Booklet 8 : Organisational Design Flashcards
Define organisational design (2)
Organisational design is how a business is planned and structured, staff at higher levels of the hierarchy have greater responsibility which shows how the business is divided (2)
Explain how organisational design depends on the size of the business (2)
As the business grows, there will be a higher demand for employees, the greater volume of business activity requires for more co-ordination, command and control (2’
Explain how organisational design depends on the span of control (2)
Span of control refers to the number of staff members under control of a direct supervisor or manager, managers with a wide span of control have a lot of subordinates, managers with a narrow span of control have little subordinates but may experience tight control and communication (2)
Explain the factors that influence the span of control (3)
- Nature of the task - if repetitive, it is easier to supervise a large number of people
- Subordinates - if workers work well together, there’s a larger span of control
- Experience and ability of subordinates
Define the Chain of Command (2)
Chain of command refers to the reporting system from the top of the hierarchy to the bottom, it is the route that orders are passed down the organisation (2)
Define delegation (2)
When a task is passed onto another employee which allows the business to spread out tasks and function efficiently and achieve objectives (2)
Define a centralised structure, and state one advantages and one disadvantages of this policy (4)
A centralised structure is one where the business’ senior management team has the power, authority and decision-making responsibilities.
Advantages
1. Highly skilled manager making the decision
Disadvantages
1. Demotivates subordinates
Define a decentralised structure, and state one advantages and one disadvantages of this policy (4)
A decentralised structure involves the power, authority and decision making being in the hands of the lower-level employees (2)
Advantages
1. Motivates subordinates
Disadvantages
1. Wrong decision may be made from the firm
Define a tall organisational structure, and state one advantages and one disadvantages of this policy (4)
A tall structure exists when the business with many hierarchical layers of management, this means that the managers have fewer staff under their control (2)
Advantages
1. Narrow span of control
Disadvantages
1. Long chain of command - communication between top and bottom takes longer
Define a flat hierarchical structure, and state one advantages and one disadvantages of this policy (4)
A flat hierarchical structure exists when the business has fewer layers of management, this means the managers have larger numbers of staff under their control (2)
Advantages
1. Short chain of command - improved communication
Disadvantages
1. Wide span of control
Define outsourcing (2)
Outsourcing is when one business uses the services or expertise of another in order to undertake business functions (2)
Name three issues that relate to outsourcing services (3)
- What area of the business is being outsourced e.g canteen
- Ability of the current business to complete the outsourced activities
- Quality of service outsourcing provides
Name three advantages and three disadvantages of outsourcing (6)
Advantages
1. Cost efficient - the service company may be able to acquire the product/service in a more cost-efficient way than the original business therefore increasing profit
2. High quality - the service company usually provides the product/service to a much higher standard of quality than the business could initially provide
3. Good reputation - if the service company has a good reputation, the business is much more confident what they are paying for will contribute to the achievement of objectives
Disadvantages
1. Costly - the service company may provide goods and services at a large expense, therefore may reduce profits
2. Low quality - if the service company provides a product with low quality there may be customer complaints and decreased satisfaction
3. Poor reputation - if a service company doesn’t live up to the expectations then it could negatively affect the reputation of the business
