3: Organisational and business structures Flashcards
Organisational and business structures
Describe the management hierarchy (4 parts)
Top managers: managing the business
Middle managers: managing managers
First line managers: managing staff on direct operations
Direct operational staff: doing the work
((Accountability goes up, power + authority goes down))
What is organisational structure
Formed by the grouping of people into departments or sections and the allocation of responsibility and authority, organisational structure sets out how the various functions (ops, marketing, HR, finance, etc) are arranged
What is organisational structure intended to do?
- link individuals in an established network
- allocate the tasks
- give individuals authority required to perform the work
- coordinate objectives
- faciliate the flow of work
What are Mintzberg’s building blocks? (6)
- Operating core
- Middle line
- Strategic apex
- Support staff
- Technostructure
- Ideology
What are the basic principles of organisational structure?
- Division of work
- Scalar chain
- Correspondence of authority and responsibility
- Appropriate centralisation
- Unity of command
- Unity of direction
- Equity
What are the five types of organisational structure?
- Simple
- Machine bureaucracy
- Professional bureaucracy
- Divisionalised
- Adhocracy / innovative
Advantages of the entrepenurial structure
- Quick decisions can be made with skill and flair
- Goal congruence - objectives are pursued exclusively
- Flexible / adaptable to change
Disadvantages of the entreprenurial structure
- cannot easily expand beyond a certain size
- cannot easily cope with diversification
- lack of career structure for lower level employees
- may be too centralised with too much decision-making power retained by the entrepreneur
What is a functional structure and list its benefits?
Board of directors
MD
Production, marketing, IT, Finance, HR
- good career opportunities
- efficient as functional tasks are well-known and understood by individuals
- exploits specialist functional skils
What is divisionalisation?
The division of a business into autonomous regions or product businesses, each with its own revenues, expenditures, and capital asset purchase programmes, and therefore each with its own profit responsibility
What is a matrix structure?
Formalises veritcal and lateral lines of communication
May be temporary and involves managers being appointed for projects
What is a centralised organisation?
One in which decision-making authority is concentrated in one place
Describe geography
Some functions may be centralised rather than ‘scattered’ in different offices, departments or locations
Describe authority
Centralisation also refers to the extent to which people have to refer decisions upwards to their superiors.
Decentralisation therefore implies increased delegation and autonomy at lower levels
Benefits of centralisation
- Decisions are made at one point and so are easier to co-ordinate
- Senior managers can take a wider view of problems and consequences
- Senior management can balance the interests of different functions
- Senior managers keep control
- Possibly cheaper
- Quality of decisions is (theoretically) better due to senior managers’ skills and exp.
Benefits of decentralisation
- Avoids overburdening top managers, in terms of workload and stress
- Improves motivation of more junior managers who are given responsibility and authority
- Greater awareness of local problems by decision makers
- Supports managerial succession
What is span of control?
The number of people (subordinates) reporting to one person
Describe scalar chains
The chain of command from the most senior to most junior
What is a tall business?
One which, in relation to its size, has a large number of levels in its management hierachy, normally because there are narrow spans of control
What is a flat business?
One which, in relation to its size, has a small number of hierarchal levels, normally because there are wide spans of control
Advantages and disadvantages of a tall business
- Narrow control spans
- Small groups enable teams to participate in decisions
- Large number of steps on the promotional ladder promotes career planning and training
//
- Inhibits delegation
- Rigid supervision can be imposed
- Increased admin and overhead costs
- Same work passes through too many hands
Advantages and disadvantages of a flat business
- More opportunities for delegation
- Relatively cheap
- In theory, speeds up communication between strategic apex and operating core
//
- Requires that jobs can be delegated
- Sacrifices control
- Managers only get a superficial idea of what goes on
What is a mechanistic organisation?
stable, efficient and suitable for slow-changing operating environments
What is an organic organisation?
flexible, adaptive and suitable for fast-changing or dyanmic operating environments
