Unit 1 P3

IntroductionI am going to describe the organisation that businesses have while investigating the organisational structure of Tesco and British Red Cross, and how this structure helps to achieve their aims and objectives.

Why it is important for businesses to be organisedIt is important for businesses to be organised because it makes it easier to run the business. It is important that to be organised they use an organisation chart, this is because it helps to give a clear definition of the job roles and responsibilities that are assigned to different sectors. The chart also shows who runs what in the organisation and it controls the activities that take place within the organisation. If businesses were not organised then it wouldn’t be efficient as the employees will be clueless of what they have to do and who they have to do it for.

Organisational structureOrganisational structures are what businesses need to use to ensure they are able to meet their purposes efficiently and successfully. These structures have different purposes for each business but they should be designed to make sure that the work that businesses have to do is divided to give each member of staff a fair amount relating to their job position and their wages. They also need to establish the lines of control and communication that the business has which I will explain in the next point. These structures are also important of the control of business activities that are organised and ensuring that conflict is avoided between staff and that the staff are able to individually make their own decisions that will not conflict with any others.

Line of controlThe line of control is where the individuals in a business are responsible for the actions and decisions of either a line manager or a supervisor. The more important and crucial decisions made are the senior colleagues responsibility. This is often used in a form of chain of command. Before taking any actions the lower positions within the business will have to notify the senior members of staff first.

Different types of organisational structure Businesses will use different types of organisational structure, these include;

Function

Businesses may structure their business by function. This means that they have to arrange different parts of the business according to what that section of the business does, depending on the type of the business, the size of how big the business is and how the structure is going to be used for the business. Sometimes it may depend on if the business wants to meet a specific purpose such as the rate of production that the business needs to have, the market that the business wants it products to go into or the accounts that the business have.

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Geographical

Businesses may structure their businesses using geographical organisation which means by area. This means that the organisation may have one main brand name but several smaller parts of the organisation which are only in certain countries and areas.

Product groups

Businesses may structure their businesses using product groups; this means they will organise to suit the customer’s needs to the different products that they have made. This means that a business will need to organise where their products are into categories such as if they sell many types of food they may sort them into categories that suit the customer’s needs rather than just “food”.

Customer type

Some businesses may organise their structure using the type of customers, this is similar to product groups because they will have different sections that have to deal specifically with the enquiries that the customers have and will need to deal with some customers individually.

ExampleFunction

A business that will use this type of organisational structure is Tesco. The advantages of using a structure by function is that each sector of the business is able to focus on their objectives that they have been given, for each sector of the business there is someone that is responsible for the work levels and the employees are able to know what the roles are of the other colleagues. The disadvantages of using a functional structure is that the employees have a low level of communication with their colleagues which could lead to a lack of the focus on the work they are meant to be doing, the sectors may be hard to change, it may take a long period of time for the sector to actually become coordinated and there is a gap between the higher sectors of the business and the lower sectors.

Geographical

An example of this is the Red Cross because they have the British Red Cross is Britain, the American Red Cross in America and the Indian Red Cross in India and its surrounding areas. The advantages of using geographical organisation are that the organisation is able to satisfy the local community and meet their needs better than they would be able to if they were one big organisation, they are able to keep a positive competition with their competitors and they have a better communication between the organisation itself and the customers that are local to it. The disadvantages of using this type of organisation are that the organisation may have conflicts between the management that is local and the central management and the organisation will need a higher amount of resources and functions so that the organisation can run in many places at once.

Product Groups

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An example of a business that uses this type of organisation is Nestle, they have organised their products into certain categories such as chocolate, cereal, drinks, chilled meats and ice cream. They have only used “drinks” as one of their categories because they do not have as many drink products and therefore they cannot be split into more categories where the food was. The advantages of using this type of organisation are that the organisation has a clear view of how they can meet their customers needs using the market sector they are in, with their divisions they can have a competition that is positive and the organisation have a better control over each section because they are able to generate separate profits that can be put back into the business.

Customer Type

A business that may sell their products according to their customers needs may be one such as Tesco because of the many products they sell, that is why they have several different sized stores; to meet the needs of the customers in that area.

Flat structureA flat structure is where an organisation only has a few such as two or three levels of job ranking and is usually used by small businesses. An advantage of businesses using this type of structure is that it gives the employees empowerment and they all get their say. This type of structure can increase the rate of productivity and reduce the amount that a business will have to pay out for many levels of management. Flat structures are difficult to use in large businesses because it can mean that the managers may not get all the power that they want, therefore this is only effective in small businesses. As businesses start to grow it becomes more difficult for the one manager to control everything and therefore they may switch to a hierarchical structure. Businesses that use flat structures usually employ someone to be a supervisor or have an assistant manager.

Hierarchical structureA hierarchical structure is much larger than a flat structure is and it can have several layers of job ranking. The job positions that are in this type of structure are also more specialised as they have more specific duties than they would in a flat structure. The staff that are put into this structure are placed in different departments in the business that is specific to carrying out certain tasks. Many large businesses use this type of structure because it becomes difficult to use a flat structure as a manager alone would not be able to manage. This type of structure is also used in other areas such as the Government.

Span of controlOrganisations have a span of control and it is what measures the quantity of the people that an individual has responsibilities for within the organisation they are in. if there are more people that the individual has responsibilities for then it means that the span of control will be wider. In a business if a manager has responsibilities for many people it may mean they will be forced to maintain standards at a level which can stop the manager from being able to do their job correctly, and they will be unable to perform their duties to the best of their abilities. This also applies to if the

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manager has little people to manage and therefore their abilities may be wasted when they can be trying to do better things.

Functional areasThe functional areas in a business are what section off the areas that deal with specific areas. The areas that are within a business are; finance, marketing, production, customer service, sales, and human resources.

Finance

The finance department often deals with keeping the data records held on financial transactions such as the sales that the business may back in a year. The department also deals with the provision of information to the higher job positions such as managers so that the decisions they make can be influenced and improved such as how much it may cost to start production of a certain product. The accounts department in a business is supervised by a chief accountant. In an organisation the managers need to constantly be updated on the organisations current financial position and how their decisions may impact on what happens to this position. There are two subsections for accounts; financial accounting and management accounting. Financial accounting needs to keep data records on the events that affect the business financially such as sales statistics, these accountants also need to produce annual accounts and keep records on the VAT. Management accounting needs to supply the information to the managers that can influence the decisions of the business to have a higher chance of making a profit. These accountants need to work out the costs for production and set the budgets for the business sections.

Marketing

The function of marketing is important for the business because it means that they will be able to identify the customer’s needs, anticipate them and then improve their service to satisfy them. The people in the marketing area need to research on what types of customer they need to try to attract by seeing what they want and where they want it, then they also need to know why they would like it and the preferred price for it to be set at. The marketing area works with the production area to ensure that the development of new products can be adjusted to meet the customer’s needs. Marketing has four main things that they need to agree on; these are the four P’s and are; products, prices, promotions, and place. They need to know what the products are going to be that the organisation is expected to produce, the price they are going to charge for the product, the promotions such as television advertisements that will be designed to encourage the customers to purchase their product, and the place that they are going to be selling their products to the customers.

Production

The production area in an organisation is where the products are made and here is where they will evaluate the best way to make their product. Organisations will have a production manager who will be responsible for the development of the product from starting with the raw materials to the final product. The product being developed need to meet the standards set by the business and it is up to the production manager to supervise making sure that these standards are met. The manager also

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needs to decide how the goods are going to be produced and the methods they are going to use to achieve this. It is their job to make sure that the employees know what they are doing and how they are going to do it, for example they may need to have a set schedule for the employees to follow.

Customer service

The customer service area needs to make sure that the relationship between the business and its customers is maintained and improved on. To do this before they actually sell the customer the products they may offer advice on what products will suit them best and notify them on the latest offers that are available. During the purchase they will listen to their customers’ requests and make sure that they feel valued by the business. After the purchase the business will need to listen to any complaints or queries that the customer may have and can provide more service after the sale such as spare parts or information about new items they may want to buy. Customer service may carry out questionnaires regularly to see how well they are doing with improvising on their customer relationship. Large organisations have centres that are mainly focused on dealing with customer complaints and queries and the employees working in this centre will be overseen by a manager and call centres may also work together.

Sales

This area of the business needs to make sure that the customers are becoming aware of the products that the business are trying to sell and that the customers are making regular purchases of these products. Whereas the marketing area is dedicated to seeing how the customers want the products to be, the sales area is dedicated to promoting their product sales and trying to get the customers to buy the products. The sales department needs to focus on the creation of orders for the customers to buy their goods and services. Whereas some organisations employ large forces to take care of this, other organisations may rely on advertising their product to increase the levels of sales and therefore may recruit a smaller team of people. The sales area will try to find the customer group that will be interested in the product and act on this to make sure that their advertisements tries to draw attention from this group of people.

Human resources

The human resources area has to make sure the people management in an organisation are doing their work correctly. The work that the business needs to do is they have to include a policy-making role which means they will have to create policies on the employees, they will need to have concern for the people and the needs that they have, they will need to be supportive to the other functional managers to help with the development of their work such as giving them advice on how to improve, they will need to follow a bargaining and negotiating role, they will need to manage the wages being paid to employees and the supervision of health and safety within the business, and they will also need to help with the training of staff to ensure that they are able to do the work correctly and efficiently.

The organisations I have chosen

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Tesco

Tesco are organised by product, this is seen in their many different store types they have. They have large stores called Tesco Extra, standard large supermarkets that are called Tesco Superstores. In between these two store sizes they have the Tesco Metro. Small neighbourhood stores called Tesco Express. Their newest store is Onestop; these stores are suited to sell different products with different amounts available. These stores vary in size according to where they are located. The small neighbourhood shops (Tesco Express) will most likely sell more products that are needed within a small family; this may include items such as food and drink. Larger stores such as the Tesco Extra may have different items such as books, games and electronics. Tesco is organised using a functional structure, this is because they are a big organisation and one manager will not be able to handle the rest of the business alone. This also makes it easier for the business to communicate with its employees and their decisions will be influenced by this and can lead to better decision making. Tesco use different functional areas to control the activities within their business. The business is split into different sectors; there are managers for different products such as fresh, non food, and training. These managers all manage different groups of employees to ensure that the correct work is being completed. The managers also have several assistants. All of the managers have to report to the store manager who then reports to the store director.

British Red Cross

The British Red Cross are organised by area, this is because they have different parts of the Red Cross and it includes the British Red Cross, the American Red Cross and the Indian Red Cross. This makes it possible for the charity to distribute its services locally from its different sectors; the problem with this is that they can have a duplication of supplies which will therefore mean it will cost more for the charity to operate. The British Red Cross uses a functional organisation structure because of the importance of getting the information around the charity. It would be difficult and time consuming for the charity to use a flat structure because it would mean that the information would need to be passed up until it reaches the manager. This also means if a flat structure was used the information could be slightly misheard and the manager may receive the wrong information.

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Organisational Chart

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Tesco

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Line of controlTesco

The line of control in Tesco means that the employees in Tesco will have to be supervised by higher positions. The employees will need to report to the higher positions to ensure that the information reaches the top managers.

British Red Cross

The line of control in the Red Cross means that the volunteers need to report back up to people with a higher reputation within the sector that they are working in. The volunteers with a higher reputation will then to need to keep reporting upwards in the business so that the information reaches the trustees.

How this helps the organisationsTesco

This helps Tesco by allowing the staff to know who they have to report to so that they can ensure the information reaches the top job positions within the business and that it also stays within the correct sector. Because Tesco uses a hierarchical structure they are able to organise the business into sectors and have managers within those sectors that need to be reported to. The managers are possibly then part of a different general sector, where all of the managers will then report up to the highest job positions to give the information. Because the business is organised by product and locates their stores accordingly to the local surroundings, the different stores allow the business to make sure the local community have the correct store for them. Therefore the different stores will have resources that satisfy the customers. Tesco are organised into different functional areas, this allows different sectors of the business to pass up information until it reaches the people that have to either take it into account or deal with the matter.

British Red Cross

This helps the organisation achieve its purpose which is to provide a service to the community. By using a hierarchical structure they are able to make sure that the volunteers pass up all the possible information. The volunteers are able to make sure that the information they receive is passed up to higher positions then eventually passed up to the trustees. Because the organisation is organised by area it is useful because the people that are local to the sector of the business are able to receive a more efficient service. A problem of this is that they will need to provide extra and duplicated resources to make sure all of the sectors can run efficiently. The people at the bottom of the chart report the information up continuously until it reaches the person that is to deal with the issue.

ConclusionTo conclude it is important for organisations to make sure that they organise their structure efficiently, making sure that they are able to either pass up their information efficiently, as in

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reaching everyone or reaching them quickly. They also need to organise their business effectively such as deciding whether they are going to distribute their services by area, product, or function. The organisations will also need to know why they are going to need the type of organisation and how it is going to help them.

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