1. Business Structures

2. What is an organisation?
A group of people working towards a defined set of goals and objectives.

3. ‘An organisation is the rational co- ordination of the activities of a number of people for the achievement of some common explicit purpose or goal, through the division of labour and a hierarchy of authority.’
Edgar Schein

4. Internal Structure
Organisations are set up to suit the type of activity that they carry out.
Organisations can be set up their structure in a number of ways. Organisation structures include:
Tall
Flat
Matrix
Entrepreneurial
Centralised/Decentralised

5. Organisation pyramid Board of directors Chief executive
Senior managers
Managers
Junior managers
Supervisors
Assistants

6. Organisational Structures
Description
Advantages
Disadvantages
Tall
Many layers of management
Clear lines of control
Promotion opportunities
Communication issues
Increased management costs
Flat
Fewer levels of management
Quicker decision making
Staff are empowered
Increased workload for some staff
Wide span of control makes it hard to manage

7. Span of control
Span of control means the number of people who report to a manager.
Manager
Manager
Employees
Employees
Narrow span of control
Wide span of control

8. Organisational Relationships
Narrow Span of Control
Fewer subordinates to manage = less empowerment
More opportunities to communicate with managers
Subordinates likely to be involved in decision making
Longer chain of command
Wide Span of Control
More empowerment for subordinates
Tasks can be delegated
Large number of subordinates to control
Fewer managers which saves money
Shorter chain of command

9. Organisational Structures
Description
Advantages
Disadvantages
Matrix (project)
Used for completing a specific task.
Involves various departments
Motivating for employees
Wide range of skills used
Helps solve a problem
Costly to implement as runs next to normal structure
Two managers can be confusing
Entrepreneurial
Found in smaller org’s.
Decisions mostly made by owner
Decisions are made quickly
Clear direction for the company
Demotivating for employees
Limited number of ideas
Not suitable for large org’s

10. Organisational Structures
Description
Advantages
Disadvantages
Centralised
Decisions are made by senior managers at Headquarters
Clear and consistent direction for the org
Skilled staff in charge of decisions made
Demotivating for branch staff
Communication issues
Decentralised
Decisions are delegated to departments/
branches
SMT have more time for other issues
Prepares junior managers for promotion
Decisions can be made quickly
Lack of experience or willingness amongst managers
Procedures carried out differently
Not a consistent approach used
vs.

11. Changing Organisational Structure
Often organisations change their structure. This may be due to the changing size of the organisation or financial pressures.
They can do so by:
Downsizing – removing some of the activities carried out e.g. closing a branch
Delayering – removing layers of management e.g. changing from tall to flat
Outsourcing – Allowing an outside agency to provide that service e.g. cleaning

12. Types of organisational grouping
Functional
Product/service
Customer
Place/territory
Technology
Line/staff

13. Organisational Grouping
After an organisation has chosen a structure they must then decide how to group their activities.
These can be done in a number of ways:
Functional
Product/Service
Customer
Geographical

14. Organisational Grouping - Functional
Activities are grouped into departments based on similar skills, expertise and resources used:
Marketing
Operations
Human Resources
Finance
Advantages
Disadvantages
No duplication of resources
Loyalty to department vs organisation
Become experts in field
Communication barriers
Career paths developed
Slow to respond to change
Communication and cooperation

15. Organisational Grouping - Product/Service
Grouped around product or service offered
Each product requires specialist knowledge and expertise
Advantages
Disadvantages
Self-contained units
Duplication of resources
Expertise develops
Difficult to share research or equipment
Quicker response to external changes
In competition with other divisions

16. Organisational Grouping - Customer
This is grouped by customer types e.g. market segment.
Advantages
Disadvantages
Price/promotion suit customer
Expensive – staff costs
Customer loyalty develops
New group for new customer eg ecommerce
Quick response to changing needs
Duplication of resources

17. Organisational Grouping - Geographical/place/territory
Organised by geographical region
e.g. North-East Scotland and Midlands group
Advantages
Disadvantages
Local offices = local knowledge
Cost of re-location
Accountable for success/failure in area
Language and cultural barriers
Responsive to customer needs
Duplication of resources

18. Organisational Relationships
Responsibility – being answerable for decisions and action taken
Authority – having power to make decisions
Chain of Command – how instructions are passed down through an organisation and how communication flows up and down.
Delegation – giving the responsibility to someone else to carry out a task

19. Organisational Relationships
Line Relationship – manager and subordinate e.g. Marketing Director > Marketing Assistant
Lateral Relationship – two or more people on the same level e.g. Marketing Director >Finance Director
Functional Relationship – support for other functional areas e.g. Admin Dept giving support to the HR Dept
Informal Relationships – colleagues communicating on an informal basis. These are said to be the most important relationships in an organisation

20. Answer a question
Many organisations group their activities by function. Discuss other methods an organisation could use to group their activities.
(8 marks) 2008
15 minutes

21. Peer marking You are going to swap answers.
Has your partner answered well?
Does the answer make sense?
Is it worth a mark?
Work with the class to assist them in understanding the way that questions are marked. They peer assess and discuss the answer with each other and then award the appropriate marks – teacher gives support.

22. Solution
Product/service grouping is when each division will be grouped according to a product or product range, eg Sky Sports, Sky Movies, Sky Atlantic.
Allows an organisation to be more responsive to changes in that market.
Expertise is developed within each specialised division.
Allows management to identify poorly performing products.
There can be duplication of resources and personnel across groups.
Divisions may find themselves competing against each other.

23. Solution (cont’d)
Place/territory grouping is when grouping of resources is carried out across a geographical area, eg midlands, Scottish, south-east etc.
Allows for the needs of different areas.
Can become familiar with local customs and cultures.
Expensive with regards to administration and staffing costs.

24. Solution (cont’d)
Technological grouping is when organisations group their activities according to technological process.
Suitable for large organisations with different production processes.
Duplication of resources can occur.
Customer grouping is when resources are organised around groups of customers with similar needs.
Allows for services to be tailored to each group of customers or a specific customer.
Builds up customer loyalty due to the personal service they receive.
There can be large staffing costs with this type of grouping.
Duplication of resources in administration, finance, etc.

25. Answer a question
a) Explain the advantages and disadvantages of the entrepreneurial structure.
(4 marks) 2008
b) Describe the main features of the matrix structure.
(3 marks) 2010
12 minutes

26. Self-marking You are going answer on your own! Have you answered well?
Does the answer make sense?
Is it worth a mark?
Work with the class to assist them in understanding the way that questions are marked. They self assess and then award the appropriate marks – teacher gives support.

27. Solution to a)
Advantages
Decisions are made quickly as managers do not consult staff, who rely on their expertise.
Staff know who they are accountable to as they have only one superior.
Disadvantages
Difficult to use in larger businesses as they have more complex operations.
Top managers carry a heavy workload/burden as they have to make all the key decisions.
Does not allow for initiative from staff, which can demotivate talented employees.

28. Solution to b) Matrix structures are created for specific projects.
They are made up of specialists from different functional areas, and offer a good mix of skills and ideas.
They are a a good method of solving complex problems, having different abilities and disciplines involved.
Each staff member can have two managers: the project manager and their own functional manager. This can cause confusion and conflict as staff are unsure of their priorities.
Gives staff increased experience in different situations, which improves their skills and potential for promotion (career progression).

29. Factors affecting organisation structure
Size of organisation
Technology used
Market firm operates in
Staff skills within organisation
Products/services made or supplied by organisation
Click for clip

30. Definitions
Line relationships – exist when a member of staff is in charge of another member of staff.
Functional relationships - exist with people on the same level of management.
Staff relationships – exist with people who have skills that support the firm as a whole rather than individual departments.
Informal relationships – exist as friendships between workers who may have no formal contact in the workplace.

31. Delayering What happens?
Levels of management are reduced (move from tall to flat structure)
Wider spans of control
Savings in management wages
Effect on
organisation chart
Flatter structure
Fewer management posts
Increased worker responsibilities

32. Downsizing What happens? Staff laid-off
Wages (labour costs) are reduced
Effect on
organisation chart
Greater workload for departments
Some posts will disappear
Workers have more duties

33. Answer a question Distinguish between delayering and downsizing.
(3 marks) 2008
6 minutes

34. Peer marking You are going to swap answers.
Has your partner answered well?
Does the answer make sense?
Is it worth a mark?
Work with the class to assist them in understanding the way that questions are marked. They peer assess and discuss the answer with each other and then award the appropriate marks – teacher gives support.

35. Solution
Delayering involves removing a whole level of management to flatten an organisation’s structure.
Downsizing involves closing specific areas of the organisation to cut costs.
Communication – Delayering will quicken communication between management levels. Downsizing may not, as it closes certain departments and does not affect management structures.
Efficiency – Delayering may be viewed as more efficient by removing levels of management, but downsizing may affect productivity and efficiency as staff are not replaced.
Cost – Delayering reduces costs through fewer promotions, saving on salaries, whereas downsizing saves costs by making employees redundant.

36. What is culture? Define what you think culture means.
Identify three cultures you know.
Give evidence that they exist.
Click for clip

37. Culture definitions Way of life Ethos Traditions Ambience Customs
Norms
Ethos
Ambience
Atmosphere
Culture is: ‘the way things are done around here’ or
‘the (often unwritten) code affecting attitudes, decision-making and management style’.

38. Culture definition
The values, beliefs and norms relating to the organisation that are shared by all staff. Another video on Google!
Click for clip

39. Cultural evidence
Artefacts
Values
Beliefs

40. Think of your local school
What is the visible evidence of its culture?
Academic or vocational?
Uniform?
Discipline?
Homework?
Approachable SMT?

41. Importance of corporate culture
Peters & Waterman (1982) observed US and Japanese firms to examine the differences between each.
The US firms compared favourably with the Japanese on hard skills such as strategy and structure, but not on soft skills such as values and culture.

42. Corporate culture Think of an organisation you know.
What can you tell about its culture as an outsider looking in?

43. How to develop a strong corporate culture
Use of uniforms, logos, symbols.
Ideals and principles of the organisation (a mission statement).
Reward schemes for employees.
Code of conduct for employees (attitudes and beliefs).
Advertising (promote their corporate values).
Teambuilding among employees.

44. Advantages of a strong corporate culture
Increased staff loyalty.
Less turnover of staff (saves in training costs too).
Increased staff motivation.
Increased awareness by the public.
All employees know their role and responsibilities within the organisation.

45. Answer a question
a) Describe the different methods organisations can use to develop a corporate culture.
(4 marks) 2010
b) Explain the advantages to an organisation of having a strong corporate culture.
15 minutes

46. Peer marking You are going to swap answers.
Has your partner answered well?
Does the answer make sense?
Is it worth a mark?
Work with the class to assist them in understanding the way that questions are marked. They peer assess and discuss the answer with each other and then award the appropriate marks – teacher gives support.

47. Solution to a) Implementing the ideas and beliefs of the owner.
Use of symbols or logos that customers recognise.
Staff uniforms consistent throughout the organisation.
Uniformity of layout of offices/branches.
Use of a phrase or motto that can be recognised by customers/used in marketing.
Standardise how staff interact with customers.
Merchandising of products linked to the organisation.

48. Solution b)
Improved customer satisfaction and loyalty – consumers associate themselves with the organisation because of brand/logos, etc.
Increased staff motivation as they can associate themselves with the organisation.
Staff can move between branches/departments more easily as they are aware of their practices and policies.
Staff will identify with the organisation, which could result in reduced absences or lower staff turnover.
A single corporate identity is given to customers, who will then associate with that organisation.
The organisation can be easily recognised anywhere in the world, which will allow customers to feel comfortable with products/services wherever they are.