A-Level Edexcel Business Decision Making Techniques: Evaluate the two options and rec

Question

Evaluate the two options and recommend which is most suitable for a business, such as Rolls-Royce.

Option 1 - tall structure
- A tall organisational structure is one with many layers and a narrow span of control for each manager.
- As Rolls-Royce is over 100 years old, the tall structure could have evolved as different functions/departments, such as parts and servicing, were added to the business.
- The senior managers who were removed may have been experienced members of staff; therefore the business could have lost valuable expertise, which could have helped Rolls-Royce improve its profit performance in the future.

- Tall structures allow employees to be carefully supervised, which could be beneficial to a business, such as Rolls-Royce, where staff are involved in technical engineering tasks to minimise waste.
- Lines of responsibility and accountability are clear, which can help Rolls-Royce engineers identify those responsible for poor quality products.
- Horizontal communication is often better in a tall structure because of the narrower span of control; this can be beneficial in an organisation with different departments and functions with 54,000 employees.
- For employees of Rolls-Royce, the structure may be clear and more opportunities for promotion and this can be motivating for workers who may begin careers in simple manufacturing tasks. This may, in turn, increase productivity and loyalty.

Option 2 - flatter structure
- A flat organisational structure is one with few layers and a wider span of control for each manager.
- Vertical communication can be more effective in a flatter structure as there is a shorter chain of command. This can make organisations more responsive; something that Rolls-Royce needs to be in a competitive market.
- Decision-making can be faster in a flat structure as fewer levels of management are involved in each decision ("a week would be spent for every month it took to make a decision").

- Flattening an organisation is likely to reduce the total wage bill in Rolls-Royce, which may help improve profitability given its poor profit performance in 2015.
- In a flatter structure, more decision-making is delegated by managers to lower grades; this could encourage Rolls-Royce engineers to be more responsive to the needs of customers in a market where competitors are taking market share.

Potential judgement:
- East’s decision should depend on the reasons for restructuring; he has already removed one layer of management, but this is a small action in an organisation of Rolls-Royce’s size.
- If cost-cutting and improving profitability are the short-term aim of restructuring, then moving to a flatter structure should be the option that is followed. Warren East has already hinted that this could also speed up decision-making in the business.
- If Warren East is more concerned about keeping control of the organisation through closer supervision and ensuring Rolls-Royce staff are accountable, then a taller structure with narrow spans of control would be the better option.

Evaluate the two options and recommend which is most suitable for a business, such as Rolls-Royce - Edexcel - A-Level Business - Question 1 - 2017 - Paper 1

Worked Solution & Example Answer:Evaluate the two options and recommend which is most suitable for a business, such as Rolls-Royce - Edexcel - A-Level Business - Question 1 - 2017 - Paper 1

Option 1 - tall structure

Option 2 - flatter structure

Potential judgement

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