UNIT 2. Chapter 12. Organisation structure Flashcards
Def. Organisational structure
The internal, formal framework of a business that shows the way in which management is organised and linked together and how authority is passed through the organisation.
What are the types of organisational structures? (5)
• Hierarchical structure \+ Geographical organisation structure \+ Functional organisation structure \+ Product organisational structure • Matrix structure
What is the hierarchical structure?
Advantages (3)
Disadvantages (2)
• The structure with many layers of people, with fewer people at the top.
Advantages:
• The role of individual is clear
• There’s a clear identifiable chain of command
• Can be divided by geographical location, function or product.
Disadvantages:
• Non efficient communication as there is lack of coordination between horizontal departments.
• Inflexible, and resistant to change as managers only pay attention to their department.
Geographical organisation structure sum. (3)
Firms organised by geographical location, that report to a central headquarter.
Advantage:
• Higher consumer satisfaction as products are amended according to location
Disadvantage:
• Cannot make use of economies of scale
Product organisation structure sum. (3)
Firms are organised by the product that they produce.
Advantage:
• Allows flexibility in product lines
Disadvantage:
• Unnecessary competition between products
Functional organisation structure sum. (3)
Firms are organised by their function such as marketing, finance or R&D.
Advantage:
• High level of specialisation
Disadvantage:
• Lack of team work for the better of the business itself
Def. Matrix structure
An organisational structure that creates project teams that cut across traditional functional departments.
Employees have to report to their product and functional manager, allowing both vertical and horizontal communication.
Advantages (4) and disadvantages (3) of matrix structures
Advantages:
• Allows communication between all members, avoiding subunit orientation.
• Less unnecessary competition between divisions.
• Discussions between specialists bring up better ideas and solutions
• Better responses created for fast changing markets
Disadvantages:
• Lack of bureaucratic control of managers over junior employees
• Lack of accountability
• Conflicts of interests as there are 2 managers to report to
What are the key principles of organisational structure? (4)
- Level of hierarchy
- Chain of command
- Span of control
- Delegation
Def. Level of hierarchy
A stage of the organisational structure at which the personnel on it have equal status and authority
Problems of tall and narrow organisational structures with many levels of hierarchy? (4)
- Communication may be slow and distorted down the chain
- Narrow span of control -> Little delegation and close supervision
- Junior staff may lack in decision making powers
- Higher business costs due to middle managers
Def. Chain of command
This is the route through which authority is passed down an organisation - from the chief executive and the board of directors.
Def. Span of control
The number of subordinate reporting directly to a manager. Could be either wide or narrow.
Def. Delegation
Passing authority down the organisational hierarchy.
Proven by Herzberg to be very beneficial for motivation of the staff.
Advantages (3) and disadvantages (2) of delegation
Ad:
• Gives managers better focus on more important issues
• Shows trust in subordinates -> motivates them
• Develops and trains staff for more senior positions
Disad:
• If the task if vague and the employee is not trained, delegation is risky
• If managers delegate boring jobs -> not motivating.
