An organisation structure is the way in which an organisation is arranged and the relationships between its different parts. It determines how tasks are divided, who reports to whom, and how decisions are made and communicated within the organisation.

Can organisation structure impact strategy?

There are several ways in which an organisation’s structure can impact its strategy:

  • Decision-making: An organisation’s structure can influence the way decisions are made and implemented. For example, a centralised structure may allow for quicker decision-making, as all decisions are made at the top level, while a decentralised structure may be more participatory and involve input from multiple levels of the organisation.
  • Resource allocation: An organisation’s structure can also affect how resources are allocated and used. For example, a functional structure, in which employees are organised by function, may be more efficient at leveraging specialised expertise, while a divisional structure, in which employees are organised by product or geographic region, may be better suited to addressing the specific needs of different customer segments.
  • Communication: An organisation’s structure can also impact the way information is shared and decisions are communicated throughout the organisation. For example, a flat structure with few layers of management may allow for more open and direct communication, while a hierarchical structure may require more formal channels of communication.
  • Responsiveness: The structure of an organisation can also affect its ability to respond to changes in the external environment. For example, a flexible structure may be better able to adapt to changing customer needs or market conditions, while a rigid structure may be slower to respond.

In addition to these factors, the size and complexity of an organisation can also influence its strategy. Larger and more complex organisations may require more formalised structures and processes to manage their operations effectively, while smaller and simpler organisations may be able to rely on more informal and agile approaches.

Overall, it is important for organisations to carefully consider their structure when developing and implementing their strategy, as the two are closely linked and can have a significant impact on each other.

Four main types of business structure

There are four main types of organisational structure:

  1. Hierarchical structure: This is a top-down structure, with a clear chain of command and a centralisation of decision-making authority.
  2. Functional structure: This structure organises the organisation around its different functions or departments, such as marketing, finance, and operations.
  3. Divisional structure: This structure organises the organisation around its different product lines or geographic regions.
  4. Matrix structure: This structure combines elements of both functional and divisional structures, with employees working on multiple projects and reporting to both functional and product or regional managers.

Mintzberg’s building blocks are five basic elements that can be combined in different ways to create different organisational structures. These elements are:

  1. Work specialisation: Dividing work into specific tasks or responsibilities
  2. Departmentalisation: Grouping tasks or responsibilities into departments or units
  3. Chain of command: Establishing a hierarchy of authority and responsibility
  4. Span of control: Determining the number of people that one manager can effectively supervise
  5. Centralisation: Deciding the level at which decisions are made within the organisation

Boundaryless organisations

Boundaryless organisations are organisations that seek to break down the traditional boundaries or barriers between departments, functions, or levels of the organisation. They aim to be more flexible and responsive to changing market conditions by flattening the hierarchy, encouraging cross-functional collaboration, and eliminating bureaucratic barriers. This type of structure is often associated with a more decentralised decision-making process and a greater emphasis on teamwork and innovation.

Business process outsourcing

Explain business process outsourcing advantages and disadvantages. Explain Harmon’s process strategy mix. In terms of business process redesign what a typical causes of problems and processes and typical solutions in processes.

Business process outsourcing (BPO) refers to the practice of hiring an external company to handle certain business functions or processes. Advantages of BPO may include:

  • Cost savings: Outsourcing can reduce labor costs, as companies can take advantage of lower wages or other cost savings offered by outsourcing firms.
  • Increased efficiency: Outsourcing can also improve efficiency, as specialised firms may have access to better technology or processes for completing certain tasks.
  • Improved focus: By outsourcing non-core functions, companies can focus on their core competencies and strategic priorities.
  • Increased flexibility: Outsourcing can also provide companies with more flexibility, as they can scale up or down their use of outsourcing services as needed.

However, there are also potential disadvantages to BPO, including:

  • Loss of control: Outsourcing certain functions or processes can mean relinquishing some control to the outsourcing firm.
  • Quality concerns: Companies may have concerns about the quality of work produced by outsourcing firms, particularly if they are located in different countries or regions.
  • Communication challenges: Working with an outsourcing firm can also present communication challenges, such as language barriers or cultural differences.
  • Dependence on external provider: Companies may also become dependent on their outsourcing partners, which can be problematic if the relationship ends or if the outsourcing firm experiences problems.

Harmon’s process strategy mix

Harmon’s process strategy mix refers to the combination of different process strategies that organisations use to create value for customers. The four types of process strategies in Harmon’s mix are:

  • Process focus: This strategy involves focusing on a narrow range of products or services and using highly efficient processes to produce them.
  • Mass customisation: This strategy involves using flexible processes to customise products or services to meet the specific needs of individual customers.
  • Product focus: This strategy involves focusing on a single product or product line and using specialised processes to produce it.
  • Customer focus: This strategy involves focusing on the needs and preferences of specific customer segments and using processes that are tailored to meet their needs.

Business process redesign

Business process redesign (BPR) refers to the process of evaluating and revising the way in which work is organised and performed in order to improve efficiency, effectiveness, and agility. BPR typically involves identifying the current state of a business process, determining the desired state, and implementing changes to move from the current state to the desired state. This can involve changing the way tasks are performed, introducing new technology or tools, and reorganising the way work is structured. BPR is often undertaken in response to changing business needs or external factors, such as new regulations or competition. The goal of BPR is to create a more efficient and effective process that meets the needs of the organisation and its stakeholders.

Problems with business process redesign

Typical causes of problems in business process redesign may include:

  • Lack of clear objectives: If the goals and objectives of the redesign are not clearly defined, it can be difficult to determine the appropriate changes to make.
  • Lack of stakeholder engagement: If key stakeholders are not adequately involved in the redesign process, it may be more difficult to gain support for the changes and to address their concerns.
  • Complexity: Complex processes may be more difficult to redesign, as there may be more variables to consider and more stakeholders to engage.
  • Resistance to change: Changes to processes can be disruptive, and employees may resist if they feel their skills or roles are threatened by the redesign.

Solutions to business process redesign

Typical solutions to problems in business process redesign may include:

  • Clearly defining the objectives and scope of the redesign
  • Engaging key stakeholders in the redesign process
  • Using tools and techniques to simplify and streamline processes
  • Providing training and support to help employees adapt to the changes
  • Communicating effectively with employees about the changes and their impact.

Overall, it is important to carefully consider the potential advantages and disadvantages of business process outsourcing and to approach business process redesign with a clear plan and a focus on stakeholder engagement and communication.

Read more on the benefits of outsourcing and how to leverage outsourcing to grow your business.

This content can be used as part of the Strategic Business Leader (SBL) module for the Association of Chartered & Certified Accountants (ACCA) examination. Read more content covered in the Strategic Business Leader module.
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