L10 - Org structures.

Question 1

what drives strategy?

Answer 1

structure -

Question 2

What will change your structure and why?

Answer 2

Growth - For e.g. you get so many more people in as a result of growth, and these people cannot all be looked after and overlooked by one person. So you need to change. So the bigger companies don’t use this structure and move away from it when they grow.

Question 3

3 traditional models for organisational structure?

Answer 3

1. Entrepreneurial
2. Functional.
3. Divisional

Question 4

what order to you undertake different organisational structures as you grow?

Answer 4

entrepreneurial, then grow and use functional and then divisional.

Question 5

what is needed from an organisation to pursue strategy?

Answer 5

the correct organisational structure.

Question 6

what is a good example of an org with a complicated structure and why

Answer 6

NHS:

• So complicated and probably couldn’t draw the structure on a piece of paper.
• It is such a massive org however so this is likely. But how do you control this? How do you keep control over the money? What columns do you enter for the budget?
• 92% of the services of NHS is still government controlled. But the 8% outsourced only adds to the complexity.
• The NHS is the second largest employer.

Question 7

traditional structure types?

Answer 7

Functional
Geographic
Customer
Product
Matrix

Question 8

what is a functional structure?

Answer 8

split into specialisms. E.g. IT, HR, Marketing, finance etc.

Question 9

what is a geographic structure?

Answer 9

relates to kind of divisional structure. But is done by georgraphy, e.g. Head office and then split in to Asia, Europe, MENA etc.

Question 10

whos an e.g. org that may be geographically structured?

Answer 10

lots of banks are structure this way. There is geographic centres and can grow as big as they need to be.

Question 11

what is a customer strucuture?

Answer 11

You are structured in ways where you look after a customer or group of customers.

e.g. imagine you are a wholesaler, and you supply food to Tesco and Sainos, would make sense to have HO, and then Tesco specialists that work only on Tesco and then people for Sainos, and they both don’t integrate with each other. So you structure your co just on your customers (Tesco and Sainos). This only works if you have a few big customers though, as you cant have 1000 of customers and 1000 of divisions. This could also be done by product.

Question 12

Product organisational structure?

Answer 12

You are structured in ways where divisions are focussed on producing a single or set of products.

Question 13

what is a matrix organisational structure?

Answer 13

This is a mixture of functional and divisional structures. It’s a hybrid and you try and take the best from each.

People are employed in to their functions, but they will then be put in to a specific division within the function. So under the third blue box to create product C.

e.g. PwC Green boxes (functions) are the Los. And the blue boxes represent the divisions in the LoS. So for example function = tax and divisions are ITS M&A, TP and VAT. But remember you woudnt go from the Tax LoS to Deals LoS.

Question 14

what is important to look out for with a matrix organisational structure

Answer 14

Dual command. do you have two bosses?

Question 15

what are the two types of decision making methods?

Answer 15

1. Top down decision making

2. bottom up decision making

Question 16

what is Top down decision making

Answer 16

Decisions are made from the top. e.g. donald trump. The person at the top makes all of the decisions

Question 17

what is the problem with top down decision making?

Answer 17

The people at the top, driving the decisions are too far removed. The decisions from the top are only as good as the info you are receiving. Information flows need to be good for this to be good, information flows needs to be complete when they receive.

i.e. All very well to do this but often messages can get lost on way down, people don’t agree with them so they change them in subtle ways and therefore what actually is said at the top doesn’t actually happen, and this is because the people at the top are just too far away from the people at the bottom

Question 18

what is bottom up decision making

Answer 18

allow anyone in the org to pitch ideas and projects. So hope to get a really good project idea from this

Question 19

What does bottom up decision making need in order to work?

Answer 19

technology.

Question 20

what is centralisation?

Answer 20

this is where the decisions are made by the directors (the board). Amazon is an e.g. of this.

decisions made from the top

Question 21

what is decentralisation?

Answer 21

allows decision to be taken away from the directors (the board), and therefore they are made anywhere. But for this case lets think they are made by divisional managers. Ebay is an e.g. of this, as the decisions are made by the buyers and seller

Question 22

what is Span of control?

Answer 22

The idea that one person can be in charge of loads of people or very few people.

Question 23

how can you assess the span of control. explain.

Answer 23

The number of subordinates.

If you have more subordinates you have a flatter organisational structures as one person is in charge of more people. S0 6 people reporting to you is a flatter structure.

If you have less subordinates you have a taller organisational structure as you are in charge of less people who are then in charge of people etc

Question 24

what does the span of control depend on

Answer 24

the nature of the organisation

Question 25

what span of control would a factory have and why

Answer 25

A wide span of control - may have one supervisor supervising a lot of people. This is because everyone is doing the same thing. Little skills required and everyone getting on with it. You can often in these scenarios have the supervisor doing the work too. No ones is getting training or oversight etc.

Question 26

what kind of firm would have a tall span of control. Why?

Answer 26

High skill, and high specialised work will not want one person overseeing everyone. They will want a taller span of control as where you may have a supervisor for every 2 people as the work is highly skilled and the supervisor needs to be ready when their workers is needed.

Question 27

what determines the span of control?

Answer 27

• the nature of the work.
• the management style
• the culture

Question 28

why does the nature of the work help determine the span of control?

Answer 28

some work don’t need more managers. For e.g. factories where everyone doing the same thing, just need one person)

Question 29

why does the culture help determine the span of control? e.g. ?

Answer 29

Japanese people are promotion driven. This is important for them and therefore you have tall org’s in japan as people are built for promotion

Question 30

what in this current day affects the span of control? why?

Answer 30

Tech. as people can work from home. They have more autonomy and ability to work without supervision due to technology. Productivity can be measured a lot more reliably too as we can tell if someone is doing their job

Question 31

e.g. of a company that has a flat span of control and how do they try and enhance this?

Answer 31

Dyson:

makes every new employee build a Dyson. This is to try and keep the Strucuture as flat as possible. Even if the co. might not be very flat, the cultural/ethos has a flat structure and you therefore feel involved. James dyson may be doing this to make sure that everyone in the business understands the ins and outs of the organisation.

Question 32

what is a tall org?

Answer 32

This is an organisation with lots of levels of management.

Question 33

what does a tall org result in?

Answer 33

higher costs as Lots of management levels lead to higher cost. As managers want more money. This has a massive cost implication.

The problem with a tall organisation is cost. As you have more management levels and all managers want more money than shop floor workers. Therefore you end up with an expensive cost structure. This is why retailers cut jobs from middle management so they can cut out the middle management costs. E.g. mum at marks and spencers.

Question 34

what is a flat org?

Answer 34

this is an org with less levels of management and therefore more workers to look after per manager.

Question 35

tall orgs have a … span of control?

flat orgs have a … span of control?

Answer 35

Tall org’s have a narrow span of control

Flat org’s have a wide span of control

Question 36

what is mintzbergs configurations? what are the parts .

Answer 36

A diagram where he said an organisation consists of 5 parts. These are:

1. Strategic apex
2. Middle line.
3. Operating core.
4. techno structure.
5. Support staff

Question 37

explain the main parts of Mintzberg’s configurations. explain them.

Answer 37

1. Strategic apex – this is snr management (board of directors). They are at the top, and is a small area. They will make the decisions in a centralised work place and transmit the decisions to the middle line. More snr management the taller the org. less snr management the flatter the org structure.
2. Middle line – this is middle management, the people who receive the message from the snr management (strategic apex) down to the operating core.
3. Operating core – this is the “doing bit” of the organisation. E.g. people on the factory floor. They receive the message from the middle line.

decisions flow from 1, to 2, to 3.

Question 38

explain the support structures of Mintzberg’s configurations

Answer 38

1. Techno structure. – these are specialists that are there to plan the work. Decide what the operating core deos, and lias with middle management to make sure the messages are getting through. These people run the show in some organisations, as they are the ones with the abilities and the qualifications to actually plan what happens. E.g. for a software company they are the software engineers.
2. Support staff – this could be anyone at all, they are there to support. E.g. HR, finance, cleaning staff. They are necessary to support the business but are not involved in the actually management of the business

Question 39

what did mintzberg say about this configuration? however what do you need to remember?

Answer 39

Mintzberg said you can take this structure, stretch and squash to fit any business. But you need to think about the nature of the business and the ideology.

Question 40

e.g. of how you can fit the model to any business?

Answer 40

can get rid of parts if they dont fit. for e.g. if you outsource your support staff you can get rid of this part.

Question 41

what can a divisionalised structure arise from? (amongst other things) and why?

Answer 41

an acquisition of another org. after you buy them they become a divison of your business, so you operate as how they already operate and you don’t need to interfere.

could also be as a result of diversification (new products and new markets).

Question 42

what drives structure?

Answer 42

strategy.

Question 43

what drives strategy?

Answer 43

structure.

Question 44

what three things are needed in a divisionalised structure?

Answer 44

1. Autonomy
2. Control
3. Corporation

Question 45

what does autonomy mean for a divisionalised structure and why do you need it. e.g. of divisionalised structure where the divisions have complete autonomy

Answer 45

autonomous divisions run themselves. Divisions don’t really interact with others. E.g. Svenska handelsbanken banks have complete autonomy and don’t intereact with other banks (divisions). They do their own thing.

Question 46

what does control mean for a divisionalised structure and why do you need it.

e.g. of a divisionalised structure that looked to gain control.

Answer 46

so ensure that if that is your org., you are controlling the organisation, and know that the centres are all doing the same thing. Directors have to make sure you are in control and standards are high. You need to make sure there are systems in place to do this.

E.g. when Mcdonalds set up they were worried about the standards staying high. By having this control they will not worry. Feedback and reports from customers allowed them to make sure they kept selling the right things at the right standards.

Question 47

how can you gain control in a divisionalised structure?

Answer 47

Some of this control comes from recruitment, and making sure you have the right people in the first place, this will make sure they are doing what they are supposed to do. You need to establish parameters of control.

Question 48

what does corporation mean for a divisionalised structure and why do you need it

Answer 48

You have to ensure bottom line performance. So need to measure costs, revenues and all other things measured in the business within your division.

Question 49

problems for ensuring “bottom-line performance” (‘corporation’) in a divionalised structure?

Answer 49

Problems for this can arise from things like Transfer prices. i.e. there is a dispute of how to value goods/services between divisions of the company. How do you set the price? The transfer price is used to measure performance evaluation.

Question 50

how can sub otimal decision occur when ensuring bottom line performance (‘corporation’) in a divisionalised structure?

Answer 50

This occurs if the TP is set wrong. E.g. outsourcing could be cheaper than the TP price. This is a result of divisional autonomy as it gives the division a chance to set the transfer price. If there was no divisional autonomy the head office would make the best decision and there may not even be a TP. So when divisions have autonomy it leads to sub optimal decisions.

Question 51

what does it mean if a division is a cost centre?

Answer 51

If they are cost centres they are in charge of cost and nothing else. Everything else is looked at and managed from head office.

Question 52

what does it mean if a division is a profit centre?

Answer 52

Profit centres are in charge of their own revenues and costs. So they are in charge of there revenues and costs. So you can decide how you raise money, how you sell and what costs you incur.

Question 53

what does it mean if a division is an investment centre?

Answer 53

Investment centres are completely autonomous. They decide what fixed assets they buy, what money to invest and how much money to be left over. They make their decisions on everything: costs, revenues and investments as they are completely autonomous.

Question 54

therefore, what drives how much of the decisions are made by a division?

Answer 54

the level of autonomy.

Question 55

what is a virtual org?

Answer 55

non physical form of an organisation. So no shops, offices or anything. This means there are little overheads.

So exists on internet for e.g. as a result of technology.

Question 56

what is an example of a virtual org?

Answer 56

Asos and Primark. online retailer versus a high street retailer.

Question 57

why are virtual org’s a problem for non virtual orgs?

e.g. why is asos a problem for primark?

Answer 57

This means there are little overheads. i.e. Leads to lower costs as no rent etc. This kind of organisation is causing more of a problem for the more established businesses. For example, ASOS and Primark. How can Primark compete as a result of this lower cost structure?

Question 58

What can virtual orgs result in?

Answer 58

home workers - So people work for an org anywhere in the world. E.g. freelance journalists can work remotely as the software and technology has had an impact.

Question 59

What is a transnational org?

Answer 59

idea of a transnational org is that they have a wide global reach, but they also differ based on the countries they operate in. They operate locally as well as globally.

Question 60

e.g. of a transnational and why?

Answer 60

E.g. P&G and Unilever can have the same product and call it different things in different countries as they are locally different. They are adapting the product to local languages, local cultures, local diets possibly. So they sell things in some locations they don’t sell in others. They will sell different variants in some locations they don’t sell in others. Its that mixture of globalisation but also a local focus as well.

E.g. Unilever own Lynx deodorant (UK) and also Axe (US).

Question 61

why is corp governance important in terms of company structure?

Answer 61

CG is to do with the rules governing structures and the responsibilities of the directors in organisations. CG is relevant as it says you should have robust controls, NEDs, ED’s etc. and this impacts structure. Big organisations need to have certain controls as a result of the CG e.g. board that’s diversified.