2.2 Advantages and Disadvantages of Organisational Structures

Effect of Centralisation

Tight financial control
Coherent strategies in marketing
Simplify and speed up decision making
Sharing of resources
De-motivation of lower levels
Poorer communication
Less input from lower levels

Effect of Decentralisation

Better motivation of junior staff
Produces greater innovation
Reduces communication
More enthusiasm
Less consistency
Loss of control by senior staff
Lack of direction

Effect of Bureaucracy

leaves little room for personal thinking, initiative, and delegation.

Effect of De-layering

Assist communication
Cuts out bureaucracy
Better staff motivation
Widens the span of control
Can lead to overwork
Less overhead costs
Reduces supervision

Benefits of Matrix Structure

Better use of specialist skills
Greater flexibility
Improved communication between department
Encourages creativity and innovation

Limitations of Matrix Structure

Dual reporting can cause confusion
Conflict between managers
Slower decision-making
Increased stress for employees
Higher costs

Benefits of Organisational Structure by Hierarchy

Clear chain of command
Defined roles and responsibilities
Easier supervision and control
Clear promotion structure (motivation)

Limitations of Organisational Structure by Hierarchy

Slow decision-making
Poor communication (top-down only)
Less flexibility
Can reduce creativity and innovation
Employees may feel less empowered

Benefits of Organisational Structure by Function

Specialisation
Accountability
Clarity

Limitations of Organisational Structure by Function

Closed communication could lead to lack of focus
Departments can become resistant to change
Coordination may take too long
Gap between top and bottom

Benefits of Organisational Structure by Region

Serve local needs better
Positive competition
More effective communication between firm and local customers

Limitations of Organisational Structure by Region

Conflict between local and central management
Duplication of resources and functions

Benefits of Organisational Structure by Product

Focus on specific products
Better accountability for product performance
Faster decision-making within product teams
Encourages innovation for each product line

Limitations of Organisational Structure by Product

Duplication of resources/functions
Higher costs
Poor communication between product divisions
Lack of coordination across the business
Possible internal competition between divisions

Benefits of Project-Based Organisational Structure

Flexible team formation
Better use of specialist skills
Encourages collaboration
Innovation across departments
Adaptable to change

Limitations of Project-Based Organisational Structure

Dual reporting confusion
Conflict between managers
Higher costs
Slower decision-making
Employee stress

Benefits of Shamrock Structure

High workforce flexibility
Reduced labour costs
Access to specialised skills (contract workers)
Easier to adjust workforce size
Focus on core activities

Limitations of Shamrock Structure

Lower employee loyalty/commitment
Communication issues
Less control over outsourced work
Job insecurity for workers
Potential quality inconsistency

Benefits of Holacracy

High flexibility
Encourages innovation and creativity
Increased employee empowerment
Faster response to change
Improved collaboration

Limitations of of Holacracy

Lack of clear authority
Can cause confusion in roles
Difficult to manage in large organisations
Complex decision-making processes
Hard to implement in traditional firms