Wednesday, January 25, 2012

Nature of Organisations

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Organisations have to develop a strategic plan by creating a mission statement, establish their goals and business values, develop strategies to carry out their goals and values and then develop specific action plans to implement each of the strategies set. Finally these have to be communicated to all staff in order for them to be implemented.


The mission statement outlines the direction that an organisation intends to follow and briefly summarises the reasoning and values that lie behind it.

The purpose of a mission statement is to communicate to all stakeholders inside and outwith an organisation what the company stands for and where it is headed.

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In order to achieve the desired end results of a mission statement it is essential to set organisational goals. A goal is a future expectation. It is something that an organisation is striving to accomplish. To be effective goals have to be clearly communicated to and understood by all members of the organisation.

Primary goals are commonly held to be survival, profit and growth.

The secondary goal could be to improve the level of employee engagement by developing, retaining and recruiting the human talent necessary to achieve the desired results of their mission statement.


This represents a systematic attempt to influence the medium and long term future of an organisation by defining overall company objectives; by appraising those major factors within the company and the environment which will affect the achievement of the objectives; and by establishing sufficiently detailed action plans, which can be amended if necessary, and which will therefore help ensure that the overall objectives are achieved. In general the period of the plans will involve looking ahead between 5 to 10 years. Boards of directors and very senior specialist staff tend to carry out strategic planning.

Four Key Goals

Customer service excellence / Consumer Goals

In order to achieve customer service excellence an organisation must improve customer satisfaction ratings to 5% “Fully Satisfied” in each industry group.

Efficiency & effectiveness / Product & Service Goals

Segmented sales and service delivery

Review business processes to improve efficiency. Installation of new computer software, DBSi.

Employee engagement

Monthly divisional briefings

Training and development plans

More segment meetings

Less emails, more people contact

Ability to do the job

More resources

More team actions

Profitable growth

Revenue growth

Margin growth

Reducing costs


This represents a lower level of planning and might be termed intermediate range planning. Management plans tend to be thought of as more concerned with such matters as, determining the structure of the organisation, establishing functional and departmental objectives in accordance with the overall policies laid down by the board of directors, deciding product sales mixes, formulating financial budgets, planning staff requirements. Functional directors and senior managers are usually responsible for developing tactical goals.


This represents the lower level of planning and involves line managers down to supervisory and foreman level in the setting of specific tasks. Operational planning takes place within the context of management plans, the focus of operational plans is upon individual tasks, for example scheduling individual works orders through a production planning system.

An appraisal system where each year line managers and employees will meet on a one to one basis. It is during these meetings that each employee is given several objectives that they must meet in order to achieve their grade by the end of the year. It is by issuing these objectives to all employees that organisations will eventually achieve all of their organisational goals.

e.g. Myra Carragher’s objectives are:

Liase with customer service salesmen to produce top ten spend customers. Reports to be prepared on a monthly basis.

Liase with customer service salesmen to produce commodity reports, by customer. Reports to be prepared on a monthly basis.

Monitor call pick up in all departments to ensure customer satisfaction.


A stakeholder is any individual or group which can affect or is affected by an organisation’s activities, whether they are a local community who want to know that a factory will not be releasing harmful pollutants, consumers who want product information or investors who wish to see a company prosper.

An organisation’s objectives should take into account the interests of the various stakeholders. However, different stakeholders will have different and often conflicting objectives eg.

New technology may reduce costs, increase profits but could result in redundancies

Higher wages will lead to lower profits

It is up to senior management to decide how much these conflicts can be worked out and dealt with. This will involve placing greater emphasis on the objectives of each stakeholder group. How this is done will be dependent on three main factors.

The ownership of the organisation

Eg. In government run organisations where government ministers can overrule the decisions of their management (eg. To prevent redundancies)

The relative bargaining power of the stakeholder groups

The more powerful each group is, the more its objectives will have to be taken into account in decision making.

The climate of public opinion

Eg. Public attitudes against cigarette smoking.

Below are a few examples of stakeholders and their influence within an organisation.


Research has shown that satisfied customers are loyal customers and will continue to use a company for both service and the purchase of new products. It has also been found that a satisfied customer will tell 5 friends and colleagues and a dissatisfied customer will tell friends and colleagues. Good and bad news spreads and reputations are built on quality of service. Having a reputation for excellent service will bring and retain more customers for new and used sales, servicing and parts.

Organisations are judged by the quality of goods and services they provide and the cost of these goods and services. Organisations must make sure their goods and services are priced accordingly to enable them to be competitive in their marketplace. Excellent customer service is also something that organisations must concentrate on to ensure their existing customers continue to use their products and services.


Governments can do much to strengthen the business case for sustainable development. Weak governance can be a major problem, with issues such as unsuitable economic policies, corruption, general policy instability and inconsistent regulations. Overall, good governance, regulatory certainty and an appropriate mix of policy tools including clear and enforceable regulatory standards, economic instruments and voluntary initiative each have a key role to play in promoting the business case for sustainability.

Local government influence in a an organisation would include, Planning permission, rent-free facilities and financial assistance


Employees are a key group within organsitions Individually, they can enhance sustainability within Finning by bringing their personal convictions and experiences to bear, and contributing to change and innovation.

An employee is interested in two things, primarily; they want to be paid for their contribution to the organisation.

Secondly, they are looking for job satisfaction. In order to achieve both of these the employee must provide a good service to the organisations customers. Thus enabling the organisation to achieve much needed customer service excellence.


Positive or adverse media attention on an organisations products or services can in some cases make or break an organisation.

Consumer programmes on TV like BBC’s Watchdog with a wider and more direct audience can also have a very powerful and positive impact, forcing organisations to change their tactics.

In the UK the adverse publicity the Millennium Dome received had an impact on projected sales figures.

Wharfedale who entered the DVD market received many awards from industry magazines resulting in an increased demand for this product and most importantly an increased awareness of the Wharfedale brand.


In order for an organisation to be competitive in its market it has to offer its customers high quality goods and services and as low a cost as possible. Increase in raw material prices will have a knock on affect on the marketing mix strategy of an organisation. Prices may be forced up as a result. Closer supplier relationship is one way of ensuring competitive and quality products for an organisation.

Suppliers judge an organisation on their promptness of payments. If organisations were unreliable in paying their suppliers then they would stop supplying them with the goods and services that are needed to ensure their business is run smoothly and efficiently. This in turn would have an adverse affect on how an organisations customers viewed them, as being unreliable and unable to meet delivery dates and deadlines for products and services purchased.


Competitors are also a valuable stakeholder in any organisation. What benefit can an organisation offer which is better than their competitors? Can they sustain this differentiation over a period of time from their competitors? Competitor analysis and monitoring is crucial if an organisation is to maintain its position within the market.

Organisations must keep up to speed with what their competitors are doing if they let the competitors get ahead of them in production and marketing of construction equipment then they will lose customers to the competitors. The customers will want to have the most up to date technology and machine specifications.


There are many variables that operate within an organisations environment that have a direct or indirect influence on their strategy. A successful organisation is one which understand and can anticipate and take advantage of changes within their environment.

The external environment of an organisation can be analysed by conducting a P.E.S.T. analysis. This is a simple analysis of an organisation, Political, Economical, Social and Technological environment.


Political factors can have a direct impact on the way an organisation operates. Decisions made by government affect, our every day lives and can come in form of policy or legislation. The government’s introduction of a statuary minimum wage affects all organisations, as do consumer and health & safety laws and so on.

The political decision as to whether the UK signs up to the Single European Currency is again having an impact on UK organisations. Firms like Nissan who have recently invested in the UK have signaled that they will withdraw their business from the UK if the government fails to sign up.

The increase in petrol prices is having an impact on many organisations, including Finning (UK) Ltd. Over the past 5 years the average UK motorists annual tax bill has increased by £100, purely as a result of increasing fuel taxes. Manufacturing industry in Aberdeen and the North East of Scotland is struggling to cope with transport costs. Recent business failures are, according to some observers, clear indications of the damaging effect of punitive road taxes.


All organisations are affected by economic factors nationally and globally. Interest rate policy and fiscal policy will have to be set accordingly. Within the UK the climate of the economy dictates how the consumer may behave within society. Whether an economy boom, recession or recovery will also affect consumer confidence and behaviour.

An economy which is booming, is characterised by certain variables. Unemployment is low, job confidence is high, because of this confidence spending by consumers is also high. This has an impact on most organisations. Organisations have to be able to keep up with the increased demand if they are to increase turnover. An economy that is in a recession is characterised by high unemployment, and low confidence. Because of high unemployment spending is low, confidence about job security is also low. Organisations face a tough time, consumers will not spend because of low disposable income. Many organisations start cutting back on costs i.e. labour, introduce shorter weeks and cut back on advertising to save money.

Economies globally also have an impact on UK organisations, cheaper labour abroad affects the competitiveness of UK products nationally and globally. An increase in interest rates in the USA will affect the share price of UK stocks or adverse weather conditions in India may affect the price of tea.

In the early 1990’s when the UK economy was in a slump, and organisations were folding repeatedly, a security company called ‘Dreadlock Security’ to combat falling sales embarked on strategy of cutting back on labour costs, and doubling advertising expenditure. The organisation’s theory was that not their entire target segment was affected by the recession and they had to fight for the customers that still had the income to spend on security products.

Another example of economic impact on organisations is within the food industry. Things such as genetically modified foods, BSE and E Coli among a number of issues creating public controversies. As a result in media attention given to these problems, consumers have become very aware of perceived and potential dangers from breaches of food safety and security. These same consumers are highly dubious of claims by manufacturers and retailers that all is well and that appropriate safeguards have been implemented.


Within society forces such as family, friends, media affect our attitude, interest and opinions. These forces shape who we are as people and the way we behave and what we ultimately purchase. For example within the UK peoples attitudes are changing towards their diet and health. As a result the UK is seeing an increase in the number of people joining fitness clubs and a massive growth for the demand of organic food. On the other end of the spectrum the UK is worried about the lack of exercise its youngsters are obtaining. These ‘fast food games console’ children are more likely to experience health problems in their future because of the lifestyle they are living now.

Population changes also have a direct impact on all organisations. Changes in the structure of a population affects the supply and demand of goods and services within an economy. With population changes comes the increased demand for more houses and business premises, This means that there is more of a demand for building & construction equipment from organisations and their competitors.

As society changes, as behaviours change organisations must be able to offer products and services that aim to complement and benefit peoples lifestyle and behaviour.

In Japan the fall in birth rate has a major impact on the sales of toys, as demand falls competition for the remaining market becomes very intense. If this trend continues it will have an impact on other sectors within the future affecting teen products, 0’s products and so on.


Changes in technology are changing the way organisations operate. The Internet is having a profound impact on the marketing mix strategy of organisations. Consumers can now shop 4 hours a day comfortably from their homes. The challenge these organisations face is to ensure that they can deliver their promises. Those organisations, which are slow to react, will fall at the first few hurdles. This technological revolution means a faster exchange of information beneficial for organisations as they can react quickly to changes within their operating environment.

There is renewed interest by many governments to encourage investment in research and development and develop technology that will give their country the competitive edge. The pace of technological change is so fast that in the computer industry the average life of a computer chip is approximately 6 months. In the name of progression technology will continue to evolve. Organisations that continue to ignore this will face extinction.


Organisations are normally divided into sections or functions according to their products or service. Each section or function is of vital importance to an organisation as a whole, each contributing to the more efficient buying, selling or other purpose for which the organisation exists and all merging together as a team to achieve the organisations objectives.


The functions of the Sales Department includes

Forecasting and planning of Sales each quarter and for the year

Informing existing customers and potential customers of products and deals available. Ways of achieving this would be monthly mailshots to said customers, by salesmen visiting or telephoning or by using telesales staff to promote special offers.

Producing tenders, quotes and correspondence relating to sales of equipment

Arranging and ensuring delivery of machinery on time, and in perfect condition.


The functions of the Parts Department within includes

To provide customers with a second to none parts service

Enable parts ordering through local branches by telephone, fax and walk-in

Ensure % parts availability within 4 hours

Arrange delivery and transportation of goods to customers

Provide customer satisfaction at all times


The function of the Service Department includes

Arrange timetables and priorities of workload

Allocation of work to engineers

Designing and allocating tooling to engineers as required

Focus on quality and getting the job diagnosed & completed properly first time.

Keep the customer involved and informed of progress

Ensure all engineers are fully trained and work within the health & safety regulations

Compile estimates for work to be carried out

Checking work in progress and preparing reports as required

Raise invoices for completed jobs

Ensure customer satisfaction at all times

However, the company as a whole has various other departments. These consist of


The human resources department is responsible for

Development and implementation of HR strategies

Recruitment and selection of staff

Advertisements, Interviews

Handle discipline and grievance procedures

Develop and produce employee policies and procedures

Conduct annual wage negotiations

Develop training and development strategy for all employees

Processing of payroll

Updating employee records

Deal with health & safety issues


The marketing department is not only responsible for marketing but it is also responsible for the research and development for the company. Their responsibilities are:

Have up to date intelligence on UK pricing and marketing activity

Communicate market changes, facilitating all sales opportunities whilst minimising competitive threats

Collate forecasts and sales performance information providing internal and external sales performance reports

Market Research

Organise equipment exhibitions and co-ordinate any customer or visitor events

Analyse and measurement of external market indicators, including performance against the industry and review of external market conditions

Analyse and measurement of sales against targets, lost sales / competitive data

Distribute and co-ordinate media information to the UK press

Organise customer visits to sites throughout the world.

Ensure all literature and mailshots are sent to customers


The purchasing department is responsible for:

Procuring and making available all necessary materials, parts, machinery, stationery, vehicles, furniture equipment and services that the other functional areas of the organisation may need

The key requirement is that the right supplies of the right quality are acquired at the right time at the right price


The finance department is responsible for:

Raising, allocating and controlling the finances of the organisation in terms of specified return on investment, liquidity and solvency objectives

Providing the taxation authorities with required information

Determine the type and quantity of assets needed by the organisation

Determine the appropriate financial structure for the organisation in terms of share capital and debt capital

Determine how profits should be distributed


Business Organisations The external environment

Management & Organisational Behaviour Laurie Mullins

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