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Describe two reasons why a business enterprise might change its organisational structure over time - Leaving Cert Business - Question (B) - 2004
Question (B)
Describe two reasons why a business enterprise might change its organisational structure over time. Use illustrations to support your answer.
Worked Solution & Example Answer:Describe two reasons why a business enterprise might change its organisational structure over time - Leaving Cert Business - Question (B) - 2004
Step 1
Reason 1: Adaptation to Market Changes
Answer
One significant reason a business enterprise might change its organisational structure is to adapt to changes in the market environment. Businesses operate in dynamic markets where customer preferences, competitive pressures, and technological advancements can shift rapidly.
For example, a tech company might restructure to create a more agile team-focused environment that allows for faster product development in response to emerging trends. This adaptation ensures that the company remains competitive and meets customer needs effectively.
Illustration: A company could transition from a traditional hierarchical structure to a matrix structure, promoting cross-functional teams that are better equipped to innovate and respond to changes.
Step 2
Reason 2: Growth and Diversification
Answer
As a business grows, it may need to change its organisational structure to accommodate increased complexity and scale. Growth can come from expanding into new markets or adding new product lines, which often requires additional layers of management or different departments.
For instance, a manufacturing company that starts offering consulting services may implement a divisional structure to manage its distinct business units efficiently. Each division can focus on its market segment, enhancing overall performance.
Illustration: This shift could involve creating new divisions for manufacturing, sales, and consulting, each with a dedicated management team to streamline operations and decision-making.