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Chapter 3: Organisational and Business Structures Flashcards

1
Q

What is the management hierarchy?

A

Top Management - Manage the whole business
Middle Management - Manage other managers of the business
First-line Management - Manage operational parts of the business
Direct Operation Staff - Supervisors and operational staff

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2
Q

What is organisational structure?

A

Organisational structure is formed by the grouping of people into departments or sections and the allocation of responsibility and authority.

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3
Q

What are the six components of Mintzberg’s building blocks?

A

Operating Core - the basic work of the organisation (shop floor)
Middle Line - managers linking between the strategic apex and operating core
Strategic Apex - higher management - overall strategic, long-term planning
Technostructure - accountants, computer specialists and engineers whose role is to design procedures and standards
Support Staff - provision of services to the organisation which support operations/production
Ideology - organisation’s values and beliefs (culture)

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4
Q

What are Mintzberg’s coordinating mechanisms?

A

Direct supervision
Standardisation of work
Standardisation of skills
Standardisation of outputs
Mutual adjustments

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5
Q

What are the basic principles of organisational structure? (7 points)

A

Division of work
Scalar chain
Correspondence of authority and responsibility
Centralisation
Unity of command
Unity of direction
Equity

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6
Q

What is highlighted under modern management principles?

A

Multi-skilling and Flexibility

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7
Q

What are the benefits of remote working?

A

Reduced premises costs
Ability to recruit staff from further locations

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8
Q

What are the challenges to remote working?

A

Harder to monitor staff performance
Managing staff development

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9
Q

What three ways can organisation structure be communicated?

A

Organisational charts
Organisational manuals
Job descriptions

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10
Q

What are the five types of organisational structure from combining Mintzberg’s building blocks and coordinating mechanisms?

A

Simple structure - Newsagent
Machine bureaucracy - Heavily unionised company
Professional bureaucracy - Hospital or Kaplan
Divisional - Conglomerate
Adhocracy/Innovative - Advertising agency

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11
Q

What is the entrepreneurial structure?

A

Structure is built around the owner-manager - typical of small companies.
Structure is totally centralised with all key decisions being made by the strategic leader.

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12
Q

What are the advantages of an entrepreneurial structure?

A

Fast decision making
More responsive market
Good control
Close bond to workforce

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13
Q

What are the disadvantages of an entrepreneurial structure?

A

Lack of career structure
May be too centralised
Cannot cope with diversification/growth

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14
Q

What is a functional structure?

A

Common in organisations that have outgrown the entrepreneurial structure, therefore need to organise the business on a functional basis.
Most appropriate to smaller companies with few products and locations and which exist in a relatively stable environment.

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15
Q

What are the advantages of a functional structure?

A

Economies of scale
Standardisation/efficiency
Specialists more comfortable

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16
Q

What are the disadvantages of a functional structure?

A

Empire building
Slow to adapt to market changes
Conflicts between functions
Cannot cope with diversification

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17
Q

What is a divisional structure?

A

Organisation structured in accordance with product lines/brands or geographical locations.
Headed by general managers who enjoy responsibility for their own resources.

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18
Q

What are the advantages of a divisional structure?

A

Enables product or geographical growth
Clear responsibility and accounting for products
Training of general managers

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19
Q

What are the disadvantages of a divisional structure?

A

Potential loss of control
Lack of goal congruence
Duplication
Specialists may feel isolated

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20
Q

What is a matrix structure?

A

Matrix structure aims to combine the benefits of the divisional structure and the functional structure.
Usually found in multi-product and multi-functional organisations - significant interrelationships and interdependencies.

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21
Q

What are the pros of the matrix structure?

A

Flexibility - focus on customers, projects, etc.

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22
Q

What are the cons of the matrix structure?

A

Dual command
Dilution of functional authority
Time consuming meetings

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23
Q

What is centralisation and decentralisation?

A

(De)centralisation refers to the degree of autonomy/decision making ability diffused through the organisation

24
Q

What are the pros of decentralisation?

A

Senior management free to concentrate on strategy
Better local decisions due to local expertise
Better motivation
Quicker responses/flexibility
Training/career path

25
What are the cons of decentralisation?
Loss of control by senior management Dysfunctional decisions due to a lack of goal congruence Poor decisions made by inexperienced managers Extra costs re information
26
What are the factors affecting the degree of decentralisation?
Management style and ability Size of the organisation Range of products/services/brands Geographic location
27
What is the span of control?
The span of control considers how many people report to one superior.
28
What are tall organisations?
Many managerial levels (hierarchies) Narrow span of control
29
What are flat organisations?
Fewer managerial levels (hierarchies) Wide span of control
30
What are the advantages of tall organisations?
More promotional opportunities Narrow spans of control means more supervision Smoother progression from one level to another Small spans of control lead to more personal contact with line manager
31
What are the disadvantages of tall organisations?
Inhibits delegation More expensive in terms of management overheads Extra levels of management slow down decision making and communication
32
What are the advantages of flat organisations?
Wide span of control encourages more delegation Lower management costs Better communication between top management and the workers
33
What are the disadvantages of flat organisations?
Managers may be overworked as they have more people to supervise Greater delegation means less central control
34
What factors can affect the span of control?
Complexity of work Degree of change Management's ability Assistance received Amount of non-supervisory work undertaken by the supervisor Level of knowledge and experience of staff Level of cost associated with mistakes Level of danger Physical proximity of subordinates/geography
35
What are the 2 extremes of structure summarised by Burns and Stalker?
Mechanistic and Organic
36
What is a mechanistic structure?
Rigid and formalised - formal - hierarchical - authority and control based - focuses on efficiency
37
What is an organic structure?
Fluid and Flexible - Informal - Flat - Project teams - power based on expertise
38
What is a sole trader?
A single proprietor owns the business, taking all the risks and enjoying all of the rewards of the business.
39
What is the advantage of being a sole trader?
No need to share profits Usually low cost Self-sufficiency and independence little or no regulation Own boss
40
What are the disadvantages of being a sole trader?
Unlimited liability High risk: about 75% of small businesses cease in first 4 years Problems raising finance Hard to negotiate competitively with suppliers Totally dependent on health of proprietor Can't use floating charges
41
What is a partnership?
Two or more people who own a business, taking all the risks and enjoying all of the rewards of the business.
42
What are the different forms of partnerships?
General partnerships - no separate legal identity Limited liability partnerships - a separate legal identity exists. Partners liability is limited to their investment
43
What are the advantages for general partnerships?
Few regulatory obligations Bring together range of skills and experience More owners to put finance into the business Business not dependent on health of one individual
44
What are the disadvantages of general partnerships?
Each partner has unlimited liability for the business debts Potential disagreements between partners
45
What is a limited company?
A company is a separate legal entity from its owners (shareholders)
46
What are the two main forms of limited companies?
Private limited company and Public limited company
47
What are the advantages of limited companies?
The liability of shareholders to business debt is limited to initial investment in company shares. Ownership is transferred easily by selling shares Companies can find it easier to raise new capital Can use both floating and fixed charges
48
What are the disadvantages of limited companies?
Legal burdens - complying with CA 2006 Quoted companies can suffer from short-termist pressure from city investors Financial statements open to public scrutiny
49
What is a joint venture?
A separate join-owned company
50
What is licensing/franchising?
One company allows another to manufacture/market its product or service
51
What are strategic alliances?
'Loose' collaboration
52
What are agency agreements?
One party distributes another's products
53
What are the issues to consider when forming alliances?
Sharing risks and returns Splitting out costs Potential conflicts over decisions Potential to gain expertise from the other party Allowing the third party access to your information and skills
54
What is a group?
A number of companies under common control The parent company will own shares in subsidiary companies to an extent that the owners of the parent company will also have control over the subsidiary
55
What are the advantages of operating as a group?
Different companies can be responsible for different products Easy to sell of part of business Economies of scale through vertical integration
56
What are the disadvantages of operating as a group?
Consolidated accounts must be prepared many acquisitions add negative shareholder value

BTF (7 decks)

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