Chapter 2 - Business Structure

Question 1

Entrepreneurial Structure

Answer 1

is built around the owner manager and is typical of small businesses in early stages of development.
Advantages:
fast decision making/ more responsive to market/ goal congruence/ good control/ close bond workforce.
Disadvantages:
lack of career structure/ dependant on capacity of manager/ can’t cope with diversification growth

Question 2

Functional structure

Answer 2

group together employees that undertake similar tasks.
Advantages:
Economies of scale/ standardisation/ specialists more comfortable/ career opportunities
Disadvantages:
empire building/ slow decision making due to chain of command/ conflicts between functions/ can’t cope with diversification.

Question 3

Divisional structure

Answer 3

splits business into several divisions - each autonomously overseeing a product or geographic section. Each division is a separate strategic business unit (SBU).
Advantages:
enables growth/ clear responsibility for product/ training of managers/ easily adapted for diversification/ top management free to focus on strategic matters.
Disadvantages:
Potential loss of control/ lack of goal congruence/ specialists may feel isolated/ allocation of central costs can be a problem

Question 4

Matrix structure

Answer 4

is combination of functional and divisional structures.
Advantages:
advantages of both structures/ flexibility/ customer orientation/ encourage teamwork and exchange of opinions.
Disadvantages:
dual command and conflict/ dilution of functional authority/ time-consuming meetings/ high admin costs

Question 5

Boundaryless structure

Answer 5

is not constrained by having a chain of command or formal departments, with the focus being on flexibility. There are three types: hollow, virtual, modular.