Organizational Structure: Heytsbury Holdings Ltd
Individual assessment 1
(Understanding contemporary organisational structures and design)
Business models are required for creating the value of a new concept. Besides, the models also help an organisation to understand the way of earning revenue for the company. The business models assist the company to deliver its product or services effectively.
On the other hand, a company must ncorporate proper organisational structure to utilise its human resource efficiently. The regulatory structure helps to segregate the responsibilities among the employees. Regarding the concept, the Australian multinational retail company Heytsbury Holdings Ltd has been selected. The company is a retail firm, and it has also integrated the franchising business model. The objective of Heytsbury Holdings Ltd is to expand its franchising model overseas and to increase the number of their directly owned stores across Australia. To meet the purposes of the company, the organisational structure will be discussed. The franchise management theory will also be presented about the company.
The main difference between buying a franchise and purchasing an independent business is the formula lies in both the models. Franchise formula a processor instead say franchise formula is the proven method to operate and market every single sector of business like cupcake shops to fast food restaurant to educational systems as it covers almost every unique business idea. From starting the company to maintain and manage it correctly, a franchise business model should be treated just like a separate business start-up. Following this formula as strategy, Heytsbury Holdings Limited has built specialists team to divide all the related responsibilities and creates a stronghold in the local market over the last few years. Heytsbury Holdings Limited is an Australian based public company who deals with retail, property portfolio management and integrated franchising. The company is running their business in all of the states in Australia, and now they are thinking of expanding the industry with some common but important factors in consideration. As they are trying to – Extend their franchise business model to some overseas operations and increase their domestic retail business all over the country.
Since Heytsbury Holdings Ltd is a retail company and it wants to expand its business within the country to target more customers, diversification and flexibility are very important for the company (Johansen et al., 2015). To achieve diversification and flexibility in the organisational structure, Heytsbury Holdings Ltd must incorporate Hybrid Organisation Structure.
Picture: The Hybrid Structure Model
Source: As created by the author
The Hybrid Structure is a combination of both divisional as well as the functional structure of a company (Giacomini & Mancini, 2015). Hybrid Structure helps the company to divide its operations into various departments. The departments can either be divisional, or those can be functional. If Heytsbury Holdings Ltd incorporates this structure, the company will be able to utilise its resources effectively. Besides, the knowledge of its employees can also improve the functionality of each of the departments including human support, sales, marketing, production, accounting etc. The company will also be able to maintain the specialisation of products in its different departments. Apart from that, Heytsbury Holdings Ltd can prevent the repetition of functions as all the departments will be integrated with each other. Thus, the company will not only save time that has been wasted for performing the same operation over and over again, but it can also increase its productivity by manifold.
The buying franchise business model can be the quick and easy way to start a business from scratch. But, like any other business models, franchise business also has its advantages and drawbacks to look over from the very first phase. Some of the positions like franchise come up with significant network benefits with all the independence to the small business owners as well as the middle to prominent business entrepreneurs. The start up company no needs any prior experience in franchising. It will provide the required detailed training. Other than a start-up, a franchise has the higher rate of success. The company will face the least expanse to start the self-owned business than buying a franchise. The company purchasing the franchise will have all the power in its territory; it means no competition for the same product in the same area.
Franchise management structure:
As it is known, the franchise system allows a company to use the trademark and the trade name of an existing business established by another owner (Mishra, Mishra & Grubb, 2015). To expand its franchising model to the overseas operations, Heytsbury Holdings Ltd will need to incorporate management franchise structure. As per this structure, the franchisor is provided with management expertise or business procedure by the franchise. However, the trademark of the franchisor is retained by the franchise. The model is as follows:
Picture: Management Franchise Model
Source: As created by the author
The franchisor: As a franchisor is Heytsbury Holdings Ltd head of the trademark of the organisation. Therefore, the franchise pyramid's highest position is owned by the franchisor. Although the franchisor does not have enough control over the franchise as per the management franchise structure, the decision-making authority is still owned by the person (Nijmeijer, Fabbricotti & Huijsman, 2014).
The executive: A few executives are appointed by Heytsbury Holdings Ltd to help it to perform the duties. The executive board takes decisions that are followed by the franchisees. The committee consists of a board of directors, a CEO, a President and a CFO.
The regional manager: The local managers are responsible for managing the franchise network by supervising the franchisee within their designated area.
The franchise: Franchisee is the party that uses the trademark of the franchisor in exchange of an amount. Although the franchise heads the franchise unit, he/she may have to implement procedures that the franchisor asks to.
The manager: The number of managers depends on the size of the company. The managers look after the finance, advertising, promotion etc.
The just-in-time approach allows a company to manage its supply chain management by controlling the inventory (Lai & Cheng, 2016). The primary aim of this strategy is to inventory prepared to meet the demand just in time. Therefore, the business organisations must ensure that the stock is always maintained properly so that no product remains out of stock. As Heytsbury Holdings Ltd is a retailing company that fulfils the requirements of the customers regularly, the just-in-time approach is ideal for the company. The proposal will help to manage the inventory of the retailer effectively. The complicated procedure of inventory information and control will become much easier. Besides, it will also help Heytsbury Holdings Ltd to identify the accurate inventory management system required for the company. Just-in-roach does not reduce the cost of managing inventory, but it also helps to avoid overstocking of products. Therefore, the company can thwart the production errors and ensure the growth of its business.
Herzberg’s Two Factor Theory:
As Heytsbury Holdings Ltd is targeting to expand its business within Australia, the company will have to hire more employees. To get the best performance from the employees, the company must apply Herzberg's Two Factor Theory of employee motivation. According to Herzberg, there are two factors namely motivators and hygiene factors that can motivate employees.
The hygiene factors ensure that the employees are not dissatisfied with the workplace (Alshmemri, Shahwan-Akl & Maude, 2017). The factors that Heytsbury Holdings Ltd should consider are:
- Payment: The payment should be as per the industry value, and it should be timely.
- Company policies: The company should be fair to the employees. It should offer flexible work timing, break times etc.
- Fringe benefits: Heytsbury Holdings Ltd should offer employee benefit plans.
- Working condition: The workplace should be hygienic, safe and clean.
- Status: The employees should have some designations.
- Interpersonal relationship: The relationship between the employees and the management should be healthy.
The motivational factors create satisfaction among the employees, and thus, these are also important for the company (Alston, 2017).
- Recognition: The employees should be praised for their achievements.
- The sense of accomplishment: The job must offer a sense of accomplishment for the employees.
- Promotions: Heytsbury Holdings Ltd must ensure that employees get the opportunities to be promoted.
- Responsibility: Each employee should have own responsibility within the organisation.
- Interesting work: The work must have meaningfulness for the employees.
The implementation of these two factors will make sure that Heytsbury Holdings Ltd will be able to retain employees.
A franchise does not guarantee the success and cannot apply to all principles of business management. Buying a franchise is just a formal agreement with the franchisor to entering the business. The contracts already mention the limitations and some basic principles. So, there are little options to run by the company's own rule. If one franchise cannot perform well, it may affect other franchises. The company must share the profit with the franchisor. The franchise is inflexible. Thus, the company has no or little chance to introduce changes, and that can be an obstacle to business growth.
Expanding and growing an already established business overseas is not an easy task. It requires proper planning, strategies, manpower, knowledge, experience and moreover the nerve to make a place in the global market. The master franchise is the advanced and proven version to introduce the domestic franchise to the world. As the company now decided to spread the business internationally, now they have to register the trademark in the speculated country. Here the considered state is Ireland as the European Union market. After going through all the options, advantages and drawbacks, Heytsbury Holdings Limited has decided to use Master franchise strategies. For international markets, the master franchise system helps to use the domestic assets of a franchise system with the collaboration of companies who are running successfully already in the global franchising industry. By this process, foreign companies with international franchise experience in same countries will help to take the first step in the unfamiliar situations. With this process, Heytsbury will have the option to maintain its domestic business along with the new start-up. In a Parallel way, they will grow in both the international and domestic markets. Heytsbury should engage with an international business consultant to find the right partners to link up with and the target market and potential customers for their product to launch successfully. As per these considerations, Ireland as the European market should be the best option for so many reasons. Like, for the franchise business, there are no such regulations and restrictions to grant master franchises for a foreign entity. Irish market is now gaining popularity in international interests. Existing franchises get increased sales already. Overall turnover has improved, and least labour cost. The age level is younger so productivity will be higher.
It can be seen from the above study that Heytsbury Holdings Ltd can penetrate the larger market through the implementation of the hybrid organisational strategy. The company must also utilise the franchise management model as it wants to expand its franchise model in the overseas countries. To retain employment and ensure employee satisfaction, Heytsbury Holdings Ltd must use the Two Factor Theory of Herzberg. It should also implement the just-in-time approach to control its inventory effectively. The successful market penetration and expansion of the existing business can be possible if the company can manage its employees and make the departments work effectively with the help of responsible employees.