INTRODUCTION

Organisations are a necessary part of human life and

serve many important needs.

An understanding of organisations is critical to
effective management

Organisations have an increasing impact on:

Individuals

Other organisations

Environment

COMMON FACTORS IN
ORGANISATION TYPES ORGANISATIONS

Private or public sector
Many different types of organisation

Profit or not-for-profit

Size, shape, purpose

Production or service

In ALL organisations; THREE (or four!) common

Classification factors

By major purpose (economic, protective, associative, public
People
service or religious)

By Prime beneficiary (Mutual benefit, Business concerns,
Objectives
Service organisation, Commonweal organisations)
Structure

By primary activity (Productive or economic, Maintenance,
Adaptive, Managerial)
Management

Object moulding or People moulding

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Common Factors in Organisation
ORGANISATIONS
Manufacturer Hospital

Hotel
Government
Interrelationships of people, objectives and structure
Dept
together with the efficient use of available human and
School University
non-human resources will determine the success or
Interaction of efforts of
failure of an organisation (Mullins, 2002)
Bank
PEOPLE
Charity

Also
in order to achieve
OBJECTIVES

Characteristics of individuals making up organisation
Retail Shop
Channelled and co-ordinated Hotel

Variety of goals of individuals/groups plus impact on
through
STRUCTURE
conflict
directed and controlled by
Interaction between organisation and general
MANAGEMENT
environment

Basic components of an Five components of an organisation

organisation Top
Mgmt

Operating Component – Production (or provision of eg: objectives &
Policy
services)

Administrative component – Supervision and co- Organisational
Operational
ordination Support Middle
Support
eg: office services
canteen
Mgmt eg: quality control

Operational
Core
Assembly line,
teaching

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 Organisation charts
Formal Organisation: Spans of Control
Policies and procedures
Overt Mission Statements
Job Definitions and descriptions
Production Efficiency and effectiveness
measures
SYSTEMS VIEW
Outputs from
Informal Organisation: Personal Animosities and friendships
Grapevines Other systems
Inputs to
Covert Group norms and sentiments Environment other
Informal leaders systems
Prestige and power structures influences O
Emotional feelings, needs and desires I
Effective relationships between managers u
and subordinates n
Personal and group goals and perceptions t
Patterns and habit p
p
u Activities/
Formulation Objectives
Transformation
u
of goals and policy t
process t
s
s

FEEDBACK: measure of achievement

ORGANISATIONAL ICEBERG

SYSTEMS VIEW INPUTS

INTERNAL ENVIRONMENT
People, raw materials,
components
External Environment
Cash; information
Management
strategy
Internal
environment

FEEDBACK
PROCESSES Organisational culture,
Sales turnover
Financial results
Production;
Marketing;
Services and systems
Customer surveys
Staff turnover
Recruitment training Technology and methods
R&D
Legal actions Strategy
GOALS
People
Market leadership Activities and tasks
Growth
Profit
Investors in People
OUTPUTS
Satisfied customers
Product; services
Employment
Revenue
Profits; taxes;
waste

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INTERNAL ENVIRONMENT INTERNAL ENVIRONMENT

Strategic development
People

Appropriate/effective
Right people in right job

Product, market, financial, people

Training and development

Structure/systems

Appropriate, effective to achieve goals
Appraisals

Chain of responsibility
Technology

Management style
Technology to achieve goals

Chain of communication

Appropriately trained staff

Promotion, advancement

Tasks, work

Culture

Responsibility, achievement
Organisational

Quality, TQM
national

INTERACTION WITH
ENVIRONMENT
ENVIRONMENTAL INFLUENCES
Technological
Shareholders Innovations Social
attitudes

Structure, management, functioning of organisation not Suppliers Economic Local/national
only affected by internal envt. Climate activity Govt. policies

Organisations are also influenced by range of volatile

EXTERNAL environmental factors Competitors Organisation Trades Unions

Must respond to challenges, risks, limitations

Changes affect inputs, hence transformation or conversion
Customers
processes and hence outputs Pressure
International

Requires multiple channels of interaction relations
groups

Emphasises need for systems approach i.e HOLISTIC

Other
approach organisations
Culture
CBI

Major environmental factors Training and Enterprise
councils Employers’

Also constantly changing environmental influences associations

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Layers of the business environment Macro-environmental influences:
The Macro-
Macro-Environment
PESTEL Sociocultural
Shifts in values and cultures
Technological
Government and European investment
Changes in lifestyle policy
Attitudes to work and leisure Identified new research initiatives
‘green’ environmental issues New patents and products
Education and health Speed of change and adoption of new
Industry (or Sector) Demographic changes technology
Level of expenditure on R&D by
Distribution of income
organisation’s rivals

Competitors Economic
Total GDP and GDP per head
Environmental
Inflation Green issues that affect environment
Consumer spending and disposable Level and type of energy consumed
income
Organisation Interest rates
Renewable energy
Rubbish waste and disposal
Currency fluctuations and ERs.
Unemployment
Energy costs, transport costs, raw Organisation
material costs

Political Legal
Political parties and alignment; local,
national, international Competition law
Legislation e.g. on taxation and Employment law
employment law Health and safety
Relations between government and Social Charter
organisation Product safety issues
Government attitude to monopolies and
competition

Porter’s Five Forces ORGANISATIONAL STRUCTURE

The pattern of relationships among positions in
Potential the organisation and among members of the
Entrants
organisation
Threat of
Basis for application of management
Entry

Frame work of order and command

Enables planning, direction, organisation and
Bargaining Competitive Bargaining
control
Suppliers power
power Buyers
Drucker: “Good organisation structure does not by itself
Rivalry
produce good performance. But a poor organisation structure
makes good performance impossible, no matter how good the
individual managers may be”
Threat of
Substitution

Levels of organisation are inter-related: Technical
level (production), Managerial level, Community
Substitutes level (directors or trustees)

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 Other Reading (Mullins, 2002,
DIVISION OF WORK Chapter 13 part 6)

Work can be divided below MD level by:

Span of Control

Purpose or function (R&D, Production, Marketing,
Finance etc)
Scalar Chain

Product or Service (Product A, Product B, Product C
Flatter Organisation structures
etc)
Formal organisational relationships

Location (London, Manchester, New York)
Line and staff organisation

Nature of work
Project teams and matrix organisation

Common time scales
Effects of a deficient organisation structure

Customer to be served
Organisation Charts

Structure and organisational behaviour

HRM Manager would typically be in a direct line from
top management
Patterns of Structure and work organisation

Centralised or decentralised
Technology