Organisational Structure

Question 1

What is the other name for Organisational structure & how many ways are there?

Answer 1

• Organisational Tree

- 3 main ways

Question 2

Name the 3 main ways & draw the diagrams

Answer 2

• Function
• Product
• Region

Question 3

Explain how you organise by Function

Answer 3

Mostly in Ltd companies:

- Each functional area does one part of the work eg. Marketing, Operations, Finance, HR

Question 4

What are the Pro’s & Cons of organising by function?

Answer 4

Pros - Specialist can concentrate on their own work

Cons - Departments may not work well together

Question 5

Explain how you organise by Product

Answer 5

Common in large manufacturers:

- Product base splits organisation into different sectors, eg Home furnishings, toys & clothing

Question 6

What are the Pro’s & Cons of organising by Product?

Answer 6

Pros- Managers can make decisions that are relevant to each product sector.
Cons - Can be wasteful duplication of resource between sectors

Question 7

Explain how you organise by Region?

Answer 7

Normal in multinational businesses:

-Divisions may be regional or national

Question 8

What are the Pro’s & Cons of organising by Region?

Answer 8

Pros - Spreading management between regions makes day to day control easier
Cons - Can be wasteful duplication of resource between regions

Question 9

Explain Hierarchies

Answer 9

Businesses are organised into Hierarchies:

• The amount of authority a business has is determined by their place in the hierarchy
• They are series of levels where each level has a responsibility
• Generally the number of people at each level decreases as you go up
• At each level, a certain amount of responsibility is passed on (delegated) to people in the level below

Question 10

What is a Centralised Organisation?

What are Pros & Cons?

Answer 10

• All major decisions are made by one person or a few seniors at the top of the hierarchy
• Pros - These Senior managers tend to have lots of experience & can get an overview of whole bus giving uniform policies throughout
• Cons - Can slow down decision process as all decisions are made by one or two people. This means businesses can be slow to react to change

Question 11

What is a Decentralised Organisation?

What are Pro-s & Cons?

Answer 11

• The authority to make most decisions is shared out eg. regionally
• Pros - Employees can use expert knowledge of their sector to make decisions & can make them more quickly
  Cons - Inconsistencies may develop between depts / regions.
  
  • Decision makers may not be able to see the overall needs of the bus

Question 12

What can happen overtime?

Answer 12

Structures can change over time:

• Businesses usually get more hierarchical as they grow
• Small bus often run by owner, as they grow may need managers to organise & control things
• The bigger the bus the more managers required (more cost)
• Some businesses delayer their structure (remove layers of management) to reduce costs
• May also decentralise & give groups of workers more responsibility for own self management (This often happens as firms get bigger)