Organizational Structure and Centralization
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Questions and Answers

What does the 'line of command' in an organization indicate?

  • Instructions flow from top management downwards. (correct)
  • The authority is delegated from bottom to top.
  • Decision-making is entirely decentralized.
  • Employee accountability flows horizontally.

    • How does 'span of control' influence management?

  • It defines the geographical layout of an organization.
  • It establishes the informal communication methods used.
  • It indicates the number of subordinates reporting to a supervisor. (correct)
  • It determines the formalization of roles.

    • What is a key characteristic of a decentralized organization?

  • Decision-making is distributed across various levels. (correct)
  • Power is concentrated at the top management level.
  • All significant tasks are handled by top management only.
  • Employee roles are rigid and unchangeable.

    • What is the primary purpose of specialization in large organizations?

    <p>To divide functions based on specialized areas.</p> Signup and view all the answers

    What does formalization primarily involve in an organization?

    <p>Specifying rules, procedures, and duties in writing.</p> Signup and view all the answers

    Which aspect does NOT affect the span of control?

    <p>Size of the organization’s facilities.</p> Signup and view all the answers

    What is a characteristic of a formal organization?

    <p>It emphasizes job roles and responsibilities as per formal rules.</p> Signup and view all the answers

    What defines the nature of informal organizations?

    <p>Based on interpersonal relationships and individual preferences.</p> Signup and view all the answers

    What defines the role of employees in a centralised organisational structure?

    <p>Employees follow decisions made by top management.</p> Signup and view all the answers

    Which of the following best describes a decentralised organisational structure?

    <p>Supervisors at middle and lower levels make day-to-day decisions.</p> Signup and view all the answers

    What is the purpose of a well-designed organisational structure?

    <p>To enhance alignment of organizational goals and responsibilities.</p> Signup and view all the answers

    Which of the following is NOT an element of organisational design?

    <p>Financial resources</p> Signup and view all the answers

    What could be a disadvantage of a poor organisational structure?

    <p>Ambiguity of roles and responsibilities.</p> Signup and view all the answers

    Which company exemplifies a centralised organisational structure?

    <p>Flipkart</p> Signup and view all the answers

    In a decentralised organisational structure, what is one of the impacts on top management?

    <p>They can focus on more strategic decisions.</p> Signup and view all the answers

    What is a primary characteristic of a top-down approach in decision-making?

    <p>All decisions originate from the top of the hierarchy.</p> Signup and view all the answers

    Study Notes

    Organizational Structure

    • Organizational structure is a system outlining how activities are directed to achieve organizational goals. This includes rules, roles, and responsibilities.
    • Structure determines how information flows between levels within the company.
    • A successful structure defines each employee's job and how it contributes to the overall system.
    • Two main types of organizational structures exist: centralized and decentralized.

    Centralised Organizational Structure

    • Decisions and processes are defined and handled by top management.
    • Employees and managers follow top management decisions.
    • Employees lower in the chain of command have a minimal role in decision-making.
    • Decision flow is top-down.
    • Examples: military, Flipkart, Apple, McDonalds

    Pros of a Centralized Structure

    • Clear communication and chain of command
    • Cost reduction (administrative costs)
    • Fast implementation of decisions
    • Improved work quality and reduction in task replication

    Cons of a Centralized Structure

    • Dictatorship in leadership
    • Work delays due to dependency on management
    • Employees feel disconnected, reducing work efficiency
    • Managers lack authority

    Decentralized Organizational Structure

    • Day-to-day tasks and decision-making processes are delegated to supervisors at middle and lower levels.
    • Top management lets lower level executives make decisions to improve efficiency.
    • Top management focuses on major decisions.
    • Empowerment and increased responsibility for employees result.
    • Examples: start-up companies, technology-based companies

    Pros of a Decentralized Structure

    • Better customer service
    • Better staff motivation
    • Quick decisions
    • Effective communication
    • Improved supervision and control

    Cons of a Decentralized Structure

    • Difficult coordination
    • Expensive process
    • Unnecessary cost increases due to external factors

    Elements of Organizational Structure

    • A well-designed structure defines functions, hierarchy, roles, responsibilities, and aligns organizational goals with staff/teams.
    • Poor design can lead to ambiguity, lack of trust, rigid work environments, slow decision-making, and low productivity.
    • Six key elements of organizational design:
      • Line/Chain of Command: Authority and power are delegated from top to bottom.
      • Span of Control: The direct control of supervisors over subordinates, depending on: number of tasks, geographical location, team/superior abilities, complexity of tasks.
      • Type of Structure: Centralized or decentralized, based on decision-making authority.
      • Specialization: Large organizations divide functions based on areas of expertise and subtasks.
      • Formalization: Specifies rules, procedures, duties for individuals, teams, departments etc. in writing.
      • Departmentalisation: Divides organizational functions into departments based on job specializations or responsibilities; to handle common tasks by specialized teams.

    Formalization

    • Formalization specifies rules, procedures, and duties for individuals, teams, departments, and the whole organization.
    • It indicates organizational goals, tasks, hierarchy, and relationships, authority, and responsibilities.
    • Two types: Formal and Informal

    Informal Organization

    • Emphasizes individuals, job responsibilities are based on individual skills and preferences regardless of department.
    • Individuals can be assigned roles based on self-interest and skills.

    Departmentalisation

    • Divides organizational functions into departments based on job specialization or responsibilities.
    • Two types: Rigid and Loose
      • Rigid: Minimal interaction between teams.
      • Loose: Teams interact for common tasks.

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    Description

    Explore the basics of organizational structure and the pivotal role of centralization. Understand how decisions are made, the flow of information, and the advantages of a centralized structure in various organizations. This quiz is perfect for those studying management principles.

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