Organisational Design

Question 1

what is organisational design?

Answer 1

is the formal and systematic way the managment of a business is organised

Question 2

reasons why a company would use organisational chart

Answer 2

indicate how employees are linked to other employees in business

they help individuals see their position in the business who they are responsible for as well as who are accountablwe to

allow compamies to pinpoint areas where speaclist workers are needed

show how different department relate to each other

Question 3

how can organisational charts be demotivating to employees

Answer 3

they have no been given the corret=ct status on chart

if they are at the bottom of the chart

does the business really need them

Question 4

two factors when decising organisational structure

Answer 4

managmnet hierarchy

span of control

Question 5

what is hierarchy?

Answer 5

is the order or levels of managment in a firm, from the lowest to highest rank

Question 6

what is span of control?

Answer 6

refers to the number of subordinates directly working under a superior or manager

Question 7

narrow span of control

Answer 7

Advanatges

tight control and supervision

better co-ordination

better communication

better chances of promotion

Disadvantages

subordinates may not be motivated

more costly- supervise more employees

Question 8

wide span of control

Answer 8

Advantages

superiors can delegate more work- subordinates have more freedom

disadvantages

requires a suitable superior who is capable of managing a larhe number of people

Question 9

tall organisational structure

Answer 9

long chain of command

narrow span of control

Advantagres

it enables managers to closely supervise their employees as well as improving the standard of communication in the workplace

enables employrees to specialise in particular job roles

Disadvantages

employees are supervised so closely it prevents them from using thweir initiative and making their own decisions which decreases their motivation

managers find this structure difficult as larger number of junior costs- increasing costs

Question 10

flat organisational structure

Answer 10

this is often taking out the middle managment

short chain of command

wide span of control

Advantages

saving made from laying off expensive managers

better communication

better motivated staff if they are empowered

senior managers can also make decisions much quicker

Disadvantages

remainign managers may become demoralised- over burdened with work

communication may suffer

fewer layers may also mean that there are fewer oppurtunites for promotion of staff

Question 11

what are the key organisational functional areas?

Answer 11

production function

finance function

human resources function

research and development function

sales and marketing function

administrative function

Question 12

production function

Answer 12

responsible for turning raw materials into finished products

Question 13

finance function

Answer 13

keeps records of money received and paid out

Question 14

human resources function

Answer 14

purpose of this is to develop staff so that they contribute to achieving the organisation’s objectives

Question 15

research and development function

Answer 15

aims to improve existing products, create new and better products, improve production methods and create cost-effective processes

Question 16

sales and marketing function

Answer 16

investigates which market the organisation is aiming at, the type of customer making up the market and preferences

Question 17

administrative function

Answer 17

deals with all administrative tasks, producing documents

Question 18

advantages of functional structure

Answer 18

specialisation- each department focuses on its own work

Accountability- helps identify who is responsible for what activities

clarity- employees know exactly what their role is

Question 19

disadvantages of functional structure

Answer 19

resistance to change- individual objectives can conflict with the overall objectives

co-ordination- sales may maximise but production may not be able to keep up with this

gap between top and bottom- long chain of command- slow decision making

Question 20

forms of organisational structure

Answer 20

entrepreneurial structure

functional structure

matrix structure

Question 21

entrepreneurial structure

Answer 21

all decisions made centrally

decisions made quickly

can be problematic as organisation gets bigger it becomes difficult for entrepreneur to maintain direct authority- so change is needed

Question 22

functional structure

Answer 22

divide organisation into marketing, production and finance

each layer of hierarchy reflects the distribution of responsibility and authority

it can be inflexible as there is an inability to change and meet new demands

Question 23

matrix structure

Answer 23

emphasis on getting people with particular specialist skills together in project teams

teams only exist for the duration of the project- develop new products and services

developed to overcome problems with entrepreneurial and bureaucratic structure

Question 24

advantages of matrix organisations

Answer 24

individuals are chosen according to the needs of project

use of project team- dynamic and specialised- view problems in different way

project managers are directly responsible for completing the project within specified deadline and budget

Question 25

disadvantages of matric organisation

Answer 25

conflict of loyalty- can develop between managers over allocation of resources

teams have a lot of independence- difficult to monitor

costs can be increased- more project managers= more capital

Question 26

advantages of business structure by product

Answer 26

clear focus- constantly producing same product, they will become specialists and can react to customer needs

competition- positive competition can exist between divisions

better control- each division can act as a separate profit centre- easier to assess individual performance

Question 27

disadvantages of business structure by product

Answer 27

duplication of functions- situations where extra staff may be required- e.g. sales team for every product

negative effects of competition- competition may encourage disharmony and shortcuts taken

lack of centre of control- each division has control over its own product, no central control

Question 28

advantages of business structure by area

Answer 28

serves local needs better- organisation will be located close to customer

positive competition- competition between two different locations

more effective communication between business and local customers- better position to understand needs

Question 29

disadvantages of business structure by area

Answer 29

conflict between local and central management

duplication of resources and functions

Question 30

advantages of business structure by customer

Answer 30

it may be appopriate where customers are offered different facilities. different departments may specialise for their needs

Question 31

disadvantage of business structure by customer

Answer 31

very costly

Question 32

advanatges of business structure by process

Answer 32

allows managment to identify clearly where problems arise in production process

allows new technology to be introduced at any stage of production

Question 33

disadvantages of business structure by process

Answer 33

duplication can occur if different people involved in similar processess across a range of products

Question 34

advantages of cenralisation

Answer 34

senior managment will have more control of the business

procedures such as ordering and purchasing can be standardised throughout the organisation- leads to economies of scale and lower costs

senior managment can make decisions from the point of view of business as whole whereas subordinates would tend to make decisions from only their department point of view

should be more experienced and skillful in making decisions

communication may improve if there are fewer decision makers

in a crisis, business will need strong leadership ny a central group of senior managers