How Do People Describe Businesses Structures Commerce Essay

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Structure is generally considered to be the framework for an organizations work, in which work is divided up and coordinated, policies and procedures are put in place, and authority relationships are set up.

It is communicated in charts, policies, procedures, terms of reference, roles and responsibilities, through formal communication and informally in peoples behaviour.

structure refers to the sum total of the ways in

which an organisation divides its labor into distinct tasks and then coordinates them.

(Hodge, Anthony and Gales, 1996)

structure is the degree of centralisation of

decision-making, formalisation of rules, authority, communication/standardization of work processes and skills, and control of output (OeNeill, Beauvais and Scholl, 2001)

The purpose of structure is the standardization of work processes, the specification of work output and the skills required to complete work tasks to the desired standards, thus meeting the goals and objectives of the organisation.

(Mintzberg, 1979)

what influences structure?

An organizations structure is determined by:

Age the older the organisation, the more formalized its behaviour.

Size the larger the organisation, the more formalized its behaviour, the more elaborate its structure, and the larger the average unit.

Technical systems the more regulated the technical system, the more formalised the operating work and the more bureaucratic the structure; the more advanced the technical system, the more elaborate the administrative structure.

Environment the more dynamic the environment, the more organic the structure; the more complex the environment, the more decentralised the structure; the more diversified the markets, the more propensity to split into market-based units.

Power the greater the external control of the organisation, the more centralised and formalised its structure. Examples of external power influences on RTOs are the maintenance of registered training organisation (RTO) status and adherence to the Australian Quality Training Framework, both monitored by external agencies.

Key elements of structure

Elements of structure vary in degree from one organisation to another. They either differentiate or integrate the work of an organisation.

Elements of structure that differentiate the work of an organisation help to divide up the labour in the organisation. Three kinds of differentiation, when combined, show how complex an organizations structure is. The more diverse the activities, occupations, functions and hierarchical levels an organisation exhibits, the more complex it is. Size also influences complexity. Types of differentiation are:

Horizontal differentiation, or specialisation, refers to the splitting up of work into tasks and sub-tasks at the same level. It involves decisions about whether to develop high levels of specialised expertise in a narrow field, or broadly defined arrangements with greater flexibility. For example, a teaching unit or faculty has a high horizontal differentiation if it contains specialist areas of accounting, finance, management and HR development. It has low horizontal differentiation if it has multi-skilling as an established strategy.

Vertical differentiation refers to the division of work according to level of authority or hierarchy. For example, tasks are allocated on the basis of the authority each unit or person has over others in an organisation. An organisation can be either flat, with low vertical complexity, or tall, with high vertical complexity.

Spatial differentiation refers to the geographic location of different organisational activities, for example, in RTOs that have campuses across a state or several states or territories.

Elements of structure that integrate the work of an organisation coordinate and control work. Mechanisms that integrate work are:

Formalisation refers to the rules, policies, procedures and other written documents that organisations produce to regulate be

he greater the use of these, the higher the formalisation. The lower the formalisation, the greater the management confidence in the knowledge, skills and judgement of employees.

Centralisation refers to the place of decision making within the hierarchy of an organisation. Decision making rests with the executive in highly centralised organisations, and ensures consistency. When vested in middle management or below, as in organisations committed to empowerment, this can be a time-consuming process.

Span of control refers to the number of subordinate positions that a higher position coordinates. The span can be broad, with few levels of hierarchy and many employees under the control of one; or they can be narrow with more levels of hierarchy and fewer people supervised by one person.

Standardisation refers to the mechanisms designed to reduce uncertainty and unpredictability in the work of an organisation. Examples are guidelines on assessment, validation activities to ensure consistency between assessors, specification of equipment or training and qualifications, client surveys and audits.

Typical organisational structures

Different structures are appropriate for different contexts. Each type has its own characteristics, distinct strengths and potential weaknesses.

This is typical of many small RTOs operating in niche markets in the VET sector. It is designed to be dynamic and responsive. The CEO takes on the central directive role, and works with a small managerial hierarchy with very few support staff to form a simple, informal and flexible structure.

In this structure there is some danger of dependency on personal skills, knowledge and experience of the senior executive. This may mean such organisations remain relatively static.

this has been described as both a a'machine

bureaucracy' and a silo structure, because it groups similar or related occupational functions of processes together under unit heads like teaching departments, student administration, technical support, marketing, finance and HR.

Its strengths are that it reduces uncertainty, provides ease of supervision, economy and efficiency, simplification and standardisation of staff training, and maintains the power and prestige of major functions.

Its weaknesses are that it encourages sectional interests and tensions between functional groups. It has poor cross function communication which results in duplication of effort, diminished cooperation and limited efficiency because of the focus on functions rather than overall process or product. Clients therefore do not get continuity of service. It can be inward looking and inflexible, and cannot easily adapt. It does not tolerate a dynamic or complex environment

within large RTOs this structure might be represented by discipline-based teaching faculties operating with a fair amount of independence supported by an educational services division (student services, educational research, teacher education, libraries) and a corporate services division (finance and administrative services).

Its strengths are that it focuses attention on specific products or services, geographic locations or client groups while placing responsibility for outcomes on the divisions themselves. With greater autonomy, divisional managers can better plan, delegate, adapt and coordinate divisional activities.

Its weaknesses are that, while offering opportunities for novice managers to be trained, it demands many more people with general managerial experience to sustain it. It results in duplications and competition for resources between divisions and the centre. It also has limited capacity for rapid adaptation to new ways of working.

This structure blends functional or bureaucratic

structure with temporary project teams of specialists pulled together to undertake particular projects. It can take on various forms, some emphasising the functional structure of organisations, some placing greater responsibility on project management, and others blending functional and project authority.

This structure supports creative solutions to problems, enhances risk taking, and supports better planning and faster responses to client and market demands. It provides organisational agility to formulate fluid teams and reassign

The hybrid structure

In reality, the majority of organisations are a

blend of these structures that is, they are hybrid structures.

Different environments different structures

RTOs today exist in an environment of constant change. The structures of their organisations evolve in response to this changing environment.

Two extremes of organisational structure which show very different responses to very different environments are mechanistic and organic structures. Many organisational structures evolve into forms that lie somewhere between these two.

Mechanistic organisations are bureaucracies. This structure is appropriate when conditions for the organisation are constant, where tasks and processes are routine and where standard operating procedures or a hierarchical structure of control are sufficient to manage the low levels of uncertainty in the environment.

Organic organisations are flatter, with low levels of formalization and standardisation. They are characterised by roles and tasks that require personnel with specialist skills, knowledge and experience, the ability to negotiate and mutually adjust as the environment changes around them. They are more flexible and adaptable to participative management, and create an organisation that can respond rapidly to customers' needs and changes in the business environment. This structure is appropriate for organisations in a turbulent environment

Centralised and Decentralised Organisation

In a centralized organization with a seat (or a few senior managers) continue to be the most important tasks and powers. Conversely, decentralized organizations distributed the responsibility for certain decisions in various sales and lower level management, including its branches or units away from the office / headquarters is located. An example of a decentralized structure is the supermarket chain Tesco. Every business has a branch of Tesco, which make certain decisions about their business can. The store manager is responsible for a regional manager. 

Organizations can also decide that a combination of centralization and decentralization is more effective. For example, functions like accounting and purchasing can be centralized in order to save costs. While tasks such as setting may have decentralized units away from the office, staffing-specific, only to have them. 

Some organizations implement vertical decentralization means that they have the power to make certain decisions were, in the hierarchy of the organization. Vertical decentralization increases the input, the people at the bottom of the chart in the decision-making. 

Horizontal decentralization spreading responsibility throughout the organization. A good example is the implementation of new technologies throughout the economy. This implementation will be the sole responsibility of the technology specialists

Centralized Organizational Model

is the central organizational model for an organization with similar products or services, joint marketing channels is recommended, and one, a few core competencies (eg, HIV-prevention of domestic violence or support services.) This kind of organization retains strong central control. All operational activities are defined at the enterprise level

In the following example, control would be centralized at the Executive Office level and the programs and services be segmented by some geographic area eg county, community, or region. By choosing this option, to tailor its services organization Could according to the unique opportunities and assets of each county's communities while retaining critical mass at the organization level.

Advantages of centralized structure for organizations

Senior managers have greater control over the organization.

The use of standardized procedures, results in cost savings.

Decisions are the organizations as a whole. While a decision from a department head, her department can benefit, but the disadvantage of other departments.

The organization can benefit from the decision making of experienced executives.


Effective in static or highly regulated environments

Insensitive to dynamic external environment

Ineffective use of the creativity of employees lower level, making the moral

Advocates a "command and control" leadership style

Decentralized Organizational Model

in The decentralized organizational structure model, an organization usually has a small corporate staff with autonomous business units and decision-makers. Operational decisions are within the business units. Corporate policy and the financial targets set up at company level. 

In the example below, the basis could be shared by a spatial model of the autonomous business units of county, municipality or other geographical boundaries. offer a small cadre of executives would guidance and establish strategies and financial objectives in the Home Office. Each community would be largely autonomous, what their own operational decisions. This option would work the same if other geographical substitution options (ie municipalities, regions etc

The advantages of the decentralized structure for organizations

Senior managers have time to be made on the most important decisions (like the other decisions of other people down the organizational structure to focus.

Decision-making is a form of empowerment. Empowerment is the motivation and thus means that the staff in expanding production.

The people at the lower end of the chain interact have a greater understanding of the environment in their work and the people (customers and colleagues) that they. This knowledge skills and experience may enable them to make effective decisions as Senior Manager.

Empowerment enables departments and their staff to react faster to changes and new challenges. It can executives take longer to appreciate that business needs have changed.

Empowerment makes it easier for humans to accept and be a success on more responsibility.


More expensive than central operations

Much more difficult to control

Created problems in coordinating

Locations are often in competition

Resources are often duplicated

A lack of learning across multiple sites

Lots of critical mass, by specialization

Discipline or function

Difference between centralize and decentralized organisations?

Centralized versus decentralized: The terms "centralized" and "decentralized" is an important management concept. Often they are used, refer to the distribution of authority and decision making with in an organization. Centralized organizations: they are undertaking in which all important decisions are made to the top of the hierarchy of the organization. In this organization, people are at the forefront in the control from day to day operations. In the year when founder Henry Ford was the Ford Motor Company, was the automobile manufacturer a very centralized organization. Every important decision, and many less important was taken directly from Mr. Ford. For example, he insisted on approving all orders within the company, a task that most CEOs of his stature delegated to subordinates. Today, Ford Motor Company is very different than it was during its early years, when Henry Ford made it, but many companies (especially smaller) are still highly centralized manner Run Run. Decentralized organization: In such organizations are responsible for important decision is how far down in the hierarchy of management is distributed as reasonably possible. One of the advantages of decentralization is that there are lower-level managers considerable practice in making decisions in preparation is that for the transition to the management hierarchy.