Session 2 - Organisational Structure and Governance

Question 1

Name 3 different organisational structures?

Answer 1

Functional
Divisional
Matrix

Question 2

What is a functional structure?

Answer 2

Divides the business into teams with specialised functions or skills. Work can be carried out quickly and efficiently, creating a pool of expertise. Most common structure

Question 3

What is a divisional structure?

Answer 3

Usually used for larger businesses, number of different teams each with a focus on an individual product or service or on a geographical area. Each division will have its own budget and will typically have one director at the top. Need to avoid unhealthy competition between divisions

Question 4

What is a matrix structure?

Answer 4

Individuals will work across teams and projects. A team may consist of one individual from each of the following teams: Design, production, marketing and finance. Each of the staff will then return to their usual team after the project.

Question 5

What 3 factors will determine a managers span of control?

Answer 5

Size of organisation
Type of work that the individuals do
Location of staff

Question 6

What is a tall organisational structure?

Answer 6

The chain of command will have several different layers of management. Each manager will have a narrow span of control. Decision making often will take longer as info must pass between several layers of management.

Question 7

What is a flat organisational structure?

Answer 7

Fewer levels of management, resulting in a wider span of control. Decisions are made quickly up and down the strcuture however there are fewer roles to progress into.

Question 8

What is governance?

Answer 8

Provides a framework for managing. It identifies who can make decisions and who has the authority to act on behalf of the organisation.

Question 9

What does good governance look like in a business?

Answer 9

Good governance will ensure an individual cannot go beyond their scope of authority. Enables the directors together with the management to run the business ethically and sustainably.

Question 10

Name 3 different governances?

Answer 10

Corporate Governance
Financial Governance
Legal Governance

Question 10

What is corporate governance?

Answer 10

Directors, appointed by the shareholders, must have systems in place to control the way the business operates and will include settting businesses strategic aims and objectives and providing effective leadership.

Question 11

What is financial governance?

Answer 11

This focuses on how the business collects, manages and controls financial information. Might just be as simple as making sure suppliers are paid on time and money from customers are collected on time.

Question 12

What is legal governance?

Answer 12

Business must ensure that it complies with the necessary legal legislation and regulation. This includes implementing levels of authroity responsible for ensuring the rules are complied with.

Question 13

What is centralised control (top down approach)?

Answer 13

The decision making rests with higher tiers of management, such as owners in small businesses or directors in large businesses. Decisions will be imposed on staff to implement rather than contribute to the decision making process. The higher someone is in the business the more influence they have on direction where the business goes and they will be distanced from the actual activites of the business

Question 14

What is decentralised control (bottom up approach)?

Answer 14

Authority for decision making is given to lower levels of management, these decisions will not be needed to check with management everytime.

Question 15

Advantages and disadvanatges decentralised control?

Answer 15

Advantages:
Leads to a more collaborative atmosphere.
Senior management can focus on key decisions while leaving to the day-to-day decisions to team managers who can make them quickly.
Disadvantages:
Lower level management might not have the experience to make good decisions.
May lead to a disconnection between senior managers and staff leading to a loss of control

Question 16

Name 3 different types of levels of management in an organisation?

Answer 16

Strategic or Corporate Level
Managerial level
Operational level

Question 17

What occurs at a Strategic or Corporate level?

Answer 17

At the top of the organisation where strategic decisions are made, decisions tend to be long term.

Question 18

What occurs at a managerial level?

Answer 18

Middle level of management. Decisions relate to how the team go about acheiving goals set from higher above.

Question 19

Explain operational level?

Answer 19

Decisions made at this level are short term and relate to pratical day-to-day runnings of the business.

Question 20

Name the key functions of a business?

Answer 20

Operations/productions
Sales and marketing
HR
IT
Distribution and logistics

Question 21

What does the operation/production team do and how does the finance function relate?

Answer 21

Ensures the production is as efficient as possible. Ensuring a fair price is paid, finance function helps negotiating credit terms and agreeing good prices. Also helps ensure sufficient inventory is available.

Question 22

What does the sales and marketing team do and how does the finance function relate?

Answer 22

Ensures customers are made aware of products and services, and needs of customers are met. Finance function will be involved by calculating prices to be charged. They will also set budgets for the marketing team.

Question 23

What does the HR team do and how does the finance function relate?

Answer 23

Ensures all employment rules and regs are met and ensures a positive environment. Finance function will set budgets for recruiting new and high quality staff. Also approving cost for training and managing staff benefits and pay.

Question 24

What does the IT team do and how does the finance function relate?

Answer 24

Ensures all IT systems are working and issues are dealt with promptly. Finance function will approve costs for new IT systems and will need to monitor costs for software which keeps data safe and secure.

Question 25

What does the distribution and logistics team do and how does the finance function relate?

Answer 25

Ensures all raw materials and finished goods are moved effectively. Finance function will calculate lead times and will aslo advise on costs of holding inventory. They will aslo calculate costs of exporting and importing goods.

Question 26

How is risk defined?

Answer 26

Possibility of something bad happening.

Question 27

What is uncertainty?

Answer 27

Uncertainty refer to situations where the decision maker does not know the possible outcomes or probability that they will occur.

Question 28

What does business risk mean?

Answer 28

A business’s vulnerability to factors that could decrease its profits or cause the business to fail

Question 29

What is a strategic risk?

Answer 29

Risks that arise from fundamental decisions the directors of the business make about objectives or strategies.

Question 30

What is a financial risk?

Answer 30

Financial risks come from a change in the financial conditions in which a business operates. Might be a change in interest rates resulting in an increase in repayments.

Question 31

What is an operational risk?

Answer 31

A risk which arises from the way in which an organisation operates its business functions.

Question 32

What is the definition of cyber risk?

Answer 32

any risk associated with financial loss, disruption or damage to the reputation of an organisation from failure, unauthorised or erroneous use of its information systems.

Question 33

What is a reputational risk?

Answer 33

Risks which can be a threat to the name of the business which can be from actions of one or more of its employees or third parties.

Question 34

What is the TARA method and what is it used for?

Answer 34

TARA is the framework to decided how individual risk can be managed.

Transfer
Avoid
Reduce
Accept

Question 35

Using the TARA approach, how should a High impact Low likelihood risk be treated?

Answer 35

Transfer

Question 36

Using the TARA approach, how should a Low impact Low likelihood risk be treated?

Answer 36

Accept

Question 37

Using the TARA approach, how should a High impact High likelihood risk be treated?

Answer 37

Avoid

Question 38

Using the TARA approach, how should a low impact high likelihood risk be treated?

Answer 38

Reduce

Question 39

Name 2 advantages and 2 Disadvantages of functional structures?

Answer 39

Ad - Potential Economies of Scale, Career path for employees
Dis - Empire building, Decisions made slower

Question 40

Name an example of a strategic risk?

Answer 40

A car manufacturer moving to another country

Question 41

Name a financial risk?

Answer 41

Might be interest rates rising and a business being heavily impacted as they use loans frequently