1.4.3. Organisational Design

Question 1

What are the charts used to demonstrate organisational design?

Answer 1

Organisational charts.

Question 2

What are the most common criteria used to structure a business?

Answer 2

• area
• customer
• function
• product
• process

Question 3

What is the ‘area’?

Answer 3

Where the business operates geographically.

Question 4

What is the ‘customer’?

Answer 4

The markets where the products are sold.

Question 5

What is ‘function’?

Answer 5

Departments or functional areas within the business.

Question 6

What is the ‘product’?

Answer 6

The type of goods they produce or the service they provide.

Question 7

What is the ‘process’?

Answer 7

The stages involved in making the product/providing the service.

Question 8

What is centralised?

Answer 8

When there are a few top-level managers that make decisions and hold responsibility for the entire company. Business decisions, therefore, are centralised to a main office, which communicates these decisions as objectives for the rest of the company.

Question 9

What is decentralised?

Answer 9

When the business delegates responsibilities and decision making powers to employees lower down the chain of command. Decentralised companies allow their various branches to make decisions for themselves, independent of the central head office.

Question 10

What are tall hierarchical structures?

Answer 10

Layered, pyramid like structures that depict the interrelationship between the functional areas of a business. There is a chain of command descending down, with the number of employees and span of control increasing.

Such structures are usually adopted by large organisations.

Question 11

What is a span of control?

Answer 11

The number of employees that are directly responsible to a manager or supervisor.

Question 12

Advantages of tall structures?

Answer 12

• it is an effective system of command and control, because everyone has a clear role, duty, authority and responsibility, and therefore, knows where they are and how to get where they want. (clear career promotion path)
• it encourages specialism; everyone works in the area and does the tasks that best suits them
• communication is two way, which can empower the workforce

Question 13

Disadvantages of tall structures?

Answer 13

• they tend to be very bureaucratic with every task being accurately recorded, in a duplicate or triplicate, meaning that they respond slow to market change and ideas on improving efficiency are slowly communicated and reacted on.
• this causes many to downsize, delay and replace employees with new technologies, so the employees are demotivated and less productive

Question 14

What is a flat hierarchical structure?

Answer 14

When there is relatively few or even only one layer of management, shorter chain of commands and wider spans of control. Often found in small organisations,

Question 15

Advantages of a flat structure?

Answer 15

• there is less bureaucracy so decision making is quicker and easier with less people involved, and this assists competitiveness as they can react quicker to the external environment
• internal communications are improved, making employees feel more valued and increasing team spirit
• more responsibilities can mean higher motivation

Question 16

Disadvantages of flat structures?

Answer 16

• the large span of control increases workloads, which can have a detrimental effect on managers as they cannot specialise in every aspect of the organisation and cannot get to know everyone
• individual tasks and roles can become blurred with others, which reduces chances of specialism

Question 17

What is a matrix?

Answer 17

When project team members are chosen for their particular expertise and drawn from many different department/functional areas. They usually report to their department head or line manager as well as their project leader.

Question 18

Advantages of matrix?

Answer 18

• projects are more likely to be successfully completed as employees are specifically chosen for their expertise
• avoids narrowness of constraints that can come out of selecting personnel from only one or two functional areas
• usually time bound and cost restricted which are positive constraints that motivate employees.

Question 19

Disadvantages of matrix?

Answer 19

• members report to both the team manager and department head, which can cause conflicts of interest and can reduce efficiency if slow communication
• hard to monitor overall progress as each member must be individually monitored as they have individual responsibilities
• must employ additional project leaders and more employees if the number of projects increase, which adds costs and could have a negative effect on the efficiency of individual functional areas
• can become too reliant on project work

Question 20

What are the categories that operations come under?

Answer 20

Project and Business As Usual (BAU)