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Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.1 Understanding Organisational Context 2e Slides by Claire Capon Chapter.

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Presentation on theme: "Capon: Understanding Organisational Context 2nd edition © Pearson Education 2004 1.1 Understanding Organisational Context 2e Slides by Claire Capon Chapter."— Presentation transcript:

1 Capon: Understanding Organisational Context 2nd edition © Pearson Education Understanding Organisational Context 2e Slides by Claire Capon Chapter 1 Inside organisations Organisational structures Handy’s cultures

2 Capon: Understanding Organisational Context 2nd edition © Pearson Education Organisational structures The simple structure

3 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.2 The simple structure

4 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features Centralised Organised around owner Small companies or small companies in early stages of development

5 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages Owner controls early growth and development of the business

6 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages Owner may lack specialist knowledge in some areas Appropriate up to a certain size only

7 Capon: Understanding Organisational Context 2nd edition © Pearson Education Organisational structures The functional structure

8 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.3 The functional structure

9 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features Centralised Small company producing limited range of products Organised around tasks to be carried out

10 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages Simple lines of control Efficient lines of communication and information flow - vertical and short

11 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages (cont.) Specialist managers heading up each function Improved decision making

12 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages Functional managers overburdened with operational duties Longer-term planning may be neglected

13 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages (cont.) Becomes stretched by growth and product diversification Difficult to co-ordinate and manage across different functions

14 Capon: Understanding Organisational Context 2nd edition © Pearson Education Organisational structures The divisional structure

15 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.4 The divisional structure

16 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features Product or geographical divisions Diverse range of products or services offered, or geographically-diverse markets served

17 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages Divisions are profit centres in their own right Decentralised structure - easier to manage diversity Divisional managers responsible for short-term and medium-term planning

18 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages (cont.) Top managers are free to concentrate on longer-term planning Profitability is spread across the divisions, products and markets

19 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages Potential conflict between divisions over resource allocation Overall co-ordination of divisions can be difficult

20 Capon: Understanding Organisational Context 2nd edition © Pearson Education Organisational structures The holding company structure

21 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.5 The holding company structure

22 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features Small head office - acts as an investment company Decentralised - operating companies are largely independent

23 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features (cont.) Operating companies trade under own name, rather than holding company’s name

24 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features (cont.) Operating companies are required to meet strict financial targets Financial and legal sections support head office, not the operating companies

25 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages Low central overheads Risk and profit are spread Ease of divestment of operating companies

26 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages Individual operating companies under risk of divestment by holding or parent company - may feel threatened No centralised skills

27 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages (cont.) Potential lack of overall co-ordination and direction of the whole organisation

28 Capon: Understanding Organisational Context 2nd edition © Pearson Education Organisational structures The matrix structure

29 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.6 The matrix structure: multinational company

30 Capon: Understanding Organisational Context 2nd edition © Pearson Education Main features Double definition of profit centres (two arms of the matrix) Found in different types of organisation: - large multinationals - university departments - sophisticated service companies

31 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages Decentralised and localised decision making in the matrix Growth and complexity controlled by people in the matrix

32 Capon: Understanding Organisational Context 2nd edition © Pearson Education Advantages Direct contact between two arms of the matrix replaces bureaucracy Quality decision making and increased managerial motivation

33 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages In the matrix, potentially: - a high degree of conflict - a long time to make decisions - unclear job and task responsibilities

34 Capon: Understanding Organisational Context 2nd edition © Pearson Education Disadvantages (cont.) Difficult to implement High overhead costs

35 Capon: Understanding Organisational Context 2nd edition © Pearson Education Handy’s cultures The power culture The role culture The task culture The person culture

36 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.9 The power culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, Reproduced by kind permission of Penguin Books Ltd.

37 Capon: Understanding Organisational Context 2nd edition © Pearson Education The power culture Usually found in small firms with simple structure Owners tend to recruit employees similar in character to themselves

38 Capon: Understanding Organisational Context 2nd edition © Pearson Education The power culture The culture is like that of a club with all employees as members Power culture is very reliant on the owner

39 Capon: Understanding Organisational Context 2nd edition © Pearson Education The power culture Work is divided by function or product Lines radiating from the centre represent functional or product areas

40 Capon: Understanding Organisational Context 2nd edition © Pearson Education The power culture Concentric circles represent power and influence The further away from the centre, the weaker the power and influence

41 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.10 The role culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, Reproduced by kind permission of Penguin Books Ltd.

42 Capon: Understanding Organisational Context 2nd edition © Pearson Education The role culture Often found in larger organisations with functional or divisional structure Built around defined jobs, roles and procedures

43 Capon: Understanding Organisational Context 2nd edition © Pearson Education The role culture Strength of organisation is in the pillars or departments Designed for stability and continuity Not adaptive to change

44 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.11 The task culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, Reproduced by kind permission of Penguin Books Ltd.

45 Capon: Understanding Organisational Context 2nd edition © Pearson Education The task culture Often found in organisations with the matrix structure Problem-solving organisations

46 Capon: Understanding Organisational Context 2nd edition © Pearson Education The task culture People and resources drawn together into a temporary team for a specific project Once the project is completed, the team disbands and individuals move on to other projects

47 Capon: Understanding Organisational Context 2nd edition © Pearson Education Figure 1.12 The person culture Source: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright Charles Handy 1976, 1981, 1985, Reproduced by kind permission of Penguin Books Ltd.

48 Capon: Understanding Organisational Context 2nd edition © Pearson Education The person culture Organisation exists to support the individual specialist and allow them to practise their profession Found in the professions, e.g. doctors, solicitors, dentists


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