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Business Management IB > Unit 2.2 - Organizational Structure > Flashcards

Unit 2.2 - Organizational Structure Flashcards

1
Q

What is the organizational structure of a business?

A

Shows interrelationships and hierarchical arrangements within the firm. Determins who each employee reports to and the breadth/depth of authority each person has (if any).

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2
Q

What is the organizational chart?

A

Diagramatic representation of organization’s formal organizational structure. Shows role(s) of each employee in organization: responsibilities and accountability

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3
Q

What is Delegation?

A
  • When line manager entrusts/empowers subordinate with authority to successfully complete a particular task/project/role
  • Passing on control/authority but holding subordinates accountable
  • Responsibility for outcome remains with line manager despite decision-making being passed on
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4
Q

What are advantages of Delegation?

A
  • Employees feel empowered/valued -> motivation
  • Speed of decision-making
  • Reduction of workload on senior managers -> focus on strategic planning
  • Improves skills of employees -> career advancement/employee rotation
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5
Q

What are disadvantages of Delegation?

A
  • Additional pay for employees -> increased costs
  • Training & Development of employees -> Time consuming/Expensive
  • Extra work for employees -> disgruntled
  • Unsuitable in certain situations
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6
Q

What is Span of Control?

A

Refers to how many workers are directly accountable to a particular line manager

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7
Q

What is Narrow Span of Control?

A

Line manager responsible for small nº of subordinates -> enables them to keep close control over employees’ activities/operations

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8
Q

What is Wide Span of Control?

A

Line manager responsible for many subordinates. Workers have greater degree of independence as it is not possible for manager to monitor all subordinates in team.

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9
Q

What interrelated factors influence wether a business decides to adopt a wide or narrow span of control?

A
  • Employee competencies -> more competent=wider
  • Managerial competences -> management styles
  • Business Context -> MNCs = wider spans, Sole Traders/Partnerships = narrower
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10
Q

What are Levels of Hierarchy?

A
  • Refers to nº of layers of formal authority represented in organizational chart (each horizontal level indicating level of seniority in organization
  • Indicates level of communication, decision-making authority, accountabilities and responsibilities
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11
Q

What is a tall organizational structure?

A
  • Many levels of hierarchy -> span of control likely narrow
  • Decision-making: tends to be centralized and quick
  • Can benefit from advantages of delegation
  • Can be costly due to large nº of managerial structures in organization
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12
Q

What is a flat organizational structure?

A
  • Few levels in organizational hierarchy
  • Decision-making: decentralized (slower)
  • Tend to benefit from improved/speedier communications due to fewer levels
  • However, do not create many promotional opportunities -> can overburden those in managerial positions
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13
Q

What is Chain of Command?

A
  • Referms to formal lines of authority in organization
  • Larger businesses and those with taller organizational structures tend to have larger chains of command and vice versa
  • Clear and formal chains of command -> can help improve communications within organization
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14
Q

What is Bureaucracy?

A
  • Refers to administrative systems within an organization
  • Includes formal policies/procedures of the business
  • Associated with organizations that are large and well-established with centralized decision-making
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15
Q

What are the disadvantages of Bureaucray?

A
  • Inflexibility -> slow in responding to changes in external environment
  • Creativity and innovation essentially discouraged
  • Main criticism/limitation: Slows down decision-making and causes operational inefficiencies
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16
Q

What is Centralization?

A
  • Refers to situation in organizations where decison-making is predominantly made by small group of senior managers at the top of organizational hierarchy
  • Characteristic of tall organizational structures
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17
Q

What are advantages of Centralization?

A
  • Decision-making swift -> beneficial in situations like major crisis that threatens business
  • Senior managers can maintain better command/control
  • Everyone in organization pursues business objectives set by senior executives -> beneficial in organizations where low-skilled workers form vast majority of workforce and require direction/supervision to meet organizational objectives
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18
Q

What are Disadvantages of Centralization?

A
  • Delegation rare -> morale and productivity lower
  • Structures very rigid (inflexible) -> can be demotivated for employees who cannot express opinions/suggestions
  • Centralization unsuitable for industries that rely on creativity and autonomous decision-making (e.g. high tech industry)
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19
Q

What is Decentralization?

A
  • Refers to situation where decision-making authority is delegated throughout, rather than from central authoritative group
  • Tends to have flatter structure, managers with wider spans of control
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20
Q

What are advantages of Decentralization?

A
  • Can help improve morale/productivity as workers feel valued/empowered
  • Decison-making more flexible
  • Reduced workload on senior executives/directors, freeing up their tiem to focus on strategic (rather than operational/tactical) matters
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21
Q

What are disadvantages of Decentralization?

A
  • More difficult for senior managers to know about all decisions that are made, especially in large organizations with multiple locations
  • More challenging for senior managers to maintain overall controll and ensure employees maintain clear focus on business objectives
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22
Q

What is delayering?

A
  • When organization removes on eor more layers in hierarchical structure (make it flatter)
  • Intention twofold: Cut costs, Remove/reduce bureaucratic inefficiencies
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23
Q

What are disadvantages of delayering?

A
  • Adds to workload of existing workforce especially those who have responsibility for larger team (wider span of control)
  • Can cause anxiety, stress, resentment and conflict
  • Management team need to be sensitive to those who lose out frm delayering as security needs may be threatened -> demotivation and lowre labour productivity
24
Q

What is a Matrix Structure?

A
  • Form of flexible organizational structure that uses teams of employees with suitable skills/qualifications drawn from different departments/divisions in the business
25
Q

What are advantages of a Matrix Structure?

A
  • Promote cross-functional collaboration
  • Allow firms to be responsive to changes in market demand for goods/services, as well as changing needs of a business
  • Using experts from across organization -> generate new and creative ideas as well as improve productivity
  • Flexibility -> enables organizations to overcome limitations associated with traditional/hierarchical organizational structures
26
Q

What are disadvantages of a Matrix Structure?

A
  • Conflicting interests as employees report to two or more managers (designes line managers and matrix project managers) -> uncertainties about prioritising tasks
  • Conflict -> lower morale and productivity
  • Employees may feel demoralized due to increased workload/pressures, especially if involved in numerous assignments at once
  • Additional resources/finance required to fund different teams in matrix structure
27
Q

What factors influence the choice of organizational structure?

A
  • Corporate Culture
  • Size of Workforce
  • Skills/qualifications/experiences/talents of workforce
  • Nature of decisions (strategic or routine)
28
Q

What are advantages of Flat (or Horizontal) Organization charts?

A
  • Line manager shave a lot of decision-making authority
  • Short chain of command -> improved communication
29
Q

What are disadvantages of Flat (or Horizontal) Organization charts?

A
  • managers have to supervise large nº of employees -> more difficult to control workers
  • Higher workload
30
Q

What are advantages of Tall (or Vertical) Organization charts?

A
  • Motivation for employees: opportunities for promotion
  • Sustainable if jobs/tasks are routine and not too challenging especially as there are clear lines of accountability
31
Q

What are disadvantages of Tall (or Vertical) Organization charts?

A
  • Bureaucratic -> impersonal nature to organization
  • Long chains of command -> slow decision-making and potential for miscommunications
  • Professor John Kotter: argued they are not useful for firms that operate in rapidly changing and dynamic environments as they are slow to react to new opportunities and constrain transformative change
32
Q

What is Organization by Product?

A
  • Structuring workforce according to goods/services sold
  • Each department focuses on different product within organization’s overall product portfolio
  • Suitable for large organizations with broad product portfolio
33
Q

What are advantages of Organization by Product?

A
  • Enables specialization as workers focus on specific market segment related to product
  • Helps ensure business meets needs of its customers more effectively (e.g. improved product knowledge and marketing activities)
  • Encourage healthy internal competition between departments to produce ever-more appealing products
34
Q

What are Disadvantages of Organization by Product?

A
  • Duplication of work done by each department (different marketing and sales personnel in various departments)
  • Associated with decentralized decision-making .> difficult for senior executives to maintain control of various separate divisions of the business
35
Q

What is organization by Function?

A
  • Structuring workforce according to business functions (e.g. specialised roles/tasks)
  • Typically involves staff working together in different departments (e.g. marketing, HR, Production…)
  • Departmental staff report to respective manager/director who has overall responsibility for functional area
36
Q

What are advantages of Organization by Function?

A
  • Ideal for organizations that focus on one product or a small nº of related goods/services
  • Roles/tasks carried out by experts and specialists. hence, productivity and output are both higher.
37
Q

What are Disadvantages of Organization by Function?

A
  • Departments tend to work in isolation by focusing only on areas of responsibility
38
Q

What is Organization by Region?

A
  • Structuring workforce according to different geographical areas based on where firm’s operations are
  • Suitable for large businesses that operate internationally (e.g. MNCs)
39
Q

What are advantages of Organization by Region?

A
  • Better focus on specific wants/needs of customers in respective markets
  • regiona loffices help oeganization to adapt to regional differnces in demand and exploit local knowledge
40
Q

What are disadvantages of Organization by Region?

A
  • Difficulty of controlling decentralized organization that operates across numerous regions of country or world
41
Q

Impact of Technological Advances on Organizational Structures

A
  • Enabled more people to work from home -> more delegation/decentralization
  • Created opportunities in gig economy -> flatter: fewer people fully employed
  • Developments in social media marketing -> additional jobs/roles in organizations
42
Q

Impact of the Intensity of Competition on Organizational Structures

A
  • Intensity of competition -> competitive prices -> some businesses have to delayer or cut size of workforce in order to remain competitive
43
Q

Impact of Growth & Evolution of Businesses on Organizational Structures

A
  • Larger business becomes, more complicated the structure is likely to be
  • As business becomes MNC -> adapt to being based on geography rather than function (organization by region), more formal structures, delegation
44
Q

Are organizational structures static? Why?

A

No, due to the dynamic nature of the global business environment.

45
Q

What is Project-Based organization?

A
  • Based on specific needs of particular project/business venture
  • Suitable for getting experts together
  • Once project completed -> team members disband and reassemble to begin another project or revert back to their own departments/functional areas of organization
  • Each project ran by PM in charge of tea involved: Decision-making = centralized
  • Team members from any part of organization (e.g. accountants from finance, operations managers, marketing experts…)
46
Q

What are advantages of project-based organization?

A
  • Flexibility: projects time-limited -> organizational structures continuously change as projects are completed
  • Productivity: Focused on solutions rather than functionality (PMs strive to meet deadlines)
  • Efficiency: Centralized dm -> quicker. Teams assembles from most suitable people
  • Motivation: Employees work on different projects -> more interesting/varied -> broadens professional experiences and project portfolio
47
Q

What are disadvantages of project-based organization?

A
  • Discontinuity: Employees always moving to different projects/teams
  • Isolation: Each project team = self-sufficient -> limited opportunities to work with other teams/people
  • Inefficiencies: Each project needs its own finanves and team of experts -< Duplication of resources and effort
  • Conflicting Interests and Priorities: Temporary -> challenging to develop team spirit/cohesiveness
48
Q

What are differences between matrix and project-based organization?

A
  • Project Based: Formal Structure (centralized authority, PM takes full Responsibility)
  • Matrix: No formal ranking
  • Project-based teams: report to one PM
  • Matrix teams: report to multiple line managers
  • Project-based = better for highly complex/strategic projects
  • Matrix: = suitable for less complex assignments -> team members could be working on more than one assignment at a time
49
Q

What is the Shamrock Organization? Who developed it?

A
  • Professor Charles Handy (1991) -> Argued organizations must adapt to changes in business environment in order to survive and thrive
  • Flexible structure that consists of 3 components: Professional Core, Contingent Workforce, Outsorced Vendors
50
Q

What is the professional core in Shamrock?

A
  • Full-time workers vital for organization’s operations/survival
  • Essential for business to meet organizational objectives mission/vision
  • Considered most significant group of workers in organization
51
Q

What is the Contingent workforce in Shamrock?

A
  • Temporary staff hired by organization
  • Portfolio workers, part-time staff, seasonal workers, flexi-time workers
  • Perform routine jobs
  • Supermarkets/fast-food restaurants: have significant nº of them
  • However -> often causes job security and lower staff morale -> less scope for career development
52
Q

What are the Ousorced Vendors in Shamrock?

A
  • Individuals/other organizations hired on contract basis to do specific but non-core role (e.g. security, catering, accounting, marketing…)
  • Mainly self-employed professionals/contractors
  • Not managed directly by business -> greater autonomy/flexibility
  • Pay negotiated: often based on performance rather than time
  • Can be costly, especially if they are experts
  • For workers -> nature of job lacks any job security
53
Q

What are Advantages of Shamrock Organization?

A
  • Greater flexibility/ability to change nº of employees as and when organization needs change
  • Avoid stresses/costs of staff redundancies when there are adverse changes in market
  • Retaining only multi-skilled group of core workers -> workforce can concentrate on core activities (what business does best). Non-core -> ousorced to gain cost advantages
  • Cut costs further -> only full-time workers entitled to fringe benefits
54
Q

What are Disadvantages of Shamrock Organization?

A
  • Can create uncertainties and therefore anxieties for workers
  • Flexible contracts can be legal minefields in countries/regions where labour laws are particularly stringent
55
Q
A

Business Management IB (8 decks)

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