Strategy and Structure

Question 1

Organisational structures

Answer 1

~ entrepreneurial structure
~ functional structure (bureaucracy)
~ divisions

Question 2

Entrepreneurial structure

Answer 2

~ single owner-managed business
~ quick to adapt
~ limited for expansion

Question 3

Functional structure (bureaucracy)

Answer 3

~ departments defined by their functions
~ allows economies of scale + specialisation
~ hampers innovation and be rigid

Question 4

Divisions

Answer 4

~ business divided into autonomous units
~ good for growth and diversification
~ most suitable for large diversified businesses

Question 5

Bases of divisionalisation

Answer 5

~ geographical
~ product/brand
~ customer/market segment

Question 6

Rules for successful divisionalisation

Answer 6

~ autonomy

~ controllability - factors divisions evaluated on should be w/in their control

~ corporate optimality - aim for best results for corporation as a whole

Question 7

Transfer pricing cost methods

Answer 7

~ full cost (VC + FC)
~ variable cost (not FC)
~ opportunity cost (lost revenue)

Question 8

What is the optimal transfer pricing calc?

Answer 8

Higher of:

a) variable cost
b) opportunity cost

Question 9

5 Main sections of the code:

Answer 9

~ leadership
~ effectiveness
~ accountability
~ remuneration
~ relationships w/ SH

Question 10

Non Executive Directors (NED) should…

Answer 10

~ provide independent view
~ scrutinise mgt performance
~ scrutinise integrity of financial info
~ appoint/remove executive directors

Question 11

Mintzberg’s organisational forms

Answer 11

~ strategic apex (ensure aims are met)
~ middle line (managers)
~ operating core (work on product/service)
~ technostructure (aim for process standardisation)
~ support staff

Question 12

Machine bureaucracy

Answer 12

~ arises from power of technostructure
~ emphasis on regulation
e.g. sandwich shop

Question 13

Professional bureaucracy

Answer 13

~ arises from predominance of operating core

e.g. accounting firm

Question 14

Divisionalised form

Answer 14

~ powerful middle line
~ managers control autonomous divisions
e.g. global manufacturer

Question 15

Adhocracy

Answer 15

~ complex + disorderly structure
~ no formalised procedures
~ core activities carried out by project teams

Question 16

Pros of Matrix structure

Answer 16

~ flexibility
~ improved communication
~ encourages inter-disciplinary co-operation

Question 17

Cons of Matrix structure

Answer 17

~ conflict between managers
~ more bosses = more stress for staff
~ more costly
~ slow decision making

Question 18

Shamrock organisation

Answer 18

core of essential executives and workers, supported by contractors and part-time help (0hrs)