Private sector orgs-types:
- NFP orgs
- Mutual orgs
- Profit seeking
Private sector orgs-Not for profit
- Generation of wealth for their owners not primary concern
- As efficiently as possible,avoid loss
Service rather than profit
- Co operatives,charities,unincoporated clubs,societies,associations
- Surplus to further their other obj
Clubs and associations-->some kind of benefits to their members
Charities and voluntary orgs-->benefit to society at a large
Private sector orgs-Mutual orgs:
- Special type of NFP
- Commercial ops owned by their customers
- Customers benefit from both the service and the trading surplus they make
- Possible to pursue other than max trading surplus purpose(charitable giving,promo of community interests and high quality service)
- Don t produce profit for shareholders
Private sector orgs-Profit seeking orgs:
- Undertake the most enterprising asoects if economic activity
- Bulk employment opportunities and tax revenue
- create growth to enhance economic welfare
- Sole trader/partnership;unlimited liability of their debts
- Corporation/company:Limited liability to appeal to investors
Corporations -in terms of permission to solicit investment from general public:
- Private limited company -may not offer their securities to public
- Public limited comp(plcs )-may offer(ont all are quoted)
Pricate sector-Multinational companies characterictics
- capacity to produce in more than one country by owing or controlling a subsidiary
- Often large but also could be small in size
- There s no typical MC
Many emerging countries have made use of Mcs to attract investment through subsidies and low labour costs.This type of org has been the key to export led industrialisation.
Pricate sector-Multinational companies -advantages for the org:
- Production should increase and production costs may be lower-Lower amount of cost spread over a greater amount of output
- Investement in technology can be made to take advanage of economies of scale and improve productivity
- Attract higher calibre of staff in terms of experience and ability
- The most appropriate business model can be used (eg internalising costs of an oversease subs or contracting with a suplier to produce the goods another option)
- Lower distribution costs -avoidance of quotas and import duties
- Spread the risk over many countries
- Legal and tax differences:Can reduce overall tax burder through internal pricing.
Pricate sector-Multinational companies -what contributed to the growth:
- Innovation in communication technol-Internet
- Improved transport and infrastracture
- Market homogenisation
- Political stability(opening of trading borders)
- Increase merger activity
Public sector orgs
- Two main groups: Those taht provide public services and state owned industries.Less clear distinction due to privatisation trend (curb waste and increace efficiency)
- Public -private partnership: Private funds for public sector services
- Good stewardship and prevent of waste is expected,rarely will they trady for profit
- Little control over the income (funds influenced by:current public opinion,government aspirations,negotiation skills of the leaders ect)
NGO's :different types and definition(WORLD BANK)
- Private orgs tah pursue actively to relieve suffering,promote the interests of the poor,protect the environment,provide basic social services,undertake community dvt
- Campaigning Ngos:Influence governmnet policy through lobbying(using mkt and PR techniques)
- Operational Ngos:Positive impact directly in the are interested in
- Quango(quasi autonomous):Similar obj to public sector orgs,but are privatre orgs independent of the governm,given the authority to run public services
Expanded definition of mission according to Ashridge College:
- Links busines strategy to culture and ethics
- Purpose:(why and for who it exists?
- Value :(beliefs and moral principles that underlie its culture)
- Strategy:Commercial logic (what is our business,our sustainable comp adv;from customer s perspective)
- Policies and standards of behaviour:how the business should be conducted
Mission statement-definition and elements:
Basic purpose and what it is trying to achieve:
- business areas it intends to operate
- General stm of orgs culture
- Guide to develop the diretion of the entity s strategy and its goals and obj.
Effectiveness of a corporate mission stm (Lynch)
- Specific enough to impact on behaviours ?
- Distinctive advantage and recognition of its ntrengths and weaknesses?
- Realistic and attainable?
- Flxible to the demands of the changing environment?
Mission stm -role in strateg planning process:
- Inspires and informs planning
- Screening (of the plans)
- Affects the implementation of a planned startegy(in terms of tehh ways it carries out its business and through the culture of the org).Can help develop and corp culture by communicating its core values.Helps to establish an ethics framework.
Mission stm -criticism:
- A little more than PR
- Ignored in practice
Hierarchy of obj-Ways that goals can be related:
- Hierarchically(pyramid structure-top is the mission,downwards more specific and time bound)
- Functionally(colleagues collaborate in a project)
- Logistically(resources must be shared or used in sequence)
- In wider org senses(senior exec make decisions about their operational priorities)
Goals -obj-targets how to interpret them
- Goal-long term aspiration,difficult too quantify.(Mintzberg-intentions behind decisions and actions)
- Obj :specific ,well defined they can embody comprehensive purposes
- Targets:concrete numerical terms
Management by objectives
- Relevant (appropriate to the mission)
- Time related
Type of corporate objectives:
Both financial and non financial:
- Market share
- Cash fow
- Asset base
- Customer satisfaction
- Quality produts
- New product dvt
- Social responsibility
Goals for markets and marketing:
- Mkt leadership(market leader ,number 2,growth rate)
- Positioning(whether there should be obj to shift position)
- Generation of new ideas of how to do business
- how to improve business
- creative activity
Process for setting innovation goals
- understand customer needs
- understand the current customer experience
- identifying the gaps
- identify important issues that should be addressed by innovation
Eg online shop difficult to use,customers need a simpler one-->the org should address this issue through the innovation.
Mintzberg -components of org(nb pg 16)
4Technostructure 2Middle Line 5 Support staff
1.Top management:Ensures org follows its mision-orgs relationship with the environment(direct supervision)
2.Middle mgt:Converts the 1 s desires into work through the operating core (standarisation of outputs)
3.Technical:People direclty involved ,inputs converted to outputs(mutual adj,standarisation of skills)
4.Technical suppport:Best way to do a job,planners determine outputs,personnel analysts standardise skills-eg training-statndardise outputs or work processes.
5.Admin support:Function independly of operating core,do not plan standardise production-mutual adj
Types of departmentation:
- Product basis
- Brand basis
- Matrix basis
- People with similar tasks.
- Primary functions in a manufacturing:Production,sales,finance,and general adm .
- Sub departments of Mkt:pr,market research,adv and so on
- Expertise is pooled thanks to the division of work into specialists areas
- It avoids duplication of work (1 mng accounting) and it enables economies of scale
- It facilitates the recruitment,mgt,dvt of functional specialists
- It suits centralised businesses
Functional departmentalisation: disadvantages
- Focusses on the processes and inputs rather than customers and outputs which ultimately drive a business.
- Communication problems between dpts.
- Poor coordination especially in tall org struct.Escalations to senior mgt -->increase of workload
- Vertical barriers to info and work flow.Mgt writer Peter suggests:customer service requires horizontal flow between functions rather than passing them from one function to another.
Geographic departmentalisation: adv,disadv,definition
- The org is structured according to geographic area ,some authority is retained at head office,but day to day operations are handled on a territorial basis.
- There is a local decision making at the point of contact (salesperson with customers,suppliers ect)
- Cheaper to establish area factories than transporting goods
- Duplication and possible loss of economies of scale.
- Inconsistency in methods or standards may develop across different areas.
- On basis of product/product range.Some functional dep/tion remains(manufact,distribution ect) but a divisional manager is given the responsibility for the line.
- Accountability for the profitability
- Specialisation (eg sales people trained to sell a specific product)
- Coordination-different functional activities coordinated by the product manager to sell each product.
- Increases overhead costs and managerial complexity in the org
- Different product division mail fail to share resources.
Brand departm: Recognition,differentiation and loyalty-customers do not realise reval products produces by same manufacturer due to the distinctive promotion,packaging -->need for specialisation(similar adv/dis with product dep)
- Division of business in autonomous regions or product businesses each with own revenues,expenditures,capital assets purch programmes and its own P&L.
It could be :
- Subsidiary under the holding company.
- Profit centre/investment centre within a single company.
- Strategic business unit (SBU) within the larger company,with its own obj
A successful divisionalisation requires:
- Properly delegated authority
- Large enough to support the quantity and quality of mngt. it needs
- Not rely on thhe head office for excessive mng support
- Potential for growth in its own area of operations.
- Scope and challenge in the job for the mgt of each unit
Divisionalisation:adv and dis
- Focuses the attention of mgt below top level on business performance
- Reduces the likelihood of unprofitable products and activities being continued
- Greater attention to efficiency,lower costs and higher profits
- More responsibility to junior managers -grooms them for senior positions
- Reduces the number of levels of mgt(top execs report directly to CEO)
- In some businesses difficult to identify competely independent products/markets
- Only possible at fairly senior mgt level because there is a limit to how much of discration can be used in the division of work
- More resource problems (with other divisions )
A mix of functional dpt with elements of :
- Product org (suit requirements of brand mkt or production technologies)
- Customer org (particularly in mkt dpts)
- Territorial org (partic of sales and distribution dpts to service local requirements for mkt or distribution in dispersed areas)
The simple structure (entreprenerial)
- It is characterict of small,young orgs(small group or person controlling the operating core)
- In small firms the entrepreneur will dominate(as in the power culture).If it grows teh org will need more organisational skills.
- Centralisation is advantageous as it reflects mgt's full knowledge or the operating core -might intervene too much.
- Risky as it depends on the expertise of one person.Prone to succession crises.
- Simple environment but fast paced -where standardisation cannot be used to coordinate activities.
- Coordination is achieved by direct supervision-flexible.
- Wide spamn of control,no middle line,minimal hierarchy,no technostructure,no standardisation
Matrix and projet org:def,adv,dis
- Crosses funcional and product/customer/project org
- Greater flexibility of people,workflow and decision making,tasks and structure.
- Interdisciplanary cooperation and a mixing of skills and expertise along with improved communication and coordonation
- Motivation and empl dvt
- Market awareness(more customer focused)
- Horizontal workflow
- Dual authority:conflict
- Two or more managers -stress from conflicing interests or ambiguous roles
- Cost:Product mgt posts are added ,meetings to be held and so on.
- Slower decision making.
The new organisation:recent trends from the focus on flexibility
- Flat structures-more responsive ,direct relationship between strategic center and the operational unigs serving the customer.
- Horizontal structures(multifunctional project teams and multi -skilling)-functional versatility
- Chunked or unglued structures:team working and decentralisation,empowerment,smaller and more flexible units
- Output-focused structures(focus on the customer and the results instead of the processes/functions)
- Jobless structures :build a portfolio of skills.The employee becomes not a job holder but a seller of skills
- Virtual orgs:members georgr dispersed,no physical premises
The shamrock org:handy definition
- Core of essential executives and workers supported by outside contractors and part time help.
- Permits buying in of services as needed
- Reeductions in overhead costs-flexible firm
- Professional core:professionals,technicians and managers whose skills define the org s core competence
- Self-employed professionals or technicians ore small companies:fees for results rather than time.They often telecommute.
- Contigent work force
- Consumers(do the work of the org)-personel costs respond to market conditions,,overall personel numbers can be changed,skills can be modified rapidly and multiskilling encourages
Span of control-what determines the span
Number of subordiantes a manager has.
- Physical and mental limitations to control people
- Nature of managers workload
- Solitary work(planning ,scheduling,)
- Interaction with superiors and colleagues
Tall to flat orgs/scalar chain (explain all terms)
Trend:Delayaring orgs of levels of mgt.
Tall orgs are turning into flat as a result of technological changes and the granting of more decision making power to front line employees.
- Scalar chain:The chain of command from the most senior to the most junior
- tall org:large number of levels,narow span of control
- flat org:small number of hierachical levels,wide span of control
Tall /flat org pyramid
- Team leaders
- Assistant managers
- Section managers
- Dpt managers
- Divisional directors
- Dpt Managers
Tall org pros and cons:
- Narrow control span
- Small groups enable team members to participate in decisions
- A large number of steps on the promotional ladder(assists mgt training and career planning)
- Inhibits delegation
- Rigid supervise can be imposed ,blocking initiative
- Same work through too many hands-increased overhead costs-slow decision making
Flat org pros and cons:
- More opportunity for delegation
- Better communication
- Requires that jobs can be delegated
- Sacrifies control
- Middle mgt to convert the grand vision of strategic apex into operational terms
Delayering-def and factors contributing to it:
- Reduction of mgt levels
Contextual and structural dimensions that influence org structure and design :
- Technology(geografic and matrix struct,virtualisation and remote working)
- Environment-Pest factors,industry will affect structure
- Culture and formalisation-degree to which policies and procedure are used within org ,any change may resisted by employees
- Structural dimensions:
- Business size and type(georgraphical and dicisional structure more suitable in large corporations,functional and matrix not suitable more complicated business processes)
- Specialisation(highly specialised -functional approach more suitable ,if multiple projects at once-matrix)
Local cond and scale of operation -influence org struct.Large orgs may be organised as a heterarchy.-organic structure with significan t loc control
- Headquarters function difused georgraphically
- Subsidiary managers have a strategic role for the corporation as a whole
- Co-ordinationa achieved through corporate cultures and shared values rather than formal hierarchy
Assessing proposed structures,Goold and Campbell:
Objectives and restraints:
- Market advantage(processes co-ordinated -->same structural element)
- Parenting advantage:support parenting role
- People test:structure suited to the skills
- Feasibility test-contraints by law,stakeholders,resource availability
- Specialised cultures
- Difficult links(inre depart links )
- Redundant hierarchy-as flat as possible
- Accountability-for effective controls
Opened-closed -semi closed systems
What does a boundary separate?
- Closed-isoated from its environment-not applicable for social systems (incl business orgs)
- Open system:Connected to and interacting with its environment.
- Semi closed:Interfaces with environment abd reacts in a predictable way
it shuts the system of it environment
Feedback control an feedforward control systems:
- Feedback control systems:Part of output returned as input
- Feedforward :Monitoring env,process and output-corrective actions,predictive element
- Feedback control loops:feedback gathered and used to influence future performance by adj input.
- Actual results against expected-single
- Changes to the actual plans/systems as a result of changes in conditions
Horizontal Vs Vertical integration:
- Horizontal:uses current capabilities by developing competitive/complementary activities.
- Vertical:Expands backwards/forwards becoing its own distributor(backward milk processing -acquires dairy farms,cloth manufact produces shirts instead of selling all its cloth)-succeeds when customers needs not properly satisfied-benefits for supply chain management
Alliances a business may enter:
- Joint venture-forming a separate business in which businesses take a financial stake and mgt is provided as agreed,
+ lower capital demads,access to restricted markets,access to new skills
- Arguments,special skills used from partner if relationship breaks
2. Licences:permission to manufatcure /sell product + use brand name(eg franchise)
3.Strategic alliances:Similar to joint venture,easier to break,contractual agreements,no separate comp
4.Agents:effective as distrubution channel (loc knowledge +contact important)
5.Outsourcing,Shared service centre,business process outsourcing