Organisational Structure

Part 4: Organising

Every organisation should have its own organisational structure so as to manage efficiently. Organisational structure is a stratified arrangement of the authority lines, communications, rights and duties of an organisation. It is a pictorial signification of a company’s structure which shows clearly the relations between people and organisation (Siddiqui, 2015).  Besides, organisational structure defines how the roles, power, and responsibilities are allocated, controlled, and organised; how instruction flows between the different levels of management. The organisational structure is developed to establish how an organisation works and helps an organisation in achieving its goals to offer for future growth (Lucy, n.d.). In this case, a company without a good organisational structure it may cause communication breakdown, low productivity even business losses (Ray, n.d.). Therefore, a good organisational structure can let communication becomes easier, the company have an improved operational efficiency and it makes decision making easier (McGunagle, 2012). According to the question, we select Revlon as an example of a company that used functional structure and Toyota as an example of a company that used product structure.

The functional structure is used to departmentalise an organisation into specialised functional units, such as research and development, human resource, marketing, finance, sales etc (Devaney, 2014). The specialised smaller units are responsible for reporting to the top management, which is known as CEO of the company (Griffin, n.d.). Revlon is an American cosmetics, skincare, fragrance, beauty tools and personal care company founded in 1932 (Worldwide Company Profile, n.d.). The specialised functional units of Revlon included finance, operations, marketing, legal and compliance, human resource and logistics (Appendix 2) (The Official Board, n.d.). It is important for the company to discover suitable ways to cut their products cost down and enhance the products and the customer services to keep ahead of the competition because the market nowadays is extremely competitive (“The use of functional”, n.d.). So, in order to compete with other company, Revlon applied functional organisational structure. The functional structure enables Revlon for a higher level of specialisation for the staff so that the organisation growth is measurable and scalable (Devaney, 2014). In addition, there will be a greater operational command at a top management with clear roles and tasks by using the functional structure (Devaney, 2014). The functional structure is suitable for Revlon because Revlon is a company that produces standardised products and services at large amounts and low prices (‘The use of functional’, n.d.). The operational efficiency of Revlon has improved because the company's employees became specialised at their tasks. However, this has led employees to focus more on their own unit goals, narrow their scope of responsibility and reduce their motivation (Griffin, n.d.). Revlon has 5600 employees and its yearly gross profit was 1.25 billion USD in 2015 (Macroaxis, n.d.; Amigobulls, n.d.). This structure helps Revlon to ensure profitable growth by focusing on areas where additional efforts are required to be competitive enough in the marketplace (Griffin, n.d.). By using the best-suited structure on the company's management, Revlon has developed a long-established reputation as a trend leader in the world of cosmetics, skincare, fragrance, beauty tools and personal care since 1932 (‘Revlon Fact Sheet’, n.d.). Thus, functional structure is appropriate for Revlon.

Product organisational structure is used to divide organisation by product type (Suttle, 2016). Ones of the companies have a product structure is Toyota. At first, Toyota was using functional structure but it has changed to product structure in order to integrate the working processes on a company-wide basis in March of 2016 (‘Toyota to revamp’, 2016). Therefore, Toyota has created three new product business units: compact cars, midsize cars and commercial vehicles (Appendix 3) (Greimel, 2016). At the same time, Toyota also remains a special division which is premium Lexus division as a global premium brand (Mahlich, 2016). After the organisational structure of Toyota has changed, every employee has been broadly trained to focus on each product lines in order to support the development of each product (Gregory, 2015). In addition, employees will take their own responsibilities clearly and maximise their own strengths as power as possible to achieve their goals (‘Basic Philosophy’, 2016). The decision-makings which are related to each product lines will be more quickly and independently too (‘Toyota overhauls’, 2016). As a result, the performance of each product will be obviously improved. To the contrary, Toyota has hired 2239 new employees in April 2016 and this number is significantly increased which compared to 1504 in 2015 (‘TMC hold’, 2016). This shows that product structure has duplicated the human resources at the same time. The employees which are from different product lines will easy cause conflict because of poor exchange of information and coordination across different products (Scott, 2014). According to the time, Toyota has a greater degree of flexibility by having the product structure to provide and ensure high-quality products. Toyota is also more capable in the market compared to the other companies (Gregory, 2016). With this new structure, Toyota will manage to achieve the sales and production targets of 2016 which are largely increased in sales and production compared with 2015. The Toyota automakers also predict to produce 10.19 million units globally to mainly support the output of overseas (‘Toyota to revamp’, 2016). Therefore, product structure is actually appropriate for Toyota.