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Chapter 13 - Organisational structure - Coggle Diagram
Chapter 13 - Organisational structure
Functional structure
When departments have clearly defined roles and responsibilities in a specialist area - e.g. marketing, finance, human resources or operations
Advantages:
Employees have a high level of departmental loyalty
Encourages employees to become specialists therefore increases efficiency and productivity
Departments led by managers who are specialists in the functional area.
Disadvantages
The vertical structure doesnt allow for good communication between departments
Coordination is difficult
Employees may feel remote from top management
May be competition between departments hindering the organisation
Hierarchical structure
A structure consisting of multiple levels in which all members of the organisation are subordinate to someone else other than one.
Features of hierarchical structure
Levels of hierarchy - a stage of the organisation where all personnel have equal status and authority
Can make communication slow as messages get filtered
Spans of control are likely to become narrow as there is clear relationship between levels of the hierarchy
Those on lower levels feel remote from levels at the top
Chains of command - the route through which authority from the chief executive and the board of directors is passed through an organisation
The taller the organizational structure the longer the chain of command
Spans of control - the number of employees directly accountable to a manager
A tall organisation has smaller spans of control whereas a flat organisation has wider spans of control
Advantages
Power starts at top and can be passed down to lower levels
The role of each individual is well defined
Ambitious individuals can climb the hierarchical structure
Disadvantages
Communication from the top downwards limits communication going upwards
There are no horizontal links between departments leading to lack of communication
Managers can have narrow vision from not looking at issues outside of their department
Inflexible structure leading to resistance to change
Managers can defend the importance of their position in the hierarchy.
Structure by product or geographical area
This is when departments are not based on function but on areas etc.
Each of these divisions are self-contained in the business with their own marketing, production and research.
Senior managers report to the head of the product type.
Key finctions such as strategic decision-making and finance are usually centralised
Advantages
Allows focus on specific market segments
Respond to consumer need and market changes quicker
Measure performane and profitability of each division
Disadvantages
Duplication of roles
Rivalries between divisions as they focus on divisional objectives
Loss of overall control over each division
Matrix stucture
An organizational structure that creates project teams that cut across traditional functional departments
It gathers a team of specialists to complete a task or project
Advantages
Allows good communication between all members of a team
Cuts across traditional boundaries between departments in a hierarchy
Crossover of ideas between people with specialist knowledge in different areas creates innovative solutions
New project teams can be quickly created - responds to changing markets or technological innovations
Disadvantages
Less direct control from senior managements as teams are empowered
Passing down authority is hard for managers
Reduced bureaucreatic control may be resisted by senior managers
Team members may have multiple managers to report to causing conflict of interests.
Delayering
The removal of one or more levels of hierarchy from an organizational structure.
Advantages
Reduces business costs
Shortens chain of command - improves communication
Increases spans of control and delegation
Disadvantages
Could be one-off costs making managers redundant
Lead to work overload and stress for remaining staff
Reduced sense of security