Organisation

An organisation is a social arrangement for controlled

performance of collective goals.

1.

Social arrangements: have structure which enables people to work

together towards the common goals. Larger organisation have
formal structure, small organisations divide up the responsibilities
between the concerned people.

2.

Controlled performance: have systems and procedures to ensure

that goals are achieved.

3.

Collective goals: School main goal is to educate pupils while

company goal is to make profits

Organisation
Organisation enables people to:

Share skills and knowledge;

Specialise; and
Pool resources

Type of organisation

Type of organisation - Differences

Private Sector

Public Sector

Non-Profit Org

Example:

Private companies such

as ABC Sdn Bhd

Government
Club, Societies
department,agencies Ie: Greenpeace

Purpose

To maximise the wealth

of their owners for
continue its existence

To provide benefit
to public (ie: health,
police, primary
education etc.)

To satisfy the
particular needs of
their member of
sector of society

Ownership

Owned by shareholder

Owned by
government

Owned by
members

Funding

From variety sources

(ie: issue new shares,
borrowing etc.)

From government
(ie: money from
taxation)

Government
grants, private
donations

Accountability

To owner such as
shareholder. (ie:
Director accountable to
shareholder for financial
performance)

Public

Members

Organisation Structures
1.

Entrepreneurial

A fluid structure with little or no formality

(no formal management structure);
Suitable for small start-up companies; and
The activities and decisions are dominated by a key central figure
(owner/entrepreneur).
Advantages:

- Quick decision making process

Staff
Staff

Staff

- Able to control over the workforce

Boss
Staff

Staff
Staff

- React quickly

Disadvantages:
- Relies on one person
- If organisation grows, one person will not
able to cope with the increased volume of
decision

Organisation Structures
2.

Functional

Created via separate departments or function;

Employees are grouped by specialism;
Department targets will be set;
Formal communication system will be set up to ensure information
is shared.
Advantages:
- Low cost

Directors

- Specialisation might improve effeciency

- Enhances the experience of each function

Finance
Department

Sales
Department

HR
Department

Disadvantages:
- Decision making process slow
- Could be conflict between departments

Organisation Structures
3.

Divisional

The organisation is divided into a number of different divisions;

Two main types of divisional structure:
(i) Product divisional structure (ii) Geographical division structure
Advantages:

Example: Vehicle Manufacturing company

Group
Directors
Car
Division

Truck
Division

Motorbike
Division

Example: Company based on geographical area

Group
Directors
Africa
Division

Japan
Division

- More aware of the changes in the

business environment for their
products or geographical region
- Specialist skills relating to product or
geographical area
- Clear responsibility for product
division or geographical sales area
Disadvantages:

Korea
Division

- Duplicate of functions
- High cost

Organisation Structures

Organisation Structures
4.

Matrix (dual command structure)

Created to bring flexibility to organisations geared toward project work

or customer-specific jobs.
Dual reporting to managers by an individual employee.
Ie: A University, a lecturer may have to report to both subject and
department head.
Advantages:

- Information and knowledge are

sharing between departments
- Can provide flexibility
Disadvantages:
- Increased probability of conflict
between department managers
- Complexity, which can lead to
confused employees
- Costs increased due to the use of
more managers on projects

Organisation Structures
4.

Matrix (dual command structure)

Created to bring flexibility to organisations geared toward project work

or customer-specific jobs.
Dual reporting to managers by an individual employee.
Ie: A University, a lecturer may have to report to both subject and
department head.
Advantages:

- Information and knowledge are

sharing between departments
- Can provide flexibility
Disadvantages:
- Increased probability of conflict
between department managers
- Complexity, which can lead to
confused employees
- Costs increased due to the use of
more managers on projects

Levels of planning within an

organisation
Strategic
-The big picture,
long term issues and
the whole company

Tactical
-Medium term and
Focuses on use of
resources

Operational
- Short term day to day issues

Anthonys hierarchy

Each level of the

organisation differs in
term of:
(a) The roles/tasks
performanced
(b) The decision taken
(c) The nature of the
working environment
(d) The nature of the
information required

Organisation Structures
Henry Mintzberg

Henry Mintzberg believes that all organisations can be analysed

into five components, according to how they relate to the work of
organisation and how they prefer to coordinate.

Organisation Structures
Henry Mintzberg
(a)

(b)
(c)

(d)

(e)

Strategic apex
Drives the direction of the business through control over decisionmaking.
Technostructure
Drives efficiency through rules and procedures.
Operating core
Performs the routine activities of the organisation in a proficient
and standardised manner.
Middle line
Performs the management functions of control over resources,
processes and business areas.
Support staff
Provide expertise and service to the organisation.

Centralisation & Decentralisation

Another method of analysing structures is by reference to the

level at which decisions are made.

In a decentralised structure, the authority to take decisions is

passed down to units and people at lower levels.
In a centralised structure, the upper levels of an organisation
hierarchy retain the authority to make decisions.

The factors that will affect the amount of decentralisation are:

Management style.
Ability of management/employees.
Size of the organisation/scale of activities.

Centralisation & Decentralisation

The advantages and disadvantages of decentralisation are: