Mintzberg six basic parts of organisation

Mintzberg defined organisational structure as "the sum total of the ways in which it divides its labour into distinct tasks and then achieves coordination among them". Each configuration contains six components:

1. operating core: the people directly related to the production of services or products;
2. strategic apex: serves the needs of those people who control the organisation;
3. middle line: the managers who connect the strategic apex with the operating core;
4. technostructure: the analysts who design, plan, change or train the operating core;
5. support staff: the specialists who provide support to the organisation outside of the operating core's activities;
6. ideology: the traditions and beliefs that make the organisation unique.

The organisation's structure depends on the organisation itself, its members, the distribution of power, the environment and the technical system. Design decisions can be grouped into the:

* design of positions;
* design of superstructure;
* design of lateral linkages;
* design of decision making system.



Work constellations are quasi-independent cliques of individuals who work on decisions appropriate to their level in the hierarchy. These groups range from the formal to the informal.
Mintzberg used the components, flows, work constellations and coordination mechanisms to define five configurations:

1. Simple Structure

Entrepreneurial setting: relies on direct supervision from the strategic apex, the CEO.

2. Machine Bureaucracy

Large organisations: relies on standardisation of work processes by the techno-structure.

3. Professional Bureaucracy

The professional services firm: relies on the professionals' standardisation of skills and knowledge in the operating core.

4. Divisionalised Form

Multi-divisional organisation: relies on standardisation of outputs; middle-line managers run independent divisions.

5. Adhocracy

Project organisations: highly organic structure with little formalization; relies on mutual adjustment as the key coordinating mechanism within and between these project teams. In later work Mintzberg added two more configurations:

6. Missionary Form

Coordination occurs based on commonly held ideologies or beliefs: standardisation of norms.

Each configuration represents a force that pulls organisations in different structural directions. For example, operators want to professionalize in their drive to control their work. Therefore, they favour a professional bureaucracy based on the standardisation of skills.

The structure an organisation chooses depends, to a great extent, on the power of each of Minzberg's six components.

For those studying ACCA P3: Business Analysis :)

ACCA P3 Theorists, models, framework

Here are some of many approach in terms of models,theorists works, and framework used in to assess and approach question in Business Analysis P3 of the ACCA. Some of the knowledge are as a background or can be used in passing which is not a core importance. I know its lot to learn, but its very useful.

1) Johnson, Scholes, Whittington.

• Cultural web
• Feasibility, Acceptability, Sustainability
• Ethical stance
• Strategy lenses, drifts
• TOWS analysis

2) Michael Porter

• 5 forces
• Diamond
• Value chain
• Generic strategies
• Information Intensity matrix with Miller)

3) Philip J. Kotler

• 2P's - Push, Pull factors
• Segmenting, Targeting, Positioning
• Business research
• Differentiation

4) Kotter

• Overcoming resistance to change ( with Schlesinger)

5) Campbell and Yeung

• Mission statement

6) Russell ackhoff

• Characteristics of good mission statement

7) Thomas and Strickland

• Objective - SMART

8) Management, power, leadership style

• Dunphy and stace
• Lewin
• French and Raven
• Blake and Mouton - Ohio state studies, and Michigan studies on leadership
  
• Fiedler model of leadership
• Adair
• Hershey and Blanchard matrix
• Bass transactional and transformational leaders
• Blake and Mouton Managerial Grid

TO BE CONTINUE...

Force Field Analysis

The Force Field Analysis was developed by American social psychologist Kurt Lewin as a useful tool built on the idea that forces are often driven by habits, customs, and attitudes that can affect the change process.According to Lewin there are two main forces acting for and against change in and social system. Within the organisation are to be detected:

• driving forces that operate for change
• restraining forces which act to maintain the status quo

It will be useful when looking at the variables involved in planning and implementing a change program and will undoubtedly be of use in team building projects,when attempting to overcome resistance to change.

Driving Forces
-Driving forces are those forces affecting a situation that are pushing in a particular direction; they tend to initiate a change and keep it going. In terms of improving productivity in a work group, pressure from a supervisor, incentive earnings, and competition may be examples of driving forces.

Restraining Forces
- Restraining forces are forces acting to restrain or decrease the driving forces. Apathy, hostility, and poor maintenance of equipment may be examples of restraining forces against increased production. Equilibrium is reached when the sum of the driving forces equals the sum of the restraining forces.

Force Field Analysis are shown:


For example, imagine that you are a manager deciding whether to install new manufacturing equipment in your factory. You might draw up a force field analysis like the one in Figure 1:

Force Field Analysis is a useful technique for looking at all the forces for and against a plan. It helps you to weigh the importance of these factors and decide whether a plan is worth implementing.
Where you have decided to carry out a plan, Force Field Analysis helps you identify changes that you could make to improve it.

Reference:
(1) David Williamson, Peter Cooke, Wyn Jenkins, and Keith Michael Moreton : Strategic Management and Business Analysis .
(2) Mindtools.

Cultural Web

The Cultural Web, developed by Gerry Johnson and Kevan Scholes in 1992, provides one such approach for looking at and changing your organization’s culture. Using it, you can expose cultural assumptions and practices, and set to work aligning organizational elements with one another, and with your strategy.
Elements of Cultural Web as seen Figure 1:

The cultural web contains 6 inter-related elements that help to make up what Johnson and Scholes call the “paradigm” – the pattern or model – of the work environment. By analyzing the factors in each, you can begin to see the bigger picture of your culture: what is working, what isn’t working, and what needs to be changed. The six elements are:

• Stories - within the company focus upon past events in the organisation and are told to people both outside and inside the organisation. They communicate something of the organisation's culture. Company 'heroes', such as charismatic leaders of the past, and mavericks can be perceptions of 'normal' behaviour.
• Rituals and Routines - The daily behavior and actions of people that signal acceptable behavior, Rituals such as training programmes or personnel procedures can reinforce the perception of how things are done, and demonstrate to staff what behaviour is desirable and valued by senior management.
• Symbols - The visual representations of the company including logos, how plush the offices are, and the formal or informal dress codes.
• Organizational Structure - Both the formal structure (as found on the organisation chart) and the informal structure are likely to reflect power structures and play an important part in influencing the core values of an organisation.
• Control Systems - The ways that the organization is controlled. These include financial systems, quality systems, and rewards (including the way they are measured and distributed within the organization.)
• The Paradigm - Basic assumptions and beliefs that an organisation decision makers hold in common and take for granted. It is essentially conservative since it is based on collective experience. It is closely linked to the strategy as experience lens.

USEFUL QUESTIONS TO TRY IN YOUR OWN SETTING:
Stories
What core belief do the stories in my place reflect?
How pervasive are these beliefs (through the levels of the organisation)?
Do stories relate to: strengths or weaknesses? successes or failures?
conformity or mavericks? Who are the heroes and villains?
What norms do the mavericks deviate from?

Routines and rituals
Which routines are emphasised in my organisation?
What behaviour do routines encourage? Which would look odd if changed?
What are the key rituals? What core beliefs do they reflect?
What do training programs emphasise?
How easy are the rituals/routines to change?

Organisational structures
How mechanistic/organic are the structures in my organisation?
How flat/hierarchical are the structures? How formal/informal are they?
Do structures encourage collaboration or competition?
What types of power structure do they support?

Control systems
What is most closely monitored/controlled in my organisation?
What reports are issued to keep control of operations, finance, etc...?
What process or procedure has the strongest controls? Weakest controls?

Power structures
What are the core beliefs of the leadership in my organisation?
How strongly held are these beliefs (idealists or pragmatists)?
Who makes or influences decisions?
How is this power used or abused?

Symbols
What language and jargon are used in my place of work?
How internal or accessible are they?
What aspects of strategy are highlighted in publicity?
What image is associated with your organization, looking at this from the separate viewpoints of clients and staff?

Overall
What is the dominant culture? How easy is this to change?

Reference:
Johnson, Scholes, Whittington : Exploring Corporate Strategies , 7th edition.

Six Sigma

According to the ACCA study guide, in part F regarding the Quality issues, the syllabus emphasise on Quality Initiatives : Six Sigma. I believe that this topic would be important and also quite challenging to those whom are still didnt heard of this Six Sigma. So, for this time around,I will focus on The Six Sigma, but only the surfaces and general source and not to go deeper into black,green belt,or lean six sigma,but at least you know what Six sigma is all about. Well, i've done an extensive reading on materials regarding this Six Sigma, and it took me 2 books for me to understand the reason, application and significance importance of applying Six Sigma to organisation namely Motorola,General Electric (GE).

What is Six Sigma??

Is a statistical measures of variation to improve processes by eliminating defects to represents the latest incarnation of the quality movement. A full Six Sigma equals to 99.9997% accuracy. It also acts as a business philosophy focusing on business improvement and a "tool box" of quality and management tools for problem resolution. Six Sigma's goal is to improve all processes to that level of quality or better.

Every process can be characterised by

• Average performance
• Variation

A little bit of history, the Six Sigma methodology was developed by Motorola in the mid 1980's as a result of recognising that products with high pass yield rarely failed in use.Hence,
Six Sigma asserts the following:

• Continuous efforts to reduce variation in process outputs is key to business success
• Manufacturing and business processes can be measured, analyzed, improved and controlled
• Succeeding at achieving sustained quality improvement requires commitment from the entire organization, particularly from top-level management

Based on the ACCA P3 syllabus, the study guide mentioned Six Sigma solving process relates to DMAIC, however there is methodology relates to DMADV which concerns on create new products or process design. thus to stay within the guide,let look into DMAIC.

DMAIC.
- Provides a logical sequences for applying exisiting problem solving tools and concepts.
- Repacking of exisiting tools and concepts.
-Various quality/ management tools applied at each steps.
-Improves exisiting business process.

Define
-develop a mission and assess business strategy.
-Understand customer needs and demands.
-Map the process or create goals in order to achieve such aim.
-Appropriate tools such as Gantt chart, cross functional flowcharts.

Measures
-Collect baseline data on defects and possible cause.
-Plot defect data over time & analyse for special causes.
-Create and stratify frequency plots and do Pareto analysis (80/20) (please refer)
-Calculate starting sigma level.
-Appropriate diagrams such as Basic flowchart

Analyse
-Create focused problem statement.
-Explore potential causes.
-Verify relationship of the causes and make sure that all factors have been considered.This can be applied by statistical methods to quantify cause and relationship.

Improve
-Create possible solution for root causes.
-Optimize the process based upon the analysis by using techniques Design of experiments.
-Implementation of such plan or processes.
-Measure the results and evaluate.
-identifies what will happen if needed improvements are not made and what will happen if the improvements take too long.

Control
-Develop and document standard practices.
-Possible, train staff teams, and tools are put in place to ensure that the key variables remain within the acceptable ranges over time so that process improvement gains are maintained.
-Team develops a project hand off process, reaction plans, to guarantee performance and long-term project savings.
-Recommend future plans and confirm, communicate,create process for updating procedures.

When to use Six Sigma????

• Unknown causes/situations
• When broad spectrum approach is inappropriate.
• When other problem solving method fails.
• In Complex situations with many variables

but of course in exam, question will relate to applying Six Sigma.

Why adopt Six Sigma??

• Defined process for problem solving
• Proven methodology to solve problem
• Focus on "bottom line" which encourages credibilty/supports from top management.

Probabilty of failing Six Sigma:

• Resisstance
• Fear of change
• Lack of understandings
• Internal sabotage
• CAVE people (Citizen Against Virtually Everything)

Even J.Juran criticised Six Sigma in his book ' J.Juran : A lifetime of Quality 'as "a basic version of quality improvement", stating that "there is nothing new there."

Reference:
1)Wikipedia
2)Six Sigma: The breakthrough byHarry,Schroeder.

3)What is Six Sigma? : by Pande and Holpp (Secondary texts for ACCA P3) (I recommend it)

3) A little bit of Idiots : Six Sigma.( but It doesnt have much information that I desired)

McKinsey & Co 7's

What is McKinsey 7's framework?
It is described as a management model of 7 factors to organise a company in a holistic and efficient way. Together, these factors determine the way in which a corporation operates.
Management should take all 7 factors to ensure successful implementation of a strategy.
It was first made public in Athos and Pascale's 'The Art of Japanese Management' and made even more famous in Peters and Waterman's 80s classic 'In Search of Excellence'.

Originally developed as a way of thinking more broadly about the problems of organizing effectively, the 7-S framework provides a tool for judging the "doability" of strategies.
This is the McKinsey '7S framework' of business that have been used at the McKinsey consulting company:
Hard' variables:(easier to define or identify and management can directly influence them: These are strategy statements; organization charts and reporting lines; and formal processes and IT systems).
- Strategy: plan leading to allocation of resources.
- Structure: organization reporting lines, geography, etc.
- Systems: formal and informal processes used.

Soft' variables:(on the other hand, can be more difficult to describe, and are less tangible and more influenced by culture. However, these soft elements are as important as the hard elements if the organization is going to be successful).
- Staff: demographics of personnel.
- Style: behavior of managers when interacting with others.
- Skills: core competencies of the firm.
- Shared value: culture, which is actually the core element to it all.

Strategy: the plan devised to maintain and build competitive advantage over the competition. Plan leading to allocation of resources which a set of actions that you start with and must maintain.

Structure: the way the organization is structured and who reports to whom, i.e how people and tasks / work are organised and organization reporting lines.The ways in which people are organized, tasks are coordinated.

Systems: the daily activities and procedures that staff members engage in to get the job done,in other word all the processes and information flows that link the organisation together.

Shared Values: called “superordinate goals” when the model was first developed, these are the core values of the company that are evidenced in the corporate culture and the general work ethic. They Longer-term vision, and all that values stuff, that shapes the destiny of the organisation, or the normal saying "big stuff that drives the company forward".

Style: the style of leadership adopted, so called behavior of managers when interacting with others.

Staff: the employees and their general capabilities.Its also involves how you develop managers (current and future).Concerns on demographics of personnel.

Skills: the actual skills and competencies of the employees exists or working for the company. Where the core competencies of the firm is captured.

The 7S model can be used in a wide variety of situations where an alignment perspective is useful, for example to help you:
- Improve the performance of a company;
- Examine the likely effects of future changes within a company;
- Align departments and processes during a merger or acquisition; or
- Determine how best to implement a proposed strategy.

In change processes, many organizations focus their efforts on the hard S’s, Strategy, Structure and Systems. They care less for the soft S’s, Skills, Staff, Style and Shared Values. Peters and Waterman in “In Search of Excellence” commented however, that most successful companies work hard at these soft S’s. The soft factors can make or break a successful change process, since new structures and strategies are difficult to build upon inappropriate cultures and values. These problems often come up in the dissatisfying results of spectacular mega-mergers.
The 7-S Model is a valuable tool to initiate change processes and to give them direction. A helpful application is to determine the current state of each element and to compare this with the ideal state. Based in this it is possible to develop action plans to achieve the intended state.

The McKinsey 7Ss model is one that can be applied to almost any organizational or team effectiveness issue. If something within your organization or team isn’t working, chances are there is inconsistency between some of the elements identified by this classic model. Once these inconsistencies are revealed, you can work to align the internal elements to make sure they are all contributing to the shared goals and values.

Reference:
*Organizational Alignment: The 7-S Model, Harvard Business School Note, Bradach Jeffrey.
*Peters, T., Waterman, R. (1982) “In Search of Excellence”.
Strategic Management Concepts by Michael A Hitt R. Duane Ireland , Robert E. Hoskisson (2006 version).

Porter's Model - Value Chain, Generic strategies, 5 Forces.

Micheal Porter Value Chain
The term ‘Value Chain’ was used by Michael Porter in his book "Competitive Advantage: Creating and Sustaining superior Performance" (1985), for identifying ways to create more customer value.
(a)Value activity describes the activities within and around an organization, and relates them to an analysis of the competitive strength of the organization. Therefore, it evaluates which value each particular activity adds to the organizations products or services.

(b)Primary activities- Primary activities are directly concerned with the creation or delivery of a product or service. They can be grouped into five main areas: inbound logistics, operations, outbound logistics, marketing and sales, and service.

Support activities - support activities which help to improve their effectiveness or efficiency in those Primary activities. There are four main areas of support activities: procurement, technology development (including R&D), human resource management, and infrastructure.
Any or all of these primary activities are vital in developing a competitive advantage.

(c) Inbound logistics: Refers to goods being obtained from the organisations suppliers ready to be used for producing the end product.

Operations – Value creating activities that transform the input into final product.

Outbound logistics – Activities required to get the finished product to the customer, including warehousing, order fulfillment, etc

Marketing and Sales – Activities that associates with getting buyers to purchase the product, including channel selection, advertising, pricing, etc.

Services – Activities that maintain and enhance product value, including customer support, repair service, etc.

Procurement – process for acquiring the various resource inputs to the primarily activities.

Technology development – Development of machines, computers, processes and system expertise of staff.

Human resource – Activities to train develop and provide remuneration, recruiting staff.

Infrastructure – Maintenance of the general infrastructures of the organization including management, finance and planning.

Porters’ value chain is very important from view of developing on info. system/IT strategy, because the value chain framework helps to build a relative competitive advantages in terms of software in which each of organization are using. It also can be seen as one of two dimension in maximizing corporate value creation when dealing with customers.
This model can be used to assess the effectiveness and efficiency of resource use within each activity in the chain.
Efficiency is to measure of how well resources are being used.
Effectiveness relates to how well resources are being allocated to those activities.

Porter's Generic Strategies

Porter’s proposes 3 generic strategies for achieving competitive advantage;
cost leadership, differentiation, and focus.

Cost leadership – refers to the strategy of operating at a lower cost level than competitors and therefore being able to offer better value for money to customers. Cost leadership is most appropriate when a price or value for money is the most important factors in the buying decision. To achieve this strategy, economies of scale or exclusive use of a particular technology. Thus, increase market share.Each generic strategy has its risks, including the low-cost strategy. For example, other firms may be able to lower their costs as well. As technology improves, the competition may be able to leapfrog the production capabilities, thus eliminating the competitive advantage. Additionally, several firms following a focus strategy and targeting various narrow markets may be able to achieve an even lower cost within their segments and as a group gain
significant market share.

Differentiation – refers to a seeking a competitive advantage by doing something different to competitors. The “something” could be a different way of doing business. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product.Hence; increase profit margin, increase bargaining power of supplier, and strength of strong sales team with the ability to successfully communicate the perceived strengths of the product.The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments.

Focus – focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly.involves a restriction of activities to only part of the market (a segment or niche) through:
a)Providing goods and/or services at lower cost to that segment ( cost-focus)
b)Providing a differentiated product or service to that segment (differentiation-focus)

A Combination of Generic Strategies - Stuck in the Middle?
Michael Porter argued that to be successful over the long-term, a firm must select only one of these three generic strategies. Otherwise, with more than one single generic strategy the
firm will be "stuck in the middle" and will not achieve a competitive advantage.Porter argued that firms that are able to succeed at multiple strategies often do so by creating separate business units for each strategy. By separating the strategies into different units having different policies and even different cultures, a corporation is less likely to become "stuck in the middle."

Porter's 5 Forces

Michael Porter's 1979 framework uses concepts developed in Industrial Organization (IO) economics to derive 5 forces that determine the attractiveness of a market. They consist of those forces close to a company that affect its ability to serve its customers and make a profit. A change in any of the forces normally requires a company to re-assess the marketplace.
Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are:
-The threat of entry of new competitors (new entrants)
-The threat of substitutes
-The bargaining power of buyers
-The bargaining power of suppliers
-The degree of rivalry between existing competitors

The threat of New Entrants
New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, restaurants). Key barriers to entry include:
-Economies of scale
-Capital / investment requirements
-Customer switching costs
-Access to industry distribution channels
-The likelihood of retaliation from existing industry players

Threats of Substitutes
The presence of substitute products can lower industry attractiveness and profitability
because they limit price levels. The threat of substitute products depends on
- Buyer' willingness to substitute;
- The relative price and performance of substitutes;
- The costs of switching to substitutes.

Bargaining Power of suppliers.
Suppliers are the businesses that supply material and other products into the industry.
The cost of item bought from suppliers can have a significant impact on company profitability. If suppliers have high bargaining power over a company, then in theory the company is less attractive. The bargaining power of suppliers will be high when:
- There are many buyers and few dominant suppliers
- There are undifferentiated, highly valued products
- Suppliers threaten to integrate forward into the industry
- Buyers do not threaten to integrate backwards into supply

Bargaining Power of Buyers.
Buyers are the people / organization who create demand in an industry.The bargaining power of buyers is greater when
- There are few dominant buyers and many seller in the industry
- Products are standardized
- Buyers threaten to integrate backward into the industry
- Suppliers do not threaten to integrate forward into the industry

Intensity of Rivalry.
The intensity of rivalry between competitors in an industry will depend on :
- The structure of competition- e.g. rivalry is more intense where there are many small or
equally sized competitors; rivalry is less when an industry has a clear market leader.
- The structure of industry costs- e.g. industry with high fixed costs encourage
Competitors to fill unused capacity by price cutting.
- Switching cost- rivalry is reduced where buyers have high switching costs. E.g. there is a
significant cost to buy from an alternative supplier
- Exit barriers- when barriers to leaving an industry are high (cost of closing down) then
competitors tend to exhibit greater rivalry.

Reference :
Porter, Michael E., Competitive Strategy: Techniques for Analyzing Industries and
Competitors.