1. Organisation Structure

2. Hierarchy type Organisational Structure
Flat type Organisational Structure

3. Pros and Cons of Different Structures
This depends on the business type, size and structure used
Let’s look at a functional structure:
Chief Executive
Board of Directors
Production
Marketing
Accounts
Personnel IT

4. Functional Structure Advantages Disadvantages
Specialisation – each department focuses on its own work
Accountability – someone is responsible for the section
Clarity – know your and others’ roles
Closed communication could lead to lack of focus
Departments can become resistant to change
Coordination may take too long
Gap between top and bottom

5. An Example of Organisation by Product/Activity
Hewlett Packard
Imaging and
Printing Group
Personal
Systems Group
Enterprise
Systems Group
HP Services
HP Financial
Services

6. Organisation by Product/Activity
Advantages
Disadvantages
Clear focus on market segment helps meet customers’ needs
Positive competition between divisions
Better control as each division can act as separate profit centre
Duplication of functions (eg different sales force for each division)
Negative effects of competition
Lack of central control over each separate division

7. Hewlett-Packard’s Headquarters Worldwide
Organisation by Area
Hewlett-Packard’s Headquarters Worldwide
Hewlett Packard
Americas
Houston, Texas
Europe, Middle East, Africa
Geneva, Switzerland
Asia Pacific
Hong Kong

8. Organisation by Area Advantages Disadvantages Serve local needs better
Positive competition
More effective communication between firm and local customers
Conflict between local and central management
Duplication of resources and functions

9. Illustrating Structures 1
The Pyramid
Traditional view of organisations
Decisions pass down formal channels from managers to staff
Information flows up formal channels from staff to management

10. Illustrating Structures 2
Entrepreneurial
Key worker
Key worker
Quick to act but pressure on decision makers
One or two people make decisions
Most small businesses have this structure
Decision maker
Great reliance on key workers supporting decision makers
Key worker
Key worker

11. Illustrating Structures 3
Matrix
Marketing
Production
Finance
Project A
Project teams created
Staff with specialist skills
Project B

12. Illustrating Structures 4
Independent
Not suited to most businesses due to lack of control
Dr A
Dr B
Support systems to professionals such as doctors
Dr C
Dr D

13. More on Business Structure
Centralisation
Decentralisation
Managers keep control
Decisions are made in the interests of the whole business
Costs can be cut by standardising purchasing and so on
Strong leadership
Empowering and motivating
Freeing up senior managers’ time
Better knowledge of those closer to customers
Good staff development