Course:

Principles and Practice of Management

Date:

24 March 2010

1)
2)

3)
4)

State 6 reasons for delegation [12]

Define/Explain the following types of organizational structure
a) line
b) line and staff
c) functional
d) divisional
e) matrix
[10]
State the advantages/disadvantages of centralization [10]
State the advantages/disadvantages of decentralization [10]

1)
- Delegation saves time, it is critical in time management. Managers cannot be
everywhere at once, to accomplish more, one has to use the limited time available
optimally. There is no need to take care of stuff others are capable of doing.
- Delegation is a safeguard against executive stress. To avoid unnecessary stress it is
important to delegate and not think you can and should do everything.
- Delegation is a way of employee development and motivation. Developing staff is a
managers responsibility; there is no better training than practical training. Delegating
tasks that can challenge an employees potentials will go a long way in forming the
people who work for you both professionally and personally.
- Delegation is a way of organizational development. Organizations, like most systems,
believe in the principle that the whole is greater than the sum of its parts; whatever you
accomplish in a small unit would generally spill to the greater whole. One long-term
benefit is that all members of the team are dynamic and able to perform in a great variety
of tasks when required.
- Delegation can free us up to grow. Simply maintaining our current level of
performance does nothing to move us forward. By delegating a manager gets more time
to focus on his/her own personal and professional development.
- Delegation builds a sense of community. Sharing the load builds relationships.
2)
a) Line it is defined by its clear chain of command, with final approval on
decisions affecting the operations of the company still coming from the top down.
Commonly used in small organizations such as small accounting offices and law
firms, hair salons etc.
b) Line and Staff This combines the flow of information from line structure with
the staff departments that service, advise and support them.
c) Functional Classifies people by the functions they perform. It helps identify
and place employees within assigned activities that best utilize their talents.

d) Divisional also known as product structure. It groups each organizational

function into divisions. Each division within a divisional structure contains all the
necessary resources and functions within it. Divisions can be categorized from
different points of view. They can be made a distinction on geographical basis,
e.g. US Division and EU division or on product/service basis different products
for different customers: households or companies etc
e) Matrix this is a variation of the line and staff organizational structure, the
matrix structure combines both vertical authority relationships (functional) and
horizontal or diagonal, work relationships (where employees report to their
project supervisor for the length of the project). Workers are accountable to two
supervisors, one functional manager in the department where the employee
regularly works and one special project manager who uses the employees
services for a varying period of time.
3)
Centralization is the extent to which decision making is retained by upper level
management in an organization. All key decisions of the organization are made by top
management without or little participation from lower level managers.
Advantages
Disadvantages
- Uniformity of policies, practices and
procedures are fostered.
- Singularity of purpose
- Better use of centralized experts
- Close control of operations
- Decreased span of control
- A strong coordinated top management team
is developed

Staff have limited authority to carry something

out without prior approval
Sometimes decisions need to be carried out
quickly, but since none of the decisions can be
made without permission of to level managers it
can result in financial losses for the
organization.
Employees have limited freedom due to the
bureaucratic nature of centralization
Credit of work of junior employees sometimes
is taken by senior officers and they may gain a
promotion and rewards. This demoralizes the
employees and next time they will not give their
best to the work
Middle level managers may not work efficiently
due to less authority as they just serve as a link
to carry out decisions of top level managers
from lower level managers.

4)
Decentralization is a process of handing down the process of decision making authority to
lower levels of the organization
Advantages
Disadvantages
-

Decision making is democratic, participative

and detailed.
Flexible to adapt to minor issues and changes
Enables decisions to be taken more quickly
and effectively
Can increase the motivation and commitment
of lower level managers leading to improved
productivity
Managers in decentralized units will be close
to customers who will feel that they are more
accountable

- Managers must be trained to handle decision

making, and this may require expensive formal
training program.
- Since many managers have worked in
centralized organizations, it is uncomfortable for
them to delegate authority in a decentralized
management. Their attitudes are difficult to alter,
and attempts often lead to resistance.
- Accounting and performance appraisal system
must be made compatible with the decentralized
management, and this can be costly.
Administrative costs are incurred because new or
altered accounting and performance appraisal
systems must be tested, implemented, and
evaluated.
- Complexity of organization structure. In
centralization, organization structure is simple,
whereas in decentralization this structure is rather
complex.
- May result in lack of goal congruence or sub
optimization.