Last Updated 27 Jul 2020

Product organisation

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As in product organisation, the geographically based organisation tends to produce decentralised activities, which may cause additional control problems for the senior management. Hence it is usual with such structures to find groups of senior functional managers at headquarters in order to provide direction and guidance to line managers in the regions or product groups. Finning (UK) Ltd. operates this type of structure also.

They have their main UK organisation as well as organisations based in Canada and Chile. As well as this they also have this system in operation within the UK. The head office based in Staffordshire, but they also have 19 other branches throughout the UK. This enables them to cater to a wider customer base and claim more of a market share within their industry sector. Below is an example of Finning (UK) Ltd. International geographical structure.


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A project team may be set up as a separate unit on a temporary basis for the attainment of a particular task. When this task is completed the project team is disbanded or members of the unit are reassigned to a new task. Project teams may be used for people working together on a common task or to co-ordinate work on a specific project such as the design and development, production and testing of a new product; or the design and implementation of a new system or procedure. For example, project teams have been used in many military systems, aeronautics and space programmes. A project team is more likely to be effective when it has clear objectives, a well defined task, a definite end result to be achieved, and the composition of the team is chosen with care.

One such team is ongoing at the moment within Finning (UK) Ltd. A project team (DBSi team) has been set up to enable Finning (UK) Ltd., Finning (Canada) and Finning (Chile S.A.) to standardise their computer database system for the Construction and Materials Handling divisions. This will ensure all Finning dealer operations are working together to ensure that the service they provide to their customers is the same no matter where they are located in the world.


Matrix structures are organisational forms which have come about as a result of co-ordination problems in highly complex industries such as aircraft manufacture, where functional and product types of structure have not been able to meet organisational demands for a variety of key activities and relationships arising from the required work processes. A matrix structure usually combines a functional form of structure with a project-based structure.

For example, in a two year project to produce a modified version of a standard aircraft, one project manager will co-ordinate, and be held accountable for, the work to be undertaken by the project team, and he will be the person who deals on a regular basis with the client. However, in addition to reporting to his own senior line manager on progress with the project as a whole, he will also report on specialist matters, such as design issues, to one or more functional managers, depending on the complexity of the project. The functional managers provide technical expertise and organisational stability. The project manager provides the driving force and the day-to-day control required to steer the project through during its relatively temporary lifetime.

The main feature of a matrix structure is that it combines lateral with vertical lines of communication and authority. This has the important advantage of combining the relative stability and efficiency of a hierarchical structure with the flexibility and informality of an organic form of structure. A matrix form focuses on the requirements of the project group, which is in direct contact with the client. It helps to clarify who is responsible for the success of the project.

It encourages functional managers to understand their contributive role of the purely functional form, i.e. individual empire building by the functional heads. However, like all organisational form, matrix structures do have their disadvantages. Many managers are reluctant to delegate because they don't know how to do so or they feel threatened by a subordinate who performs well. Organisations need to help managers decide how much responsibility to delegate and to overcome the threat of being overshadowed.

Decisions about how to distribute authority throughout an organisation result in decentralisation or centralisation. Decentralisation is the systematic delegation and responsibility to middle and lower levels of an organisation. Centralisation is the systematic retention of power and responsibility at higher levels of an organisation. Decentralisation and centralisation are the opposite ends of a continuum. Most firms are relatively more decentralised or relatively more centralised. Centralisation generally allows top managers to exercise control over the organisation, however, it also slows decision making and constrains innovation.

Decentralisation distributes control more evenly throughout the organisation. It also tends to speed decision making and make the organisation more flexible and responsive. However, decentralisation allows more opportunities for errors in decision making. The decision to decentralise or centralise is influenced by the organisation's environment, size and economic performance.

Delegation is essentially a power-sharing process in which individual managers transfer part of their legitimate authority to subordinates / team leaders, but without passing on their own ultimate responsibility for the completion of the overall task which has been entrusted to them by their own superiors.Functional relationships apply to the relationships between people in specialist or advisory positions, and line managers and their subordinates. The specialist offers a common service throughout all departments of the organisation, but has no direct authority over those who make use of the service. There is only an indirect relationship.

For example, the personnel manager within Finning (UK) Ltd. has no authority over staff in other departments; this is the responsibility of the line manager. But as top management would have sanctioned the position and role of the personnel manager other staff might be expected to accept the advice that is given. The personnel manager, however, could be assigned some direct, executive authority for certain specified responsibilities such as, health and safety matters throughout the whole organisation. However, specialists in a functional relationship with other managers still have a line relationship with both their own superior and their own departmental subordinate staff. Another example of this relationship within Finning (UK) Ltd. would be the Regional Manager who has a functional relationship with the Customer Services Manager, whilst he also has a line relationship with the Sales Representatives.


This type of relationship exists where authority is representative and responsibility advisory. Employees in a staff position have no direct authority in their own right, but act as an extension of their superior and exercise only 'representative' authority. An example of this kind of relationship within Finning (UK) Ltd. would be between the branch administrator and the regional manager. There is no direct relationship between the branch administrator and other members of staff except where delegated authority and responsibility has been given for some specific task. However, the branch administrator often has some influence over other members of staff, especially those in the same department or grouping.

This may be partially because of the close relationship between the branch administrator and the regional manager, and partially dependant upon the knowledge and experience of the administrator and the strength of the administrators own personality. In this respect the branch administrator exercises the regional managers authority. Having no personal authority she cannot take decisions herself, although she does have a duty to advise the manager on all aspects of the business and to offer her own recommendations.

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