- 10 Marks
Question
a) Djaba Ltd uses an organisational structure in which most power and critical decision-making responsibilities are concentrated with a few key leaders. The organisation often houses its primary decision makers or executives in a central headquarters with offices and meeting areas for leaders to discuss business.
Required:
Identify and explain THREE advantages and TWO disadvantages of this organisational structure to Djaba Ltd. (10 marks)
Answer
Advantages:
- Better Coordination: Decisions are coordinated more easily, and management has better control over decisions.
- Goal Congruence: Decisions taken centrally are based on overall objectives, whereas decentralized decisions may be influenced by short-term or local objectives.
- Standardization: Ensures consistency in processes like pricing and menus across locations. For example, McDonald’s customers expect to find standard menus and pricing.
Disadvantages:
- Reduced Morale and Job Satisfaction: Local managers and divisional staff may be frustrated at their inability to take decisions, reducing their job satisfaction and motivation.
- Imperfect Information: Local managers may have greater knowledge about operational activities or local market conditions than senior management or head office staff, leading to potentially suboptimal decisions.
- Tags: Centralization, Decision Making, Organizational Structure
- Level: Level 1
- Topic: Business and Organisational Structure
- Series: MAY 2017
- Uploader: Dotse