Organisational Design

Question 1

Functional organisation : definition

Answer 1

Organised by departments within the business

Question 2

Functional organisation: advantages

Answer 2

Accountability is clear
Clarity is improved
Specialisation is more efficient

Question 3

Functional organisation: disadvantages

Answer 3

Communication is weakened
Inertia may set in
Can become overly bureaucratic
Not suitable for larger businesses

Question 4

Product organisation: definition

Answer 4

Organised by types of goods/services they produce.

Question 5

Product organisation: advantages

Answer 5

Gives focus on individual products
Each group run as separate profit centre
Cooperation will improve

Question 6

Product organisation: disadvantages

Answer 6

Danger of duplication
Rivalry can get out of hand
Individual teams can get out of overall management control

Question 7

Area organisation: definition

Answer 7

Organised by markets where the business operates geographically.

Question 8

Customer organisation: definition

Answer 8

Organised by the markets where the products are sold

Question 9

Customer organisation: advantages

Answer 9

Focus on customers and individual needs

Departments can be organised by market segment.

Question 10

Customer organisation: disadvantages

Answer 10

Difficult to defin which group a customer belongs to
Customer groups may be small
Duplication of resources
Individual departments may escape from proper management control

Question 11

Process organisation: definition

Answer 11

Organised by stages in making the product.

Question 12

Process organisation: advantages

Answer 12

Focus on production processes
Helps identify problem areas
Allows new tech to be introduced at any stage of production

Question 13

Process organisation: disadvantages

Answer 13

Duplication of resources

Question 14

De layering : definition

Answer 14

Removing,Ayers of management from the hierarchy of the organisation.

Question 15

De layering : advantages

Answer 15

Reducing number of layers in hierarchy
Lower labour costs
Faster decisions
Shorter communication paths
Stimulating employee innovation 
Greater emphasis on teamwork

Question 16

Delegation : definition

Answer 16

The assignment to others of the authority for particular functions, tasks and decisions

Question 17

Delegation : advantages

Answer 17

Reduce management stress and workload
Allow senior management to focus on key tasks
Subordinates are empowered and motivated
Good method of on the job training

Question 18

Delegation : disadvantages

Answer 18

Shouldn’t delegate responsibility
Depends of experience of subordinates
Harder in smaller firms
Increase workload and stress of subordinates

Question 19

Chain of command : definition

Answer 19

The flow of information, power and authority through the organisation. This at the top have more power and authority. They can delegate tasks to subordinates below them.

Question 20

Span of control : definition

Answer 20

This is a number. This is the number of subordinates that they can delegate to. The number of people that a manager if responsible for.

Question 21

Tall structure organisation : definition

Answer 21

It has many levels of management and supervision. There is a long chain of command running from the top of the organisation to the bottom. (Rarely exceed 8 levels of managment)

Question 22

Tall organisation : advantages

Answer 22

Narrow span of control
Clear management structure
Function of each layer clear and distinct
Lear progression and promotion ladder

Question 23

Tall organisation : disadvantages

Answer 23

Freedom and responsibility of employees is restricted
Decision making slowed down
Communication has to take place though many layers
Higher management cost as managers paid more

Question 24

Flat structure : definition

Answer 24

A flat organisation will have relatively few layers or just one layer of management. Chain of command is short and wide.

Question 25

Flat structure : advantages

Answer 25

Greater communication
better team spirit
less bureaucracy and easier decision making
fewer levels of management ie lower costs.

Question 26

Flat structure : disadvantages

Answer 26

Workers have more than one boss
Limit growth of organisation
Limited to smaller organisation
Function of each department blurred.

Question 27

Matrix structure : definition

Answer 27

In a business where there are more than one project running at a time a matrix structure is more suitable than a standard hierarchy.

Question 28

Matrix structure: advantages

Answer 28

Ideal for businesses that works on a project by project basis.
Very flexible structure means staff can jump in and out of different rolls

Question 29

Matrix structure: disadvantages

Answer 29

Coordination problems
Conflict of interest across projects
Staff stretched across different projects

Question 30

Centralisation : definition

Answer 30

Most decisions are take. At the top tiers of the firm and this means employees at lower levels have little authority.

Question 31

Centralisation: advantages

Answer 31

Easier to implement common policies and practices
Prevents other parts of the business becoming too independent
Easier to coordinate and control from centre
Economies of scale
Quicker decision making

Question 32

Centralisation: disadvantages

Answer 32

More bureaucratic
Local or junior managers are likely to be closer to customer needs
Lack of authority may reduce manager motivation
Customer services does miss flexibility and speed of local decision making

Question 33

Decentralisation: definition

Answer 33

Decision making is spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations

Question 34

Decentralisation: advantages

Answer 34

Decision make closer to customer
Better able to respond to local circumstances
Improved level of customer service
Good way of training and developing junior management
Improve motivation