Chapter 8 Flashcards
What factors must you consider when looking at organizational structure (3)
The organizational configuration of the entity itself (eg entrepreneurial, divisional)
The degree of flexibility and control needed by the org
Degree of centralization or decentralization imposed by management or circumstance
What are the 4 types of business structure
Entrepreneurial (simple)
Functional structure (bureaucracy)
Matrix structure
Divisionalisation
What are 3 aspects of the entrepreneurial structure
All decisions run through the entrepreneur
Offers flexibility and swift decision making
Dependency on entrepreneur creates limited ability to expand or cope with diversification
What are 3 aspects of the functional (bureaucratic) structure
Specialisms allows the firm to be more efficient and benefit from EOS
Departments may have a tendency to silo and communication may be slow
Rigid structure is unsuitable for highly dynamic environments
How can a business be divided in divionsalisation structure
What is the top of the structure
Geography
Product or market
Type of operation
Head office
What is centralization v decentralization
Refers to how much authority/ decision making ability is diffused throughout the org
Centralized - upper levels retain authority to make decisions
Decentralized - ability to make decisions passed down to lower levels
What are the positives (3) and negatives (3) from SSCs
Positives
Cost savings from reduced headcount and economies of scale
Knowledge sharing and development of best practice
Standardized processes
Negatives
Loss of knowledge in terms of business specifics
Staff based in SSC are removed from day to day realities
Weak relationships between SSC and the local business
Which model describes a flexible firm
Break down the model
The shamrock organization
Broken down into:
Professional core (permanently employed staff)
Flexible labour force (temp and part time workers)
Contractual fringe (external providers undertaking non-core activities)
Customers (enabled to execute some tasks themselves)
How can transfer pricing be used by a division to be manipulative
Can determine the profits of a division
These profits may affect the performance evaluation
Can determine taxes to be paid
Adding incremental margins could influence the final sales price of the product
Sometimes dysfunctional decisions can be made
How can transfer pricing be used by a division to be manipulative
Can determine the profits of a division
These profits may affect the performance evaluation
Can determine taxes to be paid
Adding incremental margins could influence the final sales price of the product
Sometimes dysfunctional decisions can be made
What is the best way for companies to develop overseas operations incrementally
Selling goods produced in home market to overseas customers
Formal pursuit of overseas sales channel through use of agents
Set up overseas office to build overseas base
Formally setting up production in overseas territory
Which model describes possible structures for multi- national businesses
Describe each part
Bartlett and Ghoshal
Matrix varying on level of global co-ordination and level of local independence
HC LI - global product division
HC HI - transnational corporation
LC LI - international division
LC HI - local subsidiaries
Which 3 committees should good corporate governance include
Audit committee
Nominations committee
Remuneration committee
What should the split between EDs and NEDs be for good corp gov
Majority NEDs
