Topic 18: Organisational Structure Flashcards Preview

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Flashcards in Topic 18: Organisational Structure Deck (34):

Define organisational structure.

"The division of labour as well as the patterns of coordination, communication, work flow and formal power that direct organised activities."


What is division of labour? How much is best?

  • Subdividing work into seperate jobs assigned to different people.
  • Limited by ability to coordinate work.
  • Potentually increases efficiency.
  • Necessary as company grows and work becomes more complex.


How can work efficiency be coordinated?

  1. Informal communication.
  2. Formal hierarchy.
  3. Standardisation.


Outline informal commucation as a coordinating mechanism.

Give the subtypes & strategies.

Sharing information on tasks, forming common mental models to synchronise activities.

Subtypes & Strategies.

  • Direct communication.
  • Liason roles
  • Integrator roles.
  • Temporary teams.


Outline formal hierarchy as a communicating mechanism.

  • Assigning legitimate power to individuals who then use the power to direct work processes and allocate resources.
  • Can utilize direct supervision and formal communication methods.


Outline standardisation as a coordinating mechanism.

Creating routinepatterns of behavior or output, by standardising:

  • Skills.
  • Processes.
  • Output.


What is concurrent engineering?

When employees from different departments organize into a team for the purpose of developing some product or service. Example of informal communication.


What are the elements of organizational structure?

  • Span of control.
  • Centralization.
  • Formalization.
  • Departmentalization.


Outline and explain span of control.

  • Span of control is the number of people directly reporting to the next level in the chain of command.
  • Wider span of control is possible when:
    • There are other coordinating mechanisms.
    • Routine tasks.
    • Low employee interdependence.


What are the problems with tall hierarchy structures?

  • Overhead costs of managers, etc.
  • Worse upward information.
  • Focus power around managers, staff fell less empowered.


What are the problems with flat hierarchy structures?

  • Undermines management functions.
  • Increases workload and stress.
  • Restricts management career development.


Outline centralization and decentrilization.

Centralization is when decicion making authority is held bya  few people, usually high in the hierarchy.

  1. Decentralization is when that authority is held by more people spread out through the organization.


Outline formalization.

  • The degree to which roganizations standardize behavior through rules, procedures, formal training and related machanisms.
  • Formalization increases as firms get older, larger and more regulated.


What are the problems with formalization?

  • Reduces organizational flexibility.
  • Discourages organizational learning/creativity.
  • Reduces work efficiency.
  • Increases job dissatisfaction and work stress.


Outline Mechanistic and Organic organisational structures.


  • Narrow span of control
  • High formalisation.
  • High centralisation


  • Wide span of control.
  • Little formalisation.
  • Decentralised decisions.


Outline departmentalization. What is it's purpose?

Specifies how employees and their activities are grouped together.


  • Establishes a chain of command.
  • Gather employees with similar tasks, skills, etc.
  • Enables them to coordinate / communicate informally.


What kind of departmentalization structures are there?

  • Simple.
  • Functional.
  • Divisional.
  • Team-based.
  • Matrix.
  • Network.


Outline the simple organisational structure.

  • Minimal hierarchy, staff report to owner.
  • Roles are loose and have flexibility.
  • Informal communication to coordinate.
  • Centralised structure - owner makes most decisions


Outline the functional organisational structure.

Employees organisased around specific knowledge: Finance, production, marketing etc. with the ceo at the top. 


Evaluate functional organisational structures.

  • Benifits:
    • Economies of scale.
    • Supports professional identity and career paths.
    • Easier supervision.
  • Limitations:
    • More emphasis on subunit than organisational goals.
    • Higher dysfunctional conflict.
    • Poorer coordination - requires more controls.


Outline divisional structures.

  • Organises employees around non knowledge things, such as:
    • Geographic location
    • Product
    • Client
  • Best form depends on environemntal diversity or uncertainty
  • There has been a movement away from the grographic location form.


Evaluate Divisional Structures


  • Building block structure -> accomidates growth.
  • Focuses on markets / products / clients.


  • ​Duplication, inefficient use of resources.
  • Specialisations are disperesed - silos of knowledge.
  • Politics/conflict when two forms of equal value.


Outline team based structures.

  • Self-directed work teams.
  • Organised around work processes.
  • Typically an organic structure.
  • Usually found within divisionalized structures.


Evaluate team based structures.


  • Responsive, flexible.
  • Lower admin costs.
  • Quicker, more informed decisions.


  • Interpersonal training costs.
  • Slower during team development.
  • Role ambiguity increases stress.
  • Porblems with supervisor role changes.
  • Duplication of resources.


What is a matrix structure? 

Employees belong permantently to a functional unit, and are assigned temporarily to specific project teams. Example below.

A image thumb

Evaluate the matrix organisational structure.


  • Uses resources and expertise effectively.
  • Improves communication, flexibility, innovation.
  • Focuses specialists on clients and products.
  • Supports knowledge sharing within speciality.
  • Solution when two divisions have equal importance.
  • Limitations:
  • ​Increases goal conflict and ambiguity.
  • Two bosses - dilutes accountability.
  • More conflict, organisational politics and stress.


What is a network organisational structure?

An alliance of firms creating a product or service. Supporting firms beehived around a hub or core firm (possibly created for a joint venture.


Evaluate the network organisational structure.


  • Highly flexible.
  • Potentially better use of skills and technology.
  • Not saddled with same resources for all products.


  • Exposed to market forces.
  • Less control over sub-contractors than in-house.


What organizational factors affect organisational structure?   

  • External environment.
  • Strategy.
  • Technology.
  • Human resources.


What components of the extenal environement determine a firms best organizational structure?

Dynamic vs Stable:

For Dynamic, team-based, network or other organic structures are best.

For stable, mechanistic structures are best.

Complex vs Simple:

For complex environments (many elements e.g. stakeholders) decentralize.

Diverse vs Integrated

Use divisional for diverse, functional or geographic division if integrated.

Hostile vs Munificent

Use organic strucures for hostile environments. 


What are the effects of organisational size on structure?

  • Greater division of labour (specialization)
  • Greater use of standardization
  • More hierarchy and formalisation, less decentrilisation.


What is technology and its contingencies?

Technology refers to mechanisms or processes by which an organisation turns out its product or service.

  • Variability: The number of exceptions to standard procedure.
  • Analysability: The predictability or difficulty of the required work.


What kinds of organisational strategies affect structure?

  • Differenciation: providing unique products.
  • Cost leadership: maximise productivity.


What are the signs of poor organisational structure?

  • Poor communication and coordination.
  • Poor adaptation.
  • Not meeting customer needs.
  • Higher cost than expected.
  • Slower response to changes.
  • Conflicts.
  • Poor decisions.