Chapter 4: Organsiational Structure and Governance

Question 1

What are the advantages and disadvantages of an Entrepreneurial structure?

Answer 1

Advantages - fast decision making, good control, close bond

Disadvantages - lack of career structure, dependant on the capabilities of the owner, can’t cope with company growth

Question 2

What are the advantages and disadvantages of an Entrepreneurial structure?

Answer 2

Advantages - fast decision making, good control, close bond

Disadvantages - lack of career structure, dependant on the capabilities of the owner, can’t cope with company growth

Question 3

What are the advantages and disadvantages of a Functional/departmental structure?

Answer 3

Advantages - career opportunities, employees role is specialised, more efficient

Disadvantages - slower to make decisions, conflicts between departments

Question 4

What is a functional structure?

Answer 4

If an organisation outgrows the entrepreneurial structure, they use the functional structure.

This groups together employees that undertake similar tasks into departments.

Question 5

What is an entrepreneurial structure?

Answer 5

This is built around the manager, one manager and several employees

Question 6

What is a divisional structure?

Answer 6

An organisation is split into divisions and each division is split into structures.

E.g. division 1 and division 2 each have their own finance, IT and marketing department

Question 7

Define empire building

Answer 7

Empire building is when the board have too much control over the business

Question 8

What are the advantages and disadvantages of a divisional structure?

Answer 8

Advantages - enables growth, clear responsibilities, easily adapted

Disadvantages - specialists may feel isolated, duplication of roles, allocation of costs can be a problem

Question 9

What is a matrix structure?

Answer 9

A combination of the functional and divisional structures.

Each division will have a set of departments, e.g. production, sales and finance department within the fruit and veg division

Question 10

What are the advantages and disadvantages of a matrix structure?

Answer 10

Advantages - flexible, enables growth, clear responsibilities, easily adapted, career opportunities

Disadvantages - dual command, dilution of authority, higher admin costs

Question 11

enables growth, clear responsibilities, easily adapted

Question 12

Define a scalar chain.

Answer 12

A scalar chain is the line of authority. E.g a long scalar chain has lots of levels of mangement

Question 13

Define a scalar chain.

Answer 13

A scalar chain is the line of authority. E.g a long scalar chain has lots of levels of mangement

Question 14

Define span of control

Answer 14

Span of control is the number of people a manager is responsible for

Question 15

Name the three factors that affect the span of control.

Answer 15

1. Nature of work
2. Type of personnel
3. Location of personnel

Question 16

Define a tall organisational structure

Answer 16

Many levels of management = long scalar chain and narrow span of control

Question 17

Define a flat organisational structure

Answer 17

Few levels of management = short scalar chain and wide span of control

Question 18

Define governance

Answer 18

Governance are the authority structures, processes and rules that an organisation has

Question 19

What is the difference between centralised and decentralised structure?

Answer 19

Centralised structure - the upper levels of a hierarchy have the authority to make decisions.

Decentralised structure - the authority to make decisions is passed down to people at lower levels

Question 20

What are the advantages of decentralisation?

Answer 20

– Senior management can concentrate on strategy.

– more motivation due to increased training.

– quicker responses due to small chain of command

Question 21

What are the disadvantages of decentralisation?

Answer 21

– Loss of control by senior management.

– dysfunctionality due to different decisions.

• Poor decisions made by inexperienced people.
• Extra costs such as training 

Question 22

What are the three different levels of planning?

Answer 22

One strategic planning – making long-term decisions for the entire organisation.

Business planning – plans for specific divisions and how to use resources.

Operational planning – short term, detailed and practical