Download - BM Unit 2 - LO11 Higher Business Management Unit 2 Learning Outcome 1 Internal Organisation
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BM Unit 2 - LO1 1
Higher Business Management
Unit 2Learning Outcome 1Internal Organisation
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BM Unit 2 - LO1 2
An Organisation
“An organisation is the rational co-ordination of a number of people for the achievement of some common explicit purpose or goal through the division of labour and a hierarchy of authority.”
Edgar Schein
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BM Unit 2 - LO1 3
Organisation by Function
T ypical O r ganisat ion Char t
M ar ket ing H uman
R esour ces
F inance O per at ions R & D A dmin
B oar d of D ir ect or s
4 main departments found in most organisations
2 departments found mainly in
large organisations
Regarded as “typical” and associated with a centralised
organisational structure
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BM Unit 2 - LO1 4
Organisation by Function
Advantages Efficient use of
resources Staff specialisation Career progression Centralised decisions Good communications
within the department Team motivation Problems sharing and
solving
Disadvantages Departmental rivalry Poor communication
between departments Slow response to
external factors Slow decision-making Over specialised
workforce Difficult to pinpoint
problems
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BM Unit 2 - LO1 5
Organisation by Product/Service
O r ganisat ion int o "D ivis ions"
D eb enhams B ur t on
(M enswear )
D or ot hy
Per k ins
E vans T opshop
(and T opman)
Pr inciples
(Pr inciples f or M en)
B ur t on
Gr oup
Each division has its own functional staff
Find other examples of this!
Generally associated with large multi-national organisations
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BM Unit 2 - LO1 6
Organisation by Product/Service
Advantages Each division can focus
on its own market segment
Each division’s performance can be measured
Healthy competition between divisions
Allows flexibility - can close down or sell off loss-making divisions
Co-operation between divisions can reduce costs - eg shared transport for the whole group
Disadvantages Duplication of
functions may be wasteful
Competition may de-motivate a poorly performing division
Loss of control by central management over divisional managers
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BM Unit 2 - LO1 7
Organisation by Customer
Advantages Can cater for
specific customer needs
The market can be segmented
Disadvantages Can be inefficient
if a division is too small (insufficient customers)
Loss of control by senior management over divisional managers
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BM Unit 2 - LO1 8
Organisation by Area
Advantages Can serve the
needs of local people more easily
Improved communications - on the spot
Healthy competition between regions
Disadvantages Duplication of
resources Loss of control by
senior management over area managers
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BM Unit 2 - LO1 9
Organisation by Technology
Used in the manufacturing sector where different technological processes are involved in a diverse range of products
Scope for specialisation of the workforce and simplified training within the same manufacturing process
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BM Unit 2 - LO1 10
Line/Staff Groupings
Line Departments Hierarchical
system Superior -
subordinate relationships
Clear lines of authority
Can be very long chains of command leading to slow actions
Staff Departments Examples - Human
Resources, Finance, Research & Development, Strategic Planning
Specialist advice but often have no authority
Many companies out-source staff activities
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BM Unit 2 - LO1 11
The Marketing Function
The Marketing Mix
Product Price Promotion Place
“Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.”
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BM Unit 2 - LO1 12
The Human Resource Function
Recruitment Training Appraisal Collective bargaining Employment legislation Personnel records
“HR is concerned with people at work and with their relationships within an organisation.”
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BM Unit 2 - LO1 13
The Finance Function
Financial Accounting
Management Accounting
Financial Reporting
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BM Unit 2 - LO1 14
The Operations Function
The Production Process Inputs - raw materials and labour
Process - making the goods
Outputs - products/services
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BM Unit 2 - LO1 15
Forms of Organisational Structure
Hierarchical (tall) structures Flat structures Matrix structures Entrepreneurial structures Centralised structures Decentralised structures
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BM Unit 2 - LO1 16
Aspects of Organisational Structure
Organisation charts Span of control Line/functional/staff relationships Formal and informal structures Organisational culture Recent trends in structure Delayering Down-sizing Management roles/responsibilities