1. Organisational Structures
SAC Revision 2010

2. Why Have a Structure?

3. All businesses have to organise what they do
A clear structure makes it easier to see which part of the business does what
Having a structure allows you to divide the workload

4. Be able to define the following
Flat or tall structure
Span of control
Chain of command
Hierarchy
Delegation
Empowerment

5. Ways to Structure a Business
By function: arranging the business according to what each section or department does
By product or activity: organising according to the different products made
A combination of both: Matrix

6. Ways to Structure a Business
1. What are the advantages/disadvantages of different types of business structure?

7. Pros and Cons of Different Structures
This depends on the business type, size and structure used
Let’s look at a functional structure:
Chief Executive
Board of Directors
Production
Marketing
Accounts
Personnel IT

8. Make sure that you know how many layers each structure has

9. Functional Structure Advantages Disadvantages
Specialisation – each department focuses on its own work
Accountability – someone is responsible for the section
Clarity – know your and others’ roles
Disadvantages
Closed communication could lead to lack of focus
Departments can become resistant to change
Coordination may take too long
Gap between top and bottom

10. An Example of Organisation by Product/Activity
Hewlett Packard
Imaging and
Printing Group
Personal
Systems Group
Enterprise
Systems Group
HP Services
HP Financial
Services

11. Organisation by Product/Activity
Advantages
Clear focus on market segment helps meet customers’ needs
Positive competition between divisions
Better control as each division can act as separate profit centre
Disadvantages
Duplication of functions (e.g. different sales force for each division)
Negative effects of competition
Lack of central control over each separate division

12. Hewlett-Packard’s Headquarters Worldwide
Organisation by Area
Hewlett-Packard’s Headquarters Worldwide
Hewlett Packard
Americas
Houston, Texas
Europe, Middle East, Africa
Geneva, Switzerland
Asia Pacific
Hong Kong

13. TRUE OR FALSE Most modern businesses are working towards adopting a flatter organizational structure.

14. TRUE OR FALSE
One benefit of the Matrix structure is that staff are multi-skilled

15. True or false Vertical specialisation involves top-down communication

16. TRUE OR FALSE
Tactical or operational planning is completed by the Board of Directors and the C.E.O