Organizational Economics

Economics of Organization Management

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Economics of Organizational management can be considered as applied economics that evaluates various transactions and management practices of an individual firms, as opposed to the transactions that occur within the greater market (Imber and Vogler, 2013). Organizational economics is playing significant role in various management decisions and business practices of firm's such as development of human resource management policies, determination of business structure, assessing business risk, implementing rewards systems and making, analyzing and improving management decisions. With the help of an efficient business structure, every organization can manage several situations of business with an effective manner. It also assists management in order to manage different kinds of business situations (Hendrikse, 2003). Economics of organization management determines various kinds of organization structures which can be used by business entity according to nature of company and its operations. It includes U-form, M-from and Matrix form.

This essay presents corporate organizational structure followed by management of Sainsbury in order to manage various business operations. It is a the third largest supermarket chain of UK. Company was found John James Sainsbury in 1869. In this process, essay carries out detail study about different practices of management and employees at different organization level. It also determines how management structure influences business practices within particular organization. Essay also determines type of business structure followed by Sainsbury. Essay evaluates various tactics which can be selected by organization in order to improve internal business structure of company.

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The organization chart plays significant role in order to manage various aspects of business entity. It determines internal decision making structure of company. So, managerial structure of Sainsbury is mentioned below:


According to organization chart of Sainsbury, the top most authority of company is David Tyler. Chairman is responsible for all management decisions of company. All major decisions related to expansion of organization's business in new emerging market, acquisition of new firms etc (Zhu, 2012). Chairman is responsible of each activity of company. It is the top most authority of company and takes all decisions on the basis of views and suggestions of top manager of different different departments of company. Another top authority of Sainsbury is Chief executive who is Mike Coupe can be called as second command of company. He plays most important role within organization. Chief executive manages coordination among different departmental heads and chairman of company in development of various strategic plans for organization (Galende, 2006). Chief executives manages all projects of company with the help of different departments along with corporate governance. All major decisions are taken by Chief executive in Sainsbury.

With reference to managerial Structure of Sainsbury, the next top position of company is Chief Financial Officer. This role is played by Johan Rogers. Chief Financial Officer (CFO) or Controller is responsible to seek money. Chief Financial Officer manages relationship with investors and deal with banks, lenders, etc (J Sainsbury PLC Annual Report and Financial Statements 2013, 2013). All kinds of budgets are prepared by CFO with the help of various divisional heads of company. In the process of allocation of funds of various operations of business, Johan Rogers takes suggestion and view of other top managers of company (Epstein and Buhovac, 2014). There are several responsibilities managed by CFO which are evaluation of financial outcomes of company, development of future plans, allocation of funds through budget, evaluation of needs of top manager of different departments.

There are several department controlling all activities and management practices of Sainsbury. Different departments of company are managed by different director that are Helen Buck as Retail Director, Roger Burnley (Managing Director of General Merchandise, Clothing & Logistics), Mike Coupe (Group Commercial Director), Angie Risley (Group HR Director), Tim Fallowfield (Company Secretary & Corporate Services Director), Rob Fraser (IT Director), Luke Jensen (Group Development Director), Neil Sachdev (Property Director) and Sarah Warby (Marketing Director) (J Sainsbury PLC Annual Report and Financial Statements 2013, 2013). There are some non-executive directors also play crucial role in business structure of company that includes Gary Hughes, John McAdam, Jean Tomlin, Mary Harris and Matt Brittin. All directors play several roles within their department. They also takes suggestion and view of middle and lower of level of employees in various business decision. In this retail director performs all operations related to retail business of company such as opening of outlets in new emerging markets and overseas nations. In similar way, logistic director organizes business operations related to management of supply chain that will increase sales and productivity of company (Ireland and Hoskisson, 2008). In this process, views of employees belong from middle and lower level of management are considered in order to reduce logistical cost of company. HR director is responsible for all activities related to human resource management. It is the most important department of business. The human resource manager of Sainsbury manages various operations and management practices such as manpower planning, recruitment and selection of suitable employees according to requirement of client organization (Almeida and 2011). HR manager also determines different kinds of incentive plans in order to enhance motivation level of workers.

In retail organization, Marketing director manages organizational activities related to assessment of desire of consumer, growth in demand and new product development. Various types of marketing, promotional strategies are developed marketing head with the help of other employees of marketing demand in order to increase sales of company. In similar way, property director is responsible for acquisition of new properties for company (Bock and et.Al. 2012). IT director of Sainsbury manages all technology related operations of company like acquisition of new technology for production process along with evaluation of different online tools and websites in order to increase distribution network of company.

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As per the internal structure, Sainsbury divided top, middle and lower management. Top management includes all board members and departmental heads of company that take all major decisions of company (Dutta, 2006). The Middle Level Management in combination of the Departmental Heads (HOD), Branch Managers, and the Junior Executives. The Departmental heads are Finance Managers, Purchase Managers, etc. The Branch Managers are the head of a branch or retail outlet of company. The Junior Executives includes Assistant Finance Managers, Assistant Purchase Managers, etc that are selected by the Top Level Management. In Sainsburry, middle level managers perform all major operations of company (Cartwright, 2005). Middle level management gives recommendations and suggestions to the top level management. It executes all the policies and business strategies which are developed by the top level management. These managers co-ordinate the activities of all the departments in order to achieve business goals. Staff member also communicate with the top level Management and the lower level management about various policies and business goals (Eppinger and Browning, 2012). Various short term plans are prepared middle manager in order to improve efficiency of business operations. The middle Level Management has limited authority and responsibility. They are acting as intermediary between top and lower management. Employees require more managerial and technical skills and less conceptual skills in management of various business operation. The lower level management includes supervisors, sales managers, sales executives, operational staff, production workers etc (Galende, 2006). All these employees perform several kinds of activities related to sales, production, administrative activities. In Sainsbury, managers involve lower level of staff in development of various business plans, strategies and decision making process. This activity increases efficiency and effectiveness of organizational operations and top management can easily get support of staff in various risky decision. Workers involvement in various organizational operations influences motivation level of workers (Brickley, Smith and Zimmerman, 2006). It directly affects productivity and growth of organization by enhancing sales and market share of company.

Matrix Form

On the basis of assessment of internal structure of Sainsbury, it can be stated that matrix form of business organization is closely related to business structure of Sainsbury. The matrix organizational structure divides authority and responsibilities into functional area and project. In a matrix form, each employee has to manage relations with two immediate supervisors that are functional supervisor and project supervisor (Douma and Schreuder, 2008). The functional supervisor is charged with overseeing employees in a functional area of firm such as marketing or engineering. On the other hand, project supervisors control a specific and often impermanent project. They absorb employees according to their skills from various functional areas to manage various project objectives like sales increment etc.

This business form provides several benefits to Sainsbury. It allows supervisors in order to give extra attention on their areas of expertise. Functional supervisors can manage their focus on hiring, training and managing employees in their field (Epstein and Buhovac, 2014). On the other hand, project supervisors give their extra attention in achieving the business goals which are related to particular projects or products. Placing employees according to their functional expertise assists manager in maximum utilization of skills and ability. So, retail organization can perform various task with the help of highly specialized staff. In a matrix structure, employees manage constant contact with other members of other functional areas along with supervisors through their membership in project teams (Hendrikse, 2003). With the help of the project team, employees have the opportunity in order to develop a wider set of skills and attributes than they would in a purely functional structure. The matrix structure also facilitates shared flexibly to employees across different projects or products. Functional areas help top management to maintain a stock of talented employees that can easily meet projects' requirements.

There are some disadvantages identified in Matrix form. It develops internal complexity within Sainsbury. The dual authority creates communication problems in division of work among employees and managers. Miscommunication also leads employee dissatisfaction and low morale (Almeida and, 2011). It also increases overhead expenditure of company because of the need for double management. In this business structures, Sainsbury also pays extra salaries in order to manage different resources with an effective manner. The sharing of employees also promotes unhealthy competition between managers within a retail firm.

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Suggestions to improve internal structure of Sainsbury

There are various recommendations suggested which can be used to improve internal structure of Sainsbury. In order to improve communication among several employees belongs form different department and to keep proper record of each activity of staff, the top management of Sainsbury should implement latest technology within organizational structure (Cartwright, 2005). It includes management information system as well as emails, mobile messages which make communication more effective and quick.

With the help of management information system, managers of Sainsbury can monitor operations of each department at different organizational level (Imber and Vogler, 2013). By implementing management information system, business entity can keep systematic record of various task allocated to different staff members along with their skills and ability. So, company can easily allocate various targets and resources to staff with an effective manner. Due to increase in the size and complexity of organizations, managers have lost personal contact with the scene of operations so as MIS improves flow information at different departments. This information system changes the larger amount of data into summarized form and avoid confusion among different departments of Sainsbury. MIS Encourages decentralization of authority that is possibly only when there is a proper monitoring system at lower levels. MIS is successfully used for measuring performance and outcomes of staff (Various Advantages of Information Management Systems, 2015). It brings Co ordination by integration of specialized activities of each department. It connects all decision centers in the organization that increases control of top management among on internal business structure of company. It makes control easier by developing link between managerial planning and control. It also enhance the ability of management in order to evaluate and improve performance (Bock and et.Al. 2012). The use of computers has increased the data processing and storage capabilities of from.

There are various new communication tactics like emails, mobile messages playing significant role to increase speed of messaging among different departments. So, manager can quickly allocate tasks to various that will improve effectiveness of internal business structure (Zhu, 2012). With the help of high speed communication, employees would get clear instructions about activities and tasks of all department of Sainsbury so as one department of firm can easily manage its activities according to operations of another divisions. The management of Sainsbury should use external experts and consultants in order to improve internal structure of firm. In this process, external individuals carry out detail study of current management practices and internal structure of company (Brickley, Smith and Zimmerman, 2006). On the basis of this information, external experts provide various solution to solves problems of organization regarding improper management of business resources, assessment of business outcomes.

Organization needs to consider internal management structure of other companies belong from similar industry. By comparing performance and efficiency of internal structure of other firm with current process of working in Sainsbury, management can identify various factors which are creating negative impact on performance of employees and effectiveness of management practices (Epstein and Buhovac, 2014). With the help of this comparison, business entity can adopt good practices of other organizations and could improve overall structure of business.

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The essay concludes that organizational structure of company is playing most important role in success of organization. It concludes that matrix organizational arrangement provides greater control of operations of employees at lower level to top management. Essay determines that performance of firm, productivity of staff and coordination among various management practices are greatly influenced by an effective internal corporate structure. It concludes that management information system creates huge impact on success of business because it increase flow of information at various level of organization as well as enhances coordination among different department of organization. It defines that management will record good performance of business if company got success in manage balance among various operations of different section.


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