Questions and Answers
What is the primary reason for organizing a business into departments?
What type of organisational structure groups activities belonging to each management function together?
Which of the following is NOT a type of organisational structure?
What is the main purpose of structuring a company according to customers?
Signup and view all the answers
What is the result of a business growing and reaching a particular size?
Signup and view all the answers
What is a key benefit of customer departmentalisation?
Signup and view all the answers
Under the Marketing Function, which of the following activities is NOT typically grouped?
Signup and view all the answers
What is the benefit of grouping activities into smaller units in an organisational structure?
Signup and view all the answers
What is a disadvantage of customer departmentalisation?
Signup and view all the answers
What type of manager is developed through customer departmentalisation?
Signup and view all the answers
What is a limitation of customer departmentalisation in terms of problem solving?
Signup and view all the answers
What is one of the advantages of a functional organisation structure?
Signup and view all the answers
What is a disadvantage of functional departmentalisation?
Signup and view all the answers
What is the advantage of geographic departmentalisation?
Signup and view all the answers
What is a disadvantage of geographic departmentalisation?
Signup and view all the answers
What is the advantage of product departmentalisation?
Signup and view all the answers
What is a disadvantage of product departmentalisation?
Signup and view all the answers
What is departmentalism according to customers?
Signup and view all the answers
What is an example of a company that uses geographic departmentalisation?
Signup and view all the answers
Why is product departmentalisation suited to fast changes in a product?
Signup and view all the answers
What is the main advantage of functional departmentalisation in Toyota S.A?
Signup and view all the answers
Study Notes
Organising a Business into Departments
- The purpose of departmentalisation is to create specialists who can perform tasks more efficiently than generalists.
- As a business grows, it becomes impossible for the owner-manager to supervise all employees, leading to the creation of managerial positions and departmentalisation.
Types of Organisational Structures
- Functional structures
- Geographic structures
- Product structures
- Customer-based structures
Functional Organisational Structures
- The most basic structure type, where activities belonging to each management function are grouped together (e.g. Marketing, Sales, Public Relations).
- Advantages:
- Promotes skill specialisation
- Enhances career development and training within the department
- Promotes high-quality technical problem-solving
- Reduces duplication of resources and increases coordination within the functional area
- Centralises decision-making
- Disadvantages:
- Emphasises routine tasks
- May create conflict over product priorities
- Focuses on departmentalisation rather than organisational issues and goals
- Reduces communication between departments
- May make interdepartmental scheduling difficult
- Develops managers who are experts in narrow fields
Geographic Organisational Structures
- Departmentalisation according to location, suitable for businesses operating in different geographic regions.
- Advantages:
- Equipment is located in one place, saving time and costs
- Managers know customer problems
- Managers develop expertise in solving problems unique to one location
- Method is suited to multinational companies
- Production can be located near suppliers/raw materials
- Disadvantages:
- All functions are duplicated at each location, which is costly
- May cause conflicts between each location's goals and corporate goals
- May require extensive rules and regulations to coordinate and ensure uniformity of quality among locations
Product Organisational Structures
- Departmentalisation according to products, where all activities related to a product are grouped together.
- Advantages:
- Suited to fast changes in a product
- Fosters a concern for customer demand
- Develops managers who can think across functional lines
- Allows greater product viability
- Disadvantages:
- May not use skills and resources effectively
- Fosters politics in resource allocation
- Limits career mobility for personnel outside their product line
- Doesn't foster coordination of activities across product lines
- Restricts problem-solving to a single product
Customer Departmentalisation Structures
- Departmentalisation according to customers, where an organisation focuses on a special segment of the market.
- Advantages:
- Allows greater customer focus
- Suited to understanding customer needs
- Clearly identifies key customers
- Develops managers who become customer advocates
- Disadvantages:
- Doesn't foster coordination between customers
- Employees feel pressure from customers to give them privileges
- Fosters politics in resource allocation
- Restricts problem-solving to a single type of customer
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Learn about the importance of departmentalisation in business organisations, creating specialists and its impact on efficiency. Understand how business growth leads to the creation of managerial positions.