Unit 1 outcome 1.3 - business structures

Question 1

What are the 4 different types of business structure?

Answer 1

• Hierarchical (tall) structure
• flat structure
• matrix structure
• entrepreneurial structure

Question 2

What is a hierarchical structure?

Answer 2

• Traditional structure for many medium and large organisation, sometimes called a pyramidal structure.
• Decisions and instructions are passed down from the senior staff to the workforce, and information passes back up

Question 3

What does Specialisation in a tall structure allow?

Answer 3

Allows the organisation to benefit from economies of scale in its operations

Question 4

What are the 3 types of decisions within a tall structure?

Answer 4

• operational decisions
• Tactical decisions
• Strategic decisions

Question 5

What are 2 advantages of a Tall structure?

Answer 5

• the structure is clearly defined and each member of staff knows their role and who to report to
• with many levels come many promotion opportunities which can motivate staff

Question 6

What are 2 disadvantages of a Hierarchical structure?

Answer 6

• Communications take time to flow down through the levels, which slows down decision-making
• The organisation can be slow to react to changes in the market

Question 7

What is a flat structure?

Answer 7

When there are very few levels in the hierarchy, so communications are passed quickly from one level to another, speeding up the processing of information and decision-making

Question 8

What are 2 advantages of a flat structure?

Answer 8

• information can be communicated quickly between levels

- the organisation can respond quickly to external factors such as competition

Question 9

What are 2 disadvantages of a flat structure?

Answer 9

• Fewer levels means fewer promotion opportunities so quality staff may leave to gain promotion in larger organisations
• As there are less management levels, staff may be delegated more tasks, which could put them under pressure

Question 10

What is a matrix structure?

Answer 10

This emphasises getting people together who have particular specialist skills and placing them in project teams to complete specific tasks.
There is no hierarchy

Question 11

What are 2 advantages of the matrix structure?

Answer 11

• Each team has specialised staff from all functional areas

- Complex problems can be solved

Question 12

What are 2 disadvantages for the matrix structure?

Answer 12

• many managers across all project teams will mean high wage costs
• Duplication of resources such as administration staff and equipment for each project team.

Question 13

What is an entrepreneurial structure?

Answer 13

A structure common in small businesses, where decisions have to be made quickly

Question 14

What are 2 advantages of an entrepreneurial structure?

Answer 14

• Decisions are made quickly as there is little consultation
• Staff know who they need to report to

Question 15

Name 2 disadvantages of an entrepreneurial structure?

Answer 15

• This structure can create a heavy workload for the main decision maker
• If the owner is busy or not available, key decisions can’t be made

Question 16

What is centralised management?

Answer 16

• when the control and decision-making lies with the most senior directors or managers or the owners of the organisation
• decisions start at the top, and they are passed down to the workforce
• subordinates have no authority

Question 17

What are 3 advantages of a centralised management?

Answer 17

• procedures are standardised which ensures consistency
• there is low risk of important information leaking from branches or departments
• a high degree or corporate identity and strategy exists as decisions are made for the whole organisation

Question 18

What are 3 disadvantages of a centralised management?

Answer 18

• Less responsibility is given to subordinates which can result in demotivated staff
• Decisions will not reflect the needs of local markets
• the organisation will react slowly to external factors such as competition

Question 19

What is decentralised management?

Answer 19

• decision-making and control are delegated to and carried out by subordinates, relieving senior management
• decisions are made throughout the lower end

Question 20

Name 3 advantages of decentralised management?

Answer 20

• The business reacts quickly to external factors
• decisions are made quickly as local managers don’t need to consult senior managers before implementing decisions.
• More subordinates are empowered which encourages creativity

Question 21

Name 2 disadvantages of decentralised management?

Answer 21

• the organisation can lose an overall corporate image if each department/branch is operating differently
• local branches could start to compete with each other if they are allowed to make key decisions

Question 22

Why do organisations change their structure overtime?

Answer 22

to ensure that they can cope with changing circumstances

Question 23

What are the two steps businesses can be forced to make to become more competitive and to survive the worst of a recession?

Answer 23

• De-layering

- Down sizing

Question 24

What is de-layering?

Answer 24

The cutting out of levels of management within the organisation in order to ‘flatten out’ the structure

Question 25

What does de-layering overcome?

Answer 25

the effects of aggressive competition in the market place

Question 26

Name 3 advantages of de-layering;

Answer 26

- money is saved on paying expensive management salaries - quicker decision-making and communications are possible as there is a shorter chain of command - there is a wider span of control

Question 27

What are 3 disadvantages of delayering?

Answer 27

- there are fewer promotion opportunities for staff - redundancy payments will cost the organisation a significant amount of money - the organisation will lose key members of staff in the restructure

Question 28

Why do organisations use down-sizing? and how?

Answer 28

to attempt to reduce costs - reducing the scale of their operations to meet actual market demand - stripping out excess capacity within the organisation (at all levels and within all functions) - consolidating complimentary operations under one function - reducing the resources of the organisation following increases in productivity

Question 29

What does down-sizing mean? (3)

Answer 29

- the closure of factories or production units or - merging two or more separate operations under separate management functions and bring them together under one management umbrella or - scaling down of their production capacity

Question 30

What are 2 advantages of down-sizing?

Answer 30

- cost of wages and rent will be reduced | - the business is more efficient and can become more competitive

Question 31

Name 2 disadvantages of down-sizing?

Answer 31

- valuable skills and knowledge are lost when redundancies ae made - remaining staff feel vulnerable and are demotivated

Question 32

What do organisational charts show?

Answer 32

The structure of the organisation in diagrammatic form where individuals are identified in specific positions within the organisation, showing their links to others along lines of authority and responsibility

Question 33

Name 3 advantages of organisational charts?

Answer 33

- each individual can be names in the position they hold, providing clear identification - they identify appropriate lines of communication or where bottlenecks occur - they identify the span of control or number or subordinates each individual has

Question 34

Name the 2 disadvantages of organisational charts:

Answer 34

- they don't show how much authority each position in the chart carries - they don't identify any informal relationships that occur

Question 35

What is the span of control?

Answer 35

the number or workers or subordinates under a supervisor or manager

Question 36

name 2 important factors considered when deciding on the span of control of any manager or supervisor?

Answer 36

- the calibre and ability of the manager or supervisor must be considered as some people are better at managing and leading as others and therefore can cope with a larger number of subordinates - the calibre and ability of the subordinates must be considered as intelligent, motivated and able subordinates will need little in the way of control, and therefore a superior can manage a relatively large number of people. The same will not be true if subordinates are lazy, demotivated or less able.

Question 37

What are the 3 types of relationships within a business?

Answer 37

- line relationships - functional relationships - staff relationship