Chapter 18: Competitive Organisational Structure

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  • Competitive Organisational Structure
    • organisational structure
      • the relationship between different people and functions in an organisation- both vertically and horizontally between different functions and people at the same level
    • Factors determining the choice of organisational structure
      • size of the organisation
      • nature of the organisation
      • culture and attitudes of senior management
      • skill and experience of its workforce
      • dynamic, or ever-changing, external environment
    • Accountability
      • the extent to which a named individual is held responsible for the success or failure of a particular policy, project or piece of work
      • can easily be seen in organisational chart
    • Centralisation vs Decentralisation
      • disadvantages of centralisation
        • manager of local branch has greater knowledge about customers needs but has little input in decision making
        • can adversely affect motivation of managers
        • can lead to inflexibility and inappropriate decisions on a local level
      • advantages of decentralisation
        • empowers local managers
        • local knowledge may have a beneficial effect on sales
        • flexibility should improve
        • could enhance motivation
        • reduces volume of day-to-day communication between head office and local branches
      • disadvantages of decentralisation
        • customers may not like reduction in uniformity of branches
        • by focusing on local issues, local managers may not see the big picture and therefore may miss an opportunity
      • advantages of centralisation
        • consistent policies on marketing and production
        • decisions can be made quite quickly
        • corporate views can be clearly emphasized
        • every branch is identical, meaning customers know what to expect
        • strong centralised leadership is useful in times of crisis
      • the degree to which authority is delegated within the organisation
    • Delayering
      • the removal of one or more layers of hierarchy from the management structure of an organisation
      • often done in order to cut cost by making people redundant
      • however organisations may lose experienced managers and therefore corporate memory
    • Outsourcing
      • using sources outside a business to undertake functions that used to be done internally
      • gives a firm the opportunity to use expertise not otherwise available in the organisation, to offload low-level admin, allowing employees to undertake interesting work and to reduce costs.
    • Homeworking
      • organisations can greatly reduce their costs if using homeworking as it removes employees need to travel and may motivate staff as it allows them to be independent and have responsibility
    • Advantages of a flexible workforce
      • able to respond more quickly to market conditions by expanding or contracting capacity
      • able to cut down costs
      • can make more use of specialists
      • can make more efficient use of resources by directing them to strengths or p priorities
    • Disadvantages of a flexible workforce
      • organisations will be dependent on other organisations
      • may be less opportunity for future expansion
      • peripheral workforce may be less motivated than core workers
      • in the short tem, firm may receive a negative image
      • likely to require a culture change for the firm


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