Page 8 - CIMA OCS Workbook February 2019 - Day 2 Suggested Solutions

CIMA FEBRUARY 2019 – OPERATIONAL CASE STUDY

Advantages

The divisional structure provides clear areas of responsibility for local managers which will improve
local decision making and provide a good training environment for management. It also allows the
senior management to focus on strategic issues and not get bogged down in operational matters. This
should in turn promote growth within the business.

Disadvantages

As each division has its own functional areas then there will be considerable duplication of effort, for
example duplicated finance tasks, which leads to sub-optimisation. There may also be problems
getting autonomous managers to make goal congruent decisions that could lead to a loss of senior
management control. This may also lead to functional specialists feeling isolated and less important.

Applying concept to Trigg Adventure

This may be a structure worth considering if Trigg Adventure were to diversify into different market
areas such as indoor children’s play equipment, where the clientele would be different and the
business environment would throw up different challenges and opportunities. It would be relatively
easy to ‘bolt on’ another division.

However this would require an increase in functional staff particularly in HR, IT and also finance in
order to operate effectively.

Matrix Structure

The matrix structure is a combination of the functional and divisional approaches. It requires dual
reporting as each functional staff member will report to both their functional manager and their
divisional manager. It allows for a functional employee to be utilised by a divisional manager only
when needed thus reducing costs of idle time and improving resource utilisation.

Advantages

As well as the advantages of both the functional and divisional structures, the matrix approach
offers increased flexibility as functional staff will work in a number of divisions and therefore will
be encouraged to share ideas among divisions. It also gives a customer focus to the work of
functions who would not normally be customer facing as the divisions act as the customer of the
functions.

Disadvantages

The functional approach can lead to conflict between divisions as they compete for the scarce
resource that the functions offer. It can lead to functional heads not having total control over
their staff and can be expensive to implement as careful scheduling of time and negotiation is
required to make it work well.

Applying concept to Trigg Adventure

Many would say that Trigg Advenure’s current structure has a somewhat ad hoc nature which has
evolved since the company began and it would need to be formalised before its functions could
be included within this structure.

64 KAPLAN PUBLISHING