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Chapter 3 - Organisational and business structures Flashcards

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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
What are disadvantages of a functional structure
1. Empire building 2. Slow to adapt to market changes 3. Conflict between functions 4. Cannot cope with diversification
26
What is a divisional structure
Organised in accordance with product lines/brand or geographical locations Managers enjoy responsibility for their own resources
27
What are the advantages of a divisional structure
1. Enables product or geographical growth 2. Clear responsibility and accounting for product 3. Training of general managers
28
What are the disadvantages of divisional structure
Potential loss of control Lack of goal congruence Duplication Specialists may feel isolated
29
What is a matrix structure?
Aims to combine both divisional and functional structure Usually found in multi-product and multi-functional organisations - significant interrelationships and interdependencies
30
What are the advantages of a matrix structure
Flexibility - focus on customers
31
What are the disadvantages of a matrix structure
- Dual command - Dilution of functional authority - Time consuming meetings
32
What is decentralised allocation of authority
Degree of autonomy/decision making ability through the organisation e.g. geographical areas
33
What are the advantages of decentralisation
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
What are the disadvantages of decentralised
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
What factors affect the degree of decentralised
- Management style and ability - Size of organisation - Range of products/ services/brands - Geographic location
36
What is the span of control
Considers how many people report to one superior
37
Difference between Tall and Flat organisations
Tall: Many managerial levels Flat: Fewer
38
What are the advantages of tall organisations
- 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
What are the disadvantages of tall organisations
- Inhibits delegation - More expensive in terms of management overheads - Extra levels of management slow down decision making and communication
40
What are the advantages of Flat organisations?
- Wide span of control encourages more delegation - Lower management costs - Better communication between top management and the workers
41
What are the disadvantages of Flat organisations
- Managers may be overworked as they supervise more people - Greater delegation means less central control
42
What factors affect the span of control
- 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
What are Burns and Stalkers summary of two extremes of structure
Mechanistic Organic
44
What is the difference between Mechanistic and Organic
- Mechanistic is rigid and formalised - Organic is fluid and flexible
45
What are the characteristics of mechanistic structure
- Formal - Hierarchical - Authority and control based - Focuses on efficiency
46
What are the characteristics of Organic structure
- Informal - Flat - Project teams - Power based on expertise
47
What is a sole trader?
Single person owning a business taking all risks
48
What are the advantages of a sole trader?
- 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
What are the disadvantages of sole traders
- 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
What is a partnership?
Two or more people who own a business taking all the risks
51
What are the two types of partnerships and definitions
- 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
What are the advantages of general partnerships
- 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
What are the disadvantages of a general partnership
- Each partner has unlimited liability for the business debts - Potential disagreements between partners
54
What are limited companies
Separate legal entity from its owners (shareholders)
55
What are the two forms of limited companies
- Private LTD - One or few owners but not registered public - Public Limited company PLC -Listed on stock exchange
56
What are the advantages of limited companies
- 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
What are the disadvantages of limited companies
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
What are alliances and name the 4
Different ways a business can work together 1. Joint ventures 2. Licensing/franchising 3. Strategic Alliances 4. Agency Agreements
59
What are joint ventures
Separate joint-owned company e.g. Sony Ericson
60
What is Licensing/franchising
One company allows another to manufacture/market its product or service e.g. Mcdonalds
61
What is strategic alliances
Loose collaboration e.g. virgin atlantic airways and malaysia airlines
62
What are agency agreements
One party distributes another's product
63
What is important to consider when forming alliances?
- 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
What are groups?
Parent company will own shares in subsidiary companies to the extent that owners of parent company owns the subsidary
65
What are the advantages of working as a group
- 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
What are disadvantages of operating as a group?
- Consolidated accounts must be prepared - Many acquisitions add negative shareholder value

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