Business Enterprise – Internal Organisation - Perth High School

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Nov 20, 2013 (3 years and 11 months ago)

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Business Management
-

Intermediate 2

©

Copyright free to Business Education Network
members 2007/2008

Business Enterprise



Internal Organisation

1

B107/078


Bus Enterprise
-

ICT

BUSINESS ENTERPRISE

Internal Organisation

Structure of Organisations

Factors Affecting the Internal Structure
of an Organisation

Business Management
-

Intermediate 2

©

Copyright free to Business Education Network
members 2007/2008

Business Enterprise



Internal Organisation

2

1.

Structure of an Organisation

2.

Factors Affecting the Internal Structure of
an Organisation

B107/078


Bus Enterprise


Internal Organisation

Internal Organisation

Business Management
-

Intermediate 2

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Copyright free to Business Education Network
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Business Enterprise



Internal Organisation

3

1. Structure of Organisations

FUNCTIONAL ACTIVITIES

This is the most common way of organising business activity.

It involves dividing activity by departments.


Marketing


Operations


Finance


Human Resources


Administration

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Internal Organisation


Structure of Organisation

Business Management
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Intermediate 2

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Internal Organisation

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1. Structure of Organisations
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continued

The workers within each functional department specialise in
that particular function.

The advantages of functional departments include
:


Resources are used most efficiently.


Staff become experts and are therefore more productive.


Clear career paths and opportunity for promotion are created.


Communication within each area is enhanced.


Good relationships lead to greater motivation and better teamwork.


Decision making is more manageable.

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Internal Organisation


Structure of Organisation

FUNCTIONAL ACTIVITIES
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continued

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Internal Organisation

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1. Structure of Organisations
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continued

The disadvantages of functional departments include
:


Staff can feel detached from other functional areas.


Functional areas can become competitive instead of sharing
aims.


Communication barriers can exist between functional areas.


Best solutions can come from collaboration and not in isolation.


The organisation can find it difficult to implement change.

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Internal Organisation


Structure of Organisation

FUNCTIONAL ACTIVITIES
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continued

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Internal Organisation

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FORMS OF ORGANISATIONAL STRUCTURE

HIERARCHICAL STRUCTURE

Tall/Narrow
span of control

Flat/Wide
span of control

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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Internal Organisation

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NARROW SPAN OF CONTROL

There

are

less

subordinates

to

manage
.


Staff can be supervised closely.


A manager may not have enough staff
to share the ideas with.


Greater workload to share between
fewer staff.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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WIDE SPAN OF CONTROL

There are more subordinates to manage.


A high degree of delegation is necessary.


A higher degree of trust is needed, cannot supervise
closely.


Decision making can take longer.


More pressure on the manager, greater workload.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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HIERARCHICAL STRUCTURE


features;


There are many levels of authority and responsibility.


The taller the structure the more levels there are.


Taller

structures

have

greater

levels

of

authority
.


Taller

structures

have

less

responsibility
.


Communication

travels

between

the

levels
.


Many

hierarchical

structures

operate

on

a

functional

basis
.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Business Enterprise



Internal Organisation

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HIERARCHICAL STRUCTURE


problems with;


Viewed as being old fashioned and autocratic in nature.


Decision making can be slow as communication has to
pass through several levels.


Information can be wrongly interpreted as it has to pass
through several levels.


Full consultation can be very time consuming and often
agreement cannot be reached.


There is very little flexibility to work in other areas of the
business.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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Flat Hierarchical Structure

Attempts to address some of the problems associated with
tall hierarchical structures.

There are fewer levels.

HOW?

Flat structures can only really exist in small firms but some
larger organisations make attempts towards flat structures
through.

DELAYERING

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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Internal Organisation

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DELAYERING

Cutting out levels of management in order to flatten the
structure.

This leads to a flatter structure with a wider span of control.


Delayering can
:



improve communication.


make decision making faster.


empower staff (greater responsibility).


cut costs for the business.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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MATRIX STRUCTURE

This happens when a business organises teams to work
together on a particular project or area of work.

This can exist within a hierarchical
structure where staff are pulled
from different functional areas to
work together.

Committees and working groups are examples of a matrix
structure.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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DOWNSIZING

Removing certain areas within the organisation.


Downsizing can involve
:


closing units/factories.


merging areas of the business.


Downsizing can
:


cut costs and increase profits.


help the business to become more efficient and competitive.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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FORMAL and INFORMAL STRUCTURES

These are structures which have been brought together
for a specific purpose.

Hierarchical


(tall and flat) and matrix are examples of
a formal structure.

Informal structures exist where staff
develop relationships outwith their
established formal structure.

This could include joining sports clubs or
just socialising.

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Internal Organisation


Structure of Organisation

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DECENTRALISED

Control and decision making is delegated to departments.

Decision making is quicker.

More motivating for staff who are given greater responsibility.

Better decisions are made at local level where markets are
better understood.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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CENTRALISED

Control and decision making is made by top management
centrally (at head office).

Procedures can be standardised and cost saving can result.

A corporate image is easier to promote.

Higher quality decision making although not necessarily the
best decision, taking account of local circumstances.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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LINE RELATIONSHIPS

The relationship between a manager and subordinates
(vertical line within the hierarchical structure).

LATERAL RELATIONSHIPS

The relationship between workers on the same level of
responsibility within an organisation.

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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Internal Organisation

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FUNCTIONAL RELATIONSHIPS

Where a specialist function is given to a department
which will relate to all other departments (eg finance
department).

STAFF RELATIONSHIPS

Where an individual has an advisory relationship with
another member of staff (eg ICT manager).

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Internal Organisation


Structure of Organisation

1. Structure of Organisations
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continued

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Internal Organisation

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2. Factors Affecting the Internal Structure of
an Organisation

SIZE

The larger the organisation, the more difficult it is to
organise without some form of hierarchical structure in
place.

Large organisations tend to have tall
structures in order to be easier to control
and manage.

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Factors Affecting the Internal Structure of
an Organisation

Business Management
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Internal Organisation

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TECHNOLOGY

New technology can reduce the workforce and therefore give
rise to a change in structure.

New technology can change working
practices and therefore change the
structure


eg homeworking, internet
sales.

2. Factors Affecting the Internal Structure of
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Factors Affecting the Internal Structure of
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Internal Organisation

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MARKET

The size of your market will impact on the size of the
organisation which in turn will affect the structure.

If you exist within a highly competitive
market then you may require project
teams to continue developing the product.

2. Factors Affecting the Internal Structure of
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Internal Organisation

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PRODUCT

The nature of the product may dictate the type of
structure that would be most appropriate.

For example, a designer suit will be
specialised and a small firm would be
needed


flat structure may be most
appropriate.

2. Factors Affecting the Internal Structure of
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