Organisational structure Flashcards
(40 cards)
Organisational structure
The way in which work is divided up and allocated, outlines roles of individuals and groups in the organisation (it changes over time)
Entrepreneurial structure
Built around owner manager and typical for small businesses in early stages, also entrepreneur may have specialist knowledge of product
2 +ve’s and -ve’s of entrepreneurial structure
+ve
fast decision making
close bond to workforce
-ve
lack of career structure
can’t cope with fast growth
Functional/departmental structure
Group together employees that have similar tasks, found in organisations that have outgrown the entrepreneurial structure
Good for small businesses with few products existing in stable environment
2 +ve’s and -ve’s of functional/departmental structures
+ve
economies of scale
career opportunities
-ve
slow decision making
conflicts between functions
Divisional/ product structure
Organisation is split into several divisions, each overseeing something. Each division will have a functional structure, with all departments it needs in order to operate in market
Divisions ran as separate units
Geographical structure
Similar to divisional structure, but involves each division covering specific location
2 +ve’s and -ve’s of geographical structure
+ve
clear responsibility for areas
allows local decision making
-ve
potential loss of control
allocation of central costs could be a problem
Matrix structures
- Combo of functional and divisional structures
- Requires dual reporting to two managers
What is the aim of matrix structures?
To combine benefits of both divisional and functional structures
2 +ve’s and -ve’s of matrix structures
+ve
encourages teamwork and exchange of opinions and expertise
flexibility
-ve
dual command and conflict
time-consuming meetings
Authority
relationship between participants within an organisation
the right to give orders and the power to exact ‘obedience’
Responsability
liability of person to be called to account for his or her actions
Can responsibility be delegated to others?
No
Delegation
process where manager assigns part of his authority to a subordinate to fulfil his duties
When can delegation occur?
when a manager initially possesses the authority to delegate, responsability can never be delegated
Scalar chain
line of authority which can be traced up or down the chain of command
relates to no. of levels of management within an organisation
Tall organisation
- Has many levels of management and narrow span of control
- More bureaucratic and take longer to make decisions due to large number of levels of management that need to be involved
Flat organisation
- Few levels of management and a wide span of control
- Weaker control and fewer chances for employees to progress or be promotes (can have adverse impact on motivation of employees)
Where are decisions made in a centralised structure?
Upper levels of organisation’s hierarchy
Where are decisions made in a decentralised structure?
authority to take decisions is passed down to units and people at lower levels
3 factors that affect amount of decentralisation:
- management style
- geographic spread
- size of organisation
2 +ve’s and -ve’s of decentralisation:
+ve
senior management free to focus on strategy
better local decisions due to local expertise
-ve
loss of control by senior management
poor decisions made by inexperienced managers
Virtual organisation
When an organisation outsources many of its functions to other organisations and exists only as a network of contacts, with few functions staying in-house
