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The shape and structure of the finance function - Coggle Diagram
The shape and structure of the finance function
Mintzberg five components of organisations
Middle line
- middle management
Technostructure
- designing procedures
Operating core
- basic work
Support staff
- administrative support
Strategic apex
- top management
Ideology
organisation's value and beliefs
Types of structure
Functional structure
grouping employees undertaken similar activities
Divisional structure
spliting organisations into several divisions, either product based or location
Entrepreneurial structure
is built around owner manager
Matrix structure
being the combination of functional and divisional structure
centralised or decentralised
centralised
upper levels of an organisation's hierarchy retain authority to make decisions
decentralised
authority to make decisions is passed to units and people at lower levels
factors that determine decentralisation
size of the organisation
geographical spread
Management style
Tall or flat
Tall
many managerial levels
narrow span of control
Flat
few managerial levels
wide span of control
Finance function transforms by
Advising
Applying
characteristics of the finance function
Accounting info is trusted and credible
provides a framework for performance management
An end to end view of the organisation
brings professional evidence
Evolution of the finance function
Hierarchical
segregated
digital age
the evolution has resulted in a diamond shape structure split into 4 levels
Strategic business partnering
Digital centres of excellence
senior finance team
lead the finance team to achieve the desired organisational impact
Smart finance
factories
reasons for change
technology
finance function capability
changing mandate
features of the finance function
offshoring
relocation of corporate activities to a foreign country
shared service centre
a centralised function, serving a large multinational organisation
outsourcing
contracting out aspects of the work previously done in-house to specialist providers
however may lead to loss of competitive advantage
Cox's type of competences: Core, complementary and residual
for non-core activities
Quinn and Hilmer
3 tests to identify whether a activity should be outsourced
strategic risk and a need for flexibility
Transaction cost
cost of having a business activity performed by a third party
Bargaining cost
Policing & enforcement costs
search and information cost
Williamson theory
to make or buy
frequency
Asset specificity
uncertainty
potential for competitive advantage
3 Tests to identify core competencies
does it make substantial contribution to the business
Is it difficult for a competitor to copy
does it allow entry into a number of markets
service level agreements
A negotiated agreement between customer and supplier about the level of service that will be provided
It must include
targets
response time
detailed explanation of the service offered
dealing with complaints