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BTF > Chapter 3 - Organisational and business structures > Flashcards

Chapter 3 - Organisational and business structures Flashcards

1
Q

What is organisational structure?

A

Formed by the grouping of people into departments or sections and the allocation of responsibility and authority

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2
Q

What are the 4 levels of managements?

A
  1. Top Management
  2. Middle Management
  3. First-line management
  4. Direct operation staff
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3
Q

What is top management?

A

Manage the whole business

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4
Q

What is middle management

A

Manage other managers of the business

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5
Q

What is direct operation staff

A
  • Supervisors and operational staff
  • Delivering the product/service
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6
Q

What is the Mintzberg’s building block?

A

Considers how organisations can be analysed into 6 building blocks

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7
Q
A
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8
Q

What are the 6 Mintzberg’s building blocks

A

I SMOTS
1. Ideology - Organisation’s culture

  1. Strategic Apex - Higher management - overall strat, long term planning
  2. Middle line - Managers linking between strategic apex and operating core
  3. Operating core - Basic work of the organisation e.g. shop floor
  4. Technostructure - Accountants, computer specialists and engineers whose role is to design procedures and standards
  5. Support staff - Provision of services to the organisation which support operation production
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9
Q

What are the coordination mechanisms of Mintzberg

A

D SSS M
- direct supervision (hierarchy)
- Standardisation of work (specified operating procedure)
- Standardisation of skills (identifies training needed/necessary skills base to do work)
- Standardisation of outputs (product/service specification)
- Mutual adjustment (coordination through informal contact)

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10
Q

What are the basic principles of organisational structure?

A

DUE SUC
- Division of work - making sure work is allocated rationally

  • Scalar chain - Authority Goes down the chain of command
  • Correspondence of authority and responsibility - Holder of the office must have enough authority to carry out their roles
  • Unity of command - Subordinate should be given activities from one boss
  • Unity of direction - One plan for the same direction
  • Equity - Take action if they need grieve systems
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11
Q

What is the importance of multi-skilling in a business?

A

Teams where individuals are trained to perform variety of different tasks

This enables labour and other resources to be used more efficiently

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12
Q

What is the importance of flexibility in a business?

A

Flexible working hours, matrix structure and temporary project teams

Enables companies to respond quickly to changing market conditions

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13
Q

How can organisational structure be communicated

A
  • Organisational charts
  • Organisational manuals
  • Job descriptions
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14
Q

What are the 5 types of organisational structure that Mintzberg building block is seperated into

A

SMP DM

  1. Simple structure
  2. Machine bureaucracy
  3. Professional bureaucracy
  4. Divisional structure
  5. Matrix structure
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15
Q

What are the environmental, internal factors, key building blocks and key coordinating mechanisms of Simple Structure

A

Simple + Dynamic
Small, simple tasks
Strategic Apex
Direct Supervision

e.g. newstand

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16
Q

What are the environmental, internal factors, key building blocks and key coordinating mechanisms of Machine bureaucracy

A

Simple + Static
Large, old regulated tasks
Techno structure
Standardisation of work

e.g. unionised company

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17
Q

What are the environmental, internal factors, key building blocks and key coordinating mechanisms of Professional bureaucracy

A

Complex + Static
Professional simple systems
Operating Core
Standardisation of skills

e.g. hospital + kaplan

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18
Q

What are the environmental, internal factors, key building blocks and key coordinating mechanisms of Divisional

A

Simple + Static
Very large, old, divisible tasks
Middleline
Standardisation of outputs

e.g. conglomerate

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19
Q

What are the environmental, internal factors, key building blocks and key coordinating mechanisms of Adhocracy/innovative

A

Complex + Dynamic
Young, complex task
Operating core/ support staff
Mutual adjustment

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20
Q

What is the entrepreneurial structure?

A

Structure is built around owner-manager usually found in small companies. Structure is centralised

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21
Q

What are the advantage of an entrepreneurial structure?

A

Fast decision making
- More responsive to market
- good control
- close bond to workforce

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22
Q

What are the disadvantage of an entrepreneurial structure?

A
  • Lack of career structure
  • May be too centralised
  • Cannot cope with diversification/growth
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23
Q

What is a functional structure?

A

Organisation that have grown the entrepreneurial structure therefore need to organise the business on a functional basis (economies of scale)

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24
Q

What are the advantages of a functional structure

A
  1. Economies of scale
    2.Standardisation/efficiency
  2. Specialists more comfortable
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25
Q

What are disadvantages of a functional structure

A
  1. Empire building
  2. Slow to adapt to market changes
  3. Conflict between functions
  4. Cannot cope with diversification
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26
Q

What is a divisional structure

A

Organised in accordance with product lines/brand or geographical locations

Managers enjoy responsibility for their own resources

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27
Q

What are the advantages of a divisional structure

A
  1. Enables product or geographical growth
  2. Clear responsibility and accounting for product
  3. Training of general managers
28
Q

What are the disadvantages of divisional structure

A

Potential loss of control
Lack of goal congruence
Duplication
Specialists may feel isolated

29
Q

What is a matrix structure?

A

Aims to combine both divisional and functional structure

Usually found in multi-product and multi-functional organisations - significant interrelationships and interdependencies

30
Q

What are the advantages of a matrix structure

A

Flexibility - focus on customers

31
Q

What are the disadvantages of a matrix structure

A
  • Dual command
  • Dilution of functional authority
  • Time consuming meetings
32
Q

What is decentralised allocation of authority

A

Degree of autonomy/decision making ability through the organisation e.g. geographical areas

33
Q

What are the advantages of decentralisation

A
  1. Senior management free to concentrate on strategy
  2. Better local decisions due to local expertise
  3. Better motivation
  4. Quicker responses/flexibility
  5. Training/career path
34
Q

What are the disadvantages of decentralised

A
  1. Loss of control by senior management
  2. Dysfunctional decisions due to a lack of goal congruence
  3. Poor decisions made by inexperienced managers
  4. Extra costs reinformation (multiple accountants)
35
Q

What factors affect the degree of decentralised

A
  • Management style and ability
  • Size of organisation
  • Range of products/ services/brands
  • Geographic location
36
Q

What is the span of control

A

Considers how many people report to one superior

37
Q

Difference between Tall and Flat organisations

A

Tall: Many managerial levels
Flat: Fewer

38
Q

What are the advantages of tall organisations

A
  • More promotional opportunities
  • Narrow span of control means more supervision
  • Smoother progression from one level to another
  • Small span of control lead to more personal contact with line manager
39
Q

What are the disadvantages of tall organisations

A
  • Inhibits delegation
  • More expensive in terms of management overheads
  • Extra levels of management slow down decision making and communication
40
Q

What are the advantages of Flat organisations?

A
  • Wide span of control encourages more delegation
  • Lower management costs
  • Better communication between top management and the workers
41
Q

What are the disadvantages of Flat organisations

A
  • Managers may be overworked as they supervise more people
  • Greater delegation means less central control
42
Q

What factors affect the span of control

A
  • Complexity of the work
  • Degree of change
  • Management’s ability
  • Assistance received
  • Amount of non-supervisory work undertaken by the supervisor
  • Level of knowledge and experience of staff
  • Levels of costs associated by mistakes
  • Level of danger
  • Physical proximity of subordinates/geography
43
Q

What are Burns and Stalkers summary of two extremes of structure

A

Mechanistic

Organic

44
Q

What is the difference between Mechanistic and Organic

A
  • Mechanistic is rigid and formalised
  • Organic is fluid and flexible
45
Q

What are the characteristics of mechanistic structure

A
  • Formal
  • Hierarchical
  • Authority and control based
  • Focuses on efficiency
46
Q

What are the characteristics of Organic structure

A
  • Informal
  • Flat
  • Project teams
  • Power based on expertise
47
Q

What is a sole trader?

A

Single person owning a business taking all risks

48
Q

What are the advantages of a sole trader?

A
  • No need to share profits - low costs and often work from home
  • Self-sufficiency and independence
  • Little to no regulation e.g. no requirement for an audit
  • Own boss - success of business depends on own efforts
49
Q

What are the disadvantages of sole traders

A
  • Sole trader carries unlimited liabilities
  • High Risk: 75% of small businesses cease trading in first 4 years
  • Problem raising finance: extensive personal debt and assets offered as collateral
  • Small so harder to negotiate
  • Dependent on the owner
  • Cant use floating charges
50
Q

What is a partnership?

A

Two or more people who own a business taking all the risks

51
Q

What are the two types of partnerships and definitions

A
  • General partnership: No separate legal identity
  • Limited liability partnership - Separate legal identity exists. This means the partner’s liability is limited to their investment in the partnership
52
Q

What are the advantages of general partnerships

A
  • Few regulatory obligations
  • Bring together range of skills and experience
  • More owners to put finances into the business
  • Business is not dependent on health/presence of one invidiual
53
Q

What are the disadvantages of a general partnership

A
  • Each partner has unlimited liability for the business debts
  • Potential disagreements between partners
54
Q

What are limited companies

A

Separate legal entity from its owners (shareholders)

55
Q

What are the two forms of limited companies

A
  • Private LTD - One or few owners but not registered public
  • Public Limited company PLC -Listed on stock exchange
56
Q

What are the advantages of limited companies

A
  • Liability of shareholders is limited to initial investment
  • Ownership transferred easily be selling shares
  • Companies can find it easier to raise new capital (particularly plc quoted on stock exchanges and companies with good relations with financers)
  • Can use both floating and fixed charges
57
Q

What are the disadvantages of limited companies

A
  1. Legal burdens - complying with CA 2006
    - Quoted companies can suffer from short-termist pressure from city investors
    - Financial statements are open to public scrutiny
58
Q

What are alliances and name the 4

A

Different ways a business can work together
1. Joint ventures
2. Licensing/franchising
3. Strategic Alliances
4. Agency Agreements

59
Q

What are joint ventures

A

Separate joint-owned company e.g. Sony Ericson

60
Q

What is Licensing/franchising

A

One company allows another to manufacture/market its product or service e.g. Mcdonalds

61
Q

What is strategic alliances

A

Loose collaboration e.g. virgin atlantic airways and malaysia airlines

62
Q

What are agency agreements

A

One party distributes another’s product

63
Q

What is important to consider when forming alliances?

A
  • Sharing risks and returns
  • Splitting out costs
  • Potential conflicts over decisions
  • Potential to gain expertise the other party
  • Allowing a third party access to your information and skills
64
Q

What are groups?

A

Parent company will own shares in subsidiary companies to the extent that owners of parent company owns the subsidary

65
Q

What are the advantages of working as a group

A
  • Different companies can be responsible for different products
  • Easy to sell part of business
  • Economies of scale through vertical integration e.g. car manufacturer acquires tyre manufacturer
66
Q

What are disadvantages of operating as a group?

A
  • Consolidated accounts must be prepared
  • Many acquisitions add negative shareholder value

BTF (13 decks)

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