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Syllabus H. Innovation, Performance Excellence & Change Management H1. Enabling Success: Organising

H1ab. Internal & External Relationships

Internal

Centralisation v De-centralisation

Head office decision making v delegated decision making

Centralisation Decentralisation
Ensures corporate objectives met Better local knowledge
Better coordinated decisions Motivates managers
Easier in a crisis situation Quicker and more practical in large, complex firms

Features of a centralised organisational structure:

  1. A dominating head office

  2. Working from a central headquarters

External

Strategic alliances, Joint ventures, Value Networks (all seen earlier) now let’s look at a different external relationship

Outsourcing

  • Common in the building industry - work carried out by a sub-contractor on your behalf

    Often happens elsewhere, mostly in non-core activities e.g. Security, Payroll etc

Reasons for Problems with
Allows firm to concentrate on core competencies Loss of control over the work
Outsource the work to an organisation whose core competency is that work Managing the relationship 
Allows specialists to work when otherwise couldn't afford the ability to pay them full time Not as fully committed / flexible as own staff

Offshoring

This is the relocation of a business process from one country to another—typically an operational process, such as manufacturing, or supporting processes, such as accounting. 

Typically this refers to offshoring to a cheaper labour country

Shared services

This is the provision of a service by one part of an organisation is shared and the providing department effectively becomes an internal service provider