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Buss 4 All You Need to Know Revision Notes

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Section A: Prelim. Material - research ORGANISATIONAL STRUCTURES in businesses
Knowledge:
Larger businesses may choose to use:
Traditional hierarchy
Matrix Structues
Informal Structures Choosing these depends on:
- Level of skill of employees
- Business environment (eg. amount of competition)
- Desire to move away from risk taking culture; more quality than innovation; then they may become more highly structured
- Leadership styles* of senior executives
Impacts on competitiveness:
- Ability to make quick decisions
- Efficient operation at minimum cost
- Effectiveness of channels of communication
- Identity of those involved in the decision making process
IMPROVING COMPETITVENESS:
Centralisation:
- Limits number of people in the decision making process (only a few snr. executives)
Advantages:
- Quick decisions
- Good day-to-day running and financial control
- Standardised proceedures can be set
- Good crisis management
Disadvantages:
- Lack of creative decisions
- Bureaucracy
- Diseconomies of scale
Decentralisation:
- Broadens the span of control and delegate to younger / more inexperienced management (arguably unavoidable as a business grows)
Advantages:
- Senior management focus more on making corporate decisions than menial decisions
- Subordinates have increased motivation (thus decreased absenteeism, increased productivity & quality of goods/sales)
- Day-to-day problems resolved arguably more quickly, because channels of communication are shorter
- Increases flexibility (can manage changing market conditions)
- Middle and junior managers are more prepared for future senior roles
Disadvantages:
- Slower strategic decision making
- More difficult to control business finances / budgets
- More difficult to monitor economies of scale
- Leadership and direction is hard to maintain
Delayering:
Removing layers in a

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