Competitive Organisational structures

Objectives 1.To be able to explain the factors influencing the choice of organisational structures in larger businesses 2.To be able to explain how larger business adapt their organisational structures to improve competiveness 3.To evaluate the issue involved with implementing and operating an adapted organisational structure

Organisational structures in larger businesses Organisational structure regularly changes, adapting to changes in the market place. There are 3 types of organisational structure appropriate to larger organisations and often more than one will appear:

Organisational structure 1: traditional  Traditional; usually in the financial and administrative areas where confidentiality is important and consistency of service expected. What would we also call this structure?

Organisational structure 2: Matrix Matrix structure: project based appropriate for the marketing function. Sales teams often have different goals, depending on how the market is split (Geography, type of customer)

Organisational structure 3: informal Informal structure has no obvious organisation though there will be a support system. This is appropriate for the R & D Dept.

Factors influencing decisions If staff are highly skilled/specialised, the structure will be more informal than if staff are semi-skilled or unskilled

Market pressures If in a competitive market, there will be pressure to streamline & reduce costs, speeding up decision making and being more responsive to the market

Culture A move away from a risk taking culture as the business becomes more established and therefore quality focussed

Leadership style Leadership style; a tall narrow hierarchy for managers who want to be in control. Leaders who prefer delegation will have a wider span of control or matrix system

Business Size The scale of the business will ultimately decide which is the most suitable structure for an organisation to use. As businesses grow they will need to adapt their structure to suit it's new size.

Business Nature In some industries it is just not viable to run a traditional hierarchical structure as they are more project focused. This is therefore another factor that influence the decision a business will make.

Impact on competiveness How quickly are decisions made? If the company losing out to rivals, then perhaps they are to slow Does it operate efficiently at minimum cost? The structure may be inefficient, with too many layers of management. How effective are the channels of communication? If too long then communication will be poor and decision makers can not respond quickly enough. Who is involved in decision making. A the business grows the entrepreneur who started the business may have to relinquish some control to those with more knowledge. Poor Communication

Questions: 1.Describe the main factors determining the choice of organisational structure (4 )

Explain why a matrix structure might be most appropriate for the R&D dept of a Company (6)

How can the organisational structure of a large organisation lead to inefficiency (4)

An international haulage co has notice that since delayering its organisational structure, there has been an increase in stress related absenteeism. Discuss whether or not delayering always leads to improved competiveness. (18)

Adapting to improve competitiveness Centralisation Decentralisation Delayering Flexible workforce – Peripheral workers Outsourcing Homeworking Do you know all these terms and what they mean? If not jot them down and find out....