Organisational structures

Aim of the organisation - OSCAR

O – objective S – specialization C – coordination

A – authority R – responsibility

What does organising mean?- deciding, WHO WILL DO tasks that must be performed

and WHO WILL BE RESPONSIBLE for seeing, that tasks were

done properly.

Organisation chart

= diagram that shows how work is divided and where the authority lies

The aim of organisation is:To define and effectively use planned activities of

people to achieve objectives and other needs of the company.

Form of coordinating of activities to achieve objectives of organisations is organisational structure.

Forms of organisational structures

Formal – are specified by organisation systems and charts

Informal – spontaneus existence in the group of people with schared interest, friendship, sympathy, unofficial channels of communication

Grouping Jobs into FunctionsGrouping Jobs into Functions Once tasks are grouped into jobs, managers

must decide how to group jobs together. Function: people working together with similar

skills, tools or techniques to perform their jobs. Functional structure consists of departments such as

marketing, production, and finance. Workers can learn from others doing similar tasks. Easy for managers to monitor and evaluate workers.

Hard for one department to communicate with others. Managers can become preoccupied with their

department and forget the firm

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A Sample of Functional StructureA Sample of Functional Structure

V .P . Tax V .P . C on tro lle r

V .P . M IS D irec to rC orp . P lan n in g

E xec . V .P .F in an ce & A d m in .

S en io r V . P .S to res

D irec to rTran sp orta tion

V .P .D is trib u tion

S en io r V .P .L og is tic s

C la rk Joh n sonC E O

Divisional StructuresDivisional StructuresA division is a collection of functions working together to produce a product.

Divisions create smaller, manageable parts of a firm.Divisions develop a business-level strategy to compete.

A division has marketing, finance, and other functions.

Functional managers report to divisional managers who then report to corporate management.

Product structure: divisions created according to the type of product or service.

Geographic structure: divisions based on the area of a country or world served.

Market structure: divisions based on the types of customers served.

Product StructureProduct Structure

W ashing M achineDivision

LightingDivision

T elevisionDivision

CorporateM anagers

CEOCorporation

Geographic StructureGeographic Structure

NorthernRegion

W esternRegion

SouthernRegion

EasternRegion

CorporateM anagers

CEOCorporation

Market StructureMarket Structure

Large BusinessCustom ers

Sm all BusinessCustom ers

EducationalInstitutions

IndividualCustom ers

CorporateM anagers

CEOCorporation

Figure 8.4c

Global StructuresGlobal Structures

When managers find different problems or demands across the globe, global solutions are needed. Global geographic structure: different divisions

serve each world region. For customer needs that vary between regions.

Global product structure: Customers in different regions buy similar products so firms keep most functional work at home and set up a division to market product abroad.

Matrix & Product TeamsMatrix & Product Teams Matrix structure: managers group people by

function and product teams simultaneously. Results in a complex network of reporting relationships. Very flexible and can respond rapidly to change. Each employee has two bosses which can cause problems.

Functional manager gives different directions than product manager and employee cannot satisfy both.

Product Team Structure: no 2-way reporting and the members are permanently assigned to the team and empowered to bring a product to market.

Matrix StructureMatrix Structure

CEOCEO

Func.Func. ManagersManagers

SalesSales DesignDesign ProductionProduction

Product Product team Ateam A

Product Product team Bteam B

Product Product team Cteam C

Product Team

= two boss employee

Tea

m M

anag

ers

Tea

m M

anag

ers

Organisation structures according Organisation structures according to shape or span of controlto shape or span of control

a) flat structures – wide span structures,

b) tall structures – narrow span structures.

Flat structuresFlat structures

Enterprise has got less organisation levels with more subordinates. There is more decentralised management with higher requirements for independence, self-reliance and higher quality of labour.

Tall structuresTall structures

The enterprise has got more organisation levels with less subordinated departments.

Generally there is a centralized management.

Organisation structures based Organisation structures based on time durationon time duration

a) Temporary structures (with limited duration) –existence of structural organisation and configuration has got time limited duration (e.g. team work),

b) With unlimited duration – expected long term duration of these structures

There is a tendency to use more temporary structures to achieve more flexible enterprises (team work, project teams)

Tendences of development of Tendences of development of organisation structuresorganisation structures

a) Hole structures,

b)Network structures,

c) Virtual enterprises,

d) Intra-entrepreneurship.

Hole structuresHole structures

What is outsourcing?

Definition of outsourcingDefinition of outsourcing

Outsourcing is work done for a company by Outsourcing is work done for a company by another companyanother company or people other than the or people other than the original company's employees.  original company's employees. 

Outsourcing entails purchasing a product or Outsourcing entails purchasing a product or process from an outside supplier rather than process from an outside supplier rather than producing this product or process in-house. producing this product or process in-house. The business that is outsourcing will train The business that is outsourcing will train outsourcing provider to form a supply chain outsourcing provider to form a supply chain partnership partnership

The enterprise dispose of all activities, which it can buy in expected quality, but cheaper from external suppliers. (outsourcing).

Hole structures keep the activities with the highest value added, as research, construction, design, technology, marketing, production, sale, but other activities and services rent from some other firm.

What you can do by outsourcing?What you can do by outsourcing?

Examples:Examples:

SecuritySecurity

TransportTransport

AccountingAccounting

AuditingAuditing

CleaningCleaning

„„Hole“ enterprise for production of trackHole“ enterprise for production of track

Chierf Executive

Research, development, construction

Marketing Sale

Motors

Clutch, gear

Assembly

Axle, brakes

Electric componets

Subdelivery:

When to use outsourcing?When to use outsourcing?

the price is lower than the internal costs,

it is not possible to transport and store the products,

the supplier is able to ensure a higher quality,

the production rights are not available or are too expansive,

internal production is associated with various risks (safety etc.)

there is no experience with management of a similar type of production.

When is not outsourcing When is not outsourcing advantageous?advantageous?

the price is higher than the internal supply,

it is not possible to transport and store the products

free manufacturing capacities are available,

capital is available and is not used sufficently,

know-how and patents are available,

nobody react to the demand

Network structuresNetwork structures

The enterprises are connected together and participate on individual stages – preproduction,

production and after production stage.

From outside they figure as independent, but the product can be made only with the cooperation.

Network structureNetwork structure

Production(part 1)

Production(Part 2)

Výzkum avývoj

Production(Part 3)

Completion

Regionalbank

Distribution

Management and administration

Virtual organisationVirtual organisation

Flexible variante of network organisatin. It does not have a fixed structure, it changes according to objective and activity. It is a free organisation of firms for limited time on some purpose for realisation of specific purchuase order. Virtual enterprise works, deliver, even if it does not exist as independent.

It is a form of firm cooperation (consorcium), when firms enter to the alliance to combine their limited possibilities and connected their research, production, sale or other potenctial.

Intra-entrepreneurshipIntra-entrepreneurship

Simulation of market situation and business conditions inside the firm. Firm is divided in SBU = Strategic

Business Units with high autonomy. There is „firm in the firm“. SBU behaves as independent, sovereign firms with

defined customers, competitors, mission, objectives, plans and have self-management, resources. They are responsible for their business results (profit, loss) but they are also limited with central management and its

strategy.

Organisation structure - SBUOrganisation structure - SBU

Top management

Sectorgoods

Sectorsystems

Sectorenergy

Sectorinternational

services

GroupSBU

Group Group

Division Division DivisionDivision

SBUDivision Division Division

DepartmentalSBU

DepartmentalSBU

Process organisationProcess organisation

PROCESS – system connection of activities. Example – material orders.

ACTION – system connection of individual activities.

Example – material orders.

ACTIVITY – basic element of business process, which is possible to clasify from the point of view of costs, which are spent for this activity. Example – discharge of pallets with material by the fort-lift track