how does an organisational structure help a business to be succesful?Watch
I am looking at tesco in partiuclar but general information would also be appreciated massively
There many different ones we could consider, including; tall structure, flat structure and matrix structure.
With tall structures, there are many layers in the hierarchy (which refers to the flow of power from the upper layers to lower layers in the organisation). How do you think this would effect a businesses? Well, firstly, if you were a worker at the bottom of the hierarchy then it would take much longer for yourself as say a Tesco employee to get a message to top management such as CEO. This in turn causes changes to be made slower and thus reducing productivity. Now productivity is KEY and you should always use this analysis point when talking about it:
(Assuming their aim to profit maximise like a rational firm!) “A fall in productivity leads to rising average variable costs which in turn means that profit margins are reduced. This in turn means that the firm must raise prices in order to maintain profit margins which is likely to make them less competitive against other supermarkets such as ASDA and Sainsbury’s which would lead to falling profits and in turn lead to falling market share” therefore a tall structure may not be compatible but rather a flat structure which has lower layers in the hierarchy. You could analyse why a flat structure may be worse. For instance it increases the span of control which could lower motivation and so lead to errors or falling productivity.
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