A Functional and Divisional Structure of a Company - Essay Example

Answer A functional structure: Advantages The efficiency with a firm increases because tasks are assigned to employees having common attributes. For example, marketing assignments are given to marketers while accounting jobs are allocated to financial officers. Indeed, this also results in Economies of Large scale operations because productivity increases and expansion of departments is possible. 2) Secondly, employees are actually professionals and specialists who contribute their knowledge and skills in goal accomplishment and organisational development. 3) Employees are very much motivated because they receive more career and promotion opportunities within a functional structure. Indeed, they opt to portray optimal performance and advance within their enterprises. 4) The top management has considerable control over all business activities that in turn lead to stability and task achievement. In fact, the structure enables to maintain decorum and discipline. 5) Another advantage is that inter-departmental communication is improved that leads to greater group collaboration and mutual agreement. Organisational harmony and unity is also enhanced because of excellent relationship building. 6) The structure is very much beneficial in problem-solving and decision making because problems related to different operations are resolved by the concerned department personnel. For example, marketing personnel will resolve the issue of declining sales whereas production department will focus on issues about product designing and prototyping. Disadvantages: 1) One of the biggest demerits is lack of proper communication among personnel from different departments that may lead to decline in organisational effectiveness. 2) Secondly, the organisation becomes rigid and less adaptable to changes in external environment. Indeed, it may not be possible to make immediate innovations because of delayed approvals from strategic planners. 3) Next, the key decisions by top managers are delayed because information about specific operations flows from down-to-up and up-to-down that wastes sufficient business hours. Staggering losses are incurred in some instances. 4) It is, indeed, difficult for top management to pinpoint problems within departments because a department only performs the assigned tasks regarding a particular product or service. 5) Employees within this structure are mostly bothered about their personal and departmental interests or tasks; hence they often do not pay attention to a firm’s mission and vision. 6) Employees are not provided general administrative training and thus they can not adjust themselves other than their specific area of interest. For example, a marketer may not be able to perform administrative / management duties even for temporary periods because he is not trained by employers. A divisional structure: Advantages: 1) An organisation becomes fast, adaptable and responsive to the changes in their business environment because they divide their employees and resources along the divisional lines. 2) Since an organization divides itself in small units, it becomes easier to respond to customer needs and their demands / preferences. 3) Unlike functional structure, the information flow and communication is relatively better across various functional departments because employees are grouped together in a single location. 4) The strategic planners can easily pinpoint the responsibility of problems to individuals that have not fulfilled criteria and standards. 5) There is greater focus on products offered to customers as well as strong emphasis on accomplishment of divisional goals. 6) General management training could be offered to employees because top management can easily conduct sessions across small divisions or units. Disadvantages: 1) Duplication of resources becomes more evident because organization is divided in small units for separate products. In addition, the costs of doing business increase that affects profitability. 2) Departments in each unit are small, therefore the divisions lack technical expertise, proficiency and specialisation. 3) The coordination among employees of different divisions is relatively poor because of distance and locations constraints. 4) Top management’s control becomes weaker because of multiple divisions. 5) Employees and divisions compete with each other for organizational resources to showcase top performance; however, this may lead to an adversarial approach and lack of unity. A matrix structure: Advantages: 1) The internal efficiency within an organization increases in a rapidly changing business environment that demands immediate adjustments. The human resources are used more effectively. As a result, a business organisation becomes highly flexible and adaptable. 2) The managers are provided specialist and general management skills; hence they can be transferred to any division or unit. 3) The workers have access to in-depth job training and skills development programmes, so they could prepare themselves for new workplace challenges. 4) Information sharing and coordination is excellent among workers because of frequent meetings and discussion sessions. 5) Finally, workers are assigned enlarged tasks to enhance their participation and contribution towards organisational goals. Disadvantages: 1) The biggest demerit of matrix structure is dual chain of command that causes distress, confusion and frustration among employees. 2) There is greater probability that conflicts among members will occur because of dual chain managerial structure. 3) Next, the structure often leads to more discussions than taking actions to rectify a particular issue because different goals and options are being addressed. 4) Indeed, an employee has to deal with two bosses; therefore, it requires more training about human and public relations. 5) Finally, one side in this structure may dominate or portray its power that may lead to adversary and conflicts with the employees of latter side. Answer 3: Customers do not have any inclination to purchase a substandard product because they demand value and satisfaction for money they spend on various goods and services. In fact, every potential buyer is interested in purchasing high quality products to meet its needs / desires and to attain satisfaction. Quality, therefore, can be defined as the ability of a product that meets or exceeds customer’s perceived expectations. Indeed, quality can be also ensured from effective designing and packaging besides its core product features that in turn entices maximum customers towards a particular product, brand or service. In other words, quality is a name of reliability, durability, permissibility, safety and authenticity that later leads to customer satisfaction and loyalty. Without any doubt, quality plays a vital role in a company’s business survival, growth, expansion and long term sustainability. A top quality product wins the trust of customers who then become loyal to that firm or enterprise and make frequent purchases. As a result, the brand awareness, recognition and consumer acceptance increases thereby leading to surge in sales and profitability. Businesses can utilise their excessive profits and income to develop new products and increase product range / variety, to further enhance existing products’ quality and to add extra features. Similarly, these retained earnings could be used for business expansion in new markets and diversification thereby expanding business portfolio. In addition, top quality transforms customers in becoming ‘Customer Evangelists’ (those who become promoters of products through word-of-mouth and without any payments / commissions). It is worthwhile to mention the fact that a business can make strong relationships, generate value and earn profits by ensuring top quality to its potential customers. As far as the consequences of substandard quality is concerned, it is worthwhile to mention that poor product designing, packaging, very limited useful life, unsafe and socially irresponsible products adversely impact a firm’s goodwill, reputation and image in the marketplace. Indeed, other businesses especially distribution channel partners are not willing to sign agreements with a badly reputed company. In addition, the customers disregard poor quality product that in turn leads to sharp decline in current and future sales of a firm. This decline in sales results in frequent production losses and escalation of costs that in turn hampers overall business growth. The end result is obviously either closure of existing business or sale of operations to any other firm. Examples: Honda Motors which is a Japanese automaker of top quality vehicles has now expanded its business operations all across the world and reaped enormous profits. Its famous brands such as Accord, Civic and City etc have received consumer acceptance and worldwide recognition. Marks and Spencer, a UK based garments manufacturer, not only sells its excellent quality products in UK but also in European, American and Asian economies. Indeed, it uses supreme quality fabric to produce garments from its state-of-the-art production sites. Raddick (2010) highlighted that Toyota had recalled its 8.5m vehicles worldwide including 1.7m in Europe and 180,000 in United Kingdom. Indeed, the company failed to maintain its quality and reliability of its automobiles because they had certain technical defects in brakes and accelerator pedals. It has, indeed, damaged Toyota’s as its goodwill and reputation among the end users and dealers. Consequently, the costs are increased and customers are reluctant to make any purchases of Toyota’s products. Answer 4: Quite unequivocally, organizations and business firms are not run by robots or machines rather by employees who contribute their knowledge, skills and capabilities to deliver optimal performance and achieve business goals and targets. Highly educated and professional workers are essential for business success and sustainability. Organisations, therefore, tend to have a Human Resource Department that is responsible to induct specialists and quality workforce in a company. These HR managers design a Recruitment and selection process to hire business demanded (from unskilled, semi-skilled to well trained, well educated and highly skilled) employees to fulfil various organisational needs and to run routine business operations smoothly and efficiently. Unequivocally, employees are the actual assets of an organisation and they are hired through a comprehensive recruitment and selection process comprising of advertisements of vacancies in print / electronic / internet media, scrutiny of applications, aptitude tests, interviews and medical tests). After successful induction, these employees are provided on-the-job training so that they could understand firm’s external environment, corporate governance policies, performance criteria, duties / responsibilities and expectations. This in turn prepares them to participate in business affairs and contribute in accomplishing defined goals, objectives and targets by strategic planners. For instance, workers that are hired through an in-depth Recruitment and Selection Process are responsible for running production-related, sales, marketing, finance, administrative and IT business operations. These workers are grouped into separate departments such as Marketing, Finance, IT, Research and Development etc because of their specialties, proficiency and command over specific operations. Also, the efficient group of employees leads to increased productivity that in turn saves costs. In addition, they opt to satisfy their customers and build outstanding business relationships with all distribution channel / supply chain members, concerned stakeholders and shareholders. A business enterprise that lacks a proper and unorganised Human Resource Management department is unable to recruit SMART workers and thus become uncompetitive compared to their rivals in the same industry. This type of enterprise becomes inefficient and fails to develop new products, to innovate existing products, to expand into new markets, to diversify its business and obviously fail to become proactive or at least reactive businesses. In other words, such organisation becomes inactive and the top management or strategic planners wonders if they could restore their position, reputation, goodwill and share in the market. Usually, the firms that do not have a thorough and strictly merit-based Recruitment and Selection process do not grow in the long run, unable to retain their existing customers and to attract new buyers. Examples: Proctor & Gamble, a US based consumer products manufacturer and retailer that had enjoyed sales of over $79 billion in fiscal year of 2009 - 2010, has a very sophisticated and strictly merit-based recruitment and selection process across the world. This enables the global giant to induct highly creative, adaptable, educated and dexterous employees that have strong vision, critical thinking and communication skills. These passionate and well-trained workers then contribute in organizational business affairs and opt for well-being, prosperity and success of Proctor and Gamble. Read More