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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.1
Understanding
Organisational Context 2eSlides by Claire Capon
Chapter 1
Inside organisationsOrganisational structures
Handys cultures
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.2
Organisational structures
The simple structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.3
Figure 1.2 The simple structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.4
Main features
Centralised
Organised around owner Small companies or small
companies in early stages of
development
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.5
Advantages
Owner controls early growth
and development of thebusiness
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.6
Disadvantages
Owner may lack specialist
knowledge in some areas Appropriate up to a certain
size only
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.7
Organisational structures
The functional structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.8
Figure 1.3 The functional structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.9
Main features
Centralised
Small company producinglimited range of products
Organised around tasks to be
carried out
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.10
Advantages
Simple lines of control
Efficient lines ofcommunication and
information flow -
vertical and short
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.11
Advantages (cont.)
Specialist managers heading
up each function Improved decision making
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.12
Disadvantages
Functional managers
overburdened withoperational duties
Longer-term planning
may be neglected
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.13
Disadvantages (cont.)
Becomes stretched by
growth and productdiversification
Difficult to co-ordinate and
manage across differentfunctions
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.14
Organisational structures
The divisional structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.15
Figure 1.4 The divisional structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.16
Main features
Product or geographical
divisions
Diverse range of products or
services offered, or
geographically-diversemarkets served
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.17
Advantages
Divisions are profit centres in
their own right
Decentralised structure - easier
to manage diversity
Divisional managers responsiblefor short-term and medium-term
planning
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.18
Advantages (cont.)
Top managers are free to
concentrate on longer-term
planning
Profitability is spread across
the divisions, products andmarkets
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.19
Disadvantages
Potential conflict between
divisions over resource
allocation
Overall co-ordination of
divisions can be difficult
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.20
Organisational structures
The holding company structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.21
Figure 1.5 The holding company structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.22
Main features
Small head office - acts as an
investment company
Decentralised - operating
companies are largely
independent
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.23
Main features (cont.)
Operating companies trade
under own name, rather than
holding companys name
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.24
Main features (cont.)
Operating companies are
required to meet strict
financial targets
Financial and legal sections
support head office, not theoperating companies
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.25
Advantages
Low central overheads
Risk and profit are spread Ease of divestment of
operating companies
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.26
Disadvantages
Individual operating
companies under risk of
divestment by holding or
parent company - may feel
threatened No centralised skills
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.27
Disadvantages (cont.)
Potential lack of overall
co-ordination and direction
of the whole organisation
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.28
Organisational structures
The matrix structure
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.29
Figure 1.6 The matrix structure: multinational
company
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.30
Main features
Double definition of profit
centres (two arms of the matrix)
Found in different types of
organisation:
- large multinationals- university departments
- sophisticated service companies
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.31
Advantages
Decentralised and localised
decision making in the matrix
Growth and complexity
controlled by people in the
matrix
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.32
Advantages
Direct contact between two
arms of the matrix replaces
bureaucracy
Quality decision making and
increased managerialmotivation
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.33
Disadvantages
In the matrix, potentially:
- a high degree of conflict- a long time to make
decisions
- unclear job and task
responsibilities
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.34
Disadvantages (cont.)
Difficult to implement
High overhead costs
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.35
Handys cultures
The power cultureThe role culture
The task culture
The person culture
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.36
Figure 1.9 The power cultureSource: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright
Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.37
The power culture
Usually found in small firms
with simple structure
Owners tend to recruit
employees similar in
character to themselves
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Capon: Understanding Organisational Context2nd edition Pearson Education 20041.38
The power culture
The culture is like that of a
club with all employees as
members
Power culture is very reliant
on the owner
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Capon: Understanding Organisational Context2nd edition Pearson Education 20041.39
The power culture
Work is divided by function
or product
Lines radiating from the
centre represent functional
or product areas
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Capon: Understanding Organisational Context2nd edition Pearson Education 20041.40
The power culture
Concentric circles represent
power and influence
The further away from the
centre, the weaker the power
and influence
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Capon: Understanding Organisational Context2nd edition Pearson Education 20041.41
Figure 1.10 The role cultureSource: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright
Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.
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Capon: Understanding Organisational Context2nd edition Pearson Education 20041.42
The role culture
Often found in larger
organisations with functional
or divisional structure
Built around defined jobs,
roles and procedures
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.43
The role culture
Strength of organisation is in
the pillars or departments
Designed for stability and
continuity
Not adaptive to change
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.44
Figure 1.11 The task cultureSource: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright
Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.45
The task culture
Often found in organisations
with the matrix structure
Problem-solving
organisations
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.46
The task culture
People and resources drawn
together into a temporary team
for a specific project
Once the project is completed,
the team disbands and
individuals move on to other
projects
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Capon: Understanding Organisational Context2nd edition Pearson Education 2004 1.47
Figure 1.12 The person cultureSource: Understanding Organizations by Charles Handy (Penguin Books 1976, Fourth Edition 1993). Copyright
Charles Handy 1976, 1981, 1985, 1993. Reproduced by kind permission of Penguin Books Ltd.
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Capon: Understanding Organisational Context 2nd edition Pearson Education 2004 1.48
The person culture
Organisation exists to
support the individual
specialist and allow them to
practise their profession
Found in the professions, e.g.doctors, solicitors, dentists