Business & Finance

Chapter : 3
Organizational structure and business form

Q-1) What is organizational structure?

Q-2) Why an organizational structure?
Q-3) What are the building blocks of organizational structure?
Q-4) What are the coordinating mechanisms of organizational structure?
Q-5) What are the classical principles of organizational structure?
Q-6) What are the modern approaches to organizational structure?
Q-7) What are the methods of communicating the structure of business?
Q-8) How many types of business structure?
Q-9) What are the features of entrepreneurial structure?
Q-10) Where entrepreneurial structure is suitable?
Q-11) What are the advantages of entrepreneurial structure?
Q-12) What are the disadvantages of entrepreneurial structure?
Q-13) What are the features of functional(Bureaucratic) structure?
Q-14) Where functional(Bureaucratic) structure is suitable?
Q-15) What are the advantages of functional(Bureaucratic) structure?
Q-16) What are the disadvantages of functional(Bureaucratic) structure?
Q-17) What is divisionalisation?
Q-18) What are the features of divisionalization?
Q-19) What are the key conditions for successful divisionalization?
Q-20) Where divisionalization is suitable?
Q-21) What are the advantages of divisionalization?
Q-22) What are the disadvantages of divisionalization?
Q-23) What are the features of matrix structure?
Q-24) Where matrix structure is suitable?
Q-25) What are the advantages of matrix structure?
Q-26) What are disadvantages of matrix structure?
Q-27) What is centralization?
Q-28) What are the factors affect the amount of centralization?
Q-29) What is span of control in Management? [ND10] 2
Q-30) Narrate the factors influence the span of control in an organization. [ND10] 4
Q-31) What is scalar chain?
Q-32) What is tall business?
Q-33) What is flat business?
Q-34) What is mechanistic structure (Bureaucracy)?
Q-35) What are characteristics of bureaucracy?
Q-36) What are the advantages of bureaucracy?
Q-37) What are the disadvantages of bureaucracy?
Q-38) What are the basic legal forms of business?
Q-39) What is sole tradership?
Q-40) What are features of soletradership?
Q-41) What are the advantages of soletradership?
Q-42) What are the disadvantages of soletradership?
Q-43) What is partnership?
Q-44) What are the features of partnership?
Q-45) What are the advantages of partnership?
Q-46) What are the disadvantages of partnership?
Business & Finance 2
Chapter # 3: Organizational structure and business form
Q-47) What is company?
Q-48) What are the features of a limited company?
Q-49) Types of company
Q-50) What are the advantages of company?
Q-51) What are the disadvantages of company?
Q-52) What is alliance?
Q-53) What is joint venture?
Q-54) What are the benefits of joint venture?
Q-55) What are the disadvantages of joint venture?
Q-56) What is strategic alliance?
Q-57) What is agent?
Q-58) What is group?
Q-59) What are the advantages of group?
Q-60) What are the disadvantages of group?
Business & Finance 3
Chapter # 3: Organizational structure and business form
What is organizational structure? Q-4) What are the classical principles
of organizational structure?
Organizational structure is formed by the
grouping of people into departments or Henry Fayol an early (“classical”)
sections and the allocation of responsibility management theorist suggested that all
and authority, organizational structure set organization should follow the 14 principles
out how the various functions of hierarchy outline below based on
(manufacture, marketing, HR, finance ete) hierarchy of principles, in order to function
are formally arranged. effectively and efficiently:
(i) Division of work
(ii) Scalar chain
Q-1) Why an organizational (iii) Correspondence of authority and
structure? responsibility
(iv) Appropriate centralization
Organizational structure is a framework (v) Unity of command
intended to: (vi) Unity of direction
(vii) Initiative
(i) Link individual in an established (viii) Subordination of individual interest
network so that authority, (ix) Discipline
responsibility and communications can (x) Order
be controlled, (xi) Stability of personnel
(ii) Allocate the task to be done to (xii) Equity
suitable individuals or groups, (xiii) Remuneration
(iii) Give individual or group the authority (xiv) Spirit de corps
required to perfom allocated task,
(iv) Co-ordinate objectives and activities of
separate group, so that object are Q-5) What are the modern
ahieved without gap or overlap in flow approaches to organizational
of work, structure?
(v) Facilitate the flow of work, information
and resources through business Modern management theorists emphasize
values such as-
(i) Multiskilling
Q-2) What are the building blocks of (ii) Flexibility
organizational structure?

Mintzberg suggests that all business can be Q-6) What are the methods of
analyzed into six building block: communicating the structure of
business?
(i) Operating core,
(ii) Middle line There are three main methods of
(iii) Strategic apex communicating the structure of the
(iv) Support staff business.
(v) Technostructure
(vi) Ideology (i) Organization chart
(ii) Organization manual
(iii) Jobs description
Q-3) What are the coordinating
mechanisms of organizational
structure?
Business & Finance
Chapter # 3: Organizational structure and business form
Q-7) How many types of business
structure?
Mintzberg’s building blocks and co-
coordinating mechanism of organizational
structure are generally combined in one of
five different type of business structure:
(i) Simple business structure
(entrepreneurial structure)
(ii) Machine bureaucracy structure
(functional or bureaucratic structure)
(iii) Professional bureaucracy structure
(iv) Divisionalzed business structure
(v) Adocrachy/innovative business
structure
Q-8) What are the features of
entrepreneurial structure?
Features of entrepreneurial structure:
- Entrepreneur has specialist
knowledge of product/service.
- Entrepreneur has total control over
running of business.
Q-9) Where entrepreneurial structure
is suitable?
The entrepreneurial structure is most
suitable where; there is one product or a
group of similar product.
Q-10) What are the advantages of
entrepreneurial structure?
Advantages of entrepreneurial
structure:
(i) Quick decision can be made with skill
and flair,
(ii) Goal congruence- entrepreneur’s
objective perused exclusively
(iii) Flexible/adaptable to change
4
Q-11) What are the disadvantages of
entrepreneurial structure?
Disadvantages of entrepreneurial
structure:
(i) Cannot expand beyond a certain size,
(ii) Cannot easily cope with diversification
into new product/services about which
entrepreneur does not have specialist
skill/knowledge,
(iii) Lack of career structure for lower level
of employees
(iv) May be too centralized i.e. too much
decision making power retained by the
entrepreneur.
Q-12) What are the features of
functional (Bureaucratic)
structure?
Features of functional (Bureaucratic)
structure:
(i) Jobs grouped by common features i.e.
production and ranked in hierarchy
mangers, supervisor and employees
etc.
(ii) Clear line of reporting and authority
exist
(iii) Formal procedures and paperwork
characterize this type of structure
(iv) The vertical flow of authority can go
up and down through the structure
from top to bottom
Q-13) Where functional (Bureaucratic)
structure is suitable?
Functional (Bureaucratic) structure is
suitable:
(i) Single product/closely related product
forms
(ii) Relatively stable environment i.e. not
one subject to rapid change
(iii) A smaller enterprise
Business & Finance 5
Chapter # 3: Organizational structure and business form
Q-14) What are the advantages of
functional (Bureaucratic)
structure?

Advantages of functional
(Bureaucratic) structure:

(i) Goods career opportunity for

employees can progress through the
ranks
(ii) Can be efficient as tasks are well-
known by individuals
(iii) Exploits specialist functional skill

Q-15) What are the disadvantages of

functional (Bureaucratic)
structure?

Disadvantages of functional
(Bureaucratic) structure:
(i) Structure is very rigid and unsuitable
for
- Growth
- Diversification
(ii) Tendency toward non participative
authoritative management style as
clear level of authority
(iii) Poor decision/ slow decision which
have to pass along a line authority
(iv) Functional heads may build empire
and interfunctional dispute may result

Q-16) What is divisionalisation?

Q-17) What is span of control in

Management? [ND10]
2
Q-18) Narrate the factors influence the
span of control in an organization.
[ND10] 4