1) Types of organisational structure

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Applied Business Unit 12 Unit 1: Organisational Structures

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1) Types of organisational structure
  1. Tall Structure
    1. - Has many levels of management. - There is a long chain of command running from the top of the organisation.
      1. Advantages
        1. Narrow span of control which means managers have a small number of employees under their control (close supervision)
          1. Clear progression and promotion ladder.
            1. The function of each layer will be clear and distinct. Clear lines of responsibility and control
            2. Disadvantages
              1. The freedom of responsibility of employees is restricted.
                1. Decision making could be slowed as approval may be needed from each level.
                  1. High management costs because managers are generally paid more than subordinates.
                2. Flat Structure
                  1. Relatively few layers of management. Chain of command is shorter and span of control is wider.
                    1. Advantages
                      1. Greater communication between managers and subordinates
                        1. Better team spirit as fewer management layers increase interaction between employees at all layers.
                          1. Less bureaucracy and easier decision making.
                            1. Fewer layers reduces costs.
                            2. Disadvantages
                              1. Employees may have more than one manager as there are a number of managers at one level.
                                1. May hinder growth of the organisation, especially is managers have wide span of control.
                                  1. Structure limited to small organisations
                                    1. Lack of layers reduces promotion opportunities
                                  2. Matrix Structure
                                    1. Contains teams of people created from various sections of the business. Each team will have a specific purpose and be led by a project manager. Matrix structure usually deployed to develop products and services.
                                      1. Advantages
                                        1. Individuals can be chosen according to the need of the project.
                                          1. A project manager is directly responsible within a specific deadline & budget.
                                          2. Disadvantages
                                            1. If teams have a lot of freedom it can be difficult to monitor.
                                          3. Centralisation
                                            1. Decision making is taken by senior management at the top of the business.
                                              1. The use of standardised procedures can result in cost savings.
                                                1. Decision making can be made for the benefit of the whole organisation rather than the benefit of one department.
                                                2. Decentralisation
                                                  1. decision-making is spread out to include more junior managers in the hierarchy
                                                    1. Senior management will have time to focus on more important decisions.
                                                      1. Decision making is a form of empowerment.
                                                        1. People lower down will gain greater understanding of te environment they work in and this knowledge will make them more effective.
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