Organizational Structure Design

 

ORGANIZATION BACKGROUND

In the cosmetics company where I am employed, it has a range of products such as makeup, skincare, fragrances. The goal of the company is to create the future of beauty together. The company’s objectives are to increase competitiveness, reduce costs and improve customer support.

The cosmetics industry plays a significant role in personal care and self-expression. That is why the industry continues to grow and become more popular. It is highly competitive with both established and emerging brands competing for the market share.

 

Our business is subject to various trends and changes such as evolving consumer preferences, technological advancements, and sustainability concerns. Therefore, we strive hard to innovate and offer new products that cater various consumer demands.

 

We also face challenges in respect of the regulatory requirements, product safety, and ethical issues related to animal testing and environmental impact. To cope with these challenges, we now focus more on sustainability, transparency, and ethical production.

EXTERNAL ENVIRONMENT ANALYSIS

Political

Product safety is one of the main concerns in the cosmetic industry. The company needs to report the products ingredients and is required to be registered manufacturer. Personal Care Product Safety Act allows the Food and Drug Administration (“FDA”) to have a more hands-on approach to ensure product safety.

Moreover, our company imports ingredients and sells them in other countries. All of our products have to follow the political and legal requirements of the local country. For example, Europe and Canada have stricter ingredient requirements. If the product contains any of the banned ingredients, they will not be allowed across the border.

Economic

The cosmetic industry is highly resistant to the economic recession compared to other industries. It survived the 2008 Great Recession. Not only women but more men are taking good care of their skin and paying more attention to their appearances nowadays. People are spending more on skincare and cosmetics even though they became more sensitive to prices. Therefore, we need a very good pricing strategy when we enter the market. We do not want to scare away the customers but at the same time, we want to make a good profit.

Social

Our company tries to carefully perform Corporate Social Responsibility (“CSR”) like many other cosmetics companies. Customers nowadays are more conscious about what the trends are and what they use. Skincare and makeup are like their second skin, so customers have concerns about the source of ingredients and how the products are made etc.  For example, our company’s products are cruelty free. We marketed ourselves as one that does not do product test on animals. Social is currently one of the areas having the biggest impacts on the company.

Technological

Like many other cosmetics companies, our company is investing more in virtual technology for providing consumers with aesthetic products. Advanced technology not only helps boost the business, but it also helps identify our brand image for positioning ourselves in the cosmetics market. We use various online tutorials, contents and influencers to attract more customers. The influencers have greatly helped boost our products by word-of-mouth through different social media platforms. The videos and photos with our products are shared by many customers around the world.  Technology is currently another area having the biggest impacts on the company.

Environmental

One of our goals is to create sustainable and environmentally friendly business. We try hard to develop and implement various measures for reducing greenhouse gas emissions and the use of water at the manufacturing factory.  We also focus more and try to go green. Our packaging is becoming more eco-friendly for the benefit of the environment.

Legal

The Federal Food, Drug and Cosmetic Act (FD&C) and the Fair Packaging and Labeling Act (FPLA) are the important laws for the cosmetic industry. The FD&C monitors ingredients based on their use and ensures there is no misleading information stated on the products. If there are issues, the product may not reach shelves and may even require a recall. Therefore, our company needs to stay update on any changes in laws and regulations and ensure they are all complied with. Legal is also another area having the biggest impacts on the company.

INTERNAL ENVIRONMENT ANALYSIS

Goal

The goal of the company is to create the future of beauty together. The company’s objectives are to increase competitiveness, reduce costs and improve customer support.

Strength

• We know our target audience and competitors: We know precise who we target and what the demand exists in the market and what is expected to fulfill the demand so we can formulate strategies to cater to the market demand and achieve objectives. We also pay attention to the movements of competitors and try to differentiate ourselves from them.
• Research and development: We work on research and development and resource capital to forecast the future market demand, changes in the market, and customer expectations.
• Social Media: We are aware of the future developments and conduct various campaigns through various social media like Instagram, Facebook, Twitter and YouTube.
• Product quality: We have seriously checked for quality and consistency to maintain quality standards.
• Availability: Our products are available in retail and online worldwide. The online system is available for purchase 24/7.
• Employees: Our employees are primarily makeup artists or professionals who have had connection and experience in the industry.

Weakness

• Limited product category: We could have expanded our product lines to bath and shower-based products which could have generated more revenue.
• Pricing: Our products are priced at a premium and target audience from a higher income group can afford to make a purchase. Our company can be afforded only a select audience so there is a limit to sales and affecting the profits.
• Inability to adapt to new demands: We face challenges to adapt to changing market demands. We are in a very competitive industry, the inability to match up to changing demands can easily affect our market position and image.

Organizational tasks

Organizational tasks also have the biggest impact on our organizational structure.

1. Industry analysis

We need to do research to understand the market we are operating in e.g. key competitors, key suppliers, growth forecast, market size, beauty trends. Through the market research, we try to improve our marketing strategy accordingly.

2. Customer analysis

We need to detail the different customer segments e.g. individuals, families, and corporations we serve in our business plan.  They have a great impact on our operation. For example, individuals would respond to different marketing promotions than corporations. We must clearly recognize the demographic, psychographic, geographic and behavioristics of our customers so to fulfill their demands.

3. Competitive analysis

We need to identify the indirect and direct competitors. We need to find out what customers the competitors serve, their charges, their customer service, their strength and weakness etc. All of this information is important for our strategic plan.

4. Marketing plan

We need to work on a marketing plan including Product, Price, Place, and Promotion.

Product: We detail the specific products or services we are offering like makeup and skincare products to specific skin types or in accordance to customer’s preference, or esthetician services.

Price: We document our price and compare to competitors.

Place: We document the places to sell and analysis their impact on our business.

Promotion: We document the favorite promotion from customers’ perspective and try to drive potential customers to purchase from our brand. We put efforts to make good use of social media to increase engagement, boost sales and improve the SEO on website so to increase reach and conversions.

5. Operational plan

We need an operational plan to support the business plan. For example, a plan that includes daily tasks: answering inquiries, arranging supplies, stocking shelves, greeting customers, collecting payments etc.

6. Financial plan

We need to work on 5- and 10-years financial plan, and we have financial statement broken out both monthly and quarterly. The financial statements include income statement, balance sheet, and cash flow statements with information such as cost of equipment and supplies, materials, R&D, payroll, insurance, taxes, permits and license expenses etc. The financial statements provide guidance to achieve the company’s goals, mission and vision.

Job characteristics

Our business requires a strong management team to lead in order to survive the competitive market. The management team requires solid skills and experience in the cosmetic industry. Same for the team members. They must have direct experience in managing cosmetic businesses so to achieve company goals and objectives.

Skill variety: IT department (e.g. they require to have solid skills in technology in order to support various departments and frontline sales).

Task identity: Managers in various departments (e.g. they receive information/data from the Assistant and compile a report to the boss with advice and analysis. They are responsible for completing the work).

Task significance: Marketing and Operation Departments (e.g. their work affects the customers directly. The work of Marketing team like their promotion strategy, customer services is affecting the sales. The work of Operation team like the management of supply chain is affecting the product supply to customers).

Autonomy: Directors in various departments (e.g. they are the ones who provide instructions to their teams for execution).

Feedback: Marketing department (e.g. they need to obtain feedbacks from customers and evaluate the effectiveness of their marketing strategy).

Growth cycle

1. Creativity: Marketing department to focus work on the R&D to create new products that fit the needs of the target audience.
2. Direction:  Create functional organizational structure so that each employee is clear about whom they should contact to obtain information or report to. This is a formal communication created amongst employees.
3. Delegation: Various departments (Legal, IT, Marketing, Finance, HR & Admin, Operation) are created, and the creation of each department is to decentralize the organizational structure with delegation. Each has it led by a Director who is given the authority to provide instructions to their team, develop plans and make decisions which are consistent with the business plans, the company’s goals, mission and vision.
4. Coordination: Each department share their views and provide professional advice on their own area with other departments. They are responsible for coordinating product groups like Marketing and Operation teams to see how they can support (e.g. product launch, product distribution etc). All department will then establish formal planning procedures.  
5. Collaboration: Each department from the top down (Director, Manager, Assistant) must collaborate well internally and work with other departments to create better structure.

ORGANIZATIONAL STRUCTURE DESIGN

This is about the ideal organizational structure of the headquarter (back) office.

Since our company is the marketer of makeup and skincare product through both the online and offline channels. The ideal organizational structure for the company will be splitting the Marketing department into two teams: eCommerce and retail. The two teams will be respectively led by the relevant manager. Such arrangement will allow each team to focus only on one specific selling channel. It will be easier for them to observe the customer demands, offer better customer services, promote products with more accurate information e.g. depending on customers’ feedbacks and preference, different marketing tools/platforms should be used to optimize the effectiveness and boost sales etc. If the eCommerce and retail channels are being run by one single team, employees might easily get confused with the information they obtain from the market (like trends and competitions), customers (like preference and feedbacks) etc. Thus, they cannot apply the right market strategy to the right target audience. Moreover, they might also get overloaded.

Besides, comparatively speaking, the external environments like legal, social, technology and the internal environment like the organizational tasks as above mentioned are the areas having the biggest impacts on the company and its structure.

To best address the external environments, the company must delegate professionals in the Legal, HR & Admin and IT departments in the back office so they can provide advice and useful information in their own area in order to support the frontline sales. For example, the Legal department will be responsible for updating all stakeholders on any regulatory and law changes. The HR & Admin department is responsible for ensuring all departments are following the CSR so to have a successful brand and retain customers with trust. The IT department is responsible for the technical support given to both the back office and the frontline. Technical support is very important to the company in particular that we are providing online channel 7/24 to customers. Smooth shopping experience, data privacy etc require support and expertise from the IT department.

To best address to the internal environment like the organizational tasks (i.e. analysis on industry, customers, market, competitors, and plans for operation and finance), the company must delegate professionals in the Marketing, Operation and Finance departments in the back office so they can provide advice and useful information in their own area in order to support the frontline sales. For example, the Marketing department is responsible for the analysis on industry, customers, market, competitors. They are useful information for understanding trends, setting prices, knowing customers’ preferences and brand positioning etc. With such information at hand, the company can have high chance to convert target audience to sales and make a profit. The Operation department also plays an important role in support of the sales e.g. their operation plan must ensure the delivery and storage of products so to provide the right amount of products at the right time and meet the customers’ demands. Last but not least, the Finance department is responsible for obtaining and handling any monies on behalf of the company. They control the income and expenditure and ensure the company is running effectively and smoothly with minimum disruptions.

All of the aforesaid departments will be led by its own Director and supported by a Manager and an Assistant. The Director in each department will have the authority to instruct and give directions to their subordinates who will then execute accordingly. Each level will be given a clear role and report line so there is no confusion and overlapping responsibilities. 

ORGANIZATION CHART

Below is the ideal organizational chart of headquarter (back) office: