Page 37 - E1 Integrated Workbook STUDENT 2018

Organisational structure

6.5 Shared service approach

 Instead of a service (such as IT) being found in several parts
of the organisation, it is centralised into one part of the
organisation.

 The service is run as a separate business, charging the rest of
the business for use of the service.

Advantages Disadvantages

 Improved quality of service  Potential cost savings may be
provider. over-estimated.
 Improved consistency of  Not suitable for all
service. organisations, e.g. diverse
organisations.
 Cost savings due to greater
efficiency and reduced
duplication.

6.6 Alliances

A business may enter into various types of alliance with other
businesses.

Involves forming a separate business entity,

Joint venture the shares of which are owned by two or
more business entities.

Strategic Similar to a joint venture but a separate legal
alliance entity is not formed.

The purchase of a right to exploit a business
Franchising brand in return for a capital sum and a share

of profits or turnover.

The right to exploit an invention or resources
Licensing
in return for a share of the proceeds.

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