent times this model has become flatter as organisations have ‘rightsized’ or ‘downsized’.

Types of Management Structures Traditional Hierarchical – as per last slide, also referred to as Vertical specialisation, with its centralised decision making (chain of command). Simple Hierarchy – all are responsible to the one manager, who in turn has responsibility for all strategic decision making. Promotes close contact between manager and employees, but limits career paths for employees Functional/Horizontal specialisation – where staff are organised into departments (HR. Marketing, Finance, R&D, Production). Promotes specialisation, but only works if the different functional managers communicate with each other. This structure works best for medium to large organisations Read text pgs 51 – 54 Activity 2.1a, pg 55

Types of Management Structures Geographic structure – . This structure works well with businesses in several different locations, allows LSO to access wider markets, local laws can be handled better if there is a branch in the country/region, employers can see parts of the world; difficulties include language barriers, travel time for managers and different time zones. Matrix structure: works well for Projects, as workers are answerable to 2 managers – 1 project and 1 functional manager. Positives include: multiskilling of employees, opportunities for staff, difficulties include complexity and communication can be difficult between the 2 managers Organic structure: business outsources all non core activities/areas. Positives include: money not wasted on employing people all year (eg marketing/HR), difficulties include some control is lost and there may be a lack of understanding of the culture/values of the business. Read text pgs 51 – 54 Activity 2.1a, pg 55

Trends in Management Structures The traditional hierarchical structure is increasingly being viewed as too inflexible, expensive, and stifling employee creativity. As such, many organisational structures are becoming flatter, to reduce costs (downsizing), improving communication channels (flows in all directions), maximizing employee participation, increasing motivation, skills, and empowerment. Many organisations are also outsourcing many of their departments e.g. HR, IT, Payroll, Accounting.