2 Why Have a Structure? All businesses have to organise what they do A clear structure makes it easier to see which part of the business does whatThere are many ways to structure a business
3 Some Key Terms Flat or tall structure Span of control Chain of command HierarchyDelegationEmpowerment
4 Ways to Structure a Business By function: arranging the business according to what each section or department doesBy product or activity: organising according to the different products madeBy area: geographical or regional structure
5 Ways to Structure a Business By customer: where different customer groups have different needsBy process: where products have to go through stages as they are madeWhat are the advantages/disadvantages of different types of business structure?
6 Pros and Cons of Different Structures This depends on the business type, size and structure usedLet’s look at a functional structure:Chief ExecutiveBoard of DirectorsProductionMarketingAccountsPersonnelIT
7 Functional Structure Advantages Disadvantages Specialisation – each department focuses on its own workAccountability – someone is responsible for the sectionClarity – know your and others’ rolesDisadvantagesClosed communication could lead to lack of focusDepartments can become resistant to changeCoordination may take too longGap between top and bottom
8 An Example of Organisation by Product/Activity Hewlett PackardImaging andPrinting GroupPersonalSystems GroupEnterpriseSystems GroupHP ServicesHP FinancialServices
9 Organisation by Product/Activity AdvantagesClear focus on market segment helps meet customers’ needsPositive competition between divisionsBetter control as each division can act as separate profit centreDisadvantagesDuplication of functions (e.g. different sales force for each division)Negative effects of competitionLack of central control over each separate division
10 Hewlett-Packard’s Headquarters Worldwide Organisation by AreaHewlett-Packard’s Headquarters WorldwideHewlett PackardAmericasHouston, TexasEurope, Middle East, AfricaGeneva, SwitzerlandAsia PacificHong Kong
11 Organisation by Area Advantages Disadvantages Serve local needs better Positive competitionMore effective communication between firm and local customersDisadvantagesConflict between local and central managementDuplication of resources and functions
12 Other Organisational Structures By Customer:Similar effects to structuring by productBy Process:Similar to structuring by function
13 Organisational Structures Now go to the Activity for more……
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