Chapter 5 Business organisation, structure and strategy Qiang Jiang School of Business Sichuan University, China [email protected].

Chapter 5 Business organisation, structure

and strategyQiang Jiang

School of Business Sichuan University, [email protected]

Topic list

1 The informal organisation2 Organisational structure3 Levels of strategy in the organisation4 Centralisation and decentralsation

1 The informal organisation

• Benefits of the informal organisation– Employee commitment– Knowledge sharing– Seed– Responsiveness– Co-operation

1 The informal organisation

• Problems of informal organisation:– Collectively against organisational interests– Moral-damaging rumours– Too important to fulfilling employees’ needs– Violating safety or quality assurance measures

1 The informal organisation

• Managers can minimize problems by:– Meeting employee’s needs as far as possible– Harnessing the dynamics of the informal

organisation– Involving managers themselves in the informal

structure

2 Organisational structure

• Components of the organisation– Strategic apex– Operating core– Middle line– Technostructure– Support staff

2 Organisational structure

• Functional departmentation • Advantages:– Expertise is pooled– Avoid duplication– Facilitates– Centralised

• Disadvantages:– Communication problems– Poor co-ordination– Vertical barriers

2 Organisational structure

• Geographic department• Advantages:– Local decision-making– Cheaper

• Disadvantages:– Duplication– Inconsistency

2 Organisational structure

• Product/brand departmentation• Advantages:– Accountability– Specialisation– Co-ordination

• Disadvantages:– Increases the overhead costs– Fail to share resources

2 Organisational structure

• Customer departmentation– Sales department– Business customers

• Divisionalisation• Properly delegated authority• Large enough• Management support• Potential for growth• Scope and challenge• ‘arm ‘s length’ transaction

2 Organisational structure

• Hybrid structures• The simple structure– A pull to centralise– The simple structure is characteristic of small,

young organisations

2 Organisational structure

• Matrix and project organisation• Advantages：• Greater flexibility of people, workflow and decision-

making, tasks and strucure• Inter-disciplinary co-operation• Motivation and employee development• Market awareness• Horizontal workflow

2 Organisational structure

• Matrix and project organisation• Disadvantages：• Dual authority• Conflicting demands or ambigurous roles• Cost• Slower decision making

2 Organisational structure

• The new organisation– Flat structures– Horizontal structures– Chunked and unglued structures– Output-focused structures– Jobless structures– Virtual organisations

2 Organisational structure

• The shamrock organisation– Professional core– Self-employed professionals– Contingent work force– Consumers

• Three kinds of flexibility:– Personal costs– Personnel numbers– Skills

2 Organisational structure

• Span of control refers to the number of subordinates responsible to a superior– Capabilities– Nature of the manager’s workload– Geographical dispersional

2 Organisational structure

• Tall and flat organisations– Scalar chain

• Delayering– Information technology– Empowerment– Economy– Fashion

3 levels of strategy in the organisation

• Corporate strategies– Scope of activities– Environment– Resources– Values– Timescale– Complexity

3 levels of strategy in the organisation

• Business strategy• Functional/operational strategies• Marketing • Production• Finance• Human resources management• Information systems• R&D

3 levels of strategy in the organisation

• Corporate strategies• Business strategy• Functional/operational strategies• The anthony hierarchy

3 levels of strategy in the organisation

• Corporate strategies• Business strategy• Functional/operational strategies• The anthony hierarchy

3 levels of strategy in the organisation

• The anthony hierarchy– Strategic management– Tactical management– Operational management

4 Centralisation and decentralisation

• Centralisation– Geography– Authority

• Advantages an disadvantages of centralisation