2. TYPES ORGANISATIONAL STRUCTURES

Types organisational structure: DEFINE

Outline of how activities are directed to achieve the goals of an organisation. It shows the direction of work through an organisation

Types organisation structure: DESCRIBE

Based on organisations common elements + purpose, it is structured to ensure a coordinated effort, division of labour, hierarchy of authority to achieve its goals

• typically exhibit one of the 4 broad departmental structures: functional, product, divisional or team

Types organisational structures: EXPLAIN

when determining which type of organisational structure to implement, you must consider the business environment

• INTERNAL FACTOR: such as its

  • Life stage (eg, start ups usually have fewer employees and levels therefore could operate more on a team structure)

  • Leadership culture (eg, more autocratic the leaders the more levels therefore could operate as traditional function structure)

  • Expertise and experience of staff (higher levels of expertise leads towards a team or functional/product with a larger span of control)

• EXTERNAL FACTORS, such as

  • Market: supply and demand if volatile or highly competitive a flatter structure may be required for quick decision making. A product structure may also assist in product innovation

  • Industry: such as creative industry (marketing firm) a team structure may be appropriate

BY FUNCTION: DEFINE

When reporting relationships are grouped based on task or specialty area

BY FUNCTION: DESCRIBE

There may be separate departments for marketing, accounting, and engineering

These departments serve as functional units and are overseen by functional managers or department heads

• in each department, team members report up the chain of command to department heads, who in turn report to the business top management, apprising them on the status of their functional areas

Characteristics of a functional organisational structure include:

1. There’s a top-down hierarchical structure - most functionally structured business have a senior management team that oversees the business at large

2. Department heads report to senior management. Each department has its own head who is either part of top management or directly reports to them

3. Employees specialise in certain tasks. Employees are hired for their expertise in a particular skill

BY FUNCTION: EXPLAIN

Generally, businesses using a functional approach are traditional and hierarchical (lots of layer).

• all the functional heads will report directly to the business president or CEO

BY FUNCTION: DISCUSS

ADVANTAGES:

• specialisation: staff is managed by a person with experience in their same specialty who can adequately understand and review their work

  • Employees typically start their careers in an entry-;even position within the function and develop specialised knowledge as they move up within the hierarchy

  • Become experts within their functional area

• Productivity and efficiency: staffers work with others in their field, which allows for knowledge sharing

  • A worker who is an expert in the functional areas Characteristics can perform tasks with a high level of speed and efficiency which enhances productivity

• Employee growth: because the career paths within the functional unit are clear, the employees may be highly motivated to advance their careers by reaching the next rung on the ladder, which may also make them more productive

DISADVANTAGES: (This type of organisational structure can lead towards a more autocratic leadership style as it tends to be hierarchical

• lack of teamwork/‘big picture overview’: functional areas may have difficulties working with other functional areas

  • Often a perception that they are competing with other functional areas for resources and a lack of understanding of what other areas do for the business

  • If project called for several units to work together, units may become territorial and unwilling to cooperate with each other

  • In essence, each unit may act in what it perceives to be its own best interests instead of those of the organisation as a whole

  • Infighting may cause projects to fall behind schedule

  • Since the unit doesn’t have an overview, of the entire business, it may focus attention on goals that it believes are important but which are not priorities for top management

• Difficult management control: as business and function area grows larger, the functional areas can become difficult to manage due to their size

  • They can become almost like small firm on their own, with their own cultures, facilities and management methods

  • As organisations get larger and top management needs to delegate more decision-making responsibilities to each functional area, the degree of autonomy may also increase, making coordination of activities more difficult

BY PRODUCT: DEFINE

The business is organised around specific products or groups of products (goods or services) sold or provided

BY PRODUCT: DESCRIBE

• in product organisational structure, managers report to the executive/director/manager by product type

• This type of structure is primarily used by retail businesses

  • For example, in a grocery store, the product lines may include fresh, grocery or frozen

BY PRODUCT: EXPLAIN

• each product is generally treated as profit centre

  • The expenses related to a product are subtracted from the revenues generated by the products sales

• This allows the business to track trends in consumer demand, as a decline in specific products lines may indicate the need to innovate or a decision to remove a product item.

BY PRODUCT: DISCUSS

ADVANTAGES:

• individuals in different product groups are more focused on quality and product features for customer satisfaction (it will increase)

• There is usually greater product responsiveness to market changes

• It often reduces the product decision making burden of the top executive

• The performance of the business’s products (profits and losses) is typically easier to evaluate

• Employees become specialised and highly knowledgeable for product they are responsible for

• Develops competition between different product departments

• More innovative

DISADVANTAGES

• duplication and lack of economies of scale for functional areas (eg, IT, finance, Human Resources)

• Can create problems for customers who purchase products across multiple product groups

• Sometimes, there are conflicts between the organisational objective and the objectives of its product groups

  • Department more worries about being better than other rather than organisational objectives/aims

• There us a increased likelihood of conflict between different product groups and greater difficulty coordinating across product groups

• Coordinate and communication between product departments can be more difficult if in conflict

BY DIVISION (eg geography): DEFINE

The market-based structure where in the divisions of an organisation are based around the market ( or industry ) in which the business operates in.

BY DIVISION: DESCRIBE

Include geographies, customer type or industry (where product can be used in multiple industries such as retail, manufacturing, primary etc such as business software for managing employees)

BY DIVISION: EXPLAIN

Ideal for an organisation that has geographical locations, customers or applications that are very unique or distinct from each other

BY DIVISION: DISCUSS

ADVANTAGES:

• collaboration: communication and collaboration between representatives of the different focuses generally establish working relationships with other employees within the office area as they often work side by side with personnel from various departments as regional office are generally smaller in zine than centralised office

  • Ability to adapt quickly to changes in divisional goals and processes and to bring everyone on board with new strategic initiatives

• Local managers and local focus: Ability to hire locally offers business the advantage of having leaders + employees whoa re completely family with the local business environment, culture and legal climate

  • Customers can feel more at ease when speaking with local representatives who fully understand their language and expressions

  • Focusing all functions on one geographical area allows each department to operate with precision: product attributes can be altered to suit local tastes; workplace policies can be altered to fit local workers; marketing can be tailored to the specific market; sales practises can stay within culturally acceptable boundaries; pricing schemes can fit local trends

  • Performance measurement and strategy: tracking performance of individual markets and work groups is simplified under this structure as metrics such as revenues, profit margins, costs and performance improvements can be tagged to specific regions

  • Communication with local customer: understand unique needs + wants

DISADVANTAGES:

• independent: can be easy for decision making to become narrow focused as corporate headquarters can be in different country or region

  • Too much autonomy can lead to divisions developing systems that are incompatible with one another and divisions may end up inadvertently duplicating activities that other divisions are already handling

TEAM: DEFINE

Groups people according to common objective

TEAM: DESCRIBE

• less hierarchical than other organisational structures

• These types of structures chain of command and span of control can change depending on the project or goals being completed

• Management may take on role of assign tea leaders or facilitators

• Employees can be assigned different replies depending on the project goals and areas of needs and expertise

• Some employees may belong to multiple teams

TEAM: EXPLAIN

Without chains of command, decisions made more quickly and business becomes adaptable and able to move quickly within marketplace

• empowered employees leading to highly motivated workplace

TEAM: DISCUSS

ADVANTAGES:

• without chains of command, decisions are made quickly and business becomes adaptable and able to move or innovate quickly within the marketplace

• Empowers employees leading to highly motivated workplace

• Get to know everyone

• Chance for leadership roles

• Get big picture of organisation

DISADVANTAGES:

• increase in conflict as employees compete for recognition and team leader roles

• Unequal work distributions

• Workers must be trained to take on challenges, problem solve and work cooperatively

• Loss of control

• Span of control becomes confusing