Business Organisations and Environment Paper 3

D Rationale: Line authority can easily be shown on the organisation chart. Pitfalls: You may have hesitated if you didn’t know the difference between functional authority (where an expert department has authority over the activities of other departments in the areas of its expertise eg the HR department setting recruitment policy for the sales and production departments) and line authority (direct authority flowing down the chain of command). However, you only needed to know the meaning of line authority to see that the statement was untrue. Ways in: You may have paused to ask whether an organisation chart can improve internal communications, but it does in one key way: by highlighting the length and complexity of lines of communication between people who need to co-ordinate their work.

C Rationale: This is the definition of span of control: all the others are distractors. Pitfalls: All the distractors are plausible: note the need to think them through carefully. Option A is close to the correct definition but if you think about it, the number of subordinate employees includes all those below the manager, whereas span of control is direct reports only.

B Rationale: Support base is not one of Mintzberg’s components of organisation structure: the other correct terms are middle line and support staff. Pitfalls: The basic terminology of well-known models is must-learn material!

B Rationale: While there may be elements of functional and geographical organisation, Y plc’s situation suits divisionalisation: more or less autonomous product and regional businesses, with co-ordination from head office. ‘Diversification’ and ‘acquisition’ are good pointers to divisionalisation. Pitfalls: Don’t get sidetracked by the link between ‘overseas markets’ and ‘geographical’.

C Rationale: Matrix organisation is based on dual command: the classical principle of unity of command is ‘one person, one boss’.

D Rationale: Option A is a fact. Option B is true, because of informal ‘short cuts’ which are often developed and shared, by-passing health and safety rules and procedures. Option C is true, because the ‘grapevine’ encourages knowledge sharing and multi-directional communication. Option D is not true: managers can feed information into the grapevine and be part of their own informal networks.

A Rationale: Statement (i) is true. Statement (ii) is not, because the informal organisation has its own agenda. Statement (iii) is not, because a strong informal organisation with its own agenda can undermine the formal organisation: create damaging rumours, safety/quality shortcuts, distractions from task goals etc.

D Rationale: This describes a boundaryless organisation. A hollow organisation splits people and activities into core and non-core. In modular organisations different elements or components of the product or service the organisation produces are outsourced to different suppliers. In a jobless structure the employee becomes not a job-holder but a seller of skills.

B Rationale: The shared service centre is created within the organisation and is a part of it, although its relationship is similar to that of an external service provider.

A Rationale: The role culture is a bureaucratic or mechanistic culture, as described in the scenario. Task culture is project-focused; existential culture is person-focused; and power culture is leaderfocused. Pitfalls: If you didn’t know Harrison’s model well, you might have confused ‘focus on the task’ (see in the scenario) with a task culture, or the strong central leadership with a ‘power’ culture.