12 - Organisational structure and design

Question 1

4 learning outcomes - chapter 12

Answer 1

• understand and challenge the appropriateness of different types of organisational structures;
• challenge the relationship between structure, culture and systemic behaviour;
• demonstrate the iterative nature of the relationship between strategy and structure;
• consider whether, when and where we need strategic and organisational boundaries;

Question 2

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

Answer 2

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

Question 3

Chandler - traditional view of structure/strategy

Answer 3

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 4

Quinn - more modern view of structure/strategy

Answer 4

‘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 5

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

Answer 5

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

Question 6

Simple organisational structure

Answer 6

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

Question 7

3 advantages of simple structure

Answer 7

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

Question 8

3 disadvantages of simple structure

Answer 8

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

Question 9

Functional organisational structure

Answer 9

Manager
Function heads
Employees

Question 10

3 advantages of functional structure

Answer 10

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

Question 11

3 disadvantages of functional structure

Answer 11

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

Question 12

What are the ‘functions’ in a functional structure?

Answer 12

Finance, sales, production, etc.

Question 13

Divisional organisational structure

Answer 13

CEO
Directors
Managers
Employees

Question 14

3 advantages of divisional structure

Answer 14

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

Question 15

3 disadvantages of divisional structure

Answer 15

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

Question 16

What does a matrix business structure look like?

Answer 16

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

Question 17

3 advantages of matrix structure

Answer 17

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

Question 18

3 disadvantages of matrix structure

Answer 18

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

Question 19

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

Answer 19

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

Question 20

4 advantages of joint venture form of strategic alliance

Answer 20

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

Question 21

3 disadvantages of joint venture form of strategic alliance

Answer 21

• reporting and compliance add to admin burden
• guarantees may exceed limited liability and increase costs
• risk of double taxation

Question 22

3 key aspects of traditional structural form

Answer 22

Centralised
Bureaucratic
Structured

Question 23

3 key aspects of empowered structural form

Answer 23

Devolved
Participative
Fluid

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

Answer 30

• Where does our supply chain fit into the supply chain?
• What influences us as an org?
• What type of structure do we need?
• What type of structure will be expected by our stakeholders?