Organisational Structure Flashcards
purpose of org structure
needed as a business **GROWS **larger to provide a framework for authority and responsibility to ensure clarity over job roles
KEY: use org structure as an eval point whenever business suggests growing/expanding - will the structure need to change to facilitate the growth? what structure should they use?
pros of functional structure
divided into the specialist departments
- increased specialisation in that area - increased productivity and efficiency thus lower unit costs
- greater sense of ownership over work of department - more committed to high quality performance thus more likely to meet objectives
- possibly greater EOS - all marketing for e.g. carried out by one department so lower unit costs
- more clarity over job role should increase productivity
cons of functional structure
- lackof horizontal communication links reduces cooperation - could slow down projects thus reduces flexibility to changing market conditions and loss of competiveness OR customer dissatisfaction OR reduce efficiency and increase costs (will depend on context)
- may compete for resources due to silo mentality- hostile environment may be demotivating thus higher absenteeism
functional structure eval
best used in stable industries with little need for change or innovation - apply to case - if very dynamic industry then less appropriate than matrix or product structure for e.g.
what are divisional org structures?
organises activities by location or product groups, each division has its own marketing, production and research teams
pros of product based/geographical org structure
cost, reactive, specialisation, needs
- encourages specialisation - focusing on what people are best at will increase efficiency and productivity thus lower unit costs and lower price without lower profit
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more responsive to market changes/more localised decision making as departments are closer to the market and more aware of needs - can gain first-mover advantage thus increases market share
3.better product portfolio mgmt due to more accurate cost and revenue allocation - allows loss makers/profitable products to be identified thus can remove dogs to save costs which might increase profits to reinvest in new profitable products - easier to implement customer-centric marketing strategies - can monitor needs of that particular market and better meet them thus increases satisfaction
don’t use both point 2 and 4
cons of product/geographical structure
- wasteful duplication of roles as opposed to centralised marketing for e.g. - reduces efficiency due to lower EOS thus higher unit costs
- loss of control over activities of each division - may take decisions that damage whole brand image - lower LT sales
- divisions may compete for resources to meet their own objectives rather than the business objectives - may damage work morale and motivation thus reducing productivity
eval divisional structure
depends on how distinct the markets for each product/location are
if needs are drastically different, costs of duplication of roles will outweigh benefits of focusing on needs
cons of functional structure
- silo mentality may make communication and coordination hard - reduce efficiency
- compete against each other for resources
- may develop their own cultures which may differ from overal business culture and further reduce flexibility to change
- combine points 1 and 3 to say that this reduces flexibility to changing market conditions as they take much longer to coordinate efforts - could reduce competitiveness if it delays a product launch or business fails to adapt to new rivals for e.g.
pros of tall structure
many layers of management
- path for career advancement - motivating thus higher productivity/lower turnover
- better supervision due to lower SOC - ensure employees performing well thus more likely to meet objectives
- clarity over job role (who is responsible for what) - more focused performance
- better manager relationships - support (same impact as point 1)
cons of tall structure
- higher management costs - charger higher prices thus less competitive and lower sales
- poor communication due to long chain of command - distortion/delay will reduce productivity thus increase unit costs
- slower to implement change in all layers - less flexible and responsive to changing market conditions thus lower competitiveness
- more direct managerial control can be demotivating
- little scope for delegation and job enrichment - demotivating
- negative work culture - one-way top-down could create mistrust, worsening resistance to change
pros of flat structure
defined by fewer layers of management
- better communication - could increase collaboration thus increase innovation leading to new USP and edge
- lower management costs
- more flexible and less resistant to change - respond to changes in market so increase competitiveness and sales
- less direct control and more delegation and job enrichment (wide SOC) - autonomy is motivating
cons of flat hierarchical structure
- less scope for promotion - less employee commitment and motivation so high turnover
- wide SOC puts stress on managers - reduces productivity thus increases unit costs
- less well-defined roles could cause confusion - wasteful duplication of work thus increasing costs and lowering profits (revenues constant)
- less effective manager supervision - cannot ensure employees performing well so may not meet objectives
eval for functional structure
best for stable industries with little need for innovation and change
why are hierarchical structure less flexible?
a sense of division is created within the organisation as managers tend to defend their own position in the hierarchy and are not encouraged to view problems from the perspective of any other department
what is the need for an org structure?
as a business grows larger, it needs clarity on:
- what each person’s role is
- who each worker is responsible to
- the authority each worker has
- relationships between different people and departments
- The number of subordinates reporting to each senior manager
- Formal channels of communication - horizontal and vertical
