2. BM Unit 2 - LO11 Higher Business Management Unit 2 Learning Outcome 1 Internal Organisation

3. BM Unit 2 - LO12 An Organisation “An organisation is the rational co-ordination 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. BM Unit 2 - LO13 Organisation by Function 4 main departments found in most organisations 2 departments found mainly in large organisations Regarded as “typical” and associated with a centralised organisational structure

5. BM Unit 2 - LO14 Organisation by Function Advantages n Efficient use of resources n Staff specialisation n Career progression n Centralised decisions n Good communications within the department n Team motivation n Problems sharing and solving Disadvantages n Departmental rivalry n Poor communication between departments n Slow response to external factors n Slow decision-making n Over specialised workforce n Difficult to pinpoint problems

6. BM Unit 2 - LO15 Organisation by Product/Service Each division has its own functional staff Find other examples of this! Generally associated with large multi-national organisations

7. BM Unit 2 - LO16 Organisation by Product/Service Advantages n Each division can focus on its own market segment n Each division’s performance can be measured n Healthy competition between divisions n Allows flexibility - can close down or sell off loss-making divisions n Co-operation between divisions can reduce costs - eg shared transport for the whole group Disadvantages n Duplication of functions may be wasteful n Competition may de- motivate a poorly performing division n Loss of control by central management over divisional managers

8. BM Unit 2 - LO17 Organisation by Customer Advantages n Can cater for specific customer needs n The market can be segmented Disadvantages n Can be inefficient if a division is too small (insufficient customers) n Loss of control by senior management over divisional managers

9. BM Unit 2 - LO18 Organisation by Area Advantages n Can serve the needs of local people more easily n Improved communications - on the spot n Healthy competition between regions Disadvantages n Duplication of resources n Loss of control by senior management over area managers

10. BM Unit 2 - LO19 Organisation by Technology n Used in the manufacturing sector where different technological processes are involved in a diverse range of products n Scope for specialisation of the workforce and simplified training within the same manufacturing process

11. BM Unit 2 - LO110 Line/Staff Groupings Line Departments n Hierarchical system n Superior - subordinate relationships n Clear lines of authority n Can be very long chains of command leading to slow actions Staff Departments n Examples - Human Resources, Finance, Research & Development, Strategic Planning n Specialist advice but often have no authority n Many companies out-source staff activities

12. BM Unit 2 - LO111 The Marketing Function The Marketing Mix n Product n Price n Promotion n Place “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.”

13. BM Unit 2 - LO112 The Human Resource Function n Recruitment n Training n Appraisal n Collective bargaining n Employment legislation n Personnel records “HR is concerned with people at work and with their relationships within an organisation.”

14. BM Unit 2 - LO113 The Finance Function n Financial Accounting n Management Accounting n Financial Reporting

15. BM Unit 2 - LO114 The Operations Function The Production Process n Inputs - raw materials and labour n Process - making the goods n Outputs - products/services

16. BM Unit 2 - LO115 Forms of Organisational Structure n Hierarchical (tall) structures n Flat structures n Matrix structures n Entrepreneurial structures n Centralised structures n Decentralised structures

17. BM Unit 2 - LO116 Aspects of Organisational Structure n Organisation charts n Span of control n Line/functional/staff relationships n Formal and informal structures n Organisational culture n Recent trends in structure n Delayering n Down-sizing n Management roles/responsibilities