The formal structure of organisation - main elements.

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HNC

BUSINESS ADMINISTRATION

OUTCOME 2

STRUCTURE OF BUSINESS ORGANISATIONS

Student's Name: MYRA CARRAGHER

THE FORMAL STRUCTURE OF ORGANISATION

THE MAIN ELEMENTS OF ORGANISATIONAL STRUCTURE

A company's structure influences how its strategies are carried out and how work is done.

Organisation structure is the basic framework of positions, groups of positions, reporting relationships and interaction patterns that an organisation adopts to carry outs its strategy.

There are six elements of organisation structure:

* Job definition

* Forming departments and work units

* Creating a hierarchy

* Distributing authority

* Co-ordinating and integrating activities

* Differentiating between positions

Job definition specifies the boundaries of a job by describing what tasks the job does and does not involve, the responsibilities and expectations of the job holder and the authority of the job holder to make decisions.

Below is an example of job definition within Finning (UK) Ltd.:

Construction Equipment Sales Rep

Accountabilities Market Analysis - Gather and analyse relevant market data to identify potential commercial opportunities and identify trends

Sales Planning - Develop appropriate sales plans to ensure that industry/sector sales targets are achieved

Marketing - Liase with customers and suppliers to ensure that all Finning products and services are presented in a manner benefiting the corporate image

Channel/Dealer Development - Work with associated dealers and franchise operations to maximise product distribution and ensure that Finning products and services are presented appropriately

Customer Service - Liase with other internal functions and departments to ensure that the highest levels of customer service are provided to purchasers of Finning products and services

Internal Communication - Influence and communicate with territory and account management representatives to ensure that a consolidated sector/industry plan is implemented nation-wide

Information Gathering - Maintain a personal understanding of key developments within the sector/industry so that commercial opportunities can be identified and capitalised upon

Personal Information Seeking - Position self as an expert in the relevant sector/industry so that clients will look to the incumbent as a reliable source of technical and industry information.

Performance Measures: Revenue; Profit; Market Share; Marketing Effectiveness; New Business; Customer Satisfaction

Knowledge and Skills: Direct Sales Experience

Deep and detailed sector and industry knowledge

Product knowledge

Supervisory experience

Understanding of dealer networks

Understanding of local marketing principles

Understanding of sales planning processes

As an organisation grows, the tasks within that organisation tend to become more specialised. Job specialisation is the process of breaking jobs into small component parts and assigning specialists to perform each part.

Advantages of job specialisation would be:

* Job holders can develop enormous skill in performing a narrowly defined and specified task.

* Job specialisation typically means that less work time is lost in switching from one job to another.

* Specialised equipment to increase productivity can be more easily developed in highly specified jobs

* Training people for specialised jobs is relatively easy

Disadvantages of job specialisation would be:

* Boredom is a problem. Workers often get little satisfaction from the job and feel no pride in carrying out trivial tasks

* Workers with highly specialised jobs often have high levels of absenteeism and job dissatisfaction and may quit more readily or develop antagonistic relationships with their superiors

Examples of job specialisation within Finning (UK) Ltd. would be the Service Engineers, Parts Sales Interpreters, Construction Equipment Sales Reps, Customer Service Sales Reps.

Once jobs have been designed, organisations must then group the jobs into logical units. At upper levels of an organisation, the groups may be called divisions, product groups or units. At middle and lower levels, they are usually called departments. Departmentalisation is the basis on which jobs are grouped together within an organisation.

MAIN TYPES OF ORGANISATIONAL STRUCTURE

FUNCTIONAL ORGANISATION - groups jobs on the basis of common functions, such as, marketing, production, finance and human resource.

The main advantages of functional organisation are that by grouping people together on the basis of their technical and specialist expertise, the organisation can facilitate both their utilisation and their co-ordination in the service of the whole enterprise. Functional grouping also provides better opportunities for promotion and career development.

The disadvantages are primarily the growth of sectional interests which may conflict with the needs of the organisation as a whole, and the difficulties of adapting this form of organisation to meet issues such as product diversification or geographical dispersement. Functional structures are probably best suited to relatively stable environments.

The organisational chart below is an example of one such type of structure used within Finning (UK) Ltd.

PRODUCT OR SERVICE

Another form of grouping is by product. This is a popular structural form in large organisations having a wide range of products or services. In the National Health Service, for example, the key groups of employees - medical, nursing, para-medical and hotel services - are dispersed according to the service they provide, e.g. maternity, orthopaedic, surgical, psychiatric and other services. By comparison, a large pharmaceutical company could be organised as below.

Finning (UK) Ltd. also operates this type of structure as it has several divisions which all operate separately. These consist of:

* Power Systems

* Materials Handling

* HCMQ

The advantage of a product organisation is that it facilitates co-ordination and integration, speeds up decision making and eases assessment of units' performance.

Disadvantages of this type of organisation. There is some duplication of effort in the various functional areas and managers tend to focus narrowly on their product responsibilities rather than the overall organisation.

GEOGRAPHIC

Another form of organisation structure is the one grouped on a geographical basis. This is usually adopted where the realities of a national or international network of activities make some kind of regional structure essential for decision-making and control.

The advantages of geographic structure are:

* Reduction in transport costs

* The ability to cater for different local tastes

* International operations units can adapt to different legal, political and economic constraints

As in product organisation, the geographically based organisation tends to produce decentralised activities, which may cause additional control problems for the senior management. Hence it is usual with such structures to find groups of senior functional managers at headquarters in order to provide direction and guidance to line managers in the regions or product groups.

Finning (UK) Ltd. operates this type of structure also. They have their main UK organisation as well as organisations based in Canada and Chile. As well as this they also have this system in operation within the UK. The head office based in Staffordshire, but they also have 19 other branches throughout the UK. This enables them to cater to a wider customer base and claim more of a market share within their industry sector.
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Below is an example of Finning (UK) Ltd. International geographical structure.

PROJECT TEAMS

A project team may be set up as a separate unit on a temporary basis for the attainment of a particular task. When this task is completed the project team is disbanded or members of the unit are reassigned to a new task. Project teams may be used for people working together on a common task or to co-ordinate work on a specific project such as the design and development, production and testing of a new product; or the design and implementation of ...

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