Competitive Organisational
structures
Objectives
1. To be able to explain the factors influencing the choice
of organisational structures in larger businesses
2. To be able to explain how larger business adapt their
organisational structures to improve competiveness
3. To evaluate the issue involved with implementing and
operating an adapted organisational structure
Organisational structures in larger
businesses
Organisational structure
regularly changes,
adapting to changes in
the market place. There
are 3 types of
organisational structure
appropriate to larger
organisations and often
more than one will
appear:
Organisational structure 1: traditional
 Traditional;
usually in the
financial and
administrative
areas where
confidentiality
is important
and
consistency of
service
expected.
What would we also call this structure?
Organisational structure 2: Matrix
• Matrix structure: project based appropriate for the marketing
function. Sales teams often have different goals, depending on
how the market is split (Geography, type of customer)
Organisational structure 3: informal
• Informal structure has no
obvious organisation
though there will be a
support system. This is
appropriate for the R &
D Dept.
Factors influencing decisions
• If staff are highly
skilled/specialised,
the structure will
be more informal
than if staff are
semi-skilled or
unskilled
Market pressures
• If in a competitive
market, there will be
pressure to
streamline & reduce
costs, speeding up
decision making and
being more
responsive to the
market
Culture
• A move away from
a risk taking
culture as the
business becomes
more established
and therefore
quality focussed
Leadership style
• Leadership style; a tall
narrow hierarchy for
managers who want to
be in control. Leaders
who prefer delegation
will have a wider span
of control or matrix
system
Business Size
• The scale of the business
will ultimately decide
which is the most
suitable structure for an
organisation to use. As
businesses grow they will
need to adapt their
structure to suit it's new
size.
Business Nature
• In some industries it is
just not viable to run a
traditional hierarchical
structure as they are
more project focused.
This is therefore another
factor that influence the
decision a business will
make.
Impact on competiveness
• How quickly are decisions
made? If the company
losing out to rivals, then
perhaps they are to slow
• Does it operate efficiently
at minimum cost? The
structure may be
inefficient, with too many
layers of management.
Poor
Communication
• How effective are the
channels of
communication? If too
long then communication
will be poor and decision
makers can not respond
quickly enough.
• Who is involved in
decision making. A the
business grows the
entrepreneur who started
the business may have to
relinquish some control to
those with more
knowledge.
Questions:
1. Describe the
main factors
determining the
choice of
organisational
structure (4)
• Explain why a
matrix structure
might be most
appropriate for
the R&D dept of a
Company (6)
• How can the
organisational
structure of a
large
organisation
lead to
inefficiency (4)
• An international
haulage co has notice
that since delayering its
organisational structure,
there has been an
increase in stress related
absenteeism. Discuss
whether or not
delayering always leads
to improved
competiveness. (18)
Adapting to improve competitiveness
•
•
•
•
Centralisation
Decentralisation
Delayering
Flexible workforce
• Do you know all these
terms and what they
mean?
– Peripheral workers
• Outsourcing
• Homeworking
• If not jot them down
and find out....