SG 3 - Org Structure

Question 1

What does an org structure do?

Answer 1

It determines how decision-making authority and responsibility is delegated, as well as specifies the formal lines of communication and reporting within an organization

Question 2

4 factors that affect org structure

Answer 2

Economic environment
Competition/industry
Products/services
Regulatory

Question 3

A formal org structure allows organizations to do 3 things:

Answer 3

• effectively implement strategy
• allow for timely decisions
• create clarity in roles and responsibilities

Question 4

Simple structure definition and +/-

Answer 4

owner, sole shareholder or group of managers make all decisions and communicate them to everyone

+ decisions can be made quickly
+ decisions likely to be consistent as they’re made by one person
- no empowerment for employees leading to turnover

Question 5

Functional structure definition +/-

Answer 5

Specialized departments managed e.g. sales/accounting etc
+ clear path for individual career development
+ promotes learning
- interdepartmental communication is limited
- as org grows top management may lose control of their department

Question 6

Divisional structure definition +/-

Answer 6

Org split into divisions, each one managed like a separate business
+ allows divisions to focus on one thing, and develop a culture
+ stronger culture retains employees
- can create a sense of competitiveness between divisions, negatively affecting bottom line
- possible incompatibility of products

Question 7

Matrix structure definition +/-

Answer 7

Functional and business unit structures are combined at the same level
+ promotes input from multiple employees increasing engagement
+ quick resolution of issues
- multiple lines of communication
- unclear chain of command
- more managers so more expensive (employees report to two managers)

Question 8

Network structure definition +/-

Answer 8

Matrix structure with no office - totally virtual
+ promotes input from multiple employees increasing engagement
+ quick resolution of issues
+ lack of overheads saves money
+ can attract talent as people can work from anywhere
- multiple lines of communication
- unclear chain of command
- more managers so more expensive (employees report to two managers)
- reliant on internet connections
- possible imbalance of work

Question 9

When are centralized structures appropriate? +/-

Answer 9

When there are few leaders
+ decisions are quick and efficient
+ cheaper as less managers
- “group think” - lack of innovation

Question 10

When are decentralized structures appropriate? +/-

Answer 10

When there are lots of people responsible for decision-making
+ faciliates gworth
+ greater empowerment
+reduced turnover
- managers of each department can become competitive with each other