Page 2: Organisational structure and ownership
The business model
Specsavers has adopted a unique partnership or joint venture approach. This is similar to a franchise model of ownership. Business owners contribute an initial sum of capital to buy into the Specsavers brand. They then become partners and trade under the Specsavers name. Owners are provided with products, training and other support from Head Office.
There are typically two business owners for each store. One is a trained Optometrist and the other a Retail Director. These owners are responsible for running their individual stores. They retain any profits made. This joint venture structure is based on gaining the maximum benefits of both:
- centralisation where activities are concentrated at the Head Office of a firm. For example, Specsavers' huge buying power for frames and lenses enables it to pass on savings to customers. Head Office also provides centralised IT, legal, finance and marketing support for all branches
- decentralisation which involves giving responsibility for decision making to local operating units, e.g. branches. Individual stores are run by the owners, who have direct, local knowledge to meet local consumer demands.
Organisational structure refers to the way in which workers are arranged in a business. A hierarchy is an organisation that is structured in layers. Those at the top of the hierarchy have more authority than those lower down.
A typical Specsavers store has a hierarchical structure, with layers of employees reporting up the chain. The business owners (directors) are at the top of the hierarchy. They delegate responsibility for different tasks to employees lower down. The organisation chart shows the chain of command and layers of hierarchy within a typical Specsavers store.
Span of control
The larger the store, the greater the span of control. This describes the number of people that each manager is directly responsible for. For example, in a large Specsavers store there might be as many as 50-60 staff members reporting to a Store Manager. There will also be several Dispensing Opticians, Laboratory Assistants and Optometrists reporting to the Directors.
Tall structures have many layers and small spans of control. This can lead to slow communication as instructions and information have to pass through lots of intermediaries. It is particularly important for a Specsavers store to have clear communication routes to ensure both the retail and clinical sides of the business are working together. It is better, therefore, to adopt a flatter structure where there are fewer layers and larger spans of control.