12 - Organisational structure and design

Question 1

Should structure come before strategy or should strategy come before structure?

Answer 1

Trick question! - depends on the circumstance - sometimes structure would be too hard to change

Question 2

Chandler - traditional view of structure/strategy

Answer 2

Strategy should come before structure - once strategy is devised, orgs need to determine what is required to deliver vision, and this will lead to the required structure forming

Question 3

Quinn - more modern view of structure/strategy

Answer 3

‘Strategy then structure’ oversimplifies what actually happens within an org - structure is intertwined with strategy and both will lead and follow at different stages

Question 4

Robbins and Judge - 6 key elements that ought to be considered when designing organisational structure

Answer 4

• Specialisation
• Departmentalisation
• Chain of command
• Span of control
• Levels of centralisation
• Formalisation

Question 5

Simple organisational structure

Answer 5

Business run by single manager-owner, employees underneath, limited lines of hierarchy

Question 6

3 advantages of simple structure

Answer 6

• Clarity of accountability
• Wide spans of control
• Centralised authority

Question 7

3 disadvantages of simple structure

Answer 7

• Need for manager to deal with every aspect of business
• Rigidity can prevent personal progression
• Focus on day-to-day rather than strategy

Question 8

Functional organisational structure

Answer 8

Manager
Function heads
Employees

Question 9

3 advantages of functional structure

Answer 9

• Flexibility and breadth of senior skills
• Focused decision-making structure
• Opportunities for people progression

Question 10

3 disadvantages of functional structure

Answer 10

• Duplication of tasks, lack of centralisation
• Differing values between functions
• Short-termism - ‘what is best for my function?’

Question 11

What are the ‘functions’ in a functional structure?

Answer 11

Finance, sales, production, etc.

Question 12

Divisional organisational structure

Answer 12

CEO
Directors
Managers
Employees

Question 13

3 advantages of divisional structure

Answer 13

• Separation of strategic from operational
• Responsiveness to external environment
• Opportunities to grow management skills and talent

Question 14

3 disadvantages of divisional structure

Answer 14

• Loss of central control with inter-division competitiveness
• Expensive solution with duplication of function across divisions
• Image and quality differentiation

Question 15

What does a matrix business structure look like?

Answer 15

Combination of functional and divisional, leading to duel lines of accountability (functional head and divisional head)

Question 16

3 advantages of matrix structure

Answer 16

• Specialised skills can be used across divisions
• Resources are shared more easily, improving efficiency
• Flexibility can lead to removal of silo thinking

Question 17

3 disadvantages of matrix structure

Answer 17

• Risk of power struggles across seniors
• Uncertainty about accountability/reporting lines
• Hard-workers can become overburdened

Question 18

4 types of multi/transnational structures, and whether they are high or low:
- local independence and responsiveness
- global co-ordination

Answer 18

• International divisions (low, low)
• Local subsidiaries (high, low)
• Global product divisions (low, high)
• Transnational corporations (high, high)

Question 19

4 advantages of joint venture form of strategic alliance

Answer 19

• retention of individual autonomy and structure
• liability limited
• reduces reputational damage
• net accounting basis

Question 20

3 disadvantages of joint venture form of strategic alliance

Answer 20

• reporting and compliance add to admin burden
• guarantees may exceed limited liability and increase costs
• how will resources be allocated and revenue be split?

Question 21

3 key attributes of traditional structural form

Answer 21

Centralised
Bureaucratic
Structured

Question 22

3 key attributes of empowered structural forms

Answer 22

Devolved
Participative
Fluid

Question 23

Empowered structural forms - 3 key aspects

Answer 23

• Flexibility (3 dimensions)
• Boundary-less orgs (4 dimensions)
• Virtual structures

Question 24

3 dimensions of flexibility required for firms in modern age (re. structure)

Answer 24

Functional - ability to redeploy eees quickly and smoothly

Numerical - ability to change numbers of people required in line with tasks being completed

Financial - need for different methods of remunerating employees to enable functional and numerical flexibility

Question 25

Johnson et al. - 3 key challenges that need to be recognised by 21st century organisations and included within business srtuctures

Answer 25

• Speed of change and increasing uncertainty
• Importance of knowledge creation and sharing
• Acceptance that markets recognise few geographic boundaries (world is more globalised)

Question 26

What is a boundary-less concept of structure really known to mean?

Answer 26

Appreciative of the movement to flexibility of structures in the modern age - does not actually mean there are no boundaries/structure

Question 27

4 dynamics which need to be flexible in an org (re. boundary-less)

Answer 27

Vertical - Guys at top need to know what guys at bottom think, vice versa

Horizontal - Limitation of silo boundaries

External - Customers, suppliers, regulators need to be viewed as stakeholders

Geographic - Understanding of need to behave differently in different cultures

Question 28

Handy’s shamrock organisation explained

Answer 28

3 arms to a modular organisational structure
- Core workers (full-time)
- Peripheral workers (part time, consultancy, etc.)
- Contract workers (cleaners, etc.)

Question 29

A company with which type of structure would have only a ‘net’ existence?

Answer 29

Virtual structure

Question 30

Lynch - 3 key questions for an org to ask when designing structural form

Answer 30

• What kind of organisation are we, and do we want to be anything different?
• Who are our influential stakeholders?
• What is our purpose (vision, mission, objectices goals)?

Question 31

What is often a simple solution to restructuring when opening a new line of business

Answer 31

Creating a new division within current divisional structure

Question 32

Other than the ‘group structure’ of an organisation, what is is relevant to organisational structure and design?

Answer 32

The structure of the board