U N I T 3 : C O M P A N Y S T RU C T U R E

LEAD-IN

Which department of an organization do you think is the most

interesting to work in?
q Production
q Finance
q Accounting
q Marketing
q Sales
q Human resources
Etc.
LEAD-IN

• Why can departments sometimes get into conflict with each

other?
• Is it better to have one immediate boss or to work for more than
one manager?
• Do you prefer to work alone or in a team?
• Is it more motivating to be responsible to someone for your work
or responsible for people who report to you?
V O C A B U L A RY

• ________ a system of authority with different levels, one above the

other, e.g. a series of management positions, whose holders can make
decisions, or give orders and instructions.
=> Hierarchy or chain of command
• _______ a specific activity in a company, e.g. production, marketing,
finance.
=> Function
• ______ independent, able to take decisions without consulting
someone at the same level or higher in the chain of command.
=> autonomous
V O C A B U L A RY ( C O N T. )

• ________ the power to give instructions to people at the level

below in the chain of command.
=> Line authority
• _______ to be responsible to someone and to take instructions
from them.
=> To report to
• ______ to give someone else responsibility for doing sth instead
of you.
=> To delegate
 C O M PA N Y
S T RU C T U R E

The chain of command

THE CHAIN OF COMMAND

• A hierarchical or pyramidal structure;

• One person or group of people at the top;
• An increasing number of people below
them at each successive level;
• Sometimes called ‘line structure’;
• A clear chain of command running down
the pyramid;
• All people in organization know what
decisions they can make, who their line
manager is (to whom they report) and who
their immediate subordinates are (over
whom they have line authority and can give
instructions to).
C O M PA N Y
S T RU C T U R E

Functional structure
F U N C T I O N A L S T RU C T U R E

• Most large manufacturing companies have a

functional structure;
• Specialize production, finance, marketing,
sales and human resources departments;
Example:The production and marketing
deparments cannot take financial decisions
without consulting the finance department.
• Large organizations making a range of
products are often further divided into
separate operating divisions.
F U N C T I O N A L S T RU C T U R E

• Let’s consider some disadvantages of

functional structure.
Þ People are often more concerned with the
success of their own department than that of
the company as a whole.
Þ There is permanent conflicts between, say,
finance and marketing or marketing and
production over what the objectives are.
 M AT R I X
MANAGEMENT

=> People report to more than one

superior.
Example: a product manager with an
idea could deal directly with the
managers responsible for a certain
market segment and for a
geographical region, as well as
managers in the finance, sales and
production departments.
M A T R I X S T RU C T U R E

• What can be the problem with

this structure?
Þ Matrices involving several
departments can become quite
complex, so it is sometimes
necessary to give one
department priority in decision
making.
TEAMS

• Another possibility is to have wholly autonomous temporary

groups or teams that are responsible for an entire project;
• The teams shall be split up as soon as it is successfully completed;
What can be some issues with the team structure?
=> Teams are not always very good at decision making;
=> Teams usually require a strong leader.
 => Flattening hierarchies and delegating responsibility
• Reduce the chain of command;
MODERN • Take out layers of management;
TREND IN • Make the organization much flatter;
C O M PA N Y • The owners of small firms want to keep as much
S T RU C T U R E control over their business as possible;
• Mangers in large businesses who want to motivate
their staff often delegate decision making and
responsibilities to other people.
DISCUSSION

BIG of SMALL COMPANIES?

What are the benefits of working in a large company?

Why do some people prefer to work in a small company?

A DVA N TAG E S O F WO R K I N G I N A B I G O R A S M A L L C O M PA N Y

1. You are less likely to be affected by a big reorganization or downsizing

or merger or takeover. (Big ❏ Small ❏)
2. You are often responsible for a variety of different tasks. (Big ❏ Small
❏)
3. You can actually see the result of your contribution to the firm. (Big ❏
Small ❏)
4. You can be proud of working for a company with a national or
international reputation. (Big ❏ Small ❏)
5. You can become more specialized in your work. (Big ❏ Small ❏)
A DVA N TAG E S O F WO R K I N G I N A B I G O R A S M A L L C O M PA N Y

6. You can probably change departments if you have problems with your
colleagues. (Big ❏ Small ❏)
7. You have more independence, and you don’t always have to wait for
permission from a superior. (Big ❏ Small ❏)
8. You know everyone in the company and the atmosphere is friendlier. (Big ❏
Small ❏)
9. You may be able to go and work in a foreign subsidiary. (Big ❏ Small ❏)
10. Your company will probably be in a better position in an economic
downturn or recession. (Big ❏ Small ❏)
A DVA N TAG E S O F WO R K I N G I N A B I G O R A S M A L L C O M PA N Y

In a big company: 4, 5, 6, 9,10.

In a small company: 1, 2, 3, 7, 8.
D I S C U S S I O N : I N C O M PAT I B L E G OA L S

• Finance Department
• Marketing Department
• Production Department/Operations Dept.
 T H E O F T E N I N C O M PAT I B L E
GOALS OF THE 3 DEPTS.
CLASSIFY THE FOLLOWING STRATEGIES ACCORDING TO WHICH DEPT.
WOULD PROBABLY FAVOUR THEM?
1. A factory working at full capacity
2. A large advertising budget
3. A large sales force earning high commission
4. A standard product without optional features
5. A strong cash balance
6. A strong market share for new products
7. Generous credit facilities for customers
8. High profit margins
9. Large inventories to make sure that products are available
10. Low R&D spending
11. Machines that give the possibility of making various products
12. Self-financing (using retained earnings rather than borrowing)
T H E O F T E N I N C O M PAT I B L E
GOALS OF THE 3 DEPTS.

1, 4 and 11 would logically satisfy production

managers, though 11 should also satisfy other
departments.
2, 3, 6, 7 and 9 would logically be the demands
of marketing managers.
5, 8, 10 and 12 would logically keep finance
managers happy.