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ATHE LEVEL 4

BUSINESS MANAGEMENT

UNIT 4.1

BUSINESS ENVIRONMENT

NAME: MOSSAMAT SAIMA

DATE: 04/12/2018

TASK 2

STRUCTURE OF ORGANISATION

Organizational structure shows how the power and responsibilities are controlled and how information flows between different levels of management. Organizational structure is a system how certain activities are done to achieve the goals of an organization. In a structure of an organization the top most layer which is the management has power to make any decision and has right to control the departments and the divisions. The decision that has made is divided and distributed in the departments. The employee position is identified with their function and whom they report within the firm. It is the way in which company has organized such as types of relationship that is between the directors, managers and employer. An organizational structure shows how a business organization arranges its staff and jobs so that the work should be done in a proper manner to meet its goals. There are many different ways in which an organization can be organized and structured.

The organizational structure depends on many factors they are:

 How big is the organization

 How many people work in an organization

 Where an organization is located

 What an organization sells  and how many different markets it is active in

There are different types of organizational structure they are

1. Centralized structure

2. Decentralized structure

A business organization can also be organized in some other ways to and it might be:

• Divisions

• Functions

• Geography

• Matrix

https://marketbusinessnews.com/financial-glossary/organizational-structure-definition-meaning/

http://www.businessdictionary.com/definition/organizational-structure.html

(AC2.1)

TYPES OF ORGANISATIONAL STRUCTURE

An organizational structure are of two types:

1. Centralized Structure: this structure gives the power for making decision to the team at the top such as the management.

2. Decentralized Structure: this structure distributes the decision power at lower levels of an organization which include departments etc..

A business organization can be organized in many ways based on divisions, functions, geography or with matrix.

 DIVISIONAL STRUCTURE:

Divisional structure is organized by divisions in a business organization that have entities with their own functional departments such as human resource, products, projects etc…

Advantages:

• It works well when a group of people focus on a single product and service.

• It good because it have a division of manager and supervisor so that they will receive the resource that they need from the company.

• Divisions allows people find their needs easily such as in a market there are different departments such as food skin care etc… so it easy people to find their needs according to what they need .

Disadvantage:

• Division structure have weakness

• Sometimes one division undermines the other.

• Division can lead to comparison and it will cause conflict.

• In  a company if there is competition between the division it may lead to office conflicts .

 FUNCTIONAL STRUCTURE:

Functional structure is under the functions of the job which includes departments like finance, purchasing etc… Functional structure divides a business such as marketing department, customer service, human resource department etc….

Advantages:

• The person who works under a specific department are experienced person with high skills and well educated so that they understand the entire work

• In each and every department the team members work together and share their thoughts and ideas thus it doesn't lead to any conflict.

• Any staff working under a department if they are promoted they have a chance to stay long.

Disadvantages:

• Sometimes in a company different department can have completion between each other and will have working in other areas.

• There might be lack of misunderstanding between the people from different department thus it can lead to conflict.

• Since the people are groups in different department by their skills and roles there might be a jealousy between the members.

• There will be lack of unit coordination. And it may lead to waste of time, submitting the projects late etc…

 GEOGRAPHICAL STRUCTURE:

Geographical structure is used for location where a company or a business is located it is mainly used when a company have many locations. For example Sephora a makeup brand it is there in all most of the countries and this geographical structure shows where its located because they have outlets in most of the countries. And each location operates independently.

Advantages:

• In a company local management helps the company to take decision about local market

• There will be an easy tracking of the company if there is geographical structure so that people can find it easily

• It is good to have a geographical structure with a good location area where the area is clean and where the market selling price is high so that the company earns profit and customers get satisfied too.

Disadvantages:

• Sometimes two companies selling same product in the same location leads to completion between both the markets thus sometimes it might lead to conflict.

 MATRIX STRUCTURE:

This is a type of structure in which a company is organized by teams for specific task. And in a team it consists of team leader team supervisor for the team so that they be able to function properly.

Advantages:

• A person who works under this structure can have more information so that it can be exchanged because that person no only works in one department but works in other departments too… for example ,A person working in a matrix company have duties on both the sides such as sales and customer service.

• It increases motivation. The decisions made by the manager depend upon the view of employee.

Disadvantage:

• It has many complexities. Sometimes a person working on both the side leads to confusion because the employee gets confused who is the sales man and who is the supervisor.

• A company based on matrix is expensive to maintain and it lead to a completion between manager and the employee.

https://www.shopify.com/encyclopedia/organizational-structure

https://smallbusiness.chron.com/advantages-disadvantages-divisional-organizational-structure-611.html

https://www.management-square.com/matrix-organization/

https://www.management-square.com/functional-organization/

(AC2.2)

DISTRIBUTION OF DEPARTMENTS IN A COMPANY

Case study of a company named as “THE BODY SHOP”

The body shop is a skin care and makeup based brand which sells variety of skincare products and makeup products. It is a British cosmetic and skincare brand and was found in 1976 by Dame Anita Roddick. They sell 1000 of products and they have stores in almost 66 countries. These products are unique and cruelty free. And their products are banned testing on animals. Their products are vegetarian friendly and all the products are made up of natural things which help to keep our skin good and fresh. Their products are organic and nutriganic. Their company sells variety of products for face, body, hairs, nails, perfume, makeup etc…

There is also distribution of departments in this company and there are 5 departments which are related and dependent on each other.

     

THE BODY SHOP

FUNCTIONS:

Manufacturing:

Manufacturing is something which consists of tools and machines for the production of goods and service. And the products are researched and produced in laboratory. And then the full product packaging is done in factory   Manufacturing can also be knows as production department. The main aim of the manufacturing department is to manufacture or make products.

Distribution and Warehouse:

After manufacturing a product the distribution takes place. They factory distribute their product in in different outlets they have in different countries. Distribution of product can be through import and export.  And the products that are distributed are stored in the ware houses. Warehouse is a place where the products are stored which later on is displayed in the store.

Beauty Service:

It is a department or place in which customers take a product from the store itself which kept as tester and then they test those products and see whether the product is suitable for them or not and if they feel it is fine after that they go and purchase that specific product.

Customer Service:

Customer service helps customers if there is any change in product or needs to be exchanged or if the product is broken or damaged.

Delivery Service:

Delivery service includes if there is any online purchase from a person they go and deliver there order in the tracking location they has given.  

Inter relationship between these departments:

Firstly it comes the manufacturing of product where the product will be researched and produced in laboratory and then after they have achieved a product they send it to the factory for the packaging with a good design and then pack in a good way. And then the packed products will be distributed all over there outlet stores. And then the products are kept in the warehouses in which all the products are stored and when needed is displayed in the store. Then the customers comes to the shop and go through the product they want to buy and test their product in the beauty service side and if the customer is suitable with the product they purchase the product and pay in the cashier. And then if the customer is interested in giving feedback they go to the customer service and they fill the feedback form. If the product the customer purchased has been damaged or if they wanted to exchange they come to the customer service.

If the product is purchased from online the store have delivery service and they deliver the ordered product where the customer has given location.

https://www.thebodyshop.in

(AC2.3)

IMPACT OF GLOBAL FACTORS ON THE STRUCTURE OF ORGANISATION

Businesses are affected by the competitors. The impact of global factors on the structure of organization is by PESTEL Analysis.

PESTEL Analysis:

PESTEL is an analytical tool which consist of external factors and helps to think about their impacts. It's a way of working on what is going out there so that it can be responded.

PESTEL stands for political, economic, sociological, technological, environmental, legal factors.

The global factors are:

1. Social Factor

2. Environmental Factor

3. Legal Factor

4. Economic Factor

5. Political Factor

6. Technological Factor

These factors are very important while expanding a business plan and policy.

1. Social Factor:

This factor is related to the social structure. It shows the behavior, taste, and lifestyle design of a population. The change in the structure of the population gets effected if the designs are brought and it might affect the lifestyle too… buying designs includes age, gender etc…

In a global environment the business plans should be designed by the social and cultural differences that differ from country to country. Even the religion, language, and lifestyle are also important in business management.

2. Environmental Factor:

This factor is related to the environment. Environmental factor have many meaning such as it can be related to science, human behavior etc…

Some of the environmental factors that is important for a business are:

• Availability of energy and cost

• Ecological outcome

• Physical and organizational structures such as bulidings, roads etc…

• Social indication.

• Legislation

• Regular weather condition

• Throwing away of materials

• Contamination of wastes.

3. Legal Factor:

This factor is related to the government laws and regulations. For a successful business it is important to have legal factor. It is important that the business should have some legal laws and rules and regulation from the government so that any legal issues involved in a situation should have the courage to predict the ways. The government laws keep on changing every time. And in every business it is important to have areas of customer protection legislation, environmental legislation, health and safety etc…

4. Economic Factor:

This factor is related to the changes in economy. Rise and increase in demand of products can help a business earn high profits. Economic factor is based on economic activities. If the demand of product increases the price also increases. And if the demand of product decreases there price will also go down. Business plan should be developed keep these changes in mind. Some economic changes that affect business include interest, wages, and the rate of inflation. If there is low interest rates and increase in demand business will uplift to expand and take risks.

5. Political Factors:

This factor is related to the changes in government policies.  The political factors affect the operation of business. It consists of stability of the political environment and government policies when the business expands.

In case of fast development of business, the business chooses countries to setup business branches.

6. Technological Factor:

This factor is related to the technology of the business. Technology provides opportunity for a business to make new innovations and inventions. It also helps business to make new products. In the modern days of new communication technology, technological factors have achieved great motivation in a business. And the information inside a business is shared in databases and it helps in improvements in service and cost of reductions. Technology allows the firm to manufacture and design new product and services at cheap price. With the help of communication technology which includes telephone calls, emails, video conferencing etc… It has become easy for the company to communicate with their customers in any part of the world.

https://pestleanalysis.com/what-is-pestle-analysis/

https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-analysis

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