Chapter 4: Organsiational Structure and Governance Flashcards
(22 cards)
What are the advantages and disadvantages of an Entrepreneurial structure?
Advantages - fast decision making, good control, close bond
Disadvantages - lack of career structure, dependant on the capabilities of the owner, can’t cope with company growth
What are the advantages and disadvantages of an Entrepreneurial structure?
Advantages - fast decision making, good control, close bond
Disadvantages - lack of career structure, dependant on the capabilities of the owner, can’t cope with company growth
What are the advantages and disadvantages of a Functional/departmental structure?
Advantages - career opportunities, employees role is specialised, more efficient
Disadvantages - slower to make decisions, conflicts between departments
What is a functional structure?
If an organisation outgrows the entrepreneurial structure, they use the functional structure.
This groups together employees that undertake similar tasks into departments.
What is an entrepreneurial structure?
This is built around the manager, one manager and several employees
What is a divisional structure?
An organisation is split into divisions and each division is split into structures.
E.g. division 1 and division 2 each have their own finance, IT and marketing department
Define empire building
Empire building is when the board have too much control over the business
What are the advantages and disadvantages of a divisional structure?
Advantages - enables growth, clear responsibilities, easily adapted
Disadvantages - specialists may feel isolated, duplication of roles, allocation of costs can be a problem
What is a matrix structure?
A combination of the functional and divisional structures.
Each division will have a set of departments, e.g. production, sales and finance department within the fruit and veg division
What are the advantages and disadvantages of a matrix structure?
Advantages - flexible, enables growth, clear responsibilities, easily adapted, career opportunities
Disadvantages - dual command, dilution of authority, higher admin costs
enables growth, clear responsibilities, easily adapted
Define a scalar chain.
A scalar chain is the line of authority. E.g a long scalar chain has lots of levels of mangement
Define a scalar chain.
A scalar chain is the line of authority. E.g a long scalar chain has lots of levels of mangement
Define span of control
Span of control is the number of people a manager is responsible for
Name the three factors that affect the span of control.
- Nature of work
- Type of personnel
- Location of personnel
Define a tall organisational structure
Many levels of management = long scalar chain and narrow span of control
Define a flat organisational structure
Few levels of management = short scalar chain and wide span of control
Define governance
Governance are the authority structures, processes and rules that an organisation has
What is the difference between centralised and decentralised structure?
Centralised structure - the upper levels of a hierarchy have the authority to make decisions.
Decentralised structure - the authority to make decisions is passed down to people at lower levels
What are the advantages of decentralisation?
– Senior management can concentrate on strategy.
– more motivation due to increased training.
– quicker responses due to small chain of command
What are the disadvantages of decentralisation?
– Loss of control by senior management.
– dysfunctionality due to different decisions.
- Poor decisions made by inexperienced people.
- Extra costs such as training 
What are the three different levels of planning?
One strategic planning – making long-term decisions for the entire organisation.
Business planning – plans for specific divisions and how to use resources.
Operational planning – short term, detailed and practical
