12.3 Traditional structure forms

Question 1

A clear and transparent organisational structure is important within any business, and a clarity of the lines of c___________ and a___________.

Answer 1

communication

accountability

Question 2

Wearden puts forward a number of organisational structure types:

1 S\_\_\_\_\_\_ structure
2 F\_\_\_\_\_\_\_ structure
3 D\_\_\_\_\_\_\_\_\_ structure
4 M\_\_\_\_\_\_\_ structure
5 Multinational and t\_\_\_\_\_\_\_\_\_\_\_ structures
6 Joint v\_\_\_\_\_\_\_ structure
7 Focused p\_\_\_\_\_\_ structure

Answer 2

1 Simple
2 Functional
3 Divisional
4 Matrix
5 Multinational and transnational
6 Joint venture
7 Focused project

Question 3

What is meant by a “simple” organisational structure?

Answer 3

A structure that is quite flat, typically with one owner-manager to which other individuals report. There are few lines of hierarchy.

Question 4

What are some advantages of a “simple” organisational structure?

Answer 4

• clear hierarchy and understanding of reporting lines
• wide span of control for the owner-manager
• centralised authority
• clear accountability

Question 5

What are some disadvantages of a “simple” organisational structure?

Answer 5

• the manager/owner is involved in every aspect of the business
• lack of personal progression, as there is nowhere to go
• focus on day-to-day ops rather than strategy

Question 6

What is meant by a “functional” organisational structure?

Answer 6

A structure more complex than a “simple” structure, where the owner-manager has a number of sub-managers who have specific skills that the owner may lack (e.g. finance, sales, production, engineering).

Question 7

What are some advantages of a “functional” organisational structure?

Answer 7

• flexibility
• a focused decision making structure
• opportunities for people to progress through the ranks
• a breadth of skills across senior managers

Question 8

What are some disadvantages of a “functional” organisational structure?

Answer 8

• there may be duplication of tasks due to a lack of centralization
• different functions may have different values
• there could be “short-termism” - “what is the best outcome for my function”

Question 9

What is meant by a “divisional” organisational structure?

Answer 9

Rather than having operational lines of reporting like a “functional” business, a divisional structure views the business as a series of products, services, geographical areas etc. There are likely to be individual directors with oversight of a number of functions, rather than “heads of function”.

Question 10

What are some advantages of a “divisional” organisational structure?

Answer 10

• separation of strategic and operational areas to give each their proper focus
• responsiveness to the external environment
• opportunities to grow skills and talent

Question 11

What are some disadvantages of a “divisional” organisational structure?

Answer 11

• loss of central control
• potential for inter-divisional competitiveness
• this can be expensive with duplication of functions between divisions
• there may be image/branding/quality differences between divisions.

Question 12

What is meant by a “matrix” organisational structure?

Answer 12

A matrix structure seeks to combine the “functional” and “divisional” structures. There is typically a “head office” that provides cross-functional services to the businesses, and good communication pathways between businesses.

Question 13

What are some advantages of a “matrix” organisational structure?

Answer 13

• specialised skills spread across divisions
• resources can be shared more easily giving greater efficiency
• flexibility can lead to removal of silo thinking

Question 14

What are some disadvantages of a “matrix” organisational structure?

Answer 14

• risk of power struggles across senior team
• uncertainty about ultimate accountability (confusion over who reports to who)
• hard workers can become overburdened, while other avoid accountability

Question 15

What is meant by a “multnational” or “transnational” organisational structure?

Answer 15

This is an organisation spanning multiple countries. There are a number of different structures that may be considered. Either the business will be based in one country, and buying or selling from another country, or it will run operations in multiple countries

Question 16

Wearden offers four types of multinational organisational structure:

1) International d______ - standalone operations that are not integrated with the core business.
2) Local s__________ - have a degree of autonomy in their territory
3) G______ product divisions - optimal where there is a financial benefit in establishing particular business functions in one territory.
4) Transnational c________ - require a challenging mix of local responsiveness and global coordination.

Answer 16

International divisions
Local subsidiaries
Global product divisions
Transnational corporations

Question 17

What is meant by a “joint venture” organisational structure?

Answer 17

Two or more parties creating a joint, equally owned business for the purpose of pursuing a single aim or a wide range of business activities.

Question 18

What are some advantages of a “joint venture” organisational structure?

Answer 18

• retention of individual autonomy and structure
• liability limited to agreed contribution
• reduces reputational damage

Question 19

What are some disadvantages of a “joint venture” organisational structure?

Answer 19

• additional administrative burden
• guarantees may exceed limited liability and increase cost and risk
• risk of double taxation

Question 20

What is meant by a “focused project” organisational structure?

Answer 20

This is a formal internal structure within a business for the purpose of a single project. This is commonly used in civil engineering and film companies who operate defined projects.