Chapter 3: Organisation Design

Question 1

What is organisational structure?

Answer 1

Organisational structure is the formal arrangement of jobs within an organisation.

Question 2

What is Organisational design?

Answer 2

Organisational designis the process of creating or changing an organisation’s structure.

Question 3

What are the six elements of organisational design?

Answer 3

• Work specialisation
• Departmentalisation
• Chain of command & Unity of command
• Span of Control
• Centralisation/Decentralisation
• Formalisation

Question 4

What is work specialisation?

Answer 4

• Dividing work activities into separate job tasks
• Employeespecialisesin doing specific job tasks

Question 5

What is Departmentalisation?

Answer 5

How jobs are grouped together.

Question 6

What are the five types of departmentalisation?

Answer 6

• Functional
• Geographical
• Product
• Process
• Customer

Question 7

What is Functional Departmentalisation?

Answer 7

Group jobs according to functions.
(Marketing, Accounting, Manufacturing, Purchasing, HR and IT)

Question 8

What is Geographical Departmentalisation?

Answer 8

Group jobs according to geographic regions.

(Locations, zones, districts, areas, territories and countries)

Question 9

What is Product Departmentalisation?

Answer 9

Group jobs according to products.
(Company must manufactures more than 1 type of product.)

Question 10

What is Process Departmentalisation?

Answer 10

Group jobs according to product/customer flow.
[commonly used in manufacturing companies]

Question 11

What is Customer Departmentalisation?

Answer 11

Group jobs according to type of customers.

Question 12

What is Chain of command & Unity of command?

Answer 12

Chain of command – reporting relationship

Unity of command – states that each person should report to only one manager

Question 13

What is Span of Control?

Answer 13

The number of employees a manager can efficiently and effectively manage.

Wide: more than 8 employees being managed
Narrow: 4 - 8 employees being managed

Question 14

Factors that affect span of control?

Answer 14

• Manager’s skills and experience
• Employees’ skills and experience and nature of employees’ work

Question 15

What is Centralisation/Decentralisation?

Answer 15

Centralisation - degree to which decision making is concentrated at upper levels of the organisation
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Decentralisation - degree to which lower level employees provide input or actually make decisions

Question 16

What is Formalisation?

Answer 16

Degree to which jobs are standardized and the extent to which employees behavior is guided by rules and procedures.