Introduction to Organizational Structure
Business environment can be determined as all the external and internal factors which affect the organization. Both internal and external factors work together and influence each other and affect the business. These factors are effective in influencing performance, outcomes and development of a business (Björklund, 2011). This report for dissertation writing talks about Tuffstuff Ltd which is a cement manufacturing located in UK. Firm wants to establish their business at Rwanda which is in Africa. Tuffstuff Ltd. has no distribution experience and for this purpose they have consulted a business development advisor. This report covers organizational structure which can be adopted by the organization. Further, it covers benefits and limitation of PEST analysis, possible alternative tools which can be used in place of PEST. Moreover, it also covers key factors which would affect positively or negatively with regard to Tuffstuff's proposed venture.
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Organizational Structure for Tuffstuff Ltd.
Organizational is a group in which individuals work together for achieving desired goals or objectives. For achieving these goals and objective firm should distribute the task in such a way that all the members in the group understand tasks which will help them in performing and coordinating effectively (Welford, 2013). This is possible with the help organizational structure. It is helpful in clarifying roles and responsibilities which has to be performed by employees.
Following are the importance of organizational structure:
Communication: Organizational structure is very helpful in assigning authorities. It is very helpful for the employees in communicating their issues or problems. Form the first day itself employees know to whom he/she needs to respond. In most of the organizations main decisions are made by top management and then they are conveyed through the leaders of each department.
Achieving Goals: Organizational structure help in following chain of command.. In addition to this, it is helpful in improving team efficiency and assist in working together for achieving common goal (Iskanius, Page and Anbuudayasankar, 2010).
Evaluating Performance of Employees: It is helpful in evaluating the performance of employees. It allows superiors to better evaluate employees. As they have a direct interaction with them. Employee’s drawback can be identified and they can be provided with suitable measures which will be helpful in improving their drawback.
There are mainly four types of organizational structure which are commonly used by the companies and are as follows:
Functional Structure: In this structure, firm is divided according to small groups which are based on functional areas like marketing, finance, operations, HR, etc. (Xue, Shen and Ren, 2010). In other words, organization is grouped according to similarities in skills, resources or profession. Each department is handled by a leader who will be expert in that area. Leader of each department will provide guidance and assign task to his department member.
Divisional Structure: This type of structure is useful when the organization has many markets, products or regions. In other words, it is a type of structure which groups the functions of organization into divisions (Craig and Campbell, 2012). It helps in increasing the performance of the organization. Firm as divisions are flexible which assists in reaching to specific circumstances.
Matrix Structure: This type of structure is very helpful in bringing together managers and employees to work together in achieving objectives. It is basically combination of divisional and functional structures (Definition of Matrix Organizational Structure, 2013.). It allows sharing of resources of other department. Main disadvantage of this structure is that it leads to accountability problems.
Network Structure: It is the most flexible and decentralized organizational structure. Further, in this structure teams are distributed geographically, physically or in different organizations. Product coordinator will provide all the required information to other departments (Organizational structure impact, 2013).
Among these structures Tuffstuff Ltd. should adopt functional organizational structure. As it will be helpful in dividing the firm in different department under an experienced or professional who assign task and guide members so that they can perform effectively (Moutinho, 2011). In addition to this, leader will get to know the drawback of each employee and these employees could be trained according to their drawback. Further, it will be helpful in developing a healthy relationship with each member which will aid the employees to share their ideas and innovation.
Analysis and Alternative Tool for PEST
PEST analysis involves all external macro environment factors which affects the organization. It is an important tool which helps in understanding the decline and growth of market. In simple words, it a business tool for business. It evaluates all the factors which affect a business to grow. Factors like political, economic, social and technological. Business is benefited through PEST in number of ways like in developing marketing plan, research reports, product development and strategic planning (Aterido, Hallward-Driemeier and Pagés, 2011). It measures situation and potential of market, indicates the decline or growth and moreover it analysis the business potential, suitability of business and attractiveness. In addition to this, it uses four perspectives, which are discussion, presentation, decision making and understanding which provides a logical structure. These are many other variations or extinction which can be used. PESTELI which is one of its extinctions in which it includes factors like Ecological or environmental, legal or legislative and analysis of industry. STEEPLED is another or modified form of PEST which includes factors like Social, Technological, Economical, Environmental, Political, Legal, Ethical and Demographical. But among all this types most preferred one as PEST as it covers all the required information.
There are many disadvantages for PEST, which hare as follows:
- All the external factors which are considered during analysis can change and are dynamic. In fact these changes many also occur with time span of one day, which makes it difficult to predict that how these factors can be considered in affecting the future or present of the project (Halbert and Ingulli, 2011). Even at initial stage, environmental changes which may have an adverse on the project many remain unnoticed. Due to uncertainty of change in factors may result in achieving the primary stage carrying out PEST. Factor may change frequently which make delay in decision making or any other process for which this analysis was conducted.
- In conducting a simple presentation for PEST can be considered as a limitation. Primary aim of PEST is to list out the environmental factors which affect the project. This is only possible if all the factors are critically examined in terms of degree of impact. It becomes a limitation for presentation when finding's through the analysis do not seem to have much importance (Hamilton and Webster, 2015). Through this analysis it is possible that what all results were expected many not be same. In addition to this it is possible that the findings many not have value at all.
- Another limitation occurs enormous data is collected from right sources. With this it consumes lot of time. The data collected may be very important but it consumes lot of time and costly. In collecting relevant data it requires lot of research and resources to be used. In addition to this also creates a problem to relate all the relevant information. Further, also collecting the latest data and updating it with previously collected data becomes a problematic issue (Gecevska and et.al., 2010). One more problem which occurs due to collection of enormous data is that it makes difficulty in making assumptions. This results in less on actual facts and more on assumptions. Assumptions which are not mentioned or assumptions which the analyst failed to point out may lead to disaster in planning. To overcome this kind of issues, some tools should be used which will be helpful in cross-checking the data collected.
- For conducting a PEST analysis, lot of information has to be collected. It very difficult in handling all the data collected. Moreover, it also results in confusion. Actual problem occurs when then user get confused regarding the actual data which will be beneficial among all the data (Wetherly and Otter, 2014). In addition to this, in prioritizing the important data may lead to entire planning to fail.
- PEST analysis scans only external factors of environment which is insufficient for developing strategic planning as it completely ignores the competitive scenario and internal factors which are involved in environment. To over come this issue other tools should be used which would help in developing strategic planning. The tool which can be used in developing strategic planning will be SWOT. PEST do provides various techniques which are helpful in finding out the environmental factors which affect the business but its effectiveness depends upon the accuracy or reliability of data collected.
- It may cause dangerous effort on the small firms as most of the data collated through this analysis is collected through assumptions (The market places, 2014.). There are chances that the data assumed may not be correct always. As a result the strategies which may be applied because of assumption may be wrong and could have dangerous effort on the organization. With this the firm has to apply another strategy which will result in unnecessary increase in cost (PEST ANALYSIS, 2013).
There are other tools which can be adopted in place of PEST. Alternative tools are as follows:
SWOT: It is analysis which helps to know the weakness, strengths, opportunities and threats which are involved in a business ventures or in a project.
This is used in the initial stage of preparing strategic plan. In addition to this, it is helpful in making decisions in adopting new strategies, in knowing possible areas which will have a change in program, redirecting and refinding effective midplan (SWOT analysis definition, templates, 2012).
Porters Five Forces: Another tool which can be used in place of PEST. This tool analysis and identifies five forces of competitiveness which are helpful in shaping the organization. In addition to this, it also helps in determining the strengths and weaknesses of the firm.
Threat of new entrants: This is helpful in knowing all the barriers which may occur in expancing the business (The Five Forces, 2014). It evaluates the competitors and what all strategies which they adopt.
Threat of substitute service or products: In includes the existance of product similar to the firms product which is conducting this analysis. It helps in identifying the strategies which can be adopted in order to compete effectivelly.
Rivalry: It is the major determinant related to competitiveness of the organization.
Bargaining power of buyers: It is described as the market of outputs. In simple words it is the ability of customers sensitivity for changing the price.
Bargaining power of supplier: It is discribed as the market of input.
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Key Factors for Tuffstuff's Proposed Venture
Rwanda is a sovereign state which locate at east of Africa. This state is bordered by democratic Republic of congo, Burundi, Uganda and Tanzania. The economic growth is raising due to remarkable performace of secondary sectors and Republic. Form this it is clear that the economic growth is not pressurising on the natural resources.
Following is the PEST analysis of Rwanda:
Political: Head of state is the President of Rwanda, who has the power to develop plicies in conjuction with commanding the armed forces, signing presidential orders, cabinet and declaring a state of emergency or war. Population of of the state elects the President and which is held in every seven years. Population of the state is the one who selects the Prime Minister and other members. Leagal system of this state is largly based on Belgian and German civil law system (Oh, 20100. Human rights of Rwanda are stricktly followed and the it has abolished death penalties. The country is growing and as a result it will be favorable or benefitial for Tuffstuff as the government will approve or accept new business as this country is growing so they will provide opportunities to the organizations.
Economical: The economy of this state is mainly based on agriculture. Tea and coffee are main cultivation through which they get major cash theorugh export. In addition to this the tourist is growing rapidly as its natural beauty attracts the people from other countres. Moreover, it is among two countries among which gorillas can be safely visited. Further, tourist highly pay for tracking gorillas. The culture of this country highly influence people to visit Rwand. Gdp form industrial sector is contributed upto 15.7 in 2014. These are many manufactures which includes soap, furniture, agricultural products, plastic goods, shoes, cigarettes and textiles. This factor will be favourable for Tuffstuff's as the economy of the country is highly growing. The competition is very low and has a high market coverage (Yu and Ramanathan, 2012). The economy of this country is strong in terms of per-capita GDP which contributes upto $2.432 in the year 2014. United States, China and Germany which are the main export markets. Traditional crafts and arts are developed all over the country. Tuffstuff's will be highly benefited as the this country is growing rapidly. This could be determined with the help of contribution done by the industrial sector. This shows that the country is contributing highly through industrial sector which shows that Tuffstuff's has a great opportunity for expanding their business there.
Social: The government of Rwandan focus on funding supply of water which has helped in increasing the national budget share. When compared with 2005 the safe water assessed by the population was 55% but in the year it has raised up to 83% in 2014. Local language of this country is Kinyarwanda which most commonly spoken. In addition to this, country is surrounded by mountain which adds to its beauty. Further, the climate of the country is subtropical, which includes two dry seasons and two rainy seasons each year. From this it can be said that the social factors of the country is also favourable as the resource are available in abundant (Aula, 2010). The firm will get all the required resource as according to their requirement.
Technological: They develop electricity with form hydroelectric sources. In addition to this the power stations on lake provides up to 90% electricity for the country. Moreover, the government of Rwandan provides free education. The use of technology is rapidly increasing and supply of electricity is through hydroelectric sources which has proved to be helpful in providing electricity at all the parts of the country. Moreover, government has planned for providing education to all the children which will be done within 2020. Further, government has spent about 6.9% compared to 2010. Further, they have mandatory for having applying for healthcare for all the people from 2008 and within they covered about 90% of the population in 2010. Form this it is clear that Tuffstuff will get highly benefited with the technological aspect as they are using the new technology indeveloping the country.
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From this report, it can be articulated that organizational structure plays a vital role in clarifying the roles and responsibilities which has to be performed by the employees of the organization. According to the report, Tuffstuff should adopt functional structure as it divides the organization into different departments which is handled by leaders who are expert in there respective areas. This is very helpful in coordinating and in providing proper guidance to the employees. In addition to this, performance of the employees can be closely examined and improvements can be made so that they perform effectively. Further, PEST analysis plays a vital role in providing the organization appropriate strategies which will help in expansion of business.
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- Halbert, T. and Ingulli, E., 2011. Law and ethics in the business environment. Cengage Learning.
- Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press.
- Wetherly, P. and Otter, D., 2014. The Business Environment: Themes and Issues in a Globalizing World. Oxford University Press.