Chapter 3 Organisation and business structures Flashcards
What is the organisational structure in a business?
formed by grouping people into departments and allocating responbility and authority
e.g. division of work (specialised)
unity of command (one supervisor)
unity of direction (single head and plan)
centralisation (appropriate level)
scalar chain (authority top to bottom)
What are modern principles of a organisation
multi skilling (train to perform variety of skills therefore more efficient)
flexibility (flex hours, matrix strucuture therefore adaptive to changing markets)
What are six building blocks in the business defined by Mintzberg?
Operating core - basic work of the organisation (shop floor)
strategic apex - higher managment (long term planning)
middle line - managers link between operating and strategic
technostructure - accountants, computer specialists & engineers
support structure - provision of services
ideology - organisations values and beliefs
How are the six building blocks of Mintzberg co-ordinated?
- mutual adjustment (informal contact)
- direct supervision
- standardisation of work process (G&S specification)
- standardisation of skills and knowledge (identify training needs, skills)
- standardisatin of norms (culture)
What are the outcomes of building blocks and co-ordinations mechanism 1 environment 2 internal factors 3 key building blocl 4 key co-ordinating mechanism
a. entrepenuerial strucuture (newsagent)
b. functional/bureaucratic (unionised company)
c. professional bureaucractic (Kaplan)
d. divisional structure
e. matrix structure
A1 - simple dynamic
A2 - small young simple task
A3 - stragic apex
A4 - direct supervision
B1 - complex
B2 - large, old regulated
B3 - techno structure
B4 - standardisation of work
- complex
- professional simple
- operating core
- standardisaiton of skills
- simple
- very large
- middle line
- standardisation of outputs
- complex
- young
- operating
- mutual adj.
What are the advantages and disadvantage of a entrepenuerial structure?
built around the owner-manager
adv:
- fast decision making
- more responsive market
- good control
- close bond to workforce
disadv.
- lack of career structure
- too centralised
- cannot cope with diversification
Once outgrown the entrepenuerial structure it is the functional structure
with board of directors
and marketing dept., prod. dpt, finance dpt. HR dpt.
what are the adv. and disadv.
(appropriate to
adv.
- Economic of scale
- standardisation/efficiency
- specialists prefer this
disad.
- empire building
- slow to adopt to market changes
- conflicts between functions
- cannot cope with diversification
Whare the adv. and disadv. of a divisional structure
with BoD and chemical division, plastics division , electricals divisiom, paper divsion
adv.
enables product or geo growth
clear responsbility and accounting products
training of general managers
disad. potential loss of control lack lack of goal congruence duplication specialists may feel isolated
What is the matrix structure made of ?
combine to benefit of divisional structure and functional structure (found in multi-product/functional-organisation
Area x Various department
Pro:
flexibility - focus on customers projects
Cons:
- Dual comman
- Dilution of functional authority
- time consuming meetings
What is defined by centralisation and decentralisation?
The degree of autonomy/decision making ability diffused through organisation
pro
- senior management free to concentrate on strategy
- better local decision due to local expertise
- better motivation
- quicker responses/flexbility
cons:
loss of control by senior MGMT
- dysfunctional decision due to goal congruence
- poor decisions made by inexperienced managers
- extra costs re information (e.g. multiple MGMT accounts
Which factors afffect the degree of decentralisation?
- MGMT style and ability
- size of org.
- Range of G&S
- Geo location
What is the span of control?
The tall has many MGMT levels (narrow span of control)
Flat has fewer sp wider span of control
What are the adv. and disadv. of tall org
adv.
- promo opp
- narrow spans of control = more supervision
- smoother progression
- small spans of control
disadv.
- inhibits delegation
- more expensive of MGMT overheads
- Xtra level of MGMT slow down process
What are the adv. and disadv. of flat org?
Adv.
- wide span of control = more delegation
- lower MGMT costs
- better MGMT costs
- better communication among MGMT
disadv.
- managers may be overworked
- greater delegation = less control
What are the factors influencing span of control?
- complexity of work
- degree of change
- MGMT ability
- Ass received
- Lvl of knowledge and experience of staff
Which of the below are mechanic and organic?
- informal
- hierarchical
- project teams
- power based
- authority and control based
- focuses on efficiency
Mechanistic rigid and formalised - formal - hierarchical - authority and control based - focuses on effciciency
organic fluid and flexible - informal - flat - project teams - power based on expertise - cant use floating charges
What is the business structure of a sole trader
and adv. and disadv.
single proprietor owns business and takes all risk and rewards of business adv. - no need to share profit - self-sufficient - little or no regulation - own boss
disadv.
- carries unlimited liability
- personal responsible
- high risk about 75% of small business
- extensive personal debt
- small -> hard to negotiate
What is a partnership and adv.
and disadv./
two or more people take all risk and all rewards
two seperate forms
- general (no seperate legall entity)
- LLP (seperate legal entity so limited to amount invested)
adv. for general
- few regulatory obligation
- more skills together
- more finance raised from MGMT
disadv.
- all partner unlimited liability
- potential disagreements
What is a limited company?
company a seperate legal entity
two forms
- private ltd
- public plc
adv. .
- liability of shareholders to business debts is limited to persona investement
- ownership transferred easily through sales of shares
- companies find it easier to raise new capital
- use floating and fixed charges
disadv.
- legal burdens - comply with CA (need company audit)
- quoted companies suffer from short-termist pressure
- FS to public scrutiny
What is meant by a Group
No. of companies own companies
parent company own share in subsidary (extent to owning shares)
adv.
- diff companies respon for diff products
- easy to sell part of business
- EoS through vertical integration
disadv.
- consol acc to be prepared
- many acqui and -ve shareholder value
What are the types of alliances one can do
what are those?
- Joint ventures (seperate owned company - sony ericsson
- strategic alliances (loose collaboration)
- licensing/franchising
one company allows another to manafacture/market - agency agreements
one party distributes another products
