The main advantages of individual lines at each of the new factories are as follows:
- Reduction of Equipment Costs
If each factory is earmarked for an individual line, there will only be the need to purchase machinery and equipment relating to the production of that particular line within the new factory.
- Increased Productivity and Expertise
Individual lines will mean an increase in utilisation of space creating raised productivity by focussing on an individual line. The nature of the work is therefore concentrated into one area, increasing the expertise of employees.
- Promotion of Goods in Different Areas
Increase in marketing opportunities for TBBC across three different areas; Plymouth, Manchester and the Midlands. This will also raise awareness of the company’s profile.
- Employment/Staffing
The restructuring of the company will provide job opportunities for existing staff to develop further in their career. There will also be a need for specialised Managers to assist with the development of the factories.
Relocation packages will be offered to those employees interested, along with further training opportunities for staff to work between the two individual lines. This will, in turn, provide a more flexible workforce within TBBC to utilise at busy times.
The creation of job opportunities in Manchester and Plymouth will be welcomed, as these are areas of high unemployment and with people experienced in factory line work. The salaries in these areas may vary depending on regional differences in economy.
The main disadvantages of individual lines at each of the new factories would be:
i) Shipping Distances
With segregated factories producing different lines, distribution costs will be incurred to supply customers across the country. There may also be delays in supply with the distance between regions being so great.
ii) Staff Morale
With the creation of these factories, existing staff will be given first opportunity to relocate to the Manchester and Plymouth areas with staff in specialist roles having little choice in location. This could result in low morale and loss of employees as they chose to remain in the Tiptown area.
iii) Training costs
To ensure the effective running of the lines in Plymouth and Manchester, training will need to be provided for both existing staff who may be gaining promotion and newly recruited employees to develop the required skills needed to operate the lines. This will also incur a delay in the development of the new factories.
iv) Regional Pay Discrepancies
With the variation in costs of living in each of the new areas, a drop in morale may occur with those performing the same tasks on a lower salary.
v) Management of Change
Where change occurs in an organisation, attention is required to manage this change effectively. TBBC will need to ensure that all employees are consulted and available skills are recognised and matched to available positions.
vi) Poor Communication
With three factories in operation and so geographically widely spaced, there is a possibility of regular communication breakdowns. To help prevent this, further costs in the restructuring of management will be required
CONCLUSION
There are clearly benefits with both solutions to the organisation of both the new factories.
However the main advantages are balanced in favour of each factory producing both cakes and biscuits. This will allow for the same management structure to be maintained throughout the company, which will aid communication and understanding throughout the workforce. It will enable distribution costs to be lowered and enable local tastes to be catered for in the different regions.
The development and expansion of TBBC involves consideration into the appropriate structure of the company in order for it to work effectively. When assessing the most suitable structure it is important to consider the following factors:
i) Performance of TBBC and its economy
ii) Activities of TBBC
iii) Responsibility and accountability of departments and individuals
iv) Co-ordination of departments/individuals and workload
v) Flexibility/future of TBBC and economic climate
vi) Employees/staff morale
To ensure this process is managed effectively, various styles of organisational structure will need to be considered to accommodate the expansion of TBBC.
Flat Hierarchical Structure
This structure as mentioned earlier has broader spans of control and fewer levels of authority. The advantages of this structure are that a reduction in the costs of management is achieved and owing to fewer levels of management communication is in theory, more easily achieved. Difficulties are that with fewer managers, more workload is placed upon each employee, promotion is more difficult to obtain and development opportunities are decreased.
Tall Hierarchical Structure
This structure is commonly found in larger organisations and has narrower spans of control with increased levels of authority. This results in increased hierarchical control and empire building with the creation of unnecessary work to justify positions. The advantages of this type is the spread of workload is decreased and improved staff development and training, with increased promotional opportunities.
Matrix Structure
This type of structure is effectively a combination of flat and tall hierarchical structure. It is more complex and offers greater control of the company and increased opportunities for staff, this can also lead to confusion over different roles as they are closely linked and yet independent.
Functional Structure
This type of structure is suitable for small to medium sized companies. The advantages of this are that it is concentrated into different departments with a specialised workforce within them. This assists with the development of skills and experience. The disadvantages are that horizontal co-ordination of activities between departments and lack of communication. Problems occur if the company expands and remains under the same structure, as there will be more managers at different locations.
Conclusion
It would appear that an amalgamation of these, is the best solution for TBBC’s expansion across three regions of the country.
Using the functional structure at the Tiptown base for company co-ordination, being mirrored in Plymouth and Manchester with a taller hierarchical structure. The general management picture would appear the same with an extra Director provided for each region. This would allow each area to cater for its own customer needs.
If the company does not achieve the correct structure then the organisation will become deficient. The following can cause this:
- Reactive approach rather than pro-active approach
- Insufficient management levels
- No contingency plans available
- False interpretation of trends of market information leading to poor decision making.
- Delayed response to take corrective action when problems occur
- Role conflicts and confusion over responsibility
- Poor fit between organisation and environments.
In order to achieve maximum efficiency within an organisation structure, it is important to consider the following:
- Proactive middle management and operating teams. Utilisation of good leadership qualities.
- Consumer/market emphasis. Focussing on what the customer wants (market led approach)
- Delegation of responsibility/authority, listening to others and their ideas.
- People orientated culture. Recognition of contribution and the value of individuals.
- Management need to be hands on and consultative to remain in touch.
- Use of expertise: and effective utilisation of staff.
- Simplified staffing structure with optimum staffing levels, with sensible efficiency savings.
Other areas of consideration to complement the company’s organisational structure should also be directed towards centralisation, decentralisation, specialisation, co-ordination, control, efficiency, supply and distribution.
TBBC needs to concentrate on the company’s jobs being grouped together. This involves identifying a range of tasks which are in common and allocating them to specific departments. This can be in the form of horizontal (concerning all departments at the same level) or vertical (management level). This process is called specialisation.
Along with specialisation consideration needs to be given to co-ordination (integration). This process ensures that activities of the individual departments are co-ordinated, planned and controlled in order to meet the objectives/goals of the organisation. It is important that co-ordination takes place between peers and managers.
Again, this is referred to as vertical integration, the hierarchy of co-ordination of activities at management level. and horizontal integration is the co-ordination of activities between departments at the same level. This ensures coercive and compatible pattern of activities.
It is also important to establish control throughout TBBC. This comes from senior managers organising the working patterns of its employees, which will enable them to work in unison with TBBC’s goals and objectives. Whilst working through this process the efficiency of the company needs to be borne in mind, to continue achieving optimum levels of producing the product lines at the correct financial cost.
Supply and distribution are very crucial elements to meet the company’s goals and objectives. In terms of supply TBBC needs to continue the production of goods for the appropriate market, which will have been decided upon by carrying out market research. It can then ensure maximum distribution and spread of delivery of the two production lines to the market place, meeting demands.
It is clear the above processes have been carried out within TBCC to establish its current functional organisational structure. This will need to be reviewed to suit the new structure, as problems can occur causing centralisation and decentralisation.
Centralisation occurs when decision making of the company is by senior managers. Decentralisation occurs when delegation of decision making is given to junior staff. It is important to evenly balance both centralisation and decentralisation. If this balance is achieved, then an individual contribution to the company will be recognised and utilised appropriately. This will improve their performance through increased morale and this will in turn improve the company’s overall performance.
PART 2: ORGANISATIONAL CULTURE
Culture is defined as giving an organisation identity. It reflects the development of the company in terms of history, primary function and technology, aims and objectives, size, location, staff and the external environment. The different types of culture are defined as:
Power Culture
A central power source which influence from the central figure throughout the organisation. Power culture is more often found in small organisations. Trust, empathy and communication are important factors for it to work. Few rules and procedures exist, with decisions made on balance of influence.
Role Culture
Works by logic and rationality, the role or job description is more important than the individual. Role culture is hierarchical and is common in organisations with functional departments.
Task Culture
This type of culture is job or project orientated. Task culture brings together the right balance of resources and people to maximise work potential and unity. This type of culture is often found within a matrix organisation, and is based more on expertise rather than personal qualities.
Person Culture
This type of culture is where the individual is the central focus and the current structure exists to serve the individuals within it. These individuals have independent control, for example groups of barristers, architects.
Relationship between Structure and Culture
Structure and culture are closely linked as they rely on each other. The structure used within an organisation will define the culture created. For example, the NHS is primarily a ‘role culture’, but could also relate to a task culture. However, because of the type of business it exists to be, a person culture could not exist. Although each department will have its own objectives, they will also develop their own culture.
Effect of Culture and Structure on Performance
The appropriate structure for an organisation should breed an appropriate culture. These two combined will create efficiency and increase optimum performance. However, should either of these not be matched the aims and objectives of the organisation will not be met and performance will be sub-standard as a result.
Amanda Conway, Fda Business Part-time (1.00 – 9.00 pm)