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Yet for a large organisation manufacturing a range of products, having a single production department is generally inefficient. Consequently, most large companies are decentralized, following the model of Alfred Sloan, who divided General Motors into separate operating divisions in 1920. Each division had its own engineering, production and sales departments, made a different category of car (but with some overlap, to encourage internal competition), and was expected to make a profit.

Businesses that cannot be divided into autonomous divisions with their own markets can simulate decentralization, setting up divisions that deal with each other using internally determined transfer prices. Many banks, for example, have established commercial, corporate, private banking, international and investment divisions.

An inherent problem of hierarchies is that people at lower levels are unable to make important decisions, but have to pass on responsibility to their boss. One solution to this is matrix management, in which people report to more than one superior. For example, a product manager with an idea might be able to deal directly with managers responsible for a certain market segment and for a geographical region, as well as the managers responsible for the traditional functions of finance, sales and production. This is one way of keeping authority at lower levels, but it is not necessarily a very efficient one. Thomas Peters and Robert Waterman, in their well-known book In Search of Excellence, insist on the necessity of pushing authority and autonomy down the line, but they argue that one element – probably the product – must have priority; four-dimensional matrices are far too complex.

A further possibility is to have wholly autonomous, temporary groups or teams that are responsible for an entire project, and are split up as soon as it is successfully completed. Teams are often not very good for decision-making, and they run the risk of relational problems, unless they are small and have a lot of self-discipline. In fact they still require a definite leader, on whom their success probably depends.

Task 2. Comprehension 1

Which of the following three paragraphs most accurately summarises the text, and why?

First summary

Although most organisations are hierarchical, with a number of levels, and a line of command running from the top to the bottom, hierarchies should be avoided because they make decision-making slow and difficult. A solution to this problem is matrix management, which allows people from the traditional functional departments of production, finance, marketing, sales, etc. to work together in teams. Another solution is decentralisation: the separation of the organisation into competing autonomous divisions.

Second summary

Most business organisations have a hierarchy consisting of several levels and a clear line of command. There may also be staff positions that are not integrated into the hierarchy. The organisation might also be divided into functional departments, such as production, finance, marketing, sales and personnel. Larger organisations are often further divided into autonomous divisions, each with its own functional sections. More recent organisational systems include matrix management and teams, both of which combine people from different functions and keep decision-making at lower levels.

Third summary

Most businesses are organised as hierarchies, with a clear chain of command: a boss who has subordinates, who in turn have their own subordinates, and so on. The hierarchy might be internally divided into functional departments. A company offering a large number of products or services might also be subdivided into autonomous divisions. Communication among divisions can be improved by the introduction of matrix management or teams.

Task 3. Talking Point 1

The text mentions the often incompatible goals of the finance, marketing and production (or operations) departments. Classify the following strategies according to which departments would probably favour them. Consult Speaking References p. 126–130.

The most common verbs for describing structure are:

consists of, contains, is composed of, includes, is made up of, is divided into

Model 1

The company consists of five main departments.

The marketing department is made up of three units.

The sales department is divided into two sections.

Other verbs frequently used to describe company organisation include:

to be in charge of, to support/to be supported by, to be accountable to, to be responsible for, to assist/to be assisted by.

Model 2

The marketing department is in charge of the sales force.

The marketing department is responsible for advertising, sales promotions and market research.

The five department heads are accountable to the Managing Director

? a factory working at full capacity

? a large advertising budget

? a large sales force earning high commission

? a standard product without optional features

? a strong cash balance

? a strong market share for new products

? generous credit facilities for customers

? high profit margins

? large inventories to make sure that products are available

? low research and development spending

? machines that give the possibility of making various different products

? self-financing (using retained earnings rather than borrowing)

Task 4. Writing 1

Write a description of a company you know, in about 100–150 words.

Task 5. Reading 2

Getting started

? Before reading the text, discuss in small groups what you know about the Apple Computer Company and their structure.

? What do you think about reorganisations that sometimes take place in companies? How often should they happen? Is it really necessary to reorganise companies? What for? Give reasons for your point of view.

? The text below is from a history of the personal computer industry by Robert X. Cringely, who is not convinced that the loose organisational structure of the Apple Computer Company and its regular reorganisations are a good idea.

? Read the text. Consult Vocabulary p. 143–144.

THE APPLE COMPUTER COMPANY

Somehow, early on, reorganisations – “reorgs” – became part of the Apple culture. They happen every three to six months and come from Apple's basic lack of understanding that people need stability in order to be able to work together.

The problem with reorgs is that they seem to happen overnight, and many times they are 5 handled by groups being demolished and people being told to go to Human Resources and find a new job at Apple. And so the sense is at Apple that if you don't like where you are, don't worry, because three to six months from now everything is going to be different. At the same time, though, the continual reorganizations mean that nobody has long-term responsibility for anything. Make a bad decision? Who cares! By the time the bad news arrives, you'll be gone and someone else will have to handle the problems.

If you do like your job at Apple, watch it, because unless you are in some backwater that no one cares about and is severely understaffed, your job may be gone in a second, and you may be 'on the street' with one or two months to find a job at Apple.