6 - Organisational Design Flashcards
What Are All The Models Of Organisational Structure?
(4 Points)
~ Functional.
~ Product-based.
~ Regional.
~ Matrix.
What Are The 4 Functional Areas Of A Business?
~ Marketing.
~ Operations.
~ Human Resources.
~ Finance.
Describe The Functional Organisational Structure
(4 Points)
~ When employees are organised based on their roles and functions.
~ E.g. Departments or functional areas of a business.
~ Looks to streamline efficiency and expertise in each functional area of a business.
~ Typically used in manufacturing industries, finance and healthcare.
What Are The Advantages Of A Functional Organisational Structure?
(4 Points)
~ There is specialisation within the functional area, making them more efficient.
~ These specialist skills can be developed overtime.
~ Effective with a centralised decisions making structure.
~ Easier to supervise compared to other organisational structures.
What Are The Disadvantages Of A Functional Organisational Structure?
(2 Points)
~ Could be conflicts between the functional area as they may not communicate or collaborate.
~ Meaning the business cannot be very flexible, causing them to be slower to react to change.
Describe The Product-Based Organisational Structure
(3 Points)
~ Business organises teams around different products or product ranges.
~ Each team has its own marketing, operations and finance departments but HR is usually centralised.
~ Useful to have when products are diverse and unique, requires specialised management.
What Are The Advantages Of
A Product-Based Organisational Structure?
(3 Points)
~ Focused expertise in each of the functional areas, making them more productive as they are niche to their particular area.
~ Faster more streamlined in decisions, innovations, production making them more efficient.
~ Each of the product lines are likely to be more accountable to senior management, as it’s easier to see the results by looking at the data.
What Are The Disadvantages Of A Product-Based Organisational Structure?
(3 Points)
~ May lead to duplication of functions / resources can lead to DEOS, which is inefficient for a business.
~ Coordination between teams may be complex, hindering collaboration between teams.
~ Slow to react to external change.
Describe The Regional Organisational Structure
(2 Points)
~ When the organisation is divided into different geographical regions
~ Where each geographical region will have its own set of management.
What Are The Advantages Of
A Regional Organisational Structure?
(4 Points)
~ Local adaptation, able to tailer strategies to meet specific regional needs, adapt products to culture and market needs of that region.
~ Improve customer satisfaction, due to localised approach to better meet needs.
~ Streamlined as each region has its own departments, regional autonomy leading to faster decision making increasing efficiency for the business.
~ More flexible, easier to adapt to change as decentralisation.
What Are The Disadvantages Of A Regional Organisational Structure?
(3 Points)
~ Risk of regional inefficiencies and conflicts, may be a lack of communication collaboration between regions meaning no knowledge sharing.
~ Lack of standardisation of product and processes, where different regions may do things differently to others causing inconsistencies.
~ Cost duplications due to different regional departments, could lead to higher AC per unit which is inefficient.
Describe The Matrix Organisational Structure
(2 Points)
~ Where the employees report to both the functional manager and the project manager.
~ Used by large corporations, complex projects and technology / engineering businesses.
What Are The Advantages Of
A Matrix Organisational Structure?
(3 Points)
~ Increases the flexibility of the organisation, adapt quickly to changes.
~ Increases efficiency, expertise and skills can be shared across projects.
~ Increased collaboration, projects have a holistic view as all functional areas are involved.
What Are The Disadvantages Of A Matrix Organisational Structure?
(3 Points)
~ Employees may be unclear on who and what the priority is.
~ Power struggles and conflict between functional area and project.
~ Slow down communication as there are too many stakeholders.
What Are The Influences On Organisational Design?
(5 Points)
~ Delegation.
~ Span.
~ Hierarchy.
~ Authority.
~ Centralisation and decentralisation.
Describe Delegation
When managers give authority to subordinate employees to perform tasks or make specific decisions.
What Are The Advantages Of
Delegation?
(3 Points)
~ Subordinates may be empowered by the authority and responsibility. This would lead to higher motivation, more productive and more efficient.
~ Fosters culture of internal recruitment, as managers are giving authority to subordinates, being effectively trained. E.g. New manager can be hired internally.
~ Managers are able to fully focus on their complex tasks, simpler tasks are given to subordinates.
What Are The Disadvantages Of Delegation?
(2 Points)
~ Subordinates may be demotivated by increased workload, decreasing productivity.
~ Motivation can fall as a result, there is an increased risk of employees leaving the business, all the gains from internal recruitment may be lost.
Describe Span Of Control
(3 Points)
~ Shows the number of subordinates that a manager or supervisor is directly responsible for.
~ Wide span of control -> manager has many subordinates.
~ Narrow span of control -> manager has very subordinates.
Describe Levels Of Hierarchy
(2 Points)
~ Tall and thin -> where each superior is responsible for a few subordinates.
~ Wide and flat -> Each superior is responsible for a large number of subordinates.
Describe Centralised Structures
(4 Points)
~ Where control and therefore decision making is made by the highest layers of management.
~ E.g. CEO, board of directors and senior management.
~ Tall structures, suits authoritarian management, where employees are less skilled.
~ E.g. Fast food franchises.
What Are Advantages Of Centralised Structures?
(4 Points)
~ Quicker decision making as fewer staff involved, experienced.
~ Consistency in the aims, visions and culture of the business.
~ Motivation as there is a clear job to do, this can increase confidence making them more productive.
~ Maintains a tight control.
What Are Disadvantages Of Centralised Structures?
(2 Points)
~ Employees have less flexibility in decision making, leading to missed opportunities.
~ Affects motivation as employees may feel less empowered, motivated, which would decrease productivity and innovation.
Describe Decentralised Structures
(4 Points)
~ When control and decision making is delegated by the highest layers of management.
~ E.g. To middle / lower layers of management, departments and locations.
~ Flat structures, suits a democratic management, where employees are more skilled.
~ E.g. Tech start-ups.
What Are Advantages Of Decentralised Structures?
(3 Points)
~ Increases motivation as they are empowered, increasing motivation, productivity and innovation.
~ Flexible decisions making, seizing opportunities and no need to check with the top layer of management.
~ Internal recruitment, decreasing recruitment costs.
What Are Disadvantages Of Decentralised Structures?
(2 Points)
~ Less consistency, as the person it has been delegated to might have different plans which don’t align with culture and aims, causing differing customer experiences.
~ Depends on the skills and experience of the person being delegated.
