Organisational Design Flashcards
Functional organisation : definition
Organised by departments within the business
Functional organisation: advantages
Accountability is clear
Clarity is improved
Specialisation is more efficient
Functional organisation: disadvantages
Communication is weakened
Inertia may set in
Can become overly bureaucratic
Not suitable for larger businesses
Product organisation: definition
Organised by types of goods/services they produce.
Product organisation: advantages
Gives focus on individual products
Each group run as separate profit centre
Cooperation will improve
Product organisation: disadvantages
Danger of duplication
Rivalry can get out of hand
Individual teams can get out of overall management control
Area organisation: definition
Organised by markets where the business operates geographically.
Customer organisation: definition
Organised by the markets where the products are sold
Customer organisation: advantages
Focus on customers and individual needs
Departments can be organised by market segment.
Customer organisation: disadvantages
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
Process organisation: definition
Organised by stages in making the product.
Process organisation: advantages
Focus on production processes
Helps identify problem areas
Allows new tech to be introduced at any stage of production
Process organisation: disadvantages
Duplication of resources
De layering : definition
Removing,Ayers of management from the hierarchy of the organisation.
De layering : advantages
Reducing number of layers in hierarchy Lower labour costs Faster decisions Shorter communication paths Stimulating employee innovation Greater emphasis on teamwork
Delegation : definition
The assignment to others of the authority for particular functions, tasks and decisions
Delegation : advantages
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
Delegation : disadvantages
Shouldn’t delegate responsibility
Depends of experience of subordinates
Harder in smaller firms
Increase workload and stress of subordinates
Chain of command : definition
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.
Span of control : definition
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.
Tall structure organisation : definition
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)
Tall organisation : advantages
Narrow span of control
Clear management structure
Function of each layer clear and distinct
Lear progression and promotion ladder
Tall organisation : disadvantages
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
Flat structure : definition
A flat organisation will have relatively few layers or just one layer of management. Chain of command is short and wide.
Flat structure : advantages
Greater communication
better team spirit
less bureaucracy and easier decision making
fewer levels of management ie lower costs.
Flat structure : disadvantages
Workers have more than one boss
Limit growth of organisation
Limited to smaller organisation
Function of each department blurred.
Matrix structure : definition
In a business where there are more than one project running at a time a matrix structure is more suitable than a standard hierarchy.
Matrix structure: advantages
Ideal for businesses that works on a project by project basis.
Very flexible structure means staff can jump in and out of different rolls
Matrix structure: disadvantages
Coordination problems
Conflict of interest across projects
Staff stretched across different projects
Centralisation : definition
Most decisions are take. At the top tiers of the firm and this means employees at lower levels have little authority.
Centralisation: advantages
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
Centralisation: disadvantages
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
Decentralisation: definition
Decision making is spread out to include more junior managers in the hierarchy, as well as individual business units or trading locations
Decentralisation: advantages
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
