The Impact Of The Business Structure Commerce Essay

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Matrix structure is set up to get employees with particular specialist skills together into project teams with a project manager. Within the team individuals have their own responsibilities to develop new products and services which are developed to overcome some of the problems with the entrepreneurial and bureaucratic structures.

The matrix model fits in with managers who have a Theory Y view of employees and it is suggested that this structure improves flexibility and motivation of employees. The higher level of skills the employee has the more the business will make use of the matrix structure to maximise the skills across the organisation.

Centralisation and Decentralisation structure

Centralisation and decentralisation refer to the extent to which authority is delegated in a business. The Centralisation refers to where in the organization decisions are made and which groups have the power to contribute to the decision-making process. The centralisation have more than one level of organisation and the decisions are made by the highest level of central authority were quick decisions are made without consultation and no decisions are made at the lowest levels.

The decentralisation structure consists of one level. It operates without the central authority and implies the existence of more than one centre of decisions making. The highest level of authority delegate much of their decision-making authority to lower level of the organizational structure which the organization is more likely to run on less decisions and more wider span of control among each authority.

Tall structure and Flat structure

Tall structure is an organisational structure where there are many levels of management and supervision but will rarely exceed 8 levels of management. The more the number of levels the less the span of control this means that each manager will have different level of management with small groups of staff under their control and can be closely supervised with each staff reporting to their own managers or supervisors.

Flat organisational structure is mostly used in a small organisation where there are fewer levels of management and supervision, the wider the span of control the less the number of levels within the organisation giving it a flat structure. Each manager or supervisor will have large group of staff reporting to them with more communication and team work within the organisation. The decision making process is quick with most of the employees being involved in the decision making process. This type of structure uses Maslow's higher needs and Herzberg's motivators to motivate staff.

Management styles


Autocratic management style is one where the manager sets objectives, allocates tasks, and insists on obedience. The decisions are made quickly on the higher level of authority where no lower level of staff are involved in the decision making process and staffs know exactly what they are meant to do.

The result of this style is that employees are often dissatisfied with the manager and the employees will often not work together effectively which will need a high level of supervision and will lack motivation. Employees will show little pride in their work and will not solve problems for themselves and are dependent on high levels of supervision but performance falls when this is missing.


Democratic management style gives empowerment which encourages employees in decision making. Good communication skills are required to explain ideas and understand feedback and can slow down the decision making process. Managers are able to progress into the ideas of employees with knowledge and experience in the decision making process and employees are more likely to be motivated and to volunteer new and creative ideas which can lead to better decisions being made. Democratic leadership styles can be Directive or Consultative.


Managers make decisions alone.

Employees are persuaded by the manager that the decision is the right one


Managers consults with others before decision is made.

There will be group influence in the final decision, even though it is made by the manager.

Laissez faire

Laissez faire management style is a delegate approach to leadership style which allows employees to carry out activities freely within broad limits and also have the power to make decisions without even consulting management. This management style usually occurs when the manager may not be confident carrying out their roles and responsibilities. The drawbacks on this type of management style can result in poor output and lack of motivation as employees have little incentive to work. Laissez-faire leadership style may be suitable when the managers lead a well- qualified and highly skilled team of employees and the lower level staff are highly motivated and supportive of the manager.


Paternalistic management style is were employees feel that manager have their best interests at heart and are consulted over any decisions made but the decisions are still ultimately made by the manager but take the employees views into consideration. The managers see staff as part of the family and care about them therefore less employees leaving and are more likely to be loyal to the business which reduces the recruitment costs. The drawback can be that paternalistic managers do not encourage employees to use their creative skills or even work using their own initiative. This management style share similarities with autocratic management style which leads to dependency on the manager by the employees rather than any independent thinking.

The type of leadership style adopted by mangers will depend on various factors below are the various factors that managers may adopt for different reasons.

The task

A certain task may be the result of an emergency which might need an immediate response from the person in authority.

The speed of decision needed and action taken may require an authoritarian or autocratic style of leadership.

The tradition of the organisation

A business may develop its own culture which is the result of all employees at different levels.

This can result in one type of leadership style, because of a pattern of behaviour that has developed in the organisation e.g. in the public sector leadership is often democratic because of the need to consult with politicians, etc.

Type of labour force

A more highly skilled workforce might be most productive when their opinions are sought.

Democratic leadership styles may be more appropriate in this case.

Group size

Democratic leadership styles can lead to confusion the greater the size of the group.

Leader's personality

The personality of one manager may be different to another manager and certain leadership styles might suit one but not the other e.g. an aggressive, competitive personality may be more suited to an authoritarian style.

Group personality

Some employees prefer to be directed rather than contribute, either through lack of interest, previous experience, or because they believe that the manager is paid to make decisions.

If this is the case, then an autocratic leadership style is more likely to lead to effective decision making.


The time available to complete a task might influence the leadership style adopted e.g. If a project has to be finished quickly, there may be no time for discussion and an autocratic style may be adopted.

Motivating and empowerment

Younger employees normally have lower positions in the business and are on a lower rate of pay. To motivate staff on the lower level needs that Maslow recognises must be met. Older employees may be more financially secure, so Herzberg's motivator's achievement, work itself, responsibility, and advancement will be essential in improving motivation. Redesigning jobs to offer more responsibility and more variety may raise an employee's performance who has been working in the business for a long time.

Empowerment gives employees the power to decide how they will carry out and organise their tasks. Empowerment is based on Maslow's and Herzberg's theory. Further Theory y of McGregor's theory is likely to empower employees. Some managers don't like to give power as they don't want to lose control. Most businesses will see benefits of empowerment in the long-term. In the short-term it could lead to disruption. If a manager wants to empower employees, employees must also want this to happen, further empowerment is suitable for matrix and flat structure.

Issues that could effect building a culture where innovation and creativity is encouraged and rewarded are that some employees may feel unhappy with new innovations and to create new ideas it could take up a lot of time which may make the other employees less creative and it also might cause problems with the relationships between the employees.


The type of business environment I would prefer to work in would be a matrix structural organisation with a democratic manager because in this type of organisation I would work as a team with my own responsibility. With a democratic manager you get empowerment which will encourage me in decision making and will also motivate me with new and creative ideas which can lead to a better decisions being made.