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Why Have A Structure?

The document discusses different ways that businesses can structure themselves, including by function, product, area, customer, and process. It provides examples of how Hewlett Packard structured itself by product and area. The main advantages and disadvantages of different structures like functional and geographical are outlined, noting that the optimal structure depends on factors like a business's type, size, and goals.

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meelas123
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10 views

Why Have A Structure?

The document discusses different ways that businesses can structure themselves, including by function, product, area, customer, and process. It provides examples of how Hewlett Packard structured itself by product and area. The main advantages and disadvantages of different structures like functional and geographical are outlined, noting that the optimal structure depends on factors like a business's type, size, and goals.

Uploaded by

meelas123
Copyright
© Attribution Non-Commercial (BY-NC)
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Why Have a Structure?

• All businesses have to organise


what they do

• A clear structure makes it easier to see which


part of the business does what

• There are many ways


to structure a business
Some Key Terms
• Flat or tall structure
• Span of control
• Chain of command
• Hierarchy
• Delegation
• Empowerment
Ways to Structure a Business
• By function: arranging the business according to
what each section
or department does

• By product or activity: organising according to


the different products made

• By area: geographical or regional structure


Ways to Structure a Business
• By customer: where different customer groups
have different needs

• By process: where products have to go through


stages as they are made

• What are the advantages/disadvantages of


different types of business structure?
Pros and Cons of Different
Structures
• This depends on the business type, size
and structure used
• Let’s look at a functional structure:
Chief Executive

Board of Directors

Production Marketing Accounts Personnel IT


Functional Structure

Advantages Disadvantages
• Specialisation – each • Closed communication
department focuses on could lead to lack
its own work of focus
• Departments can
• Accountability –
become resistant
someone is responsible to change
for the section • Coordination
• Clarity – know your and may take too long
others’ roles • Gap between top and
bottom
An Example of Organisation
by Product/Activity
Hewlett Packard

Imaging and Personal Enterprise HP Financial


HP Services
Printing Group Systems Group Systems Group Services
Organisation by
Product/Activity
Advantages Disadvantages
• Clear focus on market • Duplication of functions
segment helps meet (e.g. different sales
customers’ needs
force for each division)
• Positive competition
• Negative effects of
between divisions
competition
• Better control as each
division can act as • Lack of central control
separate profit centre over each separate
division
Organisation by Area
Hewlett-Packard’s Headquarters
Worldwide
Hewlett Packard

Americas Europe, Middle East, Africa Asia Pacific


Houston, Texas Geneva, Switzerland Hong Kong
Organisation by Area
Advantages Disadvantages

• Serve local needs better • Conflict between local


• Positive competition and central management
• More effective • Duplication of resources
communication between and functions
firm and local customers
Other Organisational
Structures
• By Customer:
Similar effects to structuring
by product

• By Process:
Similar to structuring by function

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