What is the other name for Organisational structure & how many ways are there?
- Organisational Tree
- 3 main ways
Name the 3 main ways & draw the diagrams
- Function
- Product
- Region
Explain how you organise by Function
Mostly in Ltd companies:
- Each functional area does one part of the work eg. Marketing, Operations, Finance, HR
What are the Pro’s & Cons of organising by function?
Pros - Specialist can concentrate on their own work
Cons - Departments may not work well together
Explain how you organise by Product
Common in large manufacturers:
- Product base splits organisation into different sectors, eg Home furnishings, toys & clothing
What are the Pro’s & Cons of organising by Product?
Pros- Managers can make decisions that are relevant to each product sector.
Cons - Can be wasteful duplication of resource between sectors
Explain how you organise by Region?
Normal in multinational businesses:
-Divisions may be regional or national
What are the Pro’s & Cons of organising by Region?
Pros - Spreading management between regions makes day to day control easier
Cons - Can be wasteful duplication of resource between regions
Explain Hierarchies
Businesses are organised into Hierarchies:
- The amount of authority a business has is determined by their place in the hierarchy
- They are series of levels where each level has a responsibility
- Generally the number of people at each level decreases as you go up
- At each level, a certain amount of responsibility is passed on (delegated) to people in the level below
What is a Centralised Organisation?
What are Pros & Cons?
- All major decisions are made by one person or a few seniors at the top of the hierarchy
- Pros - These Senior managers tend to have lots of experience & can get an overview of whole bus giving uniform policies throughout
- Cons - Can slow down decision process as all decisions are made by one or two people. This means businesses can be slow to react to change
What is a Decentralised Organisation?
What are Pro-s & Cons?
- The authority to make most decisions is shared out eg. regionally
- Pros - Employees can use expert knowledge of their sector to make decisions & can make them more quickly
Cons - Inconsistencies may develop between depts / regions.- Decision makers may not be able to see the overall needs of the bus
What can happen overtime?
Structures can change over time:
- Businesses usually get more hierarchical as they grow
- Small bus often run by owner, as they grow may need managers to organise & control things
- The bigger the bus the more managers required (more cost)
- Some businesses delayer their structure (remove layers of management) to reduce costs
- May also decentralise & give groups of workers more responsibility for own self management (This often happens as firms get bigger)
