D. Shape And Structure Of The Finance Function Flashcards
(130 cards)
What Is an organisational structure?
It’s formed by the grouping of people into departments or sections and the allocation of responsibility and authority
How did Mintzberg’s effective organisation structure suggest an organisation can be analysed?
Into six building blocks
Effective coordination will be needed to integrate the building blocks into one unit
Building blocks: operating core Middle line Techno structure Support staff Strategic apex Ideology
Draw Mintzberg’s effective organisation and describe the six different building blocks
Building blocks:
operating core-Basic work of organisation. In small or represent nearly all, in large or will require more complex arrangements
Middle line-Link strategic apex to operating core and includes lower and middle level management
Techno structure-Responsible for designing procedures and standards. Techno structure includes accountants, computer specialist and engineers
Support staff-Provide services to the organisation with support operations/production
Strategic apex– High levels of management responsible for formulating the strategy and long-term plans
Ideology-Organisations values and beliefs i.e. culture
Describe the six coordinating mechanisms used to integrate the building blocks into a cohesive unit
- Mutual adjustment – coordination through informal contact
- direct supervision – coordination through for hierarchy
- Standardisation of work processes
- Standardisation of outputs– product and service specifications
- standardisation of skills and knowledge – identifies training needs and the necessary skills base to do the work
- Standardisation of norms – cultural norms and expectations
Mintzberg converted the building blocks and coordinate in mechanisms in different ways and identified which five main structural configurations?
Entrepreneurial structure: direct supervision
Machine bureaucracy: standardisation of work excellent
Professional bureaucracy:Standardisation of skills
Divisionalised: standardisation of outputs
Adequacy/innovative: mutual adjustments
What four structural changes make up various phases of the business?
Entrepreneurial structure
Functional structure
Divisional structure
Matrix structure
What does the entrepreneurial structure and who makes all the decisions?
Built around on a data manager
All key decisions made by a strategic leader who is often the owner/entrepreneur
What are the advantages and disadvantages of the entrepreneurial structure?
Advs – quick decision-making – responsive to market – good control – close bond to work
Disads
-Lack of career structure
– dependent on owner capabilities
– cannot cope with diversification/
What is the functional structure?
Who is the most appropriate for?
Common folks that have outgrown the entrepreneurial structure, therefore need to group together employees to undertake similar tasks into departments
Board of directors and below them different departments
Most appropriate to smaller companies with a few products and locations which exist in a relatively stable environment
What are some advantages and disadvantages of the functional structure?
Advantages – economies of scale thanks – standardisation/efficiency -specialist more comfortable – career opportunities
Disadvantages -Empire building i.e. managers working on their own interest – Slow to adapt market changes – conflict between functions – cannot cope with diversification
What is the divisional structure?
Who takes leadership?
Because when an organisation is split into different divisions – each one autonomously overseeing a product line/brand or geographical location
Board of directors leading divisions which lead to different functions
The general managers take responsibility for their own resources
What are some advantages and disadvantages of the divisional structure?
Advantages
– enables product or geographical growth
– clear responsibility for divisions
– training of general managers
– easily adapted for further diversification
– top management free to concentrate on strategic matters
Disadvantages – duplication of business functions – lack of goal congruence – potential loss of control – allocation of central costs can be a problem - specialists may feel isolated
What is the matrix structure?
Which organisations are usually use it
Structure aims to combine the benefits of a divisional structure and a functional structure
Senior management leads the functional structure
Who lead the different departments for different products
Found in multiproduct and multifunctional organisations with significant interrelationships and interdependencies
What are the advantages and disadvantages of the matrix structure?
Advantages
– same advantages as functional and divisional structures
– flexibility to focus on customers, projects as less rigid than div structure
– encourages teamwork and the exchange of opinions and expertise
Disadvantages
– dual command
– dilution of functional authority I.e who to report to
– time-consuming meetings
Describe Starbucks’s matrix structure
Functional groups: split into a number of functions which are hierarchical
Geographical divisions: based on physical location and which division head has been given flexibility to adjust policies and local market. Has three geographical divisions: America, China and Asia Pacific, and EMEA
Product based divisions: focus on product development. Number of product divisions including coffee and related products, baked goods, merchandise
Teams: most visible in cafés for their organised to deliver goods and services to the customer and the optimal way
What’s the difference between a centralised a decentralised structure?
Centralised: upper levels of an organisation’s hierarchy retain the authority to make decisions e.g franchises
Decentralise: authority to make decisions is passed down to units and people at lower levels
What factors affect the amount of (de)centralisation?
Management style – how much control management want to retain
Ability of management/employees – more able, greater level of decentralisation
Geographical spread – central control more difficult
Size of organisation -small organisations can retain the level of central control easily
AdVantages of decentralisation
Senior management free to concentrate on strategy
Better local decisions due to local expertise
Better motivation due to increased empowerment of employees and a more defined career path
Quicker responses/flexibility due to reduce bureaucracy and increased autonomy
Disadvantages of deCentralisation
Loss of control by senior management and lack of standardisation
Dysfunctional decisions due to a lack of goal congruence
Poor decisions made by an experienced managers
,
Training costs
Duplication of roles within organisation
Extra costs in obtaining information since it stored in several locations
What is the scalar Chain?
Line of authority Which can be traced up or down the chain of command
Therefore relates to the number of levels of management within an organisation
What is the span of control?
How many people report to one superior
What influences the span of control?
Nature of the work – more repetitive equals wider span
Type of personnel – more skilled means wider span
Location of personnel– located locally means wider span
What’s the difference between a tall organisation and a flat organisation?
Tall
- long scaler chain
- many levels of management
- narrow span of control
Flat
- short scalar chain
- few levels
- wider span of control
Are organisations becoming flatter or taller?
Flatter
Encourages initiative
Collaborative environment
