Strategy & Organizacional Structure

Question 1

Define Mission and Vision

Answer 1

Mission and vision
All organisations should have a purpose that is known by their stakeholders. It is important for stakeholders to agree on the organisation’s purpose – even if they do not necessarily agree with that purpose. Think of the chaos that would result if shareholders thought the purpose of the organisation was to make profits but management thought its purpose was charitable.

Mission
An organisation’s mission can be defined as its reason for existence ie what its core purpose is. Well-constructed mission statements should contain the following:
- A brief description of what the company does and why it exists
- Which segment of the market it aims at (eg a supplier of luxury goods)
- Values, ethics and culture (eg offering all employees the chance to progress, complying with
laws, minimising environmental impact).
The mission statement communicates this important information to stakeholders.

Vision
A vision, or vision statement, has very similar content to a mission statement, but there is more emphasis on the future of the organisation. It is a description of what the organisation would like to achieve in the medium to long-term. This can serve as a guide when it comes to making business decisions.

Question 2

Describe the type os organizacional structures

Answer 2

Basic shape
In this structure, each function of the organisation is found in a separate, specialised department: Strategy, Finance, Operative, Marketing, Human Resources, IT. In larger companies, other functions can be developed like Logistics, Sales, etc.

There are two main decisions to make when designing a functional structure:

• Which departments (functions) should be recognised and what are their responsibilities? This is usually simple, but there are sometimes choices.
• How many layers should there be? For example, should there be only one managerial layer or will it be divided into senior managers, managers and assistant managers?

The number of layers will result in an overall shape that can be described as either a tall-narrow or wide flat structure:

Tall narrow. Shown below is a structure in which each manager or supervisor has only two people directly reporting. This means that the span of control is two. There are many layers and a considerable distance between the top and the bottom of the organisation. These are sometimes known as vertical organisations.

Wide flat. Shown below is a wide flat structure in which each manager or supervisor has ten people directly reporting. This means that the span of control is ten. There are few layers and only a short distance between the top and the bottom of the organisation. These are sometimes known as horizontal organisations.

Question 3

Describe the reasons due tall narrow companies move to a wide flat structure.

Answer 3

Many organisations have restructured so as to move from tall narrow
towards wide flat. This was because:
๏ It was thought that the many of the layers of middle management in the tall narrow structure were not carrying out useful functions – simply people checking on other people.
๏ Tall-narrow structures were very resistant to change. Employees in each layer had their entitlements and grades that they were reluctant to give up. There was great structural
inflexibility and this did not suit modern environments in which technical advances and competitive changes are very rapid.
๏ The many layers between top and bottom also meant that vertical communication of ideas was very slow. In a stable environment, this was not so important.

Question 4

Describe advantages and disadvantages for tall-narrow structures

Answer 4

Advantages

• Close supervision possible because span of control is small
• Many opportunities for promotion because there are many layers
• Task specialisation because of tight job specifications
• Task specialisation can be efficient in stable environments
• Expensive middle-management

Disadvantages

• Managers/supervisors might end up substantially redoing the work of their few subordinates
• Promotions might be small because there are so many layers
• Reluctance to do more than is set out in the job specification; inflexibility
• Employees reluctant to change and adapt to new environments because of concerns over their status.
• Slow and unreliable vertical communication

Question 5

Describe advantages and disadvantages for wide-flat structures

Answer 5

Advantages

• Employees are given more responsibility because their manager or supervisor now has a large number of people reporting and cannot duplicate work.
• Less task specialisation and a concentration on getting the job done rather than staying strictly with job specifications.
• Very real promotions.
• Flexible attitude to work and teams
• Fewer middle managers on the pay-roll.

Disadvantages

• Better managers and subordinates are needed to ensure that delegation and work are carried out properly.
• Potentially less efficient because the work is more varied. A danger that employees perform tasks for which they have little training.
• Few opportunities for promotion and when they come the change in responsibility can be huge.

Question 6

Describe a division structure with advantages and disadvantages

Answer 6

As organisations grow, they inevitably diversify ie they begin do carry out different operations. It is then common for the organisation to set up different divisions.

The divisions can be established by reference to:

• Geographical area,
• Products lines or phases.
• Customers,

Advantages

• Specialisation. a better knowledge of their business.
• Comparison of performance. Each Division can be compared.
• Modular business. It is easier to sell a part of the business.

Problems

• Duplication of some functions. This adds to costs.
• Coordination between divisions. This is particularly important if one division sells to another.

There is also a danger that two divisions might begin to compete.

Question 7

Describe Mintzberg´s organisational structure

Answer 7

Mintzberg suggested that organisations have five components:

• The strategic apex (top management)
• The middle line (middle managers)
• The operating core (the production workforce)
• Support services (eg accounting, IT, personnel)
• The techno-structure (the people responsible for devising and imposing standards, procedures and methodologies such as health and safety, quality control, employee handbooks)

Configuration

• The machine bureaucracy configuration
• The simple structure
• The professional bureaucracy
• The divisional structure

Question 8

Dsscribe a System

Answer 8

A system can be defined as:
“A set of things working together as parts of a mechanism or an interconnecting network; a complex whole.”

• The system is separated from its environment by the system boundary.
• Most systems take input from the environment, process it some way, and output it to the environment.
• Systems can be broken down into sub-systems.

Open and closed systems

• An open system is one which takes input from the environment and sends output to it. Nearly all systems are open.
• In theory there can also be closed systems that are completely cut-off from their environment.