Organisations _ ACCA Qualification _ Students _ ACCA Global f1

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<ul><li><p>8/5/2015 Organisations|ACCAQualification|Students|ACCAGlobal</p><p>http://www.accaglobal.com/gb/en/student/examsupportresources/fundamentalsexamsstudyresources/f1/technicalarticles/organisations.html 1/4</p><p>Home &gt; Students &gt; Examresources &gt; Fundamentalslevel &gt; F1AccountantinBusiness &gt; Technicalarticles</p><p>ORGANISATIONS</p><p>MyACCASearch</p><p>RELATED LINKS</p><p>StudentAccountanthubpage</p><p>ThesyllabusforPaperF1,AccountantinBusinessincludesthetheoryoforganisationsandrelatedtopics.Candidatesmustbefamiliarwiththedifferentorganisationalstructuresthatcanbeadopted,aswellasrelatedconceptssuchasdepartmentalisation,divisionalisation,centralisationanddecentralisation,spanofcontrol,scalarchainandtallandflatorganisations.</p><p>Inadditiontothesetopics,candidatesshouldalsostudysomeofthemorecontemporaryorganisationalmodels.Theseincludeboundarylessorganisationsandsharedservicesorganisations,bothofwhichareexaminableforthefirsttimein2014.</p><p>Thisarticleprovidesanoverviewofsomeoftheseconcepts.</p><p>PURPOSESOFORGANISATIONS</p><p>Anorganisationisagroupofpeoplewithacommonpurpose.Thepurposeisdefinedbytheentityforwhichtheywork.Insmallerbusinesses,suchaspartnershipsandsmallcompanies,itiscommonforthosewhoworkfortheorganisationtohavecreatedit,ortohavehadsomepartincreatingit.Bycontrast,largerorganisationshavetoemployorinvolvemorepeople,themajorityofwhichwillhavelittleornoconnectionwiththefoundersorowners.</p><p>THEDEVELOPMENTOFORGANISATIONS</p><p>Organisationshavebeenaroundforthousandsofyears.ThemightyarmiesofGreeceandRomewereorganisations,andthePhoenicianmerchantswhopliedtheirtradeacrosstheoceanscouldnothaverunsuccessfulbusinesseswithoutsomeorganisationalstructure.Whenevertwoormorepeoplecometogethertopursuethesameoutcomes,wehaveanorganisation.Organisationsexistbecausesynergycanbeachievedbycombininghumanresources.Together,thoseinanorganisationcanproducemorethanthesumtotaloutputofindividualsworkingalone.</p><p>Theindustrialrevolutionoftheeighteenthandnineteenthcenturiesbroughtaneedformoresystematicandformalconsiderationofhoworganisationsshouldbeconfigured.AdamSmithusedtheexampleofthedivisionoflabourinapinfactorytodescribethebenefitsofspecialisation:</p><p>Onemandrawsoutthewire,anotherstraightsit,athirdcutsit,afourthpointsit,afifthgrindsitatthetopforreceivingthehead:tomaketheheadrequirestwoorthreedistinctoperations:toputitonisaparticularbusiness,towhitenthepinsisanother...andtheimportantbusinessofmakingapinis,inthismanner,dividedintoabouteighteendistinctoperations,whichinsomemanufactoriesareallperformedbydistincthands,thoughinothersthesamemanwillsometimeperformtwoorthreeofthem.(TheWealthofNations,1776)</p><p>Generally,businessesstartassmallentities,andmanyremainso.Everycountryintheworldhasthousandsofsoletraders,manyofwhichworkaloneandareabletomaketheirlivingwithoutinvolvingothers.However,iftheactivitiesofthebusinessgrow,iteventuallybecomesnecessarytoutilisethelabourofothers.Infamilyconcerns,thetradermayinvolveaspouse,childrenorsiblings,andthismaynotevenrequirethecreationofanycontractualrelationships.Yetitdoesrequiresomedegreeoforganisation.Whocarriesoutwhichtasks?Doeseverybodydothesameworkordoeseachindividualspecialise?Towhatextentshouldeveryonebeabletocarryoutthetasksusuallyreservedforothers?Howdoweensurethatallworkisdone,butthereisnowastefulduplicationofeffort?Thesequestionscanbeaddressedinarelativelyinformalmannerinasmallbusinesswhereallcontrolisinthehandsofasingleperson.However,theverysamequestionshavetobeaskedinthelargestandmostcomplexbusinesses,andforthesetheanswersarelessstraightforward.</p><p>THEENTREPRENEURIALSTRUCTURE</p><p>Theentrepreneurialstructureisadoptedbysmallerbusinesses.Itissimple,informalandveryfluid,inthat</p><p>Theglobalbodyforprofessionalaccountants Aboutus Contactus Workforus Technicalactivities Help&amp;support Global</p></li><li><p>8/5/2015 Organisations|ACCAQualification|Students|ACCAGlobal</p><p>http://www.accaglobal.com/gb/en/student/examsupportresources/fundamentalsexamsstudyresources/f1/technicalarticles/organisations.html 2/4</p><p>itmaychangeonadaytodaybasis.</p><p>Thisstructureisadoptedbysoletraderswhoemployothers,somesmallpartnershipsandsomesmallcompanies.Thosewhoownandcontrolthebusinesstakedecisionsontheworktobedone,howitwillbedoneandbywhom.Itisquitecommonforemployeestobeexpectedtomultitaskandnottoexpectrigidjobdescriptions.Specialisationmaybepossible,suchasafamilymemberdealingwithbookkeeping,butthatindividualmayalsoberequiredtocarryoutadditionaltasks,perhapsifthereisnobookkeepingworktobedoneatcertaintimes.</p><p>Theentrepreneurialstructureisperfectformanysmallbusinesses,butistooinformalandcanevenbechaoticoncethelevelofbusinessactivityreachesacertainlevel.Eventually,theentrepreneurhastoconsiderformalisingtherolesthatemployeesplay,andcreatingjobswithdefineddutiesandresponsibilities.</p><p>THEFUNCTIONALSTRUCTURE</p><p>Thefunctionalstructureisthemostcommonorganisationalmodel.Itisusuallydepictedasatriangle,withthechiefexecutiveofficeratthetopandreportinglinesofothersflowingvertically.Thefunctionalstructureisformallydepictedasanorganisationchart.Figure1showsatypicalorganisationchart.</p><p>Thedutiesofindividualsareallocatedaccordingtothefunctionstheyperform.Forexample,asmallcompanymayhaveaproductionmanager,financemanager,salesmanagerandITmanagerreportingtothechiefexecutiveofficer.Eachofthefunctionalmanagersisresponsibleforadepartment.</p><p>Manylargercompanieshavegeneralmanagersorassistantgeneralmanagersresponsibleforgroupsoffunctions.Forexample,theGeneralManager(Marketing)mayberesponsibleforadvertising,publicrelations,merchandisinganddirectsales,andtheremaybeadepartmentalmanagerresponsibleforeachoftheseactivities.</p><p>Foreachfunction,employeesaregroupedtogethertoperformsimilarorcomplementarytasks.Justastheorganisationasawholecanberepresentedonanorganisationchart,sotoocaneachdepartment.Figure2showshowafinancedepartmentmightbeorganised.</p><p>Thefunctionalstructurehasseveraladvantages:</p><p>itfacilitatesspecialisation,bybringingtogetherthosewiththeknowledgeandskillsnecessarytocarryouteachfunction,andthereforeshouldcreateeconomiesofscaleitenablestheorganisationtooperatethroughclearlinesofauthorityandwelldefinedresponsibilities,withallemployeesknowingtowhomtheyreportandforwhomtheyareresponsibleitpreventsduplicationofeffort,therebyreducinginefficienciesitaccommodatesspecialists.</p><p>Thedisadvantagesofthefunctionalstructureare:</p><p>itcanbeinflexible,particularlyinaperiodofrapidchange,andineconomicsystemswhereitisdifficultorcostlytorecruitordismissemployeesitencouragesdemarcationlinestobecreated,whichmaymakeemployeesreluctanttocarryouttasksthattheyconsidernottobetheirresponsibilityasorganisationsbecomelarger,theremaybecoordinationproblemsasthenumberoffunctionsincreasesasinformationtendstoflowthroughformalorganisationallines,largerorganisationsmayencountercommunicationproblemssomearguethatthefunctionalmodelistooinwardlooking,focusingonprocessesinsteadofconsideringdeliverablesdefinedbycustomerneeds.</p><p>Thefunctionalstructureiscommontomanyorganisations,butdifferentconceptscanbedeployedwithinit.Forexample:</p><p>theorganisationcanbetallorflat:tallorganisationshavemanylevels(alongscalarchain),whileflatorganisationshavefewerlevelstheorganisationmayhavemanyemployeesreportingtoeachmanager,fewemployeesreportingtoeachmanager,oracombinationofthese:thissocalledspanofcontrolwilldependonmanyfactors,includingthenatureofthework,varietyoftasksperformed,capabilitiesofemployeesandriskfactorssomeorganisationsconcentrateauthorityatthetopofthemanagementhierarchy,withkeydecisionstakenbyseniorexecutives,whileothersempowersubordinates,withgreaterdiscretionpermittedfurtherdownthemanagementchain:thisrelatestotheconceptofcentralisationanddecentralisation.</p><p>FunctionalorganisationbyproductThefunctionalmodelcanbeadaptedfororganisationsthatofferarangeofproducts.Justasmanagersresponsiblefordifferentproductscanreporttotheproductmanager,itisalsopossibleforeachproductmanagertohavehisorherownfunctionalstructure.Inthisway,severalfunctionsareduplicatedacrosstheorganisation,asthemanagerresponsibleforeachproductmayhavetheirownproduction,sales,marketing,financeandadministrationdepartments.ThisisshowninFigure3.</p><p>Thisorganisationstructureissometimesappropriateifthedesign,productionandmarketingofeachproductisuniqueorsignificantlydifferenttothoseforotherproducts.Thisstructurecanalsobesuitableifproductsaredistinctivebrands.Forexample,somemanufacturersofdetergentsofferbothquality(orpremium)productsanddiscountproducts.Althoughtheycompetewithoneanothertosomeextent,theproductsareusuallytargetedatdifferentmarketsegments.</p><p>FunctionalorganisationbygeographicalregionManyorganisationsoperateacrossdifferentregions,oracrossinternationalfrontiers,sotheymay</p></li><li><p>8/5/2015 Organisations|ACCAQualification|Students|ACCAGlobal</p><p>http://www.accaglobal.com/gb/en/student/examsupportresources/fundamentalsexamsstudyresources/f1/technicalarticles/organisations.html 3/4</p><p>considerittobeappropriatetomaintainseparatefunctionalstructuresineachlocation.Thisapproachisnotappropriatetoallgeographicallydispersedbusinesses,butissuitablefororganisationswhosegeographicallocationshavedistinctivebutcontrastingcharacteristics.Forexample,companieswithapresenceintheUK,IrelandandGermanywouldbeabletoidentifymajordifferencesinthedemographicprofiles,personalandfamilyvaluesandtastesinthethreelocations,whilecompaniesoperatinginBelgium,LuxembourgandtheNetherlandswouldidentifydifferencesthatarelesscrucialincommercialterms.</p><p>Functionalorganisationbygeographicallocationisespeciallyimportantforlargecompaniesthatoperateacrossseveralcontinents.</p><p>MATRIXSTRUCTURE</p><p>Thematrixstructureevolvedincompaniesthatsoughttoovercomesomeoftherigiditiesofthefunctionalorganisationstructure.ItwasfirstdeployedintheaerospaceindustryintheUSAinthe1950s.</p><p>Themostcommonapplicationofthematrixstructureisthecreationofanextralayerofresponsibilitiesacrossthetraditionalfunctionalstructure.Aswellhasoccupyingapositionintheorganisationalpyramid,whichdefineslinerelationships,employeeshaveresponsibilitiestoprojectmanagers.Inthisway,theemployeemayhavetwoorevenmoremanagers.Forexample,anindividualworkinginthefinancedepartmentmayreporttotheheadoffinancebutmayalsohavesomedutiesinrelationtoIT/ISormarketingprojects.Themanagersresponsiblefortheseprojectswillbeabletocalluponstaffacrossorganisationalboundariesonaformalbasis.</p><p>Figure4showsthematrixorganisation.</p><p>Matrixorganisationscanbetakenfurtherinenvironmentsthatarelessdependentonrigidchainsofcommandandlinesofcommunication.Forexample,insomeprofessionalfirmsandconsultancies,apositioninafunctionalorganisationchartisonlyimportantforthepurposeofestablishingaccountabilitiesunderemploymentlaw.Asoneindividualworkinginsuchanorganisationputit,whenaskedWhoisyourmanager?,thereplywasItdependswhatdayitis.</p><p>Thereareseveraladvantagesofadoptingamatrixstructure:</p><p>byinvolvingindividualsformallyinteamsallocatedtospecificprojects,theorganisationcancapitaliseontheknowledge,skillsandexperiencetheycanoffercommunicationlinesareshortenedinthatprojectmanagerscandealwithstaffassignedtothembureaucracyshouldbereducedemployeesjobsareenriched,andthismayimprovemotivationmoreambitiousindividualscanexploitopportunitiesmadeavailabletothemandmorereadilypursueadvancementcooperationbetweendepartmentscanbeincreased,andthedisadvantagesofworkbeingdemarcatedbysiloscanbereducedthematrixapproachmaymakeemployeesmoreresponsivetochangeandmorewillingtowelcomechange.</p><p>Thedisadvantagesincludethefollowing:</p><p>thematrixstructuresacrificesthenotionthateveryemployeeshouldberesponsibletoonemanager,andthiscanresultinconflictingdemandsontheemployee,intermsofwhatworkshouldbedone,howtimeshouldbeapportionedandhowworkshouldbecarriedoutthedifferentmanagerstowhomtheindividualreportsmayhaveverydifferentstyles,whichmaycreateconflict,orevenconfusionastothebestorcorrectapproachthematrixstructurecreatesadditionaltimemanagementpressures,whichmayhaveaneffectoncostsifthematrixisnotdesignedorimplementedsystematically,itcancreateorganisationalinefficiencies,suchasslowerdecisiontaking.</p><p>BOUNDARYLESSORGANISATIONS</p><p>Traditionally,organisationsbringpeopletogetherinoneormorephysicallocationsinordertoprocessinputsandcreateoutputs,allwithinaformallydefinedstructure.Advancesininformationcommunicationstechnologyhaveresultedinnewapproachesthathaveredefinedwhere,whenandhowpeoplework.Themostobviousevidenceofthisisthereductioninrelianceonthe9.00amto5.00pmworkingday,theemergenceofflexibleworkingarrangementsandincreasesinworksharingandhomeworking.Organisationshavealsoadoptednewwaysofconfiguringrelationships.</p><p>VirtualorganisationAvirtualorganisationisonewhichoperatesprimarilythroughelectroniccommunications,takingadvantageoftheefficienciesmadepossiblebyinformationtechnology.Itremovesmanyofthefeaturesoftheworkingenvironmentthatwereoncetakenforgranted,suchasbringingmanagersandstafftogetheratadefinedlocation.Peopleworktogetherremotely,withlittleornodependenceonphysicalpremises.Instead,communicationstakeplacethroughmediasuchasemails,econferencing,extranetandintranet.Thisvirtualaspectoftheoperationsometimesextendstolinkswithsuppliers(upstream),andcustomers(downstream).Byextendingthevirtualconcepttocustomerrelationships,thedependenceonretailpremisesandcustomerfacingstaffiseliminated.Amazonisoftencitedasthefirstmajorvirtualbusinessinthisrespect.</p><p>Thevirtualorganisationmodelcanbeadoptedwhollyorinjustcertainpartsofthebusiness.Forexample,onemajorinsurancecompanymaintainsalargeheadofficewhichservesasabaseforfunctionaldepartments,butmanyofthestaffworkingforcertaindepartmentsworkfromhomeandrarelyifeverneedtovisittheoffice.</p></li><li><p>8/5/2015 Organisations|ACCAQualification|Students|ACCAGlobal</p><p>http://www.accaglobal.com/gb/en/student/examsupportresources/fundamentalsexamsstudyresources/f1/technicalarticles/organisations.html 4/4</p><p>Lastupdated:20Apr2015</p><p>Someserviceorganisationscanadoptthevirtualapproachinitsentirety,withatokenphysicalpresenceataregisteredofficetosatisfystatutoryregistrationrequirements.</p><p>Theadvantagesofvirtualorganisationsare:</p><p>Costscanbegreatlyreduced,asthereislessdependenceonpremises.Thiscanresultinsignificantreductionsinoverheads,suchaselectricity,water,mortgageorrent,andservicestaff.Theadoptionofebusinesssolutionscancreateefficiencies,suchasautomatedreorderingandseamlesstransactionprocessing.Infact,whilethevirtualorganisationisarelativelynewbusinessconcept,manyofthetechnologiesdeployedhavebeenavailableformanyyears.Forexample,electronicdatainterchange(EDI)wasfirstdevelopedinthe1960s.Jobswiththeorganisationmaybemoreattractive,astheneedfordailycommutingisremoved.Thiscanbeparticularlyappealingtothosewithfamilycommitmentsatcertaintimesofday,andthosewhowouldbedeterredfromworkingduetothecostoftransportandcarparking.Thevirtualorganisationhasamodernimagewhichmayappealtoseveralstakeholdergroups,includingcustomers,suppliersanddistributors.Increasingly,thisapproachtobusinessalignswiththeexpectationsofsuchgroups.</p><p>Thedisadvantagesofvirtualorganisationsare:</p><p>Thereisheavyrelianceoninformationtechnology,soifthingsgowrongthiscanhaveacatastrophiceffect.Problemscanarisefromlackofconnectivity,hardwareandsoftwarefailures,malwareandsecuritybreaches.ThosewholackbasicITskills,orareunpreparedtouseinformationtechnologyequipment,havenoprospectofdoingbusinesswithvirtualorganisationsorworkingforthem.Insomecultures,thereremainsapreferenceforthepersonaltouch,s...</p></li></ul>