curs 8 acca organizational structure 2014

8/13/2019 Curs 8 ACCA Organizational Structure 2014

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BUSINESS ANALYSIS

Chapter 8 -Organizational Structure

Prof.univ.dr. Ion ANGHEL, FRICS, REV, MAA


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Advise on how organizations can be structured

to deliver a selected strategy

Describe Mintzbergs six organizational

configurations;

Describe the types of control processes ;

Describe with examples: outsourcing, strategicalliances, networks, the virtual firm


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Chapter 8

Organizational structure

1. Factors affecting organisational structure

2. Mintzbergsstructural configurations

3. Planning and control processes4. Managing international companies

5. External relationships

6. Summary


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1. Factors affecting organizational structure

Types

Entrepreneurial

Functional (bureaucratic)

Divisional

Matrix


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A) Entrepreneurial

(+) Quick and flexible (small family restaurant)

(-) Too slow for large company

(-) Staff Demotivation

(-) Too many decision for one person

(-) No specialization


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B) Functional (bureaucratic)

(+) specialization is efficient (experience in a US restaurant,

used 20 h/day, breakfast, lunch, dinner etc.)

(+) good carrier opportunities (-) bureaucratic/ inflexible/slow to adapt

(-) conflict between functions ; lack of

communication between functions


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Advantages

Specialisation is efficient

Good career opportunities and extra responsibilities

Can cope with more products than entrepreneurial

structure

Disadvantages Empire building

Conflict between functions (i.e. lack of goal congruence)

Problems if product base expands (people are too

specialised)

Bureaucratic/ inflexible / slow to adapt

Lack of communication between functions


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C) Divisional structure


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Advantages

Customer has single point of contact

Interfunctional communication enhanced

Staff motivation can be improved through variety of

work and challenges

Very flexible (can easily react to changes in both the

internal and external environments)

Disadvantages

Functional managers expertise is diluted spread

over many projects

Staff are serving two masters; conflict, role

ambiguity, role overload

Time-consuming meetings and higher admin. costs


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Centralisation v decentralisation

Decentralisation:

is more likely in large-scale organisations

gives authority to make specific decisions to units andpeople at lower levels in the organisations hierarchy

allows front-line staff to respond flexibly to customer

demands allows local management (of dispersed units) to

respond flexibly to local market conditions


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Centralisation: (+) better management control; ex. Minirevelion

ANEVAR

(+) conformity with overall objectives; (+) economy of scale (general management, acquisions

etc.), ANEVAR cost with Vodafone invoice

(-) decisions take time, no flexibility;

(-) reduced job satisfaction;


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2 Mintzbergs structural configurations

strategic apexhigher levels of management technostructureprovides technical input that is not

part of the core activities

operating coremembers involved in producing

goods and services

middle linemiddle and lower-level management

support staffsupport that is not part of the

operating core

ideologybeliefs and values.

Where is the place of accounting services in a

production company ?


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Simple structure: single ownermanager: power ofthe owner (and his family)

Machine bureaucracy: power of technostructure;

Professional bureaucracy: medical staff in a hospital;

Divisionalised form: importance of middle

management;

Adhocracy: not formalize activities, cooperation with

consultancy firm and advertising agency

You want to start your own consultancy/ accounting

company?


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Link between the structures and the building

blocks

As the business and its structure grows, different

building blocks develop and can become more

important:


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Building blockWhat they want What they provide Structure in which

they dominate

Strategic apex Direction Supervision Simple

Technostructure Efficiency Procedures and

standards

Machine

bureaucracy

Operating core Proficiency Expertise and skills Professional

bureaucracy

Middle line Concentration Focus and control Divisional

Support staff Learning Help and training


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3 Planning and control processes

Formal control process Examples of control processes include:

all enquiries are to be processed within 48 hours

of receipt

quality sampling to ensure process meets

specification

the budgeting process.


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3. Planning and control processes

Production control processes Control processes involved in production include:

cost recording

variance analysis

lead times monitoring

quality control inspections

monitoring of rejection levels

achievement of delivery times


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4. Managing international companies

Geographical diversification Reasons why for international diversification

increasing opportunities from global markets.

If local markets are saturated, it may be possible to sell

products into new locations using existing infrastructure.

Risks may be spread as poor results in one market due to

local economic conditions can be balanced against good

conditions in another.

It may be possible to take advantage of particular aspects ofdifferent locations and markets such as low labour costs.


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Possible strategies for geographicaldiversification

A multi-domestic strategy where products and

services are tailored to individual countries and

markets

A global strategy, where standard products are

sold in different countries.

A balance between the two above strategies,where products are largely global but have minor

modifications to suit the requirements of

individual countries.


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Issues for consideration The increased complexity due to operating in a number

of different countries needs to be managed.

How to gain the maximum benefit from the expertise

and advantages of particular countries

The attractiveness of local markets, which depend on

the political environment (ex.the stability of the government)

the strength of the local economy


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Types of external relationships outsourcing, where products and services, (es. IT, accounting),

that were previously provided within the organisation are

supplied by outside organisations

strategic alliances, co-operative business activities, formed bytwo or more separate organisations for strategic purposes

networks, relationships outside the traditional organisation

boundaries

virtual organisations, which are constructed fromadministratively and geographically distributed business units or

organisations that have rejected the traditional work patterns of

bringing people to one location for a fixed period


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5 External relationships

(outsourcing)

Advantages Disadvantages

Reduced cost Loss of control

Overcomes skills shortages Dependency on supplier

Flexibility Loss of confidentiality

Allows organizations to focus on their core

skillsLoss of in-house skills


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A company is considering whether to outsource its

IT provision. Suggest some areas of conflict

between the business and its supplier.

Ex. Accounting of fixed assets in state ownership

companies ?


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The organisation might be interested in ensuring that itsIS/IT function remains dynamic, and responds to changes in

IT and changes in its information systems requirements.

The external supplier, on the other hand, might be more

interested in stability and minimal change, in order to keep

costs under control and avoid the risks that inevitably arise

with system changes and upgrades


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NetworksOutsourcing & strategic alliances = examples of ways in

which an organisation depends on relationships with

other external organisations. There are a number of other

important forms of networks.

Networks of experts which come together for a

particular project or purpose (valuation of BCR for

privzatization) Teleworking, where individuals are based in different

locations but work together through the use of

information technology.


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Networks (cont.) One-stop-shops, where a group of organisations are

co-ordinated centrally so that there is one contact

point for the customer with the aim of providing a

comprehensive and seamless service.

Service networks, where the members of the network

provide services to customers through any other

members of the network


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Example of a successful networkAmazon Amazon = the best known on-line retailers.

Amazon operates its website but relies on external book

publishers and other suppliers, couriers and credit card

companies to deliver the rest of the customer experience.

These partners are also expected to provide Amazon with

information on (stock availability, promotional material.. )

The customer feels that they are dealing with oneorganisation, not many. In addition, the Amazon

Marketplace allows other organisations and individuals to

sell their goods through the Amazon website.


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Virtual organisations the most extreme form of outsourcing, alliances and

networks.

The core organisation carries out very few activitiesand as much work as possible is carried out by other

organisations.

Virtual organisations have a number of characteristics


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Virtual organisations (characteristics) development of relationships with a broad range of potential

partners, each having a particular competency that

complements the others.

Virtual organising capitalises on the mobility andresponsiveness of telecommunications to overcome problems

of distance.

Timing is a key aspect of relationships, with key players using

responsiveness and availability to decide between alternatives. There must be trust between players separated in space for

virtual organisation to be effective.

Most virtual organisations have an operating core

E l f i t l i ti


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Example of a virtual organisation


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Chapter 8. Summary


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Homework

Case 19

25 marks


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curs 8 acca organizational structure 2014

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