Chapter 2 : Organisational Structure

Entrepreneurial

The advantage of entrepreneurial is that it response quickly, make quick decisions, exhibit good control, goal congruence, and highly bonded with workforce.

The disadvantage of entrepreneurial is that it is lack of career structure, resulting lesser promotional opportunity. Very much depends on the talent of the entrepreneur and it cannot cope with growth and diversity

Functional Organization

Economic of Scales can be achieved to cut cost; also, operation can be standardized. Intra-department is more comfortable and better opportunity in career path.

Disadvantage of it are empire building, managers may serve in their own interest but not the company’s. Also, it is slow in decision making. Moreover, conflict happens frequently between departments, also, not able to cope with diversification.

Divisional / departmental

Advantage – it enable growth as each ahs clear responsibility in divisions. The training of General Manager is made easier. It is also fast to adapt in diversification. Top management are focus in strategic planning

Disadvantage – it is highly potential to lose control, lack of goal congruence. Duplication may occur, cost ineffective. Allocation of resources made tedious. Specialist may feel lonely.

Geographically structured.

Advantage of it is that it enable growth in spread out places. Divisional manager can response clear and quickly. Top management are more focus in strategic planning.

Disadvantage are similar to divisional structured

Matrix

Advantage – flexible in their scope, customer-oriented. It encourages team building spirit, opinions and expertise gathering

Disadvantage – dual command, dilution of functional authority. Time constrain and also high in admin cost.

Scalar Chain – line of authority that can be traced up and down.

Span of control is either wide of narrow.

Narrow because managers may be lack of leadership skills, changing work requirement, employee lay backs or the personnel (manager and employee) maybe scattered. Therefore a narrower span of control is highly recommended and vice versa.

Centralize and Decentralize depends on who makes the decisions. If mainly are employees making decision it is decentralized, vice versa.

Advantage of decentralize are because managers can focus on strategic planning. Divisions/Departments make good local decisions, moreover, quick to response. Employees are more motivated too.

Disadvantage may be risk of losing control. Dysfunctional organization and lack of goal congruence. Poor decision made by inexperience employees. Higher cost may incur in training and hiring people. Duplication instances are common.

Informal organization exist because of common goals among employees, goals may differ from the organization. Personal relationship may also cause the immergence of informal organization. Natural leaders may be non-managerial personnel.

Informal organizations are highly motivated and communicative. However, may prove to be inefficient in working (disintegration) and may have resistance to change. Grapevine effect - the gossiping company’s news without basis.

Impact of informal organization

Formal organization may adapt to informal organization. Insist in formal organization but also allow informal organization to continue. Cliques may disintegrate the team member, action should be taken to reduce the effect – by changing break time, etc.

By : Alwyn =_____+