Chapter 5 Business organisation, structure and strategy Qiang Jiang School of Business Sichuan University, China jiang.qiang@outlook.com

Topic list 1 The informal organisation 2 Organisational structure 3 Levels of strategy in the organisation 4 Centralisation and decentralsation

1 The informal organisation Benefits of the informal organisation Employee commitment Knowledge sharing Seed Responsiveness Co-operation

1 The informal organisation Problems of informal organisation: Collectively against organisational interests Moral-damaging rumours Too important to fulfilling employees’ needs Violating safety or quality assurance measures

1 The informal organisation Managers can minimize problems by: Meeting employee’s needs as far as possible Harnessing the dynamics of the informal organisation Involving managers themselves in the informal structure

2 Organisational structure Components of the organisation Strategic apex Operating core Middle line Technostructure Support staff

2 Organisational structure Functional departmentation Advantages: Expertise is pooled Avoid duplication Facilitates Centralised Disadvantages: Communication problems Poor co-ordination Vertical barriers

2 Organisational structure Geographic department Advantages: Local decision-making Cheaper Disadvantages: Duplication Inconsistency

2 Organisational structure Product/brand departmentation Advantages: Accountability Specialisation Co-ordination Disadvantages: Increases the overhead costs Fail to share resources

2 Organisational structure Customer departmentation Sales department Business customers Divisionalisation Properly delegated authority Large enough Management support Potential for growth Scope and challenge ‘arm ‘s length’ transaction

2 Organisational structure Hybrid structures The simple structure A pull to centralise The simple structure is characteristic of small, young organisations

2 Organisational structure Matrix and project organisation Advantages： Greater flexibility of people, workflow and decision-making, tasks and strucure Inter-disciplinary co-operation Motivation and employee development Market awareness Horizontal workflow

2 Organisational structure Matrix and project organisation Disadvantages： Dual authority Conflicting demands or ambigurous roles Cost Slower decision making

2 Organisational structure The new organisation Flat structures Horizontal structures Chunked and unglued structures Output-focused structures Jobless structures Virtual organisations

2 Organisational structure The shamrock organisation Professional core Self-employed professionals Contingent work force Consumers Three kinds of flexibility: Personal costs Personnel numbers Skills

2 Organisational structure Span of control refers to the number of subordinates responsible to a superior Capabilities Nature of the manager’s workload Geographical dispersional

2 Organisational structure Tall and flat organisations Scalar chain Delayering Information technology Empowerment Economy Fashion

3 levels of strategy in the organisation Corporate strategies Scope of activities Environment Resources Values Timescale Complexity

3 levels of strategy in the organisation Business strategy Functional/operational strategies Marketing Production Finance Human resources management Information systems R&D

3 levels of strategy in the organisation Corporate strategies Business strategy Functional/operational strategies The anthony hierarchy

3 levels of strategy in the organisation Corporate strategies Business strategy Functional/operational strategies The anthony hierarchy

3 levels of strategy in the organisation The anthony hierarchy Strategic management Tactical management Operational management

4 Centralisation and decentralisation Geography Authority Advantages an disadvantages of centralisation