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Business structure and performance management

Organisational forms

Advantages for Disadvantages for
Organisational Information performance performance
form needs management management
Functional –  Data passed from  Lower costs  Hard to grow or
groups together functional to since roles not diversify
employees that upper level duplicated  Difficult to assess
undertake similar  Upper level  Better performance of
tasks into aggregate, standardisation individual
departments, e.g. analyse and and control products/markets
production, feedback to
finance  Defined career  Dysfunctional
functional level
path and sense behaviour by
The information of belonging for functional
system (IS) should specialists managers
aid this  Slow decision
communication
making
Divisional –  Autonomy results  Easier to grow/  Cost of role
organisation split in information diversify duplication
into autonomous being required at  Easier to assess  More differences
divisions divisional level, performance of to standards and
(subsidiaries or e.g. for budgeting individual control
strategic The IS should products/markets
business units) deliver the correct  Dysfunctional
based on information to  Faster decision behaviour by
products or divisional making and divisional
regions utilises local managers
managers, in an knowledge
appropriate form  Difficult to set up
and on a timely  Autonomy
basis motivating
 Clear
responsibility for
decisions

 Top management
can focus on
strategy

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