Organisation Structure and Governance Flashcards
Describe organisational structure
This refers to the shape of an organisation.
- Some organisations have many departments and divisions with many levels of management, whilst others may have very few.
What are 4 things the structure of the organisation will determine?
- Communication lines - who reports to who, reporting lines
- Chain of command - how each member of an org reports to another
- Responsibilities - who has a particular obligation to fulfil certain tasks
- Teams - people lived with a common purpose
What is the purpose of an organisation chart?
An organisational chart can be drawn of an organisation to highlight the links between individuals and departments and enable the understanding of how the organisation fits together.
What 6 things must directors of the business consider when deciding on the appropriate structure of the organisation?
- Size of organisation
- Organisational types (e.g., sole trader or multinational company)
- Organisation culture (formal culture or laid back etc.)
- The culture surrounding the organisation, the wider culture in the environment (some country’s cultures are more comfortable with rigid hierarchies).
- Role played by technology (does business encourage flexible working patterns or working at home).
- The degree of specialisation within the business and across employees.
What are the 3 types of organisational structures?
- Functional
- Divisional
- Matrix
Describe the functional organisational structure
- This type of structure is based on the idea of grouping together people who do similar tasks, expertise is pooled.
- For example, in a manufacturing organisation the functions might be sales, production, finance, and administration.
- These functions are often categorised as departments or divisions.
- An emphasis on roles rather than individuals who fill fill those roles.
- Tend to be bureaucratic and slow in distributing information. Communications may be slow between departments.
Describe the divisional structure
- Divides business into different regions, products, or services. Staff are grouped together based on what part of the business they work on.
What are characteristics of the divisional structure?
- Each division is largely autonomous and responsible for their own profits and losses.
- Decision making is decentralised.
- Each division has its own revenue streams, expenditure, and capital investments.
- Central head office typically retains some functions, e.g., finance, legal, and all divisions are accountable to head office.
Describe the matrix organisation structure
- A hybrid organisation.
- It combines departments seen in functional structures with project teams.
What are some characteristics of the matrix structure?
- Facilitates multiple departments to
communicate and collaborate on a project. - Co wide interaction is increased.
- Crosses functions with products/customer/projects.
- Communication tends to be dual (horizontal and vertical) rather than upwards and downwards through the hierarchy.
- The matrix structure is built upon the principles of flexibility and dual authority, going against the idea of one person being in charge.
- Matrix has increased in popularity due to the need for organisations to be flexible, benefitting from multifunctional teams and multi-skilling.
Describe the corporate/strategic operational level
- Concerned with the overall purpose and scope of the organisation and how value will be added to the different parts of the business.
- Part of the organisation that answers the question, ‘which businesses or markets should we be in’, and complex, long-term decisions are made here.
What are 4 decisions that the corporate/strategic organisational level might be concerned with?
- Where to be located geographically
- The products or services offered
- Should we compete on price or quality
- How should we allocate resources
Describe the managerial level
- Concerned with how to compete successfully in particular markets.
- This relates to the activities of departments or projects within the business for which there is a distinct external market for goods or services, e.g….
- Which products or services should be developed in particular markets?
- How to gain competitive advantage in market?
Describe the operational level
- Concerned with making it happen, ensuring the component parts of the organisation effectively deliver the corporate and managerial strategies in terms of resources and processes and people.
For example:
- HR strategy
- Marketing strategy
- Information and technology strategy
- Operations strategy
