Organisational structure and governance - Lesson 2

Question 1

What are the three common organisational structures?

Answer 1

Functional
Divisional
Matrix

Question 2

How does a functional structure work?

Answer 2

The business is divided into specialised functions so that people with similar expertise and knowledge can pool together. Staff develop their skills through training from colleagues.

Question 3

What is a divisional structure?

Answer 3

Used for larger businesses with a number of different teams that separate to cover their own area or products, usually with a managing director at the top. Each team has their own HR dep, finance staff etc. (National Grid)

Question 4

What is a Matrix structure?

Answer 4

As well as working in their own functional teams, individuals will work across teams to work on new products.

Question 5

Flat structure

Answer 5

There are fewer levels of management and so more individuals at the bottom, so a wider span of control.

Question 6

Tall structure

Answer 6

More levels of management, so fewer people at the bottom so there is a narrow span of control.

Question 7

Centralised Control

Answer 7

The decision-making lies in the higher levels of management.

Question 8

De-centralised control

Answer 8

The decision-making lies in the lower levels of management such as the line managers.

Question 9

Strategic level of management

Answer 9

Big decisions that affect the whole business and are long-term

Question 10

Managerial level of management

Answer 10

The middle level and focused on how the firm can achieve it’s goals

Question 11

Operational level of management

Answer 11

Short-term and relate to day-to-day decisions. All 3 levels of management should support each other to reach decisions.