CH3 QB Organisational and business structures Flashcards
Identify which of the following statements about an organisation chart for Ginger plc are
true.
1 The chart will show the degree of decentralisation in Ginger plc
2 The chart will show the span of control in Ginger plc
3 The chart will show the scalar chain in Ginger plc
A 1 and 2 only
B 2 and 3 only
C 1 and 3 only
D 1, 2 and 3
1 B The degree of decentralisation is a measure of how power and authority are passed
down an organisation. This is not shown on an organisation chart, which concentrates
on the shape of the organisation. The span of control refers to the number of
subordinates working for a superior, while the scalar chain is the formal arrangement of
authority or the organisation hierarchy. Both are shown on the chart.
Lan plc trains bankers. It has been established for over 30 years. Lan plc has a large
operating core which consists of all the well-qualified lecturing staff. They need to keep
their teaching material constantly updated to reflect current issues in the complex banking
industry, and to ensure that the company’s courses remain competitive. The lecturers are
supported by a large administrative team which follows procedures to ensure the smooth
delivery of courses. Which of the following organisational structures does Lan plc have?
A Entrepreneurial
B Machine bureaucracy
C Professional bureaucracy
D Divisionalised
C A professional bureaucracy (C) will hire trained specialists who are all imbued with the
skills and values of the profession. The operating core is the key part because it will
have an elaborate support staff to service it and the work is too complex to be
standardised by a technostructure. The entrepreneurial structure (A) is characteristic of
small, young organisations revolving round a single entrepreneur or small
management team. A machine bureaucracy (B) works on a sophisticated and welltuned set of rules and procedures. The technostructure is the key part of this structure
and the management philosophy is often that of scientific management. There is
strong emphasis on the division of labour and authority is hierarchical. A divisional
structure (D) is where the middle line seeks as much autonomy for itself as possible. It
exerts a pull to split into small self-managed units with autonomy given to managers
lower down the line. SAMPLE PAPER
Identify which three of the following are Henry Mintzberg's building blocks of an organisation. A Support staff B Middle line C Functional division D Scalar chain E Ideology F Matrix structure
A,B,E
The support staff (A) carry out the ancillary activities that are neither part of the core nor
the technostructure. Support staff have no role in the direct activities of the
organisation: these activities include such things as catering and public relations. The
middle line (B) represents that part of the organisation where the middle managers
operate. Its role is to turn the instructions of the strategic apex into activities for the
operating core. The ideology (E) is what binds the organisation together. It represents
the organisational values and beliefs, which provide a common focus for all the other
elements.
Functional division (C) and matrix (F) structures are both types of organisational
structure, and scalar chain (D) is the reporting chain.
Jane’s job description at Glue Pot plc states that her role is part of the company’s
technostructure. According to Henry Mintzberg, a technostructure:
A ensures that an organisation follows its mission
B provides ancillary services
C standardises work processes
D controls the work of the operating core
C The function of the technostructure is to standardise work processes (C), for example
by producing technical specifications and procedures manuals. The strategic apex,
which represents the higher management of the organisation, will ensure the
organisation follows its mission (A). The support staff provide ancillary services (B) to
the operating core. The middle line, representing the managers between the
operating core and the strategic apex, will control the work of the operating core (D).
Benton plc is a machine bureaucracy. Which of the following characteristics is the company
most likely to exhibit?
A The technostructure exerts a pull towards standardised processes
B The operating core exerts a pull towards standardised skills
C The middle line exerts a pull towards fragmentation
D The support staff exert a pull towards collaboration
A Machine bureaucracy depends primarily on the standardisation of its operating work
processes (A) for coordination. Because of that the technostructure, which houses the
analysts (technocrats) who do the standardising, emerges as the key part of the
structure. When the operating core exerts a pull towards standardised skills (B), it is
generally a professional bureaucracy. In a divisionalised structure, a good deal of
power is delegated to market-based units in the middle line (C), whose efforts are
coordinated by the standardisation of outputs through the extensive use of
performance control systems. Adhocracy coordinates primarily by mutual adjustment
among all of its parts, calling especially for the collaboration of its support staff (D).
Amy has just joined the finance function of a local hospital. She identifies that its managers
belong to the ‘classical school’ because of their adherence to the concept of unity of
command. This means that in general the managers believe that:
A a subordinate should receive orders from only one manager
B there should be only one manager of each activity
C authority should flow down a single chain of command
D work should be specialised into single tasks
A Unity of command (A) means that any employee should have to report to, or receive
orders from, only one manager. ‘Unity of direction’ is the principle that there should be
only one manager of each activity (B). ‘Scalar chain’ is the term used to describe the
chain of superiors from the lowest to the highest rank (C). ‘Division of work’ is the
principle of specialisation of work into particular tasks (D).
Justin works for Edwinstone plc. He is part of a project team developing a large
construction site. The team has a matrix structure with employees from many different
departments working on this project.
Which of the following management principles set out by Henri Fayol is necessarily
contravened by this type of structure?
A Authority and responsibility
B Subordination of individual interests
C Unity of command
D Esprit de corps
C A matrix structure would involve employees within the project team having
responsibility to more than one superior – for example, a functional supervisor and a
project leader. This breaks the principle of unity of command (C), which holds that any
employee should have to report to, or receive orders from, only one boss. There is no
reason why a matrix structure should contravene the principle of authority and
responsibility (A) as employees can be given both in such a structure. Similarly,
subordination of individual interests (B) – the principle that the interest of one or more
employees should not prevail over that of the general interest of the organisation –
would apply to a matrix structure, like any other. Esprit de corps (D) is the principle that
personnel should not be isolated (cohesion should be encouraged), which would be
ideal in this matrix setting.
The Chief Executive of Acton plc has identified problems caused by the centralised nature
of the company’s decision-making processes. These have led to accusations from staff and
some customers that the company is increasingly slow and unresponsive. The Chief
Executive wants to increase the amount of decentralised decision-making over the next
year.
Which three of the following characteristics of Acton plc are likely to increase the amount of
decentralisation that is possible?
A The authoritarian style of its management
B Its well-skilled workforce
C Its large size
D The slow pace of technological change in its markets
E The effectiveness of communication across the company
B,C,E
Decentralisation depends on workforce ability (B), company size (C) – the larger the
organisation, the harder it is to centralise – and effective communication (E), which is an
essential ingredient of effective delegation. Centralisation and decentralisation refer to
the extent to which authority for decision making is either retained at the top of the
organisation or delegated to lower levels.
If the management style is authoritarian (A), the organisation will be more centralised.
Slow technological change (D) means that there is little need to decentralise. Lower
level managers do not need to be familiar with changing technology.
Martina is a Human Resources Manager with Wardman Ltd. She is working on a project to
increase the spans of control of managers in the company’s largest subsidiary. She needs to
identify any factors about the subsidiary that indicate increases in spans of control are
possible.
Which of the following factors identified by Martina suggests that increased spans of control
are possible?
A Subordinates carry out very similar tasks
B Subordinates are geographically dispersed
C Frequent, time-consuming problems arise
D Managers are engaged in large amounts of non-supervisory work
A If employees are all carrying out the same or similar tasks (A), a supervisor will be more
able to look after many subordinates (a wider span of control) as they can all be
handled in similar ways and will face similar problems. A high geographical dispersion
of employees (B) requires more effort to supervise which, along with frequent timeconsuming problems (C), suggests a narrow span of control would be more
appropriate. Where the manager is engaged in large amounts of non-supervisory work
(D), the narrower the span of control is likely to be.
In terms of structure, Platlet plc is a wide, flat organisation.
Which three of the following characteristics is the company most likely to exhibit?
A A greater need to delegate
B Higher administration and overhead costs
C Many opportunities for promotion
D Better communication between the strategic apex and operating core
E Large spans of control
F Slow decision making
A,D,E
A wide, flat organisation implies looking after many subordinates, so delegation will be
called upon frequently (A). The vertical flow of information between the top and
bottom of the company follows a shorter, more efficient route in a wide, flat
organisation (D), so communication is likely to be improved. Looking after many
employees implies large spans of control (E).
The features you would expect to see in a tall narrow organisation are higher
administration and overhead costs (B) to support the many levels within the structure;
many opportunities for promotion (C) because there are more rungs in the ladder to
the top; and slow decision making (F) because the management structure requires
more coordination and consultation before decisions are taken.
Logical Computing Ltd adopts a wide, flat organisational structure. Which of the following is
likely to present problems for the company?
A Ensuring enough face-to-face contact takes place between superiors and staff
members
B High management overhead costs
C Internal communication
D Superiors not delegating enough work to staff
A If there are many subordinates to supervise, as there would be in a wide, flat
organisation, it can be difficult to give each enough individual time (A). High
management overhead costs (B), internal communication difficulties (C) and superiors
not delegating enough work to staff (D) are problems associated with tall, narrow
organisational structures.
Which three of the following are characteristics of limited companies?
A Perpetual succession
B Separate legal personality
C Financial statements can remain private
D Simple withdrawal of capital
E The company’s liability is limited
F Regulation under the Companies Act 2006
A,B,F
If a shareholder dies, their shares are transferred to another person without any effect
on the company at all – this is known as ‘perpetual succession’ (A). A limited company
is legally distinct from its owners – it has a separate legal identity (B). Limited
companies, both private and public, are subject to stringent regulations governing the
keeping of accounting records, the filing of financial statements with the Registrar and,
in the case of larger companies, the requirement to have an audit (F). Withdrawal of
capital (D) is relatively difficult as it provides a buffer for creditors. A limited company’s
liability is unlimited (E) – it is the liability of the owners (shareholders) that is limited.
Because financial statements are filed they are not private (C).
Tom Burns and G M Stalker classified organisations as ‘mechanistic’ or ‘organic’. Which of
the following is an appropriate description of a mechanistic organisation?
A Commitment to organisation’s mission
B Network structure of control
C Relatively flexible job descriptions
D Suitable for slow moving environments LO 1d, 2
D Mechanistic organisations are machine-like and efficient at performing the same task
over and over, implying a slow-moving environment (D). Organic organisations are
flexible and adaptable (like a living organism), implying they are suitable for dynamic
environments. Employees working for a mechanistic organisation are expected to obey
superiors, whereas for those working for an organic organisation, commitment to
mission is more highly valued than loyalty as such. In terms of structure of control, the
network structure is more prevalent in organic organisations as is the relatively flexible
job descriptions. Precise job descriptions and hierarchical structure of control are
typical features of a mechanistic organisation.
Protin plc has a modern manufacturing operation. It uses components manufactured by
suppliers and sub-contractors all over the world to assemble finished goods to customer
specifications in its assembly plant. Operations managers are technically competent and
their competence within the area of their expertise is rarely questioned. There is a high
degree of specialisation of labour. Procedures ensure that, whoever carries out tasks, they
are executed in the same way each time.
From this description of Protin plc, identify which of the following statements about the
company are likely to be true.
1 Innovation is suppressed.
2 Employees are concerned with completing the task efficiently, rather than with how the
task can be improved upon for the benefit of the organisation.
3 Everyone in the organisation finds it easy to learn from their mistakes.
A Statements 1 and 2
B Statements 2 and 3
C Statements 1 and 3
D Statements 1, 2 and 3
A The company could be described as a bureaucracy or mechanistic organisation. As
well as innovation being suppressed (statement 1), this type of structure can inhibit
creativity, initiative and openness to new ideas and ways of doing things. People would
certainly be concerned with completing the task efficiently (statement 2) – task
specification and efficiency is a feature of a bureaucratic design. Jobs are generally
broken down into narrow areas of work/responsibility so as to secure the benefits of
specialisation. In bureaucracies it is hard to learn from mistakes (statement 3) due to
the lack of feedback (especially upwards).
TinTin Ltd is facing a period of rapid change and innovation in its operating markets.
According to Tom Burns and G M Stalker, which three of the following should the company
adopt in order to be effective in its environment?
A A Theory X management style
B A Theory Y management style
C A wide, flat organisational structure
D A tall, narrow organisational structure
E Extensive use of delegation
F Limited use of delegation
B,C,E
In times of change, the Theory Y manager (B) recognises that the employees’
objectives will complement those of the organisation and commitment is a function of
the ‘intrinsic’ rewards associated with their achievement (rather than just extrinsic
rewards/punishments). The capacity to exercise imagination, ingenuity and creativity in
the solution of organisational problems needs to be widely rather than narrowly
distributed in the workforce. Wide, flat organisations (C) tend to be flexible and
employees are willing to form teams to tackle issues. Wide, flat organisations also
imply a large amount of delegation (E) is needed.
