ch01 handy

7/16/2019 ch01 handy

1/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.1

Understanding

Organisational Context 2eSlides by Claire Capon

Chapter 1

Inside organisationsOrganisational structures

Handys cultures

7/16/2019 ch01 handy

2/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.2

Organisational structures

The simple structure

7/16/2019 ch01 handy

3/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.3

Figure 1.2 The simple structure

7/16/2019 ch01 handy

4/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.4

Main features

Centralised

Organised around owner Small companies or small

companies in early stages of

development

7/16/2019 ch01 handy

5/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.5

Advantages

Owner controls early growth

and development of thebusiness

7/16/2019 ch01 handy

6/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.6

Disadvantages

Owner may lack specialist

knowledge in some areas Appropriate up to a certain

size only

7/16/2019 ch01 handy

7/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.7

Organisational structures

The functional structure

7/16/2019 ch01 handy

8/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.8

Figure 1.3 The functional structure

7/16/2019 ch01 handy

9/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.9

Main features

Centralised

Small company producinglimited range of products

Organised around tasks to be

carried out

7/16/2019 ch01 handy

10/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.10

Advantages

Simple lines of control

Efficient lines ofcommunication and

information flow -

vertical and short

7/16/2019 ch01 handy

11/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.11

Advantages (cont.)

Specialist managers heading

up each function Improved decision making

7/16/2019 ch01 handy

12/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.12

Disadvantages

Functional managers

overburdened withoperational duties

Longer-term planning

may be neglected

7/16/2019 ch01 handy

13/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.13

Disadvantages (cont.)

Becomes stretched by

growth and productdiversification

Difficult to co-ordinate and

manage across differentfunctions

7/16/2019 ch01 handy

14/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.14

Organisational structures

The divisional structure

7/16/2019 ch01 handy

15/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.15

Figure 1.4 The divisional structure

7/16/2019 ch01 handy

16/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.16

Main features

Product or geographical

divisions

Diverse range of products or

services offered, or

geographically-diversemarkets served

7/16/2019 ch01 handy

17/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.17

Advantages

Divisions are profit centres in

their own right

Decentralised structure - easier

to manage diversity

Divisional managers responsiblefor short-term and medium-term

planning

7/16/2019 ch01 handy

18/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.18

Advantages (cont.)

Top managers are free to

concentrate on longer-term

planning

Profitability is spread across

the divisions, products andmarkets

7/16/2019 ch01 handy

19/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.19

Disadvantages

Potential conflict between

divisions over resource

allocation

Overall co-ordination of

divisions can be difficult

7/16/2019 ch01 handy

20/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.20

Organisational structures

The holding company structure

7/16/2019 ch01 handy

21/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.21

Figure 1.5 The holding company structure

7/16/2019 ch01 handy

22/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.22

Main features

Small head office - acts as an

investment company

Decentralised - operating

companies are largely

independent

7/16/2019 ch01 handy

23/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.23

Main features (cont.)

Operating companies trade

under own name, rather than

holding companys name

7/16/2019 ch01 handy

24/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.24

Main features (cont.)

Operating companies are

required to meet strict

financial targets

Financial and legal sections

support head office, not theoperating companies

7/16/2019 ch01 handy

25/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.25

Advantages

Low central overheads

Risk and profit are spread Ease of divestment of

operating companies

7/16/2019 ch01 handy

26/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.26

Disadvantages

Individual operating

companies under risk of

divestment by holding or

parent company - may feel

threatened No centralised skills

7/16/2019 ch01 handy

27/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.27

Disadvantages (cont.)

Potential lack of overall

co-ordination and direction

of the whole organisation

7/16/2019 ch01 handy

28/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.28

Organisational structures

The matrix structure

7/16/2019 ch01 handy

29/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.29

Figure 1.6 The matrix structure: multinational

company

7/16/2019 ch01 handy

30/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.30

Main features

Double definition of profit

centres (two arms of the matrix)

Found in different types of

organisation:

- large multinationals- university departments

- sophisticated service companies

7/16/2019 ch01 handy

31/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.31

Advantages

Decentralised and localised

decision making in the matrix

Growth and complexity

controlled by people in the

matrix

7/16/2019 ch01 handy

32/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.32

Advantages

Direct contact between two

arms of the matrix replaces

bureaucracy

Quality decision making and

increased managerialmotivation

7/16/2019 ch01 handy

33/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.33

Disadvantages

In the matrix, potentially:

- a high degree of conflict- a long time to make

decisions

- unclear job and task

responsibilities

7/16/2019 ch01 handy

34/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.34

Disadvantages (cont.)

Difficult to implement

High overhead costs

7/16/2019 ch01 handy

35/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.35

Handys cultures

The power cultureThe role culture

The task culture

The person culture

7/16/2019 ch01 handy

36/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.36

Figure 1.9 The power cultureSource: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright

Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.

7/16/2019 ch01 handy

37/48

Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.37

The power culture

Usually found in small firms

with simple structure

Owners tend to recruit

employees similar in

character to themselves

7/16/2019 ch01 handy

38/48

Capon: