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CIMA E1 - Managing Finance in a Digital World > Chapter 3 - Structure and shape of finance function > Flashcards

Chapter 3 - Structure and shape of finance function Flashcards

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1
Q

What are Mitzberg’s 6 building blocks?

A
  • Operating core
  • Strategic apex
  • Middle line
  • Technostructure
  • Support staff
  • Ideology
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2
Q

What is the operating core?

A

Basic work of organisation

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3
Q

What is the strategic apex?

A

Higher levels of management responsible for formulating strategy and long-term plans

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4
Q

What is the middle line?

A

Link between strategic apex and operating core, include mid to low level management

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5
Q

What is the technostructure?

A

Responsible for designing procedures and standards

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6
Q

What are support staff?

A

Provide services to organisation which support operations/production

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7
Q

What is ideology?

A

Organisations’ values and beliefs (culture)

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8
Q

What are the 6 co-ordination mechanisms?

A
  • Mutual adjustment
  • Direct supervision
  • Standardisation of work processes
  • Standardisation of outputs
  • Standardisation of skills and knowledge
  • Standardisation of norms
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9
Q

What is mutual adjustment?

A

Co-ordination through informal contact

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10
Q

What is direct supervision?

A

Co-ordination through a formal hierachy

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11
Q

What is Standardisation of work processes?

A

Literally what it says

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12
Q

What is Standardisation of outputs?

A

Product and service specifications

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13
Q

What is Standardisation of skills and knowledge?

A

Identifies training needs and the necessary skills base to do the work

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14
Q

What is Standardisation of norms?

A

Cultural norms and expectations

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15
Q

What is an entrepreneurial structure?

A
  • Built around owner and management
  • Totally centralised
  • Typically small companies
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16
Q

What are the advantages of an entrepreneurial structure?

A
  • Fast decision making
  • Responsive to market
  • Good control
  • Close bond to workforce
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17
Q

What are the disadvantages of an entrepreneurial structure?

A
  • Lack of career structure
  • Dependent on owner/managers
  • Cannot cope with diversification/growth
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18
Q

What is a functional structure?

A
  • Employees grouped into departments
  • Organisation outgrown entrepreneurial structure
  • Appropriate for small company with few products
19
Q

What are the advantages of the functional structure?

A
  • Economies of scale
  • Standardisation/efficiency
  • Specialists
  • Career opportunities
20
Q

What are the disadvantages of the functional structure?

A
  • Empire building
  • Slow to adapt to market changes
  • Conflicts between functions
  • Cannot cope with diversification
21
Q

What is the divisional structure?

A
  • Split into several divisions by product or location
  • Headed by general managers
22
Q

What are the advantages of the divisional structure?

A
  • Enables product/geographical growth
  • Clear responsibilities
  • Training of general managers
  • Easily adapted for further diversiaifcation
  • Top management can concentrate on strategic matters
23
Q

What are the disadvantages of the divisional structure?

A
  • Duplication
  • Lack of goal congruence
  • Potential loss of control
  • Allocation of central costs
  • Specialists isolated
24
Q

What is the matrix structure?

A
  • Combines benefits of functional and divisional
  • Appropriate for multi-product and multi-functional organisations
25
Q

What are the advantages of the matrix structure?

A
  • Benefits of functional and divisional
  • Flexibility to focus on customers
  • Encourages teamwork
26
Q

What are the disadvantages of the matrix structure?

A
  • Dual command
  • Dilution of functional authority
  • Time consuming meetings
27
Q

What factors affect the amount of centralisation?

A
  • Management style
  • Ability of management/employees
  • Geographical spread
  • Size of organisation
28
Q

What are the advantages of decentralisation?

A
  • Senior management free to concentrate on strategy
  • Better local decisions
  • Better motivation
  • Better flexibility
29
Q

What are the disadvantages of decentralisation?

A
  • Loss of control by senior management
  • Dysfunctional decisions
  • Poor decisions by inexperienced managers
  • Training costs
  • Duplication of roles
  • Extra costs
30
Q

What is the scalar chain?

A

Line of authority which can be traced up/down chain of command

31
Q

What factors influence the span of control?

A
  • Nature of work
  • Type of personnel
  • Location of personnel
32
Q

What is a tall organisation?

A
  • Many levels of management
  • Long scalar chain
  • Narrow span of control
  • More bureaucratic
  • Longer decision making process
33
Q

What is a flat organisation?

A
  • Few levels of management
  • Short scalar chain
  • Wide span of control
  • Weaker control
  • Lack of employee progression
34
Q

What is a hierarchical triangle (traditional shape)?

A

Contains broad base of finance workers reporting upwards to a series of narrower management levels

35
Q

What is a segregated triangle?

A
  • Development over last 20 years
  • Could be carried out by a shared service centre
  • Bottom represents this
36
Q

What is the diamond shape?

A
  • Today’s digital age
  • Traditional triangle eroded due to automation
  • Central bulge due to shared service centres
  • Flat top shows move to collaborative finance leadership
37
Q

What are the 4 levels of the diamond shape (top to bottom)?

A
  • Senior finance team
  • Strategic business partnering
  • Digital centers of excellence
  • Smart finance factories
38
Q

What is the role of strategic business partners?

A

Work with internal/external stakeholders to influence and shape how value is created and preserved

39
Q

What is the role of the digital centers of excellence?

A

Specialists generate further insight about value creation and preservation

40
Q

What is the role of smart finance factories?

A

Assemble and extract data to provide info and insight

41
Q

What are the non-core services that are often outsourced?

A
  • Facilities management
  • HR management
  • Cleaning
  • Catering
  • Legal
42
Q

What are the 3 main types of transaction costs?

A
  • Search and info
  • Bargaining
  • Policing and enforcement
43
Q

What are the advantages of outsourcing the finance function’s activities?

A
  • Cost reduction
  • Radical transformation
  • Access to superior capabilities
  • Business partnering
44
Q

What are the disadvantages of outsourcing the finance function’s activities?

A
  • Loss of control
  • Managing outsourced services
  • Disruption
  • Risk of IP theft and data breaches
  • Erosion of internal knowledge and skills

CIMA E1 - Managing Finance in a Digital World (12 decks)

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