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E1 > 7. Structre > Flashcards

7. Structre Flashcards

1
Q

What was the traditional role of the finance function?

A

To generate information

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2
Q

What are the five components of an organisation according to to Henry Mintzberg

A

Strategic Apex
Technostructure
Support Staff
Middle Line
Operating Core

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3
Q

What is the strategic apex

A

Drives the direction of the business through control over decision-making

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4
Q

What is the technostructure

A

Analysts and technicians and skilled professionals that can
Drives efficiency through rules and procedures

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5
Q

What is the operating core

A

Performs the routine activities of the organisation in a proficient and standardised manner

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6
Q

What is the middle line

A

Performs the management function of control over resources, processes and business areas

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7
Q

What is meant by the support staff

A

Provides expertise and service to the organisation

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8
Q

What are the potential configurations of Mintzberg’s five components

A
  • Simple structure
  • Machine Bearaucracy
  • Professional bureaucracy
  • Divisionalised/Conglomerate
  • Adhocracy
  • Missionary
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9
Q

What is the simple structure

A
  • Strategic Apex is dominant
  • Direct supervision- exercises coordination and control
  • Effective in small, simple, dynamic organisation
  • Flexibility
  • Entrepreneurial structure
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10
Q

What is meant by machine bearaucracy

A
  • Technostructure is dominant
  • Standardisation of work processes exercise coordination and control
  • Heavily unionised business
  • Complex stable environment focused of improving performance
  • Functional structure
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11
Q

What is meant by professional bearaucracy

A

Operating core is dominant
- Processes are too complex to be standardised
- Individual trainng and expertise is most valuable
- Complex and stable environment
- Standardisation of skills/knowledge: coordination and control

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12
Q

What is divisionalised or conglomerate configuration

A
  • Middle line is dominant
  • Large organisation or too complex to be managed by one unit and is split into divisions
  • Static and diverse environment
  • Standardisation of outputs: coordination and control
  • Divisional structure
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13
Q

What is meant by the adhocracy configuration

A

-Support staff and dominant as they provide continuity
- Operating core is also important
- Dynamic and innovative environment
- Complex project based works with few formal controls
- Mutual adjustment: coordination and control
- Matrix structure

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14
Q

What is meant by the missionary configuration

A
  • Little structure or formal control
  • Held together by shared values and strong culture
  • Standardisation of norms: coordination and control
  • Effective in start-ups or campaigning groups
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15
Q

What is the direct supervision method of coordination and control

A

A formal hierarchy where manager supervises the work of subordinates

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16
Q

What is standardisation of work process method of coordination and control

A

Work tasks are established and set out in rules and operating procesdures

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17
Q

What is standardisation of skills and knowledge as a method of coordination and control

A

Focus is on identifying training needs to do their job

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18
Q

What is the standardisation of outputs as a method of coordination and control

A

Specifications are set for the service or product being made

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19
Q

What is the mutual adjustment method of coordination and control

A

Informal contact between employees and mangers to coordinate work

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20
Q

What is the standardisation of norms method to coordination and control

A

The organisation’s culture provides expectations for all employees

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21
Q

What are traditional organisational structures

A
  • Functional structure
    -Geographic or divisional structure
  • Matrix structure
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22
Q

What is a functional structure

A

Group employees by specialism or skill sets such as finance

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23
Q

What is meant by the geographical/divisional structure

A

The organisation is arranged according to geographical area

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24
Q

What is the matrix structure of an organisation

A

The organisation uses cross-functional teams
- eg. for project-based services
- mainly linked to adhocracy configuration

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25
Q

What are contemporary organisational structures

A
  • Boundaryless organisations:
  • Shamrock organisation
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26
Q

What is meant by boundaryless organisations

A

Minimise or eliminate formality to focus on speed and flexibility

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27
Q

What are the types of boundaryless organisations

A
  • Virtual: organisation only exists electronically without any premises
  • Modular: The manufacturing process is broken down into units or production is outsourced
  • Hollow: Split their activities into core and non-core. Core activities are tragically important and kept in-house whilst non-core is outsourced
28
Q

What is a shamrock organisation

A
  • Driven by pressure to reduce personnel costs, flexible firm
  • Four parts:
    Professional core: main workers who define the organisation’s competence
    Self-employed core: support professionals and are hired on contract
    Contingent core: Low-level routine jobs
    Consumers: some organisations enlist customers help
29
Q

What are other types of new organisations

A
  • Flatter structures- fewer layers
  • Horizontal structures - multifunctional project teams
  • Chunked structures or unglued structures: smaller and flexible units within the overall structure
  • Output focused structure: focus on the result rather than the process
  • Jobless structure: changing pool of freelancers
30
Q

What is the scalar chain and span of control

A
  • As organisations become bigger- different organisational structures may be suitable
    Scalar chain: levels in the organisations
    Span: control of the number of employees managed
31
Q

What is meant by delayering

A

Reduction of the number of management levels from the bottom to the top
- Organisations are increasing average span of control to reduce middle management

32
Q

What is horizontal integration

A

Developing competitor or complementary activities

33
Q

What is verticle integration

A

The company expands backwards or forwards within its existing value network and becomes its supplier or distributor

34
Q

What is an alliance

A

When an organisation works with external entities

35
Q

What are the types of alliances

A

Joint Ventures
Licences
Franchises
Consortia
Agents
Strategic alliance

36
Q

Join venture

A

two organisations set up a new shared organisation

37
Q

Liscence

A

granting permission to another company to manufacture or sell product

38
Q

Franchising

A

The franchisee manufactures or distributes the product while the franchiser retains control of the brand and marketing

39
Q

Consortia

A

short-term legal entities aim to deliver a specific product

40
Q

Agents

A

Use of agents as distribution channel

41
Q

Strategic alliance

A

Sharing of resources and activities to pursue strategy
Contractual agreements - similar to joint ventures although no separate company is formed

42
Q

What was the traditional structure of the finance function

A

Hierarchical or triangular shape

43
Q

What is the segregated structure of the finance function

A

Some parts of the finance function were moved to the shared service centres

The bottom half of the triangle - routine, lower level accounting operations migrated to shared service centres- centralised

44
Q

What is the digital age pentagon/diamond structure of the finance function?

A
  • Flat top: collaborative financial leadership
  • Strategic business partnering to create and preserve value
  • Central bulge: digital centres of excellence
  • Managing processes and applying accounting rules to assemble and extract data
45
Q

Describe the Level 1 finance leadership level

A

Type of system: Governance
Outcome: oversight
Gartner model: Predictive, Descriptive and Cognitive
Technology: AI, prediction tools, Business intelligence systems
Role of accounting: enabling value creation, allocation of resources

46
Q

Level 2 - Value partnering

A

Types of system: Engagement
Outcome: foresight
Gartner model: Diagnostic, predictive, prescriptive
Technology: AI, Visualisation, final stages of BI
Role of accounting: Shaping how value is created and enabling
Focus: quality decision-making and judgement

47
Q

Level 3 Insight generation

A

Types of system: interpretation
Outcome: insight
Gartner model: diagnostic
Tech: AI, Natural language processing, middle stages of BI
Role of accounting: narrating, begins to shape how organisations create and preserve value
Focus: Compliance

48
Q

Level 4 Data extraction

A

Type of system: recording
Outcome: Hindsight
Gartner model: descriptive
Technology: Robotic process automation, early stages of BI
Role of accounting: gathering information
Focus: quality and integrity of data

49
Q

What are shared service centres

A

Centralising operations that previously existed in more than on part of the organisation
‘internal outsourcing’

50
Q

What are the benefits of shared service centres

A

Cost savings
Standardisation of processes
Selection and delivery of best practice
Improved control and quality
Consolidation of information system

51
Q

What are the risks of shared service centres

A
  • HR Issues - redundancy and impact on morale
  • Insufficient funds to establish
  • Consolidating systems will be costly, complex and time consuming
  • Language, cultural and reporting barriers
52
Q

What are the requirements to establish a successful SSC

A

Commitment to continuous improvement
Clear scope and delegation of responsibility
A clear vision of the role of SSC in the organisation
Buy-in to change
Strong customer-focused culture
Senior management commitment

53
Q

What is outsourcing

A

Involves an organisation sub-contracting business activities to an external provider

54
Q

What are the three types of competence in regard to outsourcing identified by Lonsdale and cox

A
  • Core competencies: fundamental to firm’s competitive advantage so should not be outsourced
  • Complementary competencies: can be outsourced but technical complexity so should only be given to trusted source
  • Residual competency: outsourced at arms length
55
Q

What are advantages of outsourcing

A
  • Reduces costs
  • Enables structural changes
  • Access to expertise and resources
  • Enable finance tea to concentrate on becoming business partners
56
Q

What are the disadvantages of outsourcing

A
  • Investment is needed to manage relationships with outsourcing companies
  • Disruption to business and resistance to change
  • Loss of control over function
    -Increase risk due to loss or data breaches
  • loss of internal knowledge and expertise
57
Q

What are service level agreements

A

SLAs - legally binding contracts made between customers and outsource partners that agree on the type of service provided
- Description of service
- targets, expectations, cancellation procedures

58
Q

What are transaction costs

A

Incurred by an organisation as a consequence of having business activities performed by third parties

59
Q

What are non standard prducts which have high transaction costs

A
  • Search and information costs: determining which products are needed and selecting suppliers at appropriate cost and quality
  • Bargaining costs: negotiating deal with the supplier
  • Policing and enforcement costs: monitoring whether supplier adheres to expectation
60
Q

What is the transaction cost theory

A

Williamson: organisation has choice of whether to produce goods itself or through third party:

  • Hierarchy solution: do it itself
  • Market solution: enter a contract and buy asset outside the organisation
61
Q

What are the factors that determine whether hierarchy or market solution to be picked

A

Uncertainty: It is difficult to arrange contracts

Frequency: more likely to be outsourced if it’s infrequent

Asset specificity: when assets are specific it is preferred to be done in-house due to the high transaction cost

62
Q

What are the six main types of asset specificity

A
  • Site specificity: immobile
  • Physical asset specificity: customised for a specific purpose

-Human asset specificity: workers acquire knowledge of a specific role which has higher value in the role than outside of it

  • Brand name capital specificity: brand name associated with specific activity
  • Dedicated asset specificity: Assets acquired solely for work undertaken for a specific customer
  • Temporal specificity: activities require perishable goods
63
Q

What is business process re-engineering

A

Organisations transforming business processes and re-design them from the ground up

‘radical re-design’

64
Q

What are the four themes of BPR

A

Process reorientation: focus on resources, tasks and constraints

Creative use of IT

Ambition

Challenge and break rules

65
Q

What is offshoring

A

Relocation- involves migrating some parts of an organisation’s activities to another country

E1 (12 decks)

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