1. IB Business and Management
2.2 – Organisation Structures
HL content

2. Reminder of principles and terms
Chain of Command – the number of layers in an organisational structure
Authority - who is in control of whom
Span of control – the number of subordinates reporting to a manager; advantages of a short chain: better communication and managers get to know subordinates better
Delegation – passing down authority, responsibility remains
De-layering – the removal of one or more layers from the organisational structure

3. Delegation
The passing down of authority from a manager to a subordinate
Responsibility stays with the manager
Becomes inevitable as an organisation gets bigger and managers can’t do all of the tasks themselves

4. Accountability
The extent to which a person is held responsible for the success or failure of a task.

5. Bureaucracy
Bureaucracy is the prescribed rules, policies and procedures that an organisation has.
This ‘red tape’ slows down decision making and make the business inflexible
Bureaucracy is associated with large firms with tall structures

6. Examples of Bureaucracy
Filling in forms
Long chain of commands
Inflexible procedures

7. Task
Watch the video “A classic bureaucratic procedure’

8. Centralisation and Decentralisation

9. Centralisation vs Decentralisation

10. Centralisation and Decentralisation
These words refer to the extent to which authority is delegated in an organisation
Centralisation – only the top level managers have the authority to make decisions (all key decisions at Head Office)
Decentralisation – delegation of decision making power is passed downwards

11. Is centralised or decentralised decision making better? Why?
What does this depend on?

12. Advantages of Centralisation
Senior management have more control and can make decisions from the point of view of the whole business
Rapid decision making
Senior managers are more experienced and skilful in making decisions and so should be of a better quality
In times of crisis a business may need strong leadership by a central group of managers
Decisions will be consistent

13. Advantages of Decentralisation
It empowers and motivates workers
It reduces stress on senior managers and releases them to perform more important tasks
It provides subordinates with greater job satisfaction by giving them more say in decision making
Subordinates may have more knowledge of ‘local conditions’ affecting their area of work allowing them to make well-informed choices
It allows greater flexibility and quicker response to change
It gives training for taking over higher positions.

14. Disadvantages of Decentralisation
Loss of Control
Greater chance of mistakes and inconsistency

15. Which is best? Depends on….
Size of organisation
Time frame
Importance of decisions
Level of risk
Culture
Skill of the workforce/management
When might centralised decision making be the most appropriate

16. Matrix Structures/Project Teams

17. What is a matrix structure
A flexible organisation where employees from different functional areas of an organisation work together on projects
The groups are lead by a project manager
Each member of staff is accountable to 2 managers….. Their functional manager and their project manager

19. Key Features
Emphasises getting people with specialist skills together in PROJECT TEAMS.
Allows the organisation of tasks along lines that cut across departmental boundaries.
Individuals within the team have their own responsibility.

20. Advantages of a Matrix
The appointment of a project manager allows for better co-ordination of projects
Increased flexibility
Improved communication
Cross-fertilisation of ideas.
Increased opportunities for employees
Motivating for employees

21. Can you think of any disadvantages?

23. Disadvantages of a Matrix
Difficult to control
Friction between new group members from different departments may arise.
Contrasting sub-cultures of different departments may cause difficulties.
increased administration costs
Split loyalties of workers

24. Issues with Matrix Structures….
Training costs
Wage expectations
Motivating or demotivating?

25. Organisational Structure
Flexible structures

26. Flexible structures
Unlike a traditional hierarchical structure, flexible structures change in response to the businesses needs
This requires staff to be multiskilled - trained in different job roles so they can be used where they are needed.

27. Henry Mintzberg

28. Mintzberg says…….
The internal structure of an organisation depends on both the complexity and pace of change.
Businesses will only be successful if the structure is flexible enough to deal with rapid change

29. Different parts of an organisation according to Henry Mintzberg
Strategic Apex (top management – key decision makers)
Middle Line (middle management)
Operating Core (operations staff and processes)
Techno structure (system of technical support)
Support Staff (staff outside of the main process such as admin/ICT/marketing)
Ideology (halo of beliefs and traditions; norms, values, culture)

30. Mintzberg’s organisational configurations
Mitzberg devised 6 configurations for organisations. He says that all may be present but that one will be dominant

31. Innovative organisations (Adhocracy)
Staff work in small teams to deal with tasks
Decision making is decentralised
No standardised procedures
Firm is flexible and adaptive to change

32. Entrepreneurial organisations
Decision making power is retained by the strategic apex
There is direct supervision of staff
Decision making is centralised

33. Machine organisations (Machine bureaucracy)
Procedures are formalised
There are set ways of doing things which are set out in policy documents
Communication is clear but the organisation is inflexible

34. Divisionalised Structure
Coordination is through the middle line.
Each middle manager ensure that their teams achieve company standards.
Structures can be inflexible unless there is effective decentralisation and delegation

35. Professional organisations
The workforce is made up of professionals with standardised skills
The organisational core specialise in a skill
They are therefore not multiskilled so the structure is inflexible

36. Missionary organisations
The organisation is coordinated through standard ideologies. Workers all share the same set of beliefs

37. Tom Peters

38. What Tom Peters Says….. People are an organisation’s core asset
Flatter organisational structures are better as there is better communication, delegation and flexibility in adapting to change.
These structures will promote innovation and commitment from the workforce.
Successful businesses would:
Remove bureaucracy
Use project teams

39. Organisational Structure
The informal organisation

40. The Informal Organisation
A glance at an organisational chart can show who's the boss and who reports to whom.
But this formal chart won't reveal which people confer on technical matters or discuss office politics over lunch.
Much of the real work in any company gets done through this informal organisation with its complex networks of relationships that cross functions and divisions

41. David Krackhardt and Jeffrey Hanson (1993) say…….
There are three types of informal organisational networks that exist in the workplace:
Advice Networks People who are sought after to provide guidance and help solve problems
Trust Networks People who can be relied upon for their dependability and trustworthiness
Communication Networks People who talk to each other on a normal basis as friends
These relationships exist between staff in different departments and different ranks and are in addition to formal communication networks

42. Benefits of firms acknowledging informal organisations:
Motivation – These informal organisations can help develop a sense of belonging in the work place
Better communication - Informal groups can be a good way of spreading messages and receiving feedback
Better decision making – often informal groups are the ones who come up with the best solution.

43. Organisational Structure
Outsourcing and Off shoring

44. Outsourcing/Subcontracting
The act of finding an external party to carry out internal (and often non core) activities of the firm.
Common activities outsourced
Cleaning
Accounting
ICT maintenance
Catering
Recruitment and Selection
Manufacturing of components
Customer service call centres
Security
training

45. Task Watch the advert for Xerox and Marriot Hotels.
What point is the advert trying to make?

46. Task BISS Puxi outsources: Catering Cleaning Some printing jobs
Discuss…..
Why? What are the benefits of doing this?
What problems could it cause?

47. How does outsourcing reduce costs/efficiency?
Job is being done by specialists who are more efficient
Reduces the need for capital expenditure
Different subcontractors may bid for the contract meaning that competitive prices are gained
Increases flexibility
Reduces labour costs
The business focuses on it’s core operations

48. Potential problems of outsourcing?
Can initially cause redundancies
Quality needs monitoring
Will the third party follow the same ethical standards?

49. Why do businesses choose to outsource?
So that they can focus on their core operations
Reduce costs
If the business lacks expertise
If the business is working at full capacity

50. Off Shoring
Relocating business functions and processes overseas. This can be:
Production offshoring (e.g. manufacturing)
Service offshoring (e.g. call centres)
Why would a firm do this?
Where are popular offshoring destinations?

51. Benefits of offshoring to host countries
Job creation
Economic growth
Tax revenue
Development of skilled workforce
Investment in infrastructure

52. Issues with offshoring:
Is offshoring exploitation?
Difficult to monitor ethical standards
Communication difficulties
Exchange rate fluctuations

53. Migration
This refers to international movement of labour. This can be due to the following reasons:
Skills shortages
Free movement of labour
Pay rate differentials
Rise of multinationals
Cheap/flexible migrant workers