- 20 Marks
Question
a. In today’s business environment, organizational structure is an important element of business management because the way an organization is structured will go a long way in determining the organization’s efficiency and effectiveness.
Explain briefly the following forms of organizational structure: i. Centralisation
ii. Decentralisation
iii. Matrix
iv. Network organisation (Total 10 Marks)
b. Continuous pressure on modern business organizations has made many top managers concede more authority to middle-level and lower-level managers.
State FIVE advantages and FIVE disadvantages of decentralisation. (10 Marks)
(Total 20 Marks)
Answer
a. Forms of Organizational Structure:
i. Centralisation:
In a centralized structure, decision-making authority is concentrated at the top levels of management. Lower-level managers and employees have little autonomy, and all significant decisions are made by top executives. This structure provides tight control and uniformity across the organization.
ii. Decentralisation:
In a decentralized structure, authority and decision-making powers are distributed to middle and lower levels of management. This enables managers at different levels to make decisions and respond quickly to local or departmental needs without constant reference to top management.
iii. Matrix:
The matrix structure combines aspects of both functional and divisional structures. Employees have dual reporting relationships, typically to both a functional manager and a project or product manager. This structure enhances flexibility and allows better coordination across departments.
iv. Network Organisation:
A network organization is a flexible structure that relies on external partnerships, outsourcing, and collaborations. The organization maintains a core staff but outsources significant operations to other companies, allowing for flexibility and reduced overhead costs. The advent of technology and the internet facilitates this structure.
b. Advantages and Disadvantages of Decentralisation:
Advantages:
- Faster Decision-Making: Decisions are made closer to the point of action, leading to quicker responses to issues.
- Motivation and Empowerment: Middle and lower-level managers feel more involved and empowered, improving motivation and job satisfaction.
- Improved Flexibility: Local managers can make decisions based on specific needs, improving the adaptability of the business.
- Development of Management Skills: Decentralisation provides training and development opportunities for middle and lower-level managers, preparing them for higher responsibilities.
- Better Customer Satisfaction: Managers at lower levels can directly address customer issues, improving service and satisfaction.
Disadvantages:
- Lack of Consistency: Decentralisation can result in a lack of uniformity in decision-making across the organization, leading to inconsistent policies or actions.
- Increased Costs: Duplication of resources and efforts may occur as each department or unit operates independently.
- Difficulty in Coordination: Managing and coordinating multiple decentralized units can be challenging, especially in large organizations.
- Risk of Poor Decisions: Less experienced or competent managers may make decisions that do not align with the overall objectives of the organization.
- Reduced Control: Top management may find it difficult to maintain control over the organization’s activities when decision-making is widely distributed.
- Topic: Business and Organizational Structures and Choices
- Series: NOV 2014
- Uploader: Dotse