Topic 8 - Structures Flashcards
Functional Grouping
Groups based on skills and expertise of staff.
Advantages:
-Clear structure, lines of authority can career pathways are mapped out
- Employees can get guidance from more experienced staff in their area of expertise
- Less duplication of resources
- Allows for specialisation
Disadvantages:
- Business may become too large
- Communication is low
- Slow reactions to changing external factors
- Groups may be more interested in own objectives
- Groups may compete
Location Grouping
Groups based on geographical locations.
Advantages:
- Can identify failing areas
- Can meet the needs of local market
- Can react quickly to changing external factors
Disadvantages:
- Duplication of resources
- Groups may compete
- Groups may be more interested in own objectives
- Local knowledge and relationships with customers are lost if staff leave
Product/Service Grouping
Groups based on different products/services.
Advantages:
- Can react quickly to changing external factors
- Can identify failing products/services
Disadvantages:
- Duplication of resources
- Groups may compete
- Groups may be more interested in own objectives
- New group has to be set up every time a new product/service is launched
Technology Grouping
Groups based on technology or production processes used.
Advantages:
- High degree of specialisation
- Problems in the production process can be identified
- Capital intensive means less wage costs
Disadvantages:
- Specialist training is needed
- Can only be used by large businesses
- Capital intensive means it is expensive
Customer Grouping
Groups based on types of customers.
Advantages:
- Can tailor products to meet different types of customer needs
- Increased customer loyalty
- Can react quickly to changing external factors
- Develops knowledge and expertise in the customer area
Disadvantages:
- Duplication of resources
- Can only be used by large businesses
- Groups may compete
- Groups may be more interested in own objectives
Downsizing
Closing an unprofitable division, or merging two divisions together.
Advantages:
- Can become more competitive as business is more efficient
- Cuts wage and rent costs
Disadvantages:
- Remaining staff are demotivated
- Valuable skills and knowledge are lost in the restructure
Tall Structure
Many levels of management.
Advantages:
- Staff know their role and who to report to
- Promotional opportunities motivate staff
Narrow span of control:
- Managers have more time for supervision and decision-making
- Managers can support staff
Disadvantages:
- Communication is slow
- Slow reactions to changing external factors
Narrow span of control:
- Managers supervise work more closely
- Fewer staff to share ideas with
Flat Structure
Fewer levels of management.
Advantages:
- Quick communication
- Can react quickly to changing external factors
Wide span of control:
- Tasks are delegated which motivates staff
- Staff are empowered to make decisions
Disadvantages:
- Fewer promotional opportunities demotivate staff
- Staff may feel under pressure
Wide span of control:
- Less time for planning and decision-making
- Staff may feel unsupported
Delayering
Removing on or more layers of management.
Advantages:
- Saves wage costs
- Quicker communication and decision-making
- Can react quicker to changing external factors
- Wider span of control
Disadvantages:
- Fewer promotional opportunities demotivate staff
- Redundancy payments are expensive
- Loss of staff members
- Wider span of control
Centralised Structure
Decision-making and control is retained by senior management.
Advantages:
- High degree of corporate identity and strategy
- Procedures are standardised which improves consistency
- Low risk of important information leaking
Disadvantages:
- Less responsibility given to staff which may demotivate them
- Decisions don’t reflect needs of local market
- Slow reactions to changing external factors
Decentralised Structure
Decision-making and control is delegated to individual branches or departments.
Advantages:
- Can react quickly to changing external factors
- Quick decision-making
- Staff are empowered so motivation is increased
- Senior management are relieved of constant decision-making
Disadvantages:
- Can lose overall corporate image if each branch operates differently
- Branches could compete with each other
- Training is required for middle managers
Matrix Structure
Business is arranged into temporary project teams to carry out a task. Teams are made up of employees from different functional areas. Each staff member has two managers.
Advantages:
- Each team has specialised staff from all functional areas
- Complex problems can be solved
- Staff are motivated and have job satisfaction
Disadvantages:
- High wage costs
- Duplication of resources
- Staff may confused as to who to report to
Entrepreneurial Structure
One main decision maker.
Advantages:
- Quick decision making
- Staff know who to report to
- Decision maker is experienced so high quality decisions are made
Disadvantages:
- Heavy workload for decision maker
- Decisions can be made if the decision maker is busy or unavailable
- Staff may be demotivated
