unit 3: company structure

What is an organizational structure?

the levels of management and division of responsibilities in an organization

chain of command

Chain of command is a structure in a company which allows information to be passed down from senior managers to lower levels of management

What is the main advantage of a chain of command?

All the people in the org know what decisions they are able to make, who their line manager is (who they report to) and who their immediate subordinates are (over whom they have line authority and can give instruction to)

Describe briefly functional organizational structure.

A functional organizational structure is a common type of business structure that organizes a company into different departments based on areas of expertise, grouping employees by specialty, skill or related roles

In what way can dividing a business functionally cause problems?

People are often more concerned with the success of their department than that of the company as a whole → conflicts between departments over what objectives are.

matrix organization

Matrix management is a round hierarchy in which people report to more than 1 superior.

What is the potential disadvantage of matrix management systems?

Matrices involving several departments can become quite complex → necessary to give 1 department priority in decision making.

centralization

the act or process of centralizing a system, company, country, etc. (= removing authority to one central place

Why is it not usually possible to organize a large org in a single hierarchy?

The activities of most organizations are too complicated to be organized in a single hierarchy.

What factors might lead to companies to flatten their hierarchies?

- In hierarchical organizations, people at lower levels can’t take important decisions → pass on responsibility to their boss.

- Recessions → companies are forced to cut back and eliminate jobs.

- Advanced IT systems → reduce the need for administrative staff

Under what circumstances might team not be effective?

Teams are not always good at decision making and usually require a strong leader.