Organisational Structures and the Role of Ethics in Business

Compare and Contrast Two Types of Organisational Structures

Mullins (2016) defines organisational structure as the pattern of relationships among positions in the organisation and among members of the organisation. It defines tasks and responsibilities, work roles and relationships, and channels of communications. Another perspective of organisational structure is the process and the outcome of shaping an organisational structure (Pettinger 2007). There are many ways in which an organisation is structured, Burns and Stalker (1961) describes structures as being mechanistic or organic.

A mechanistic structure is where there is a high degree of task specialisation, people’s responsibility and authority are closely defined and decision making is centralised. There would be an organisation chart. Compared to an organic structure, which is one where people are expected to work together and to use their initiative to solve problems. Job descriptions and rules are few. There may not even be an organisation chart.

In comparison, the mechanistic structure is considered to be formal and more bureaucratic, when the organic structure is stricter and more informal. Another difference between the two types of organisational structure is that organic structure is more flexible and fluid (easy to change) when mechanistic is more fixed. Also, mechanistic structure is more associated with centralised decision making and supervision compared to organic which is associated with decentralised decision making and employee empowerment. Since the mechanistic structure is more formal, they will use formal communication methods, this also suggests that for the organic structure will use more informal communication methods. As well, both have different opinions on change, the mechanistic structure has a greater resistance to change when implemented whereas the organic structure finds change easier to handle.

Other differences between the mechanistic and the organic structure can be shown on Table 11.1 in Mullins (2016). These include specialisation, which is described by Jackson (1994) as essential, (the mechanistic structure has specialisation levels as high, whereas the organic structure is low), standardisation (for the mechanistic structure standardisation is high and methods are spelled out, for the organic structure standardisation is low and individuals decide own methods) , conflict resolution (in the mechanistic structure, conflicts are solved by superiors compared to the organic structure where conflicts are solved by an interaction between the conflicting parties), pattern of authority control (the mechanistic structure uses the hierarchy, which can be formal or informal (Diefenbach, 2011), in authority control when the organic structure uses wide net based upon common commitments) and loyalty (in a mechanistic structure employees are loyal to the organisation, when in an organic structure, employees are loyal to a project or a group).

Overall, the mechanistic structure is considered by some as one end of the spectrum and the organic structure is considered the other end of that spectrum, as they are considered completely different organisational structures with no similarities.

References

Burns, T. and Stalker, G. M. (1961) The management of innovation. London: Tavistock Publications.

Diefenbach, T. and Sillince, J.A., 2011. Formal and informal hierarchy in different types of organization. Organization studies, 32(11), pp.1515-1537.

Jackson, M., 1994. Problems, methods and specialisation. Software Engineering Journal, 9(6), pp.249-255.

Mullins, L.  (2016) Management & organisational behaviour. 11^th Edition. Pearson Education.

Pettinger, R. (2007) Introduction to management. 4^th edition. Basingstoke England: Palgrave Macmillan

Briefly explain and analyse the role of Ethics in organisations

According to Boddy (2012), ethics refers to the moral principles that guide human action by setting standards of what is acceptable. Another point of view is ethical behaviour is concerned with actions that are in accord with cultural expectations relating to morality and fairness (Michael Morahan, 2015). Both show that fairness is about fairness in society. In recent years, ethics have been becoming increasingly important to an organisation.

According to Pettinger (2007) the following areas raise ethical considerations for management, these are survival, relationships with employees, responsibilities and obligations to staff, relationships with suppliers, relationship with customers and relationships with communities. If an organisation doesn’t take into account the changes in ethics, they would gain a bad customer representation and a bad brand image, this may then lead to a fall in sales, as possible customers would prefer to shop at a competitor, who are selling similar products, as they have better understanding of current ethics.

In the long term, the fall in sales may lead to a fall in market share for large organisations, which could lead to some store closures due to funds becoming lower. For SMEs, which have been described as the life blood of modern economies(Ghobadian, 1996), this could mean that total organisational closure as if they have a fall in sales for a long period of time then there is a high chance that the SMEs will choose to leave the market. The fall in sales of the organisation will also affect the relationship with the suppliers, as when sales fall the organisation will still have stock left over, this would mean that the organisation would order less from the suppliers, this would then lead to a fall in sales for suppliers, this could in turn lead to a weakened relationship between the organisation.

As an organisation, they must take into account their corporate social responsibility (CSR), Mullins (2016) define CSR as a concept that gives rise to how a company should conduct itself within society, and different views on what a business is for and how it should act. If an organisation doesn’t take into account their corporate social responsibility then their relationship with staff, customers and communities could worsen.

However, if an organisation understands their CSR and the ethics involved in modern day society, then the representation of the organisation wouldn’t be affected, this would then lead to the sales figures of the organisation also not being affected.

In the long term, the organisations market share wouldn’t be negatively affected by the organisation understanding ethics, there market share could increase. Since the organisation understands ethics, if the organisation is a SME then they will stay in the market, if the organisation is a large organisation then there would be no store closures because of the fall in sales, sales could even increase.

Overall, understanding ethics can give an organisation a competitive advantage and increase their market share, otherwise there would be problems with their stakeholders, who Roland Jeurissen (2007) describes as any party whose justified interests of that organisation themselves (from a business ethics perspective).

References

• Boddy, D. (2012) Essentials of Management, Pearson Education Limited. P.94  
• Ghobadian, A. and Gallear, D.N., 1996. Total quality management in SMEs. Omega, 24(1), pp.83-106.
• Jeurissen, R. (2007) Ethics and Business. 1^st Edition. Uitgeverij Van Gorcum. P. 14  
• Morahan, M (2015) ‘IEEE Engineering Management Review’ Volume: 43 Issue 4
• Mullins, L. (2016) Management & organisational behaviour. 11^th Edition. Pearson Education.
• Pettinger, R.  (2007) Introduction to management. 4^th edition. Basingstoke England: Palgrave Macmillan. P.91

Discuss the Marketing or Operational function in an organisation with practical examples (Session 5)

Marketing is defined as the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large. (The American Marketing Association, 2007).

Marketing in an organisation is about giving the customer what they want in the product provided or sold by the organisation. Kotler (2014) states that the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return. If an organisation meets the customer needs where their competitors do not then it is likely that the consumer will buy from that organisation, this would mean for the organisation that their sales would have increased, making the revenue and net profit increase as well, an increase in sales would result in the organisation increasing their share of the market possibly making them a monopoly firm and a monopoly supplier, which can be described as someone who is cognisant of the customers’ valuation, and who can price discriminate (Bowman, 2000).However, if the organisation’s competitor also understands the customer needs of the consumer then sales would be split between the two competing organisations which could result in a duopoly, which is defined as the market situation in which there are two (or generally few) independent producers who do not explicitly agree on a common policy with respect to output, price, advertising, wages and all other variables subject to their control(Stigler,1940). This would then result in the two organisations competing on price and perks to try to gain the majority of the sales. Also, if there is a monopoly or a duopoly then it is likely that smaller firms, who might not be able to or aren’t meeting customer needs, will choose to leave the market as they would not be gaining any sales and would be making a loss in the market.

An example of this would be Apple and Samsung in the phones market. Each of the two firms try to meet consumer needs and often compete by offering lower prices than the other to gain sales, and both often add perks to also gain sales, if Apple offered a free set of headphones with a purchase of their phone and Samsung didn’t then the consumer would likely choose the Apple phone because of the free gift, this is on the assumption that both phones are similarly priced. By meeting customer needs the two firms often gain brand loyalty to the organisation, this means that when the consumer wants to change their phone, they would often choose the brand which they had previously. Also, if Apple and Samsung’s sales are increasing then smaller firms in that market such as Nokia would choose to leave the market as their sales would have decrease and would be making a loss as they may not be or aren’t able to keep up meeting the needs of the consumer. This shows meeting customer needs can make an organisation more profitable.

To conclude, the marketing function is very important to a firm as it can affect the competition in the market, the amount of sales in the market, a firm’s share of the market and the number of firms in that market.

References

AMA (2008) ‘AMA releases new definition for marketing’ American Marketing Association Available at http://www.marketingpower.com/AboutAMA

Bowman, C. and Ambrosini, V., 2000. Value creation versus value capture: towards a coherent definition of value in strategy. British journal of management, 11(1), pp.1-15.

Kotler, P., Armstrong, G. (2011) The principles of marketing. 14^th edition. P. 5

Stigler, G.J., 1940. Notes on the Theory of Duopoly. Journal of Political Economy, 48(4), pp.521-541.

Describe the Finance, HR or Law function in an organisation with practical examples

Human resource management is all aspects of the management of people in the organisation, including recruitment, training, and rewarding the workforce. (Morrison, 2016). Another interpretation of human resource management or HRM is that it is all those activities associated with the management of employment relationships in the organisation (Boxall and Purcell, 2011).

Human resource management (HRM) manage the staffing process, this would include analysing the job which needs filling, going through the recruitment and selection process with possible new employees and inducting the new employees into the organisation, in an organisation effective recruitment is important (Williamson, 2000). The human resource function is also in charge of training new employees for their new role and current employees if the organisation has decided to give an employee a new role then training would be needed, also if an organisation would decide to use internal recruitment rather than external recruitment to fill a vacancy in the organisation and it is likely that the employee would need training for the new role. Human resource management are also managing the remuneration and rewards of the employees, this means that human resource management is in control of the salaries of the employees. Without the human resource function salaries might not be disturbed to the employees or employees would get the wrong amount, if the employees don’t get their salaries or receive the wrong amount then this may lead to striking between the employees and the organisation, this would affect the productivity, which is considered a key factor in industrial performance (Cosmetatos,1983), of the organisation and the relationship between the employees and the owner. However, if the organisation uses and values their human resource department then the employees would receive the correct value on their salaries, without the problems with salaries the strike would never have happened so the efficiency and relationship between the employees and the organisation would not be affected.

The human resources department is also in charge of performance planning and appraising the employees. Appraisal is the impartial analysis and evaluation conducted according to established criteria to determine the acceptability, merit, or worth of an item (Business Dictionary, 2018). This would mean that the human resource department are determining the worth of the employees to the organisation. If an employee is considered to be valuable to the organisation then the employee would receive a positive appraisal, however if the employee is found to be unvalued by the organisation and has a bad appraisal by the organisation then they would be given disciplinary action or even dismissal by the organisation. Also, the human resource department are in charge of monitoring the performance of the employees, if an employee is performing well, then they would be praised for it. However, if the employee has a bad performance record then actions would need to be taken to improved performance possibly through dismissing the employee.

To conclude, the human resource department are in charge of the training and development of the employees, evaluating the employee’s performances and appraising them, and controlling the salaries and rewards of the employees, overall the human resource department is very important to the organisation.

References

• Business Dictionary (2018), Appraisal (Definition 1). Available at
• http://www.businessdictionary.com/definition/apprasial.html (Accessed 07/12/18)
• Boxall, P. F. and Purcell, J. (2011) Strategy and human resource management. 3^rd edition. Basingstoke: Palgrave Macmillan (Management, work and organisations).
• Cosmetatos, G.P. and Eilon, S., 1983. Effects of productivity definition and measurement on performance evaluation. European Journal of Operational Research, 14(1), pp.31-35.
• Morrison, J. (2016) The global business environment: challenges and responsibilities. 4^th edition. Basingstoke, Hampshire: Palgrave Macmillan
• Williamson, I.O., 2000. Employer legitimacy and recruitment success in small businesses. Entrepreneurship theory and practice, 25(1), pp.27-42.

Outline the key aspects of a Non- profit and Social Enterprise organisations

A Not for profit or Non-profit is organisations owned and controlled by central or local government or public corporations such as the Blue Cross.

In the public sector, Government and publicly owned organisations include public corporations, who were set up by law to provide services on behalf of the government e.g. BBC, the Bank of England, which is owned by the government with powers to decide the level of interest rates, Central government departments and local authority services.

Another type of not for profit organisations are those in the third sector such as the British Red Cross and Save the Children. One part of the third sector includes charities, these often have social and environmental aims, charities raise money for good causes and draw attention to the needs of people who are disadvantaged. Charities often focus on raising money for their causes and would also run business ventures for such a purpose. They raise money through fundraising, marketing and communications. Methods of fundraising such as major donors, legacies in wills, corporate partnerships, trusts, community events and individual giving. Examples of marketing in not for profit organisations raising funds is through shops, e- commerce, new product developments, marketing campaigns and branding, according to Rowley (2004) branding has gained “growing awareness” in recent years and is considered to be “important”. In a not for profit organisation, communications include media relations, digital, creative services, data services, supporter care, database insight and selections and CRM (customer relationship management).

Other than charities, another type of third sector organisation is social enterprise. A social enterprise is a business with primarily social objectives whose surpluses are principally reinvested for that purpose in the business or in the community, rather than being driven by a need to maximise profit for shareholders and owners (Department of Trade and Industry, 2001). Another definition of a social enterprise is an exercise where some person or persons aim either exclusively or in some prominent way to create social value of some kind and pursue that goal through some combination of recognising and exploiting opportunities to create this value, employing innovation, tolerating risk and declining to accept limitations in available sources (Journal of world business, 2006). This shows that both not for profit organisations and social enterprises are very similar as they wish to have a positive impact on society.  However, there are some differences, for example, with a non-for-profit organisation all funds raised go towards helping society, this is compared to a social enterprise where only profit is used to support society rather than all of the funds raised.

To conclude, the key aspect of not for profit organisations is to raise funds for their causes through methods such as fundraising, marketing and communication. Similarly, the key aspects of a social enterprise is to improve society as a whole. Both are always looking for ways in which to improve society using each using different methods which each find effective to raise as much as possible for society and the causes that they represent.

References

• Blue Cross (2018) ‘Blue Cross’ [PowerPoint Presentation] BM4116: Understanding Organisations, (Accessed 08/11/18) 
• Department of Trade and Industry (2001) ‘A guide to legal forms for social enterprise’ p.2 Available at
• https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/31677/11-1400-guide-legal-forms-for-social-enterprise.pdf  (Accessed 09/12/18)
• Peredo, A.M. and McLean, M., (2006).  ‘Social entrepreneurship: A critical review of the concept’. Journal of world business, 41(1), pp. 56- 65
• Rowley, J., 2004. Online branding. Online information review, 28(2), pp.131-138.

What is the difference between a group and a team in an organisational context?

Mullins (2016) defines a group as any number of people who interact with one another, are psychologically aware of one another and who perceive themselves as being in a group. Another interpretation is an assemblage of persons or objects gathered or located together. This is compared to a team which is a group of people in a common purpose.

One difference between a group and a team is the way in which they view their goals.

In a group different might not share a common as different people would have different objectives that they wish to complete in the group, whereas in a team they often share a common goal or cause to complete as a team rather than having their own objectives. If the organisation is working towards a common goal, then it is likely that the organisation would be more motivated than if the common goal was not shared as there would be external factors which affect the mind set of employees making them less motivated.

Another objective would be how they allocate tasks and roles in an organisation, which is described as deciding which agents to allocate to key roles in the team (Nair et al, 2003). In a team, tasks are specific and are assigned to each individual leaving no diversification in jobs for employees in an organisation, which would result in the employees becoming demotivated which can in turn affect the productivity of the organisation. This is compared to a group where specific roles and duties are not assigned to individuals, since they are a group member, they will work on tasks together and no person in a group would have a specific role to do as the work would be given randomly and not fixed.

Also, in a group, members are independent and are free to set their own tasks and do the work which they want to do. This is compared to a team where members are more interdependent, this is because of the specific members being given specific tasks.

Another difference between a group and a team is how members view each other.

In a group, members communicate better so members are more aware of the weaknesses of the other members and take them into account in an organisation. In the long term, the communication between members would affect the operations and efficiency of the organisations, which is considered to be “important” to an organisation (Thompson et al, 1995),  if the organisation is communicating better, then it is likely that efficiency and the productivity of the organisation would increase. Whereas in a team, members aren’t aware of the other members in the organisation, is would affect the level of communication and the methods available for the organisation to use in communicating. As a result of the communication being affected efficiency and productivity would decline in the organisation.

To conclude, a team and a group are very different in an organisation, each have benefits, and each have consequences. For an organisation if they are to succeed in their market, especially if they are competing in a large market, they must choose which of the two suits the organisation better, once the organisation has chosen from using a group or team, they would need to find ways of dealing with the consequences involved and effectively utilising the benefits of that method.

References

• Hasa, (2016) Difference Between Group and Team, Available at:
• http://pediaa.com/difference-between-group-and-team/  (Accessed 04/12/18)
• Mullins, L. (2016) Management & organisational behaviour. 11^th Edition. Pearson Education.
• Nair, R., Tambe, M. and Marsella, S., 2003, July. Role allocation and reallocation in multiagent teams: Towards a practical analysis. In Proceedings of the second international joint conference on Autonomous agents and multiagent systems (pp. 552-559). ACM.
• Thompson, P., Wallace, T., Flecker, J. and Ahlstrand, R., 1995. It ain’t what you do, it’s the way that you do it: production organisation and skill utilisation in commercial vehicles. Work, Employment and Society, 9(4), pp.719-742.