Topic 2 Management Structure and Roles - Lessons 2,3 &4Hopetoun Secondary CollegeVCE Business ManagementUnit 3 – Corporate Management© Peter Frances Hughes 2011

Horizontal StructureThe Functional Model p41

•Employees organised into departments based on the organisations’ functions.

•See Ramsay Health Care Limited - handout

•Chief Executive Officer develops strategic plans

•Senior Managers implement the plans•Middle Managers develop operational

plans to carry out these visions.

Horizontal StructureThe Functional Model

•Lower level Managers organise day to day plans to run the business.

Horizontal StructureDivisional or Geographical Model p42

•Employees grouped according to divisionsand•Geographical locations.•Billabong Limited•Wide range of products and markets•Shops all over Australia•Most employees in Billabong interact with

customers and don’t make the clothes.•Results can be assessed on location

levels.

Horizontal StructureDivisional or Geographical Model

•Suited to large retailers like Billabong•Each store identified by geographical

location.•Team building occurs.•Cultures often exist in the teams eg

Billabong would have a surf culture.

•Combines both FUNCTIONAL and DIVISIONAL Models.

•Complex•May be project specific•Construction firms or IT (Information

Tech Companies)•May lead to power struggles between

managers.

Horizontal StructureMatrix Model

Formal Structures•Known as mechanistic or bureaucratic

structures.•They may appear on the firm’s website as

representative of what the corporation wants the public to see. Ramsay Health Ltd etc

• In reality, the organisation is a dynamic structure, constantly changing and evolving as the business grows / contracts. These formal structures may be different than what is portrayed to the public.

Formal and Informal Structures

•The Management Structure and its members can influence the valuation of the corporations shares.

•Analysts of the share market look at the structures, board members and the CEO’s resumes with much interest and report to the public accordingly.

Informal Structures p44

•Exist inside the formal management structure.

•Can be norms, work methods and unwritten procedures.

•May be called ‘Organic structures’•Billabong - Surf culture•Nokia - tech culture•Toll Holdings - transport culturehttp://www.toll.com.au/

Corporate Culture and its Future Development p46•Corporate Culture - definition (defn)

‘A learned and shared way of life of a group of people or society’

Corporate Culture

•Includes values, beliefs, moral codes, customs and rituals.

•Corporate Culture is the values and beliefs shared by employees of an organisation.

•May be in the Mission or Vision Statement.

See Wesfarmers Handout.

Levels of Culture in an Organisation

•SURFACE CULTUREWhat is visable to the public / shareholders

and potential investors.Layout / dress codeWesfarmers - owns Bunnings.UniformStore layoutPolicy of ‘no sales’ cheapest prices

guaranteed.

Levels of Culture in an Organisation

•MIDDLE LEVEL CULTUREStated beliefs and values.On all correspondence or documentation.The Mission StatementOccupational Health and Safety Policy.See Wesfarmers reports.

Levels of Culture in an Organisation

•DEEPEST LEVEL CULTUREThe culture the employees / management

believe in.Virgin Blue - ‘a sense of fun’ but........No frills airfares and pay for your meals!Richard Branson’s culture from day one.

Levels of Culture in an Organisation

•DEEPEST LEVEL CULTUREManagement and employees believe in the

culture, values and practices of the organisation

Firms with this type of deep level culture are often highly successful.

NokiaGoogle

Ethical Morality p48

•What we know as ethical and social responsible management

•Evidenced by Corporate Governance sections on corporations’ websites.

•Has arrived as a result of serious litigation by the Australian Securities and Investment Commission of company directors acting unethically.

Creating a Corporate Culture p491. Orienting - mission statements, policies

and charters available to all stakeholders and given as an induction to new employees

2. Institutionalising - ensuring the practices of the organisation reflect the documentation.

3. Sustaining - continual improvement of these practices and assurance they become the norm for all new employees.

Creating a Corporate Culture

•Horizontal organisational structures are the ones with the best chance of maintaining an effective corporate culture.

•The team environment can aid all employees in following the line the management has chosen to show the public.

•Eg: Ray’s Outdoors have morning staff meetings every day before the shops open for trade.

Creating a Corporate Culture

RAY’S OUTDOORS•Morning Staff Meetings:1. ‘This is what we have on special today /

this week.’2. ‘This is what is appearing on our TV /

Newspaper adverts at the moment.’3. ‘There are the staff away today and here

are the new staff or replacements, please help them as much as possible today etc.’

Creating a Corporate Culture

RAY’S OUTDOORS•Every manager of every store (36 I

believe) has a morning meeting with staff.•Every manager receives training on what

the Ray’s Outdoors corporate image is to be like.

•Although they are responsible for their store, changing the corporate image and culture is not negotiable.

Learning Cultures p50

•Business needs to adapt to the changing times with subtle changes to their culture.

•Ray’s Outdoors never opened a store in Townsville (population 130,000) because they couldn’t purchase a suitable site and were prepared to wait rather than risk a location that didn’t suit their culture.

•Consequently ANACONDA and BCF (Boating, Camping & Fishing) both opened stores there.

Learning Cultures

•Ray’s Outdoors still havn't opened in Townsville and management reports indicated that online sales and mail order sales from their Cairns shop

(4 hours away) has increased substantially over the last 3 years.

•The learning culture at Ray’s is not to panic at market changes. Learn from them and create a Competitive Advantage.

Learning Cultures

•Successful organisations can become innovative as Ray’s has done with the online catalogues and sales. They adjust to change without wasting shareholder’s money and Reinvent themselves.

•Successful companies do this as research suggests.

Key Management Roles p51

P O L CThe key management functions of an organisation:

•Planning•Organising•Leading•Controlling

PLANNING (P O L C)

•Developing strategies or tasks to achieve objectives that are set by senior management.

•Undertaking a Situational Analysis as to the current position of the corporation. Where are we now?

•Set Objectives - Where do we want to be?

•The Strategy to get there - what do we want to do? Monitor - has it been done well?

PLANNING (P O L C)

Situational AnalysisEvaluating the situation of the business and

trends in the organisation’s market.Ray’s Outdoors and the Townsville

dilemma.Open a store or wait?Their objective was to wait until a suitable

commercial building was available to purchase in a preferred location matching their demographic ideal. Result - wait!