Organisational design 2

Questions and Answers

Give 3 features of a Centralised organisational structure, including an advantage of the structure.

This is a structure where authority and decision making rests with senior management at the centre.

Junior staff cannot complete tasks until managers give authority for them to do so. Senior managers have more control over the business and can make standardised decisions that must be applied everywhere. This helps cost efficiency when the business benefits from the bulk purchase of raw materials.

Give a disadvantage of a Centralised organisational structure

There may be too little flexibility to allow adjustments to variations in local tastes, and ambitious, creative junior staff may be driven to look for a job elsewhere.

Give 3 features about a Decentralised organisational structure, including an advantage of the structure.

This is a structure where decision making is spread out to managers further down the hierarchy., as well as individual functions or trading locations. This means that a business gives decisions making authority to operating units such as stores or factories.

The advantage is local managers are given plenty of scope to make decisions that may be quite bold and unexpected.

Give a disadvantage of a Decentralised organisational structure

Local decision-maker is only looking at a small part of the business and the business is less likely to benefit from cost savings of buying raw materials in bulk. Signup and view all the answers

What is a Hierarchical organisational Structure?

A traditional pyramid shaped organizational structure. At the top of the hierarchy are the senior management, at the bottom are the shop floor workers and in between are the layers of middle management. Signup and view all the answers

List 4 features of a TALL hierarchical organisational structure, including an advantage AND a disadvantage of the structure

A tall organisational structure has many levels of hierarchy and the span of control is narrow. As there are many management layers, prospects of promotion are good. However, communication through the layers can take a long time, so the business may be less responsive in making the changes needed to remain competitive. Signup and view all the answers

List 4 features of a FLAT hierarchical organisational structure, including an advantage AND a disadvantage of the structure

A flat organisational structure has few levels of hierarchy and a wide span of control. Communication takes a short amount of time so the business can be more responsive to changes needed to remain competitive. Employees can feel motivated as more decisions are delegated to them, so productivity may increase. However there may be a loss of central control of the workforce and different departments may not be working to the same objectives. Signup and view all the answers

Study Notes

Centralised Business Structure

Major decision-making authority is concentrated at the top levels of management.
Communication usually flows from the top down, leading to uniform policies and procedures.
An advantage is increased control over policies and decision-making processes, ensuring consistency throughout the organization.

Disadvantage of Centralised Structure

Slower response time to local conditions and changes due to reliance on central authority for decisions.

Decentralised Business Structure

Authority is distributed among various levels, allowing local managers to make decisions relevant to their areas.
Encourages faster decision-making, enabling responsiveness to market changes and customer needs.
An advantage is enhanced employee morale as staff feel empowered and valued through increased responsibility and autonomy.

Disadvantage of Decentralised Structure

Potential for inconsistency in decisions and policies across different branches or departments, leading to a lack of unified direction.

Hierarchical Business Structure

A system where employees are ranked according to their level of authority, creating a clear chain of command.

Features of a TALL Hierarchical Structure

Many levels of management lead to a defined reporting structure.
Clear promotion paths can motivate employees to advance their careers.
Communication can be slow due to multiple layers, creating potential delays in decision-making.
An advantage is that control and supervision are more effective at every level; a disadvantage is that it can lead to bureaucratic inefficiencies.

Features of a FLAT Hierarchical Structure

Fewer levels of management promote quicker communication and decision-making.
Employees often have broader responsibilities and roles, fostering teamwork and collaboration.
A potential advantage is reduced costs due to fewer management positions; a disadvantage is that it may lead to role ambiguity and difficulties in managing larger teams effectively.
Existing structures can become overloaded if not enough support is provided, increasing the risk of burnout among employees.

Description

Test your knowledge of centralised business structures. This quiz covers the key concepts, advantages, and disadvantages of centralisation in an organization. Perfect for students studying business management!