PGPMA TERM 1 ORGANISATION AND MANAGEMENT - …. Organis… · · 2015-02-19Middle line 3. Support...

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PGPMA TERM 1ORGANISATION AND

MANAGEMENT

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ORGANISATIONAL STRUCTURE

ORGANISATION AND MANAGEMENT



An organisation has five main parts

1. Strategic apex2. Middle line3. Support staff4. Technostructure5. Operating core



Five Organizational Structure

• Simple Structure • Machine Bureaucracy• Professional Bureacracy• Divisionalized Form • Adhocracy



Entrepreneurial structure

Found in small companies, built around the owner managerThe entrepreneur has specialist knowledge of the product/serviceAdvantages: fast decision making, more market responsive, goal congruence, good control, close bond to workforceDisadvantages: lack of career structure, dependant on owner, can’t cope with diversification

ENTREPRENEURS

EMPLOYEES



Matrix structure

Combines benefits of decentralization and co-ordinationInvolves dual reporting to managersAdvantages: Combines both functional and divisional structures, flexibility, customer orientation, encourage teamworkDisadvantages: Dual command and conflict, dilution of functional authority, time consuming meetings, higher admin costs.


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Matrix structure

CEO

Vice PresidentEngineering

Vice PresidentFinance

Vice PresidentPurchasing

Vice PresidentSales andMarketing

Vice PresidentResearch andDevelopment

Product AManager

Product BManager

Product CManager

Product DManager

Product Team



Functional departmentation

Common grouping of individuals by skill, knowledge, and action yields into tasks, departments & sub departments.

Advantages:Clear task assignments, easy for department members to build on each other’s

experience, easy to explain, excellent management training, uses employee technical quality

Disadvantages: Rigidity to change, difficulty coordinating functions, reinforces narrow training

and thinking, may create routine jobs, difficulties in communicating across technical areas

CEO

Production Marketing Finance HR

AdverManager

MktResearch



Geographical departmentation

Activities are grouped based on location, some authority is retained at Head office but day to day operations are handed on a territorial basis.

Advantages: Enables geographic growth, clear responsibilities for areas, training of general managers, relief for top management.

Disadvantages: Duplication of efforts, Inconsistency in standards.



Geographical departmentation

COMPANYHEADQUARTERS

SOUTHERNREGION

NORTHERNREGION

CENTRALREGION

WESTERNREGION

EASTERNREGION

HRFINANCEPRODUCTION MARKETING



Product departmentation

Organization structured in accordance with product lines, divisions or departmentsDivisions are profit centersCertain department (like accounts) are centralized

Advantages: Enables growth, clear responsibility for products/departments, training of general managers, easily adapted for further diversification, relief for top management

Disadvantages: Potential loss of control, lack of goal congruence, duplication, specialists may feel isolated, allocation of central costs can be a problem


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Product Division Structure

Vice PresidentSales and Marketing

Vice President Research

and Development

Vice President Materials

Management

CEO

Vice President Finance

CannedSoups

Division

PDM

FrozenVegetableDivision

PDM

FrozenDesertsDivision

PDM

BakedGoods

Division

PDM



Customer departmentation

Under customer departmentation, relatively self-contained unitsdeliver the organization's products or services to specificcustomer groups



Boundary-less structures

Hollow organisations

Virtual (network)

organisations

Modular organisations



Outsourcing

Threshold competencies

Core competencies

Service level

agreements

Transaction theory costs



Outsourcing

Advantages of outsourcing:• Can remove uncertainty about cost (costs fixed)• Long-term contracts encourage planning for the future• Can save on costs via economies of scale• Can increase effectiveness where supplier deploys higher

levels of expertise• Allows access to specialist knowledge and innovations• Flexibility (contract permitting)



Outsourcing

Disadvantages of outsourcing:• Difficulties negotiating and managing suitable Service

Level Agreement• Can lead to loss of control, particularly over quality• Means giving up an area of threshold competence that

may be difficult to reacquire• The same outsourcing service is likely to be available to

competitors



Offshoring

Offshoring is the relocation, by a company, of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. Even state governments employ offshoring.

More recently, offshoring has been associated primarily with the outsourcing of technical and administrative services supporting domestic and global operations from outside the home country ("offshore outsourcing"), by means of internal (captive) or external (outsourcing) delivery models.



Co - ordination

Coordination is the act of coordinating, making different people, departments or things work together for a goal or effect.

Mechanisms for achieving co-ordination : Budget setting Standardized work processes Standardized outputs Standardized skills and knowledge Direct supervision Mutual adjustment



Departmentation

Departmentation refers to the process of grouping activities into departments

Functional departmentation - Grouping activities by functions performed. Activities can be grouped according to function (work being done) to pursue economies of scale by placing employees with shared skills and knowledge into departments

Product departmentation - Grouping activities by product line. Tasks can also be grouped according to a specific product or service, thus placing all activities related to the product or the service under one manager

Customer departmentation - Grouping activities on the basis of common customers or types of customers. Jobs may be grouped according to the type of customer served by the organization.

Geographic departmentation - Grouping activities on the basis of territory. If an organization's customers are geographically dispersed, it can group jobs based on geography.



Scalar chain

Scalar Chain (Line of Authority)—the chain of command from the ultimate authority to the lowest

The scalar chain is the chain of superiors ranging from the ultimate authority to the lowest ranks. It represents an unbroken series of authority-accountability relationships



Span of control

Span of control is the number of individuals reporting to a supervisor

Narrow: for complex tasks, inexperienced or poorly trained subordinatesCreates many levels – expensive, unresponsive to change,

management isolation, less effective communication

Wide span of control goes along with flatter structures (fewer levels). More possible now with new information technologies



Factors influencing span of control

Manager’s capabilitiesNature of Manager’s workloadGeographical dispersion of subordinatesNature of subordinates’ workNature of the work itselfDegree of interaction between subordinatesAmount of support superior receives from other departments



31 members; 3 levels; average span of control is 5

An organization with relatively few levels in its hierarchy of authority.

Flat structure



31 members; 5 levels; average span of control is 2

An organization with relatively many levels in its hierarchy ofauthority.

Tall structure



Levels of organizational planning

Strategic Planning is long term, looks at the whole organization and defines resource requirements

Tactical Planning is medium term, looks at the department/divisional level and specifies how to use resources

Operational planning is very short term, very detailed and is mainly concerned with control



TOP LEVEL - STRATEGIC PLANNING

MIDDLE LEVEL – TACTICAL PLANNING

BOTTOM LEVEL –OPERATIONAL PLANNING



Corporate strategy

DEFINING ASPECTS OF CORPORATE STRATEGYScope of activitiesEnvironmentResourcesValuesTimescaleComplexity

FUNCTIONAL ASPECTS OF STRATEGYMarketingProductionFinanceHRInformation SystemsR & D

Business Strategy: How an organization approaches a particular product market area.



DEPARTMENT ROLE KEY CONCERNS

RESEARCH & DEVELOPMENT

Improving existing products

Developing new products

Anticipating customer needs

Generating new ideasTesting Cost

PURCHASING

Acquiring goods and services required for the business

Price and payment terms

QualityStock Levels/delivery

schedules

PRODUCTION

Converting raw materials into finished goods

Quality of materials and finished goods

Wastage/efficiencyStock levels/production

schedules

DIRECT SERVICE PROVISION

Providing services to clients

Quality Time sheets/scheduling



DEPARTMENT ROLE KEY CONCERNS

MARKETING

Identifying customer needsMarket research, product

designPricing, promotionDistribution

Customer needsQualityPromotional, distribution,

pricing strategy

ADMINISTRATIONAdministrative supportProcessing transactions

EfficiencyInformation processing

FINANCE

Book keeping, reportingFinancial controlsBudgetingRaising of capital

Accuracy and completeness of record keeping

Monthly management reporting

Annual financial reporting

HUMAN RESOURCES

Job Analysis, designRecruitment, selectionPerformance appraisalCompensationTraining, developmentGrievances, discipline

Quality Time sheets/scheduling



Strategic Alliance: Features

Strategic synergy

Positioning opportunity

Limited resource availability

Less risk

Co –operative spirit

Clarity of purpose

Win - win



Questions to be done from Kaplan E1 Study Text (Chapter 2)

1. Test Your Understanding 12. Test Your Understanding 53. Test Your Understanding 94. Case Style Question


PGPMA TERM 1 ORGANISATION AND MANAGEMENT - …. Organis… · · 2015-02-19Middle line 3. Support...

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