BUSS4 - Absolute Minimum; what you need to know for Sect. A and B
- Created by: Kat
- Created on: 19-06-13 21:52
Section A: Prelim. Material - research ORGANISATIONAL STRUCTURES in businesses
Knowledge:
Larger businesses may choose to use:
Traditional hierarchy
Matrix Structues
Informal Structures
Choosing these depends on:
- Level of skill of employees
- Business environment (eg. amount of competition)
- Desire to move away from risk taking culture; more quality than innovation; then they may become more highly structured
- Leadership styles* of senior executives
Impacts on competitiveness:
- Ability to make quick decisions
- Efficient operation at minimum cost
- Effectiveness of channels of communication
- Identity of those involved in the decision making process
IMPROVING COMPETITVENESS:
Centralisation:
- Limits number of people in the decision making process (only a few snr. executives)
Advantages:
- Quick decisions
- Good day-to-day running and financial control
- Standardised proceedures can be set
- Good crisis management
Disadvantages:
- Lack of creative decisions
- Bureaucracy
- Diseconomies of scale
Decentralisation:
- Broadens the span of control and delegate to younger / more inexperienced management (arguably unavoidable as a business grows)
Advantages:
- Senior management focus more on making corporate decisions than menial decisions
- Subordinates have increased motivation (thus decreased absenteeism, increased productivity & quality of goods/sales)
- Day-to-day problems resolved arguably more quickly, because channels of communication are shorter
- Increases flexibility (can manage changing market conditions)
- Middle and junior managers are more prepared for future senior roles
Disadvantages:
- Slower strategic decision making
- More difficult to control business finances / budgets
- More difficult to monitor economies of scale
- Leadership and direction is hard to maintain
Delayering:
Removing layers in a hierarchical structure to make the organisation more lean and efficient.
Advantages:
- Costs are removed when high salaried staff are removed
- Motivation of employees should improve- as they have more control over their work
- Delegating authority means that those with less power will be able to have more of an influence into the decisions of a business, so a business may be better at adapting to changes in environment
Disadvantages:
- Valuable market knowledge and experience may be lost; and loss of job security decreases motivation
- Legislation bans discrimination against age, so it may be difficult to hire more experienced staff or fire older staff
- Workload of managers is likely to increase and, in turn, perhaps demotivation. This means that there could be increased absenteeism rates due to stress
Flexible workforces:
More of the workforce is part-time or temporary (peripheral); which means that they don't have any rights to sick pay, holiday pay or pensions. (LESS IMPORTANT)
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