1. INTERNAL ORGANISATION
How organisations sort themselves..and why.

2. Options. Business can organise by:-
Function
Structures
Place
Customer
Technology
Product/Service

3. FUNCTIONAL GROUPING Very common in most organisations
Where the business is sorted into departments based on skills:-
Marketing
Finance
Human Resources
Operations
Research and Development ……

4. Details Usually a centralised decision-making structure
Decisions made at the top
Traditional

5. PRODUCT OR SERVICE Organised into divisions
Each division will have its own functions – self contained
Used by large organisations
Many merged conglomerates use this structure
Cadbury Schweppes – 2 divisions

6. CUSTOMER GROUPING
Organisations that are structured around customers or groups of clients
Usually found in the service sector
Medical practice
Solicitors
Bank

7. PLACE/TERRITORY Designed around geographical factors
Used by companies selling over a large area
Multinationals eg Shell
Meet the needs of the customers in the different countries
Locals can be employed

8. Allows specialisation
TECHNOLOGY
Used when production can be broken down into obvious stages
Many manufacturing firms use this:
Cutting
Assembly
Packing
Transportation
Allows specialisation

9. But …. Many firms may use a combination of these methods
A business with a main functional structure may have a secondary technological structure in Operations and a customer grouping in marketing

10. FORMS OF ORGANISATION STRUCTURE

11. In brief Hierarchical Flat Matrix Entrepreneurial Centralised
Decentralised

12. Hierarchical Structure
Traditional
Organised in levels
Called the pyramid structure
Decisions made at the top and passed down
Shown in the form of an organisation chart
Clearly defined roles
Usually organised in functions
Criticised for lack of flexibility
Going through major restructuring

13. HIERARCHICAL STRUCTURE
Rector
Depute Rector
PTs
Senior Teachers
Teachers
Information
Instructions

14. Details…
Fayol said that an organisation with more than 5 levels will suffer from communication problems
Chinese Whispers Effect
Them –v- Us scenario
Cannot react to changes in the business environment (market)
Can be stagnant and overstaffed
Is inefficient

15. Features of a Hierarchical Structure
A Hierarchical structure will be made up of
A NARROW SPAN OF CONTROL
A LONG CHAIN OF COMMAND

16. Span of control
If the organisation is to work effectively there must be a suitable span of control
THE NUMBER OF PEOPLE IN THE BUSINESS THAT A MANAGER HAS DIRECT CONTROL OF

17. SPAN OF CONTROL WILL DEPEND ON:-
How good the manager is at their job
The type of work the business does
The kinds of decisions that have to be made
manager
This manager has a span of control of 5

18. CHAIN OF COMMAND
The Chain of Command runs right the way down an organisation from the top – the chairman through the managers to the workers at the bottom
It is another way of describing the levels of an organisation

19. This organisation chart has 8 levels

20. CHAIN OF COMMAND
An organisation should not have too many links in the Chain of Command as this leads to poor communications
CHINESE WHISPERS EFFECT
Short – 3 to 4 Long – 6 to 7

21. Problems with Hierarchical structures
Designed for close control – no room for initiative
Decision-making can take a long time
Inability to change quickly

22. RESTRUCTURING/DELAYERING
What can be done?
RESTRUCTURING/DELAYERING
The removal of layers from the organisation can reduce these problems
Middle management have often been found to be carriers of information
Not effective in the running of the business

23. Remove middle management
Delayering
The length of the Chain of Command is 8. This may be too long and the business could encounter communication problems.
Delayering could help.
Remove middle management

24. EMPOWERMENT Delayering leads to:- Workers being more responsible
Workers being more productive
Empowerment
Motivation improves if staff are given more responsibility

25. DOWNSIZING
This is also a method of reducing the size of your business and cutting costs
If a particular area of your business is not profit making or can be contracted out then it can be removed
THIS IS KNOWN AS DOWNSIZING:-

26. DOWNSIZING
This example has 6 departments and could downsize if it had to cut costs.
Remove department

27. THE FLAT STRUCTURE

28. A product of Delayering
Caused by the need to respond to the market
This structure has fewer levels of management:
Shown as a flat pyramid
No problems with communication
Decisions are made more quickly
Many large organisations have gone through the delayering process

29. The Matrix Structure
Based around specialist skills and getting groups of people working together
Individuals within a team have their own responsibility
Gives scope for people lower down the organisation to use their skills
Encourages initiative

30. Matrix Structure
Team A
Team B
Team C
Project X
Project Y

31. The Entrepreneurial Structure
Decision-
maker

32. Features:- All decisions are made centrally
Few collective decisions and a great reliance on key workers
Most small businesses have this type of structure
Decisions can be made quickly
Subordinates know who is in charge
Little consultation required
Not effective for large businesses

33. Centralised Structure
Where all decisions are made centrally (like entrepreneurial)
Rely heavily on a number of key workers
Advantages
Senior management have full control
Procedures can be standardised
Senior managers have holistic view
Senior managers are experienced

34. Decentralised Structure
Subordinates have authority to take some decisions
Delegation is freely used
Advantages
Empowerment of workers
Reduces stress on senior management
Provides greater job satisfaction for subordinates
Allows flexibility and quick response to change

35. In practice….
It is unlikely that any organisation will use one of these structures completely
There is usually a mix of both
Quality and staff selection could be decentralised
Finance is centralised