3.1 Organisational structure

Question 1

Organisational structure is formed by:

Answer 1

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

Question 2

Mintzberg suggested that an org can be analysed into:

Answer 2

six building blocks and that effective co-ordination will be needed in order to integrate the blocks into one cohesive unit. (pg 46)
- Operating core
- Strategic apex
- Middle line
- Technostructure
- Support staff
- Ideology

Question 3

Operating core:

Answer 3

• this is the basic work of the org - individuals who perform the tasks of producing goods or providing service (smaller org mostly made up of this block)

Question 4

Strategic apex:

Answer 4

higher levels of management responsible for formulating strategies and long-term plans

Question 5

Middle line:

Answer 5

links the strategic apex to the operating core and includes middle and lower level management

Question 6

Technostructure:

Answer 6

• responsible for designing procedures and standards (accountants, computer specialists and engineers)
• provides support for technical structures by coordinating and standardizing work

Question 7

Support staff:

Answer 7

provides services (sales and marketing / HR management) to the org. which supports operations / production.

Question 8

Ideology:

Answer 8

Org values and beliefs (culture)

Question 9

The coordinating mechanisms that integrate the building blocks into a cohesive unit are:

Answer 9

• Mutual adjustment - Coordination through informal contact
• Direct supervision - Coordination through formal hierarchy
• Standardisation of work processes - and specified operating procedures
• Standardisation of outputs - product and service specifications
• Standardisation of skills and knowledge - identifies training needs and necessary skills base to do the work
• Standardisation of norms - cultural norms and expectations

Question 10

Mintzberg combined the building blocks and coordinating mechanisms in different ways and identified five main structural configurations (differ from bus to bus):

Answer 10

Structural config (eg) - Key Building block - Key Coordinating mech

Simple structure (newsagent) - Strategic apex - Direct supervision

Machine bureaucracy (heavily unionized org) - Techno structure - Standardisation of work

Professional bureaucracy (hospital) - Operating core - Standardisation of skills

Divisionalised (org split into bus units for each product sold) - Middle line - Standardisation of outputs

Adhocracy/Innovative (advertising agency) - Operating core / support staff - Mutual adjustment

Question 11

There are different categories of structures appropriate to bus at various phases of their lives, typical pattern of structural change would be as follows:

Answer 11

• Entrepreneurial structure
• functional structure
• divisional structure
• matrix structure

Question 12

Entrepreneurial structure: (pg 49)

Answer 12

• is built around the owner-manager
• typical of smaller bus (early stages of development)
• is totally centrallised with al key decisions being made by the strategic leader (often the owner/entrepreneur in an owner-managed bus)

Question 13

Advantages of entrepreneurial structure:

Answer 13

• Fast decision making - only one person is making decisions
• Good control - the small size and few layers of management means the entrepreneur has good control over workforce and decisions with org which leads to better conformity to goals
• More responsive to market - as soon as something in the market changes the entrep can recognise it and be able to react to it
• Close bond to workforce - the entrep and employees work closely together

Question 14

Disadvantages of entrepreneurial structure:

Answer 14

• Success is dependent on the capabilities of the owner-manager
• Lack of career structure - for employees due to small size of bus
• Cannot cope with diversification / growth - the owner-manager won’t be able to cope with for eg increased volume of decisions due to bus becoming more successful and therefore bigger

Question 15

Functional structure: (pg 50)

Answer 15

• Common in org that have outgrown the entrep structure,
• employees that perform similar tasks are grouped into departments
• this will lead to a longer chain of command
• Most appropriate for smaller org with few products and locations and in a relatively stable environment

Question 16

The chain of command is

Answer 16

• the series of positions of authority or rank within an org that are ordered from top to bottom, creating a formal line of communication, responsibility and authority

Question 17

Advantages of functional structure:

Answer 17

• Economies of scale - roles and activities are grouped together and not duplicated leading to lower costs
• Chain of command - creates a formal line of communication, responsibility and authority and makes growth or diversification more manageable
• Standardisation of outputs and systems - similar activities are grouped together leading to standardisation and focus on quality
• Specialists more comfortable - people with similar skills are grouped together and don’t feel isolated
• Career opportunities - employees can work their way up through the function

Question 18

Disadvantages of functional structure:

Answer 18

• Empire building and conflict between functions - Functional managers might make decisions which increase their own power or best for their function instead of whats best for org overall
• Slow to adapt to market changes - decision making may be slow due to a longer chain of command
• Can’t cope with rapid growth or diversification - specialists in production function may not be able to cope with making a new product

Question 19

Divisional structure: (pg 51)

Answer 19

• occurs where a bus is split into several divisions (strategic bus units)
• each one autonomously responsible for a product line/brand or geographical location (particularly highly specialised products)
• Headed by general mangers who take responsibility for their own resources

Question 20

Advantages of divisional structure:

Answer 20

• Enables product or geographical growth - struc can easily be adapted for growth or diversification
• Clear responsibility - divisions managers should be able to clearly see where their areas of responsibility are
• Training of general managers - less focus on specialisation should result in managers having a wider view of org.
• Decision making - Placing responsibility of divisional profitability at divisional level should increase the speed and quality of decisions (due to local knowledge)
• Top management free to concentrate on strategic matters

Question 21

Disadvantages of divisional structure:

Answer 21

• Duplication of bus functions - each division will have it’s own function resulting in more managers
• Lack of goal congruence - divisions may make decisions to benefit themselves to detriment of overall org.
• Potential loss of control - due to autonomy given to divisions and it’s managers
• Allocation of central costs can be a problem
• Specialists may feel isolated

Question 22

Matrix structure: (pg 53)

Answer 22

• aims to combine the benefits of divisional and functional structure
• usually found in multi-product and multi-functional org. with significant interrelationships and interdependencies

Question 23

Advantages of matrix structure:

Answer 23

• Advantages of both functional and divisional structures
• Flexibility - offers flexibility to coordinate the tasks and people required in more complex situations
• Encourages teamwork and the exchange of opinions and expertise

Question 24

Disadvantages of matrix structure:

Answer 24

• Dual command - team members may have to answer to a product manager and a functional manager resulting in potential confusion, stress and conflict
• Dilution of functional and divisional authority
• Lack of individual accountability
• Time-consuming meetings

Question 25

Another method of analysing structures is by the degree of:

Answer 25

Autonomy or the level at which decisions are made:
- Centralised structure - upper levels of org’s hierarchy have authority to make decisions
- Decentralised structure - authority to make decisions is passed down to units and people at lower levels

Question 26

Most org will operate to a degree of both centralised and decentralised decision making and the extent will be influenced by:

Answer 26

• Management style - managers who want to retain control may operate a centralised structure
• Ability of management / employees - the more employees can be trusted with making decisions the more decentralised
• Geographical spread - more spread would lean towards decentralised
• Size of the org - more centralised for smaller org
• Ideology - the org values and beliefs could influence the degree

Question 27

Advantages of decentralisation

Answer 27

• Senior management free to concentrate on strategy
• Better local decisions due to local expertise
• Better motivation for employees due to increased empowerment and a more defined career path
• Quicker responses / flexibility due to reduced bureaucracy and increased autonomy

Question 28

Disadvantages of decentralisation:

Answer 28

• Loss of control by senior management and lack of standardisation
• Dysfunctional decisions due to lack of goal congruence
• Poor decisions made by inexperienced managers
• Training costs
• Duplication of roles
• Extra costs in obtaining info stored in several locations

Question 29

Org can also be classed as: (pg 58)

Answer 29

• tall or flat depending on length of the scalar chain and the breadth of the span of control

Question 30

The scalar chain is the:

Answer 30

• line of authority that can be traced up or down the chain of command, from most senior to jnr
• it relates to the number of levels of management

Question 31

The span of control considers

Answer 31

• how many people report to one superior

Question 32

Factors that influence the span of control:

Answer 32

• Nature of the work - the more repetitive or simple, the wider the span can be
• Type of personnel - more skilled and motivated the wider the span of control
• Location of personnel - personnel located locally allows for wider span of control

Question 33

A tall org has

Answer 33

• many levels of management (a long scalar chain) and a narrow span of control
• tend to be more bureaucratic and take longer to make decisions due to large number of levels of management that need to be involved

Question 34

A flat org has

Answer 34

• few levels of management (a short scalar chain) and a wide span of control)
• tend to have weaker control and fewer chances for employees to progress as fewer middle management positions available