Business revision, 1.4.3 (Organisational Design)

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What is the 5 main criteria in which businesses can be structured or organised?
Area (where the business operates), Customer (the markets where the prod. is sold), Function (departments/functional areas of the business), Product (type of goods they produce), Process (stages involved in making the product)
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What is a centralised structure?
The business has a few top level managers that make decisions and hold responsibility for the entire company. Business decisions, therefore, are centralised to a main office, which communicates these devisions as objectives to the rest of the staff.
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What is a decentralised structure?
The business delegates responsibilities and decision making powers to employees lower down the chain of command. Decentralised companies allow their various branches to make decisions for themselves, independent of the central head office.
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What is a tall hierarchical structure?
A layered, pyramid-like structure that depict the interrelationship between the functional areas, or departments of the business. There is a chain of command, with the most authority at the top. Span of control refers to
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What are the advantages of a tall hierarchical structure?
Effective system of command and control, everyone has a clear role, duty, responsibility and authority. Encourages specialisation, this allows specialist staff to work in their specialist area which suits them. e.g finance
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What are the disadvantages of a tall hierarchical strucuture?
Tend to be bureaucratic with every task being accurately recorded, they therefore respond slow to market change. May be problems with internal communications. Companies more likely to replace staff with tech.
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How does a tall structure affect businesses?
Can increase motivation and as a result, efficiency. However, decisions may take longer to implement.
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What is a flat hierarchical structure?
These have relatively few or even only one layer of management. They have a shorter chain of command but a wider span of control, usually it is adopted by small businesses such as sole traders, partnerships and PLCs.
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What are the advantages of a flat structure?
Fewer levels of management means less bureaucracy which makes decision making and implementation quicker. This makes it easier to change to external changes.
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What are the disadvantages to a flat structure?
Span of control for a manager increases their job allocation and workload, this could effect efficiency. Individual employee tasks and roles could become blurred and merged with other employees.
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How does a flat structure affect businesses?
Allows businesses to react efficiently to changes in the marketplace. Employees have more than one responsibility due to few layers which can lead to motivation but also feelings of overworked and stressed.
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What is a matrix structure?
Encourage teamwork, cutting across the idea of independent functional areas such as HR, accounting, marketing, R&D and purchasing. Encourages employees to think outside the box, take responsibility for the successful implementation of projects
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What are the advantages of a matrix structure?
Project is staffed and implemented by employees who have been chosen for their expertise, Takes on board a wide variety of employees with different specialisms, Projects usually given a time frame+cost restric. Motivational advans for employee/er
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What are the disadvantages to a matrix structure?
Can cause conflict of interest or loyalty (due to staff reporting to team leaders/managers)-questions arise whether resources need to be given to the project or department?, Job monitoring can be difficult, May need to employ additional staff.
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How does a matrix structure affect businesses?
Can reduce efficiency but improve team work and collaboration between staff as well as motivation.
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Card 2

Front

What is a centralised structure?

Back

The business has a few top level managers that make decisions and hold responsibility for the entire company. Business decisions, therefore, are centralised to a main office, which communicates these devisions as objectives to the rest of the staff.

Card 3

Front

What is a decentralised structure?

Back

Preview of the front of card 3

Card 4

Front

What is a tall hierarchical structure?

Back

Preview of the front of card 4

Card 5

Front

What are the advantages of a tall hierarchical structure?

Back

Preview of the front of card 5
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