SBL 5

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Entrepreneurial company structure
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Structure is built around the owner manager.
Functional company structure
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That simply means that people within the organisation are organised by a function. So there is a finance function, a manufacturing function, research and development function, sales function, and so on.
Divisional company structure:
3
The normal bases for splitting up an organisation into divisions are:
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Product | Geography | Customer.
3) For example some very large organisations have one division which deals with government contracts and another one which deals with private business contracts.
Matrix structure
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A combination of a functional and a divisional structure.
What Strategic apex want?
for example, the board of directors
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Direction
What Technostructure want?
The techno-structure, for example, would be responsible for writing procedures manuals, quality control manuals, accounting manuals, personnel manuals.
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Efficiency
What Operating core want?
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Proficiency
What Middle line want?
Mintzberg buidling blocks
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Concentration
of accountants or lawyers there has to be a very close relationship between the people who do the work
What Support staff want?
e.g. the accounts department
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Learning
What Strategic apex provides?
for example, the board of directors
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Supervision
What Technostructure provides?
2
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Procedures and standards.
What Operating core provides?
the people who actually does the work
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Expertise and skills.
What Middle line provides?
the middle managers
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Focus and control.
What Support staff provides?
e.g. the accounts department
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Help and training.
Structure in which Strategic apex dominate?
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Simple
a simple structure are typically flat
Basic organizational design structure with low departmentalization, little work specialization, wide spans of control, centralized authority (typically the owner has most of the power) and little formalization or rules that govern operation.
Structure in which Technostructure dominate?
The techno-structure, for example, would be responsible for writing procedures manuals, quality control manuals, accounting manuals, personnel manuals.
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Machine bureaucracy
Organisation dealing in mass produced products. The technostructure is large: quality control manuals, good financial internal control systems, health and safety rules, employee handbooks. The central middle line is also fairly long.
Structure in which Operating core dominate?
the people who actually does the work
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Professional bureaucracy
A firm of accountants or a firm of lawyers. In such a structure, the middle line is very short and the techno-structure is very small. Because every client is unique there can’t be a lot of standardisation.
Structure in which Middle line dominate?
the middle managers
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Divisional
ERM
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Enterprise risk management
m-commerce
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Commercial transactions conducted electronically by mobile phone.
Porter suggests 3 ways IT can affected industries:
3
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New business might become possible. | Industry structure can be changed. | New ways of operating.
Like auction sites. | Music industry. | On-line airline tickets booking
IT Risks
4
HH VI
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Hacking. | Hardware. | Viruses. | Imput errors.
4. Either deliberate or accidental.
IT Software controls:
3
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Supplier selection. | Retain original disks. | License checking.
IT Network controls:
4
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Firewalls. | Flow control. | Virus protection. | Data encryption.
FFVDe
In data communications, flow control is the process of managing the rate of data transmission between two nodes to prevent a fast sender from overwhelming a slow receiver.
Residual risk equation + example:
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Inherent risk less impact of risk controls.
An example of residual risk is given by the use of automotive seat-belts. Installation and use of seat-belts reduces the overall severity and probability of injury. However, probability of injury remains when in use, that is, a remainder of residual risk.
E-commerce creates a much more efficient supply chain that benefits customers and manufactures. Companies can better serve customer needs and:
2
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Carry fewer inventories. | Send products to market more quickly.
Big data characteristic:
4V
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volume | velocity | variety | veracity
Veracity - zgodność z prawdą.
Cloud technology drawbacks (except costs):
3
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Regulatory risks. | Unauthorised access to data. | Reliance on the provider.
E-branding differences from traditional branding.
3 +1 mój
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It can evolve easily. | It requires more visual identity. | It needs to be easier to find. | Logo can be moving or flashing.
Visual identity - communicating through pictures and graphics rather than text.
Acquiring customers in e-business.
3
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Search engine marketing. | Viral marketing. | Evaluating online behaviour.
also: opt-in emails | online partnership | online PR
Managing customers in e-business. Ensuring that customers keep returning to a website relies upon:
3
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Responsiveness. | Empathy. | Website reliability.
Customer empathy in e-business can by improved through:
3
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Personalisation. | Storing past transactions. | Supporting online communities.
What is a business case document?
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A document which should be prepared for any project.
Why a Business case document is a formal document?
3
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To obtain funding for the project. | To compete with other projects for resources. | To improve planning.
Which members of the Board have right to vote?
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All of them - executives and NEDs.
Key project staff:
3
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Project sponsor. | Project manager. | Team members.
Roles of Project sponsor:
3
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Resource providing. | Changes approving. | Organisational goals communicating.
Roles of project manager:
4
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Business case building. | Executing the plan. | Team members managing. | Day-to-day job.
Stages of Project control:
3
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Create performance measures and targets. | Test performance at project gateways. | Take control actions if targets aren’t met.
Potential control action for projects:
3
It is in responsibility of Project manager.
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Adding additional resources. | Scope reduction. | Adopting higher risk but potentially more efficient approach.
+ fast tracking | employee motivation
Project review types:
2
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Post project review. | Post implementation review.
PPR | PIR
Post project review (PPR)
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It reviews the performance of the project team.
Post implementation review (PIR)
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It reviews the output from the project.
Two extent of change:
2
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Realignment | Transformation.
Two speed of change:
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Incremental. | Big bang.
Evolution
2. [Types of change]
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Slow large changes. | Likely to be proactive due to the need for future change.
Adaptation
[Types of change]
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Slow, small changes.
Revolution
2 | [Types of change]
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Large, fast change. | More likely to be reactive.
Reconstruction
2. | [Types of change]
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Fast change of limited consequences. | Often forced and reactive.
Preparation for change. Three stages suggested by Lewin.
3
Kurt Lewin
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Unfreeze. | Change. | Refreeze.
Unfreeze the situation.
2
First step of preparation for changes by Lewin.
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First, management must first explain to people why change is needed. | And get them ready for change.
Change the situation.
3
Second step of preparation for changes by Lewin.
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Make changes. | This can be a relatively long period. | People will have to perhaps undergo retraining.
Changes to strategy, processes, culture, etc.
Refreeze the situation.
2
Kurt Lewin
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Let things settle down, have a period of calm and become stable in a new environment. | Make sure that people don’t slip back into old patterns of behaviour.
Emblems and titles examples.
2
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Do the members of the board have reserved parking spaces? | Do they have very large offices or do they tend to share an open plan office with other employees?
Power relations
[Cultural Web]
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Does your boss always tell you what to do or do you usually discuss what should be done and come to a consensus?
Wide and flat organisational structure:
2
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The tall narrow organisation shape tends to result in organisations which are rather bureaucratic and formal. | Wide flat organisation tends to produce less formal cultures.
Control systems - questions.
2 | [Cultural Web]
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How carefully are you controlled?. How much are you allowed to use your own initiative?. | What reporting mechanisms are there?
Rituals and routines example.
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Some telephone-sales orientated organisations have a ritual that people, for example, ring a bell whenever a sale is made.
Myths and stories example:
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How in the past the company beat a powerful competitor.
Organisational assumptions (The centre of Cultural Web).
2
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Typical assumption is that we are the best, or we never fail or we never miss a deadline. | A hospital might have the assumption that it’s purpose is to provide healthcare irrespective of cost.
POPIt - Organisation
3
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Consider the organisational capabilities, | structure, | and ensure that these are suitable.
POPIt - IT
3
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IT capabilities, | Controls, | Software.
POPIt - People
3
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Job descriptions, | Competencies, | culture.
POPIt - Processes
2
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Analyse the value chain. | And understand the processes and their linkages.
Kaleidoscope - Time
2
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Do we have a long time, or is it urgent? | If urgent, the change process is likely to be one where people tend to be told what to do rather than having long discussions about what should be done.
Kaleidoscope - Scope
2
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If most of organisation is affected then the change process is much more complex. | If it is more restricted the change process would be much easier.
Kaleidoscope - Preservation
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Which aspects of the organisation work well and therefore are to be retained?
Kaleidoscope - Diversity
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Some parts of the organisation may be keen to embrace change whereas others resist and are protective of their current position.
Kaleidoscope - Capability
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Can we do the change or we need outside experts?
Kaleidoscope - Capacity
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Do we have enough resources and time, money, and expertise or do we need to buy some in?
Kaleidoscope - Readiness
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Are staff members aware of the need for change and ready to embrace it?
Kaleidoscope - Power
2
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How much power does the change agent have? | If that person has to keep referring upwards to get guidance, then their power is undermined.
Cost accounting characteristics:
3
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Based on standard costing systems. | May be based on absorption, marginal or activity based systems. | Becoming increasingly out-of-date in modern manufacturing environments.
Break even point equation:
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Total fixed costs minus Contribution.
Margin of safety:
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Budgeted sales minus Break even sales.
Break even analysis key assumptions:
3
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Assumes a constant selling price. | Ignores economies/diseconomies of scale. | Only relevant in the short term.
Marginal decision making:
3
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Accepting or rejecting special orders. | Closing a business unit. | Abandoning a project.
Marginal decision making. Relevant costs and revenues must satisfy three criteria:
3
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Cash, Incremental, Future.
Problems with marginal decision making:
2
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May need to consider opportunity costs. | Tax impact will be different.
How to calculate Net Present Value?
2
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Use a cost of capital and discount factors | to discount future cash flow to give the present value.
How to calculate Accounting Rate of Return?
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Divide average profits | by the initial investment.
How to calculate the Payback period?
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Determine how quickly the original cash injection is removed.
How to calculate the IRR?
2
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Determine the cost of capital | that provides a zero NPV.
NPV has best use when?
2
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The project is long | and the cost of capital is known.
Payback period has best use when?
2
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The project is short | and cash is in short supply.
ARR has best use when?
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The project has profit targets to meet.
IRR has best use when?
2
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The project is long | and cost of capital has not yet be determined.
Key advantage of NPV
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Gives an absolute estimate of the impact on shareholder wealth
Key advantage of Payback period
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Provides a minimum target for the project life.
Enterprise risk management definition
2
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the process of assessing risks to identify both threats to a company’s financial well-being and opportunities in the market. | The goal of an ERM program is to understand an organization's tolerance for risk, categorize it, and quantify it.
Industry convergence.
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Industries which had historically been separate come together so that more diverse others products or services are now offered by the same supplier.
Examples can be airlines which now offer car hire, hotels, and insurance.
Competition, or rivalry, can range from:
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Perfect competition to monopoly.
Unusual resources examples:
3
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Brands. | Knowhow. | Management information system (MIS)
used for decision-making, and for the coordination, control, analysis, and visualization of information in an organization.
Primary activities equate to...?
Value chain analysis.
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_to direct costs.
Value networks
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Value networks recognise that few companies stand alone and that what is ultimately supplied to and paid for by customers depends on activities carried on by many suppliers, distributors and, indeed, logistics companies.
Graphics available.
BCG analysis suggests that Problem Child/Question mark that there is no...?
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there is no long-term future for this product if it has only a small market share.

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