Exercises: Internal organisation: structure and organisation chart

Explain why every company needs to organise itself, even if it is small, drawing on two concepts: the division of labour (each person specialises in a task) and the need for coordination (so that the pieces fit together). Illustrate this with a bakery employing the owner, two bakers, and a shop assistant.

Distinguish between formal organisation (that which appears on the organisation chart: departments, hierarchy, written duties) and informal organisation (real unwritten relationships: friendships, influences, customs). Give two examples of each in an educational centre or a company you know, and explain why informal organisation can help or hinder.

The figure shows the organisation chart of a food company organised by functions. Identify the missing department, marked with "?", and explain two typical decisions it makes (hint: the company has just published a job advert to hire operators and wants to renegotiate shifts).

Explain what an organisation chart is and what information it shows about a company (departments, hierarchy, who reports to whom). Also point out two things a real company has that the organisation chart does not show (informal relationships, the real workload, daily communication between departments).

Businesses can be organised by functions (commercial, production, finance...), by products (one division per range), by geographical areas or by types of customer. State which departmentalisation criterion each company uses: an insurance company with home, car and life divisions; a shop chain with a management for each country; a consultancy with sales, projects and administration departments; and a bank that separates personal customers from business customers.

Explain what hierarchy is in a company and what the principle of unity of command means (each person receives orders from only one boss). Describe what problem appears when an employee receives contradictory instructions from two different bosses and give an example in a shop with two supervisors.

Match each task with the functional department that carries it out (general management, commercial, production, finance or people) and briefly justify each assignment: setting the year's objectives, studying what customers want, controlling product quality, managing the workforce's payroll and deciding how to pay for the new machinery.

In an organisation chart, levels are distinguished: senior management, middle management and the base or operators. Explain what each level does and how they communicate with each other. Then place these people from a hotel at their level: the general manager, the head of reception, the receptionists and the head chef.

A company has five typical functional departments: general management, commercial, production (or operations), finance, and human resources (people). State which department decides each matter and justify it: launching an advertising campaign, applying for a loan to buy a machine, hiring two operators, setting the monthly manufacturing schedule, and approving the opening of a second plant.

In a traditional company there are six hierarchical levels between the operator and the general manager; in a recent start-up there are only two. a) Explain the difference between a vertical (tall) structure and a flat structure. b) Analyse an advantage and a disadvantage of each, considering decision-making speed, the cost of middle management, and control over employees' work.

A restaurant chain decides all menus, prices, and promotions from headquarters; another chain allows each restaurant to adapt its menu and prices to its local area. a) Identify which one is centralised and which is decentralised. b) Analyse two advantages of each option (uniformity and economies of scale versus adaptation to local customers and manager motivation) and reason which fits best in a sector where tastes vary greatly from one city to another.

In one company, each boss manages an average of 15 people and there are few hierarchical levels; in another, each boss manages 4 people and there are many levels. a) Explain what the span of control is (the number of people who report directly to a manager) and how it relates to the height of the company's pyramid. b) Analyse which span fits better with routine, easy-to-supervise work and which with creative and complex work, justifying your answer.

A food company sells dairy products, tinned goods and frozen food in three countries. Today it is organised by functions and each department handles all three products and all three countries at once, with frequent clashes of priorities. a) Explain which two alternative departmentalisation criteria it could adopt (by products or by geographical areas). b) Analyse one advantage and one disadvantage of each criterion for this company. c) Choose one and justify the choice.

In a factory, the production department makes decisions on the assembly line (line unit), while the quality and risk prevention departments advise and control without having authority over the operators (staff or support units). a) Explain the difference between line units and staff units. b) Analyse what conflicts can arise between them (the staff "gets in the way" of production, the line ignores the staff's warnings) and how to avoid them.

The owner of a chain of three flower shops used to decide everything and now wants to delegate: each shop will have a manager with the power to decide orders, schedules and small expenses. a) Explain what delegating is and what three elements are transferred (authority to decide, responsibility for the result and the obligation to be accountable). b) Analyse what she should never delegate (setting the chain's strategy, supervising the final accounts) and what the owner needs for delegation to work (trust, training, information and results control).

A dental clinic grew without any order: the dentists hire their own assistants, the receptionist buys the medical supplies and the manager collects the invoices and also repairs the equipment. a) Spot three organisational problems (mixed functions, blurred responsibilities, purchasing without control). b) Propose a simple structure with clear functions (management, medical team, administration and purchasing) and describe in text how its organisation chart would look.

“Lácteos del Valle” operates with a classic functional structure: General Management, Production (with plant and warehouse sections), Sales & Commercial (with traditional sales to supermarkets and marketing), Finance, and Human Resources. To halt falling margins, the company launched a direct-to-consumer (D2C) online sales channel. After six months, serious problems are detected: Commercial prioritizes bulk orders from supermarkets and neglects website issues; Warehouse delays shipments to individuals because it prioritizes pallets for large distributors; and Finance blocks online promotions because they do not fit the usual 60-day payment terms.

1. a) Justify why the traditional functional structure is failing in the face of this new business line, and analyze whether the main problem is structural design or interdepartmental coordination.
2. b) Design and justify an organizational restructuring (you may choose a divisional or matrix structure, or the addition of committees/staff bodies) that resolves these bottlenecks without unnecessarily duplicating the company's fixed costs.
3. c) If management chooses to maintain the functional structure but creates the role of a “Product Manager / E-commerce Lead”, predict what authority conflicts (line vs. staff or dual reporting) will arise with the Production and Commercial directors, and how they should be formally regulated to ensure effectiveness.

“Instalaciones Voltaicas S.L.” has grown in three years from 8 to 42 workers and has quadrupled its turnover. However, the profit margin has fallen by 35 % and clients report average delays of three weeks in delivering quotes and execution. The founder and CEO states: “If I want things done right, I have to personally sign off on every purchase over 100 €, review weekly shifts, and validate every technical quote; my employees take no responsibility and make mistakes.”

1. a) Critically evaluate the founder's stance based on the concepts of span of control, agency costs, and centralization versus decentralization. Demonstrate how his management style generates internal diseconomies and talent drain.
2. b) Design a departmentalization and authority redistribution proposal for the 42 employees. Accurately define which strategic decisions General Management must retain and which tactical and operational decisions should be decentralized, establishing quantitative and responsibility limits.
3. c) Design three formal control and coordination mechanisms (which do not consist of direct, personal supervision by the founder) to ensure that delegation does not result in a loss of quality or budgetary deviations.

At the logistics company “Trans-Iberia”, the newly appointed Operations Director has implemented a new digital route-allocation protocol to reduce fuel consumption by 12 %. Two months later, consumption has not dropped and driver complaints are mounting. An internal audit reveals that drivers ignore the application and continue turning to Carmen, an administrative manager with 25 years at the company who holds no hierarchical authority over them, who manually reorganizes shift charts on a whiteboard based on her empirical knowledge of traffic and the staff's personal affinities.

1. a) Analyze the existing conflict by contrasting the sources of power (legitimate formal authority versus expert and referent power in the informal organization). Justify why the new director's formal design has failed against Carmen's informal network.
2. b) Predict the organizational consequences for the company of strict disciplinary action (for example, penalizing Carmen and forcibly mandating the app's use) versus ignoring the situation and letting Carmen continue making decisions outside the system.
3. c) Design an organizational integration strategy that allows the Operations Management to leverage Carmen's relational capital and knowledge without undermining formal authority or giving up technological optimization.

A civil engineering consultancy firm has adopted a matrix structure: functional department heads (Structural Analysis, Geotechnics, Environment) coexist with project managers (High-Speed Rail Line, International Bridge, Commercial Port). In recent weeks, serious tensions have arisen:

• The High-Speed Rail Project Manager demands that two senior Structural engineers work exclusively on his project 50 hours a week to meet the delivery deadline under threat of financial penalties.

• At the same time, the Structural Functional Director orders them to dedicate 40% of their working hours to auditing the design of the International Bridge to ensure corporate technical standards and train junior engineers.

• The affected engineers report stress, conflicting orders, and operational paralysis.

1. a) Justify how the breakdown of the unity of command principle generates this conflict and explain what type of horizontal versus vertical tensions are intrinsic to this organizational model.
2. b) Design a decision-making protocol or a conflict resolution mechanism that allows prioritizing between functional directors and project managers without destroying matrix flexibility.
3. c) Critically evaluate whether it would be advisable for this consultancy firm to dismantle the matrix and return to a purely functional structure or to a project-based divisional structure, weighing the utilization rate of specialized resources against commercial response speed.

The logistics group "TransGlobal" used to operate with a classic functional structure. Recently, it has acquired two independent companies: an express parcel delivery firm for e-commerce (high turnover, small orders, B2C clients) and a cold storage company for the pharmaceutical industry (high regulatory barriers, multi-year contracts, B2B clients). Corporate management is hesitating between maintaining the functional structure by grouping the three activities under a single operations directorate and a single sales directorate, or evolving towards a divisional model.

1. a) Technically justify why maintaining a functional structure for these three businesses would generate severe inefficiencies, relying on the variables of product heterogeneity, customer profile, and technology used.
2. b) Design the optimal new organizational structure: define which departmentalization criteria should govern the first and second hierarchical levels, which functions should remain centralized as shared services (staff), and which should be decentralized into each business unit.
3. c) Suppose that the express parcel division wants to hire an external cloud-based software platform to optimize routes, while corporate management imposes a common ERP across the entire group that is slower but unifies accounting data. Justify how you would resolve this dilemma between divisional autonomy and corporate synergies.

The supermarket chain "SuperSur" operates 80 urban stores. All decisions (exact product assortment, pricing and promotions, schedules, and store staff hiring) are made strictly centrally at corporate headquarters. In the last financial year, sales per square meter fell by 9,4%, while local competitors with decentralized store models increased their market share by offering local fresh produce and adapting their opening hours to the habits of each neighborhood.

1. a) Explain the diseconomies and efficiency losses that hyper-centralization is generating at "SuperSur". Contrast this cost with the economies of scale and brand image advantages that the company fears losing if it decentralizes.
2. b) Design a selective decentralization proposal for "SuperSur". Classify at least six key areas (purchasing from major suppliers, fresh food procurement, setting base prices, local promotions, wage policy, and hiring reinforcements) in a decision matrix, rigorously justifying which should remain at headquarters and which should be delegated to store managers.
3. c) Formulate two key performance indicators (KPIs) and an internal audit mechanism that allow senior management to monitor that store managers do not compromise corporate margins or brand consistency when exercising their new autonomy.

A healthy fast-food delivery startup has 28 employees: 2 founding partners (one technical-financial and the other a chef), 12 cooks and assistants (spread across 2 shifts), 8 dedicated delivery drivers on electric bikes, 3 app software engineers, 2 digital marketing specialists, and 1 procurement and administrative manager. Its brand promise is to deliver customized menus in under 28 minutes from the customer's click, but during peak hours the average delivery time spikes to 47 minutes due to mismatches between kitchen pace, algorithm dispatch errors, and driver availability.

1. a) Design the company's organizational structure: justify the number of hierarchical levels (flat versus hierarchical structure) and the appropriate span of control for each of the different job types (standardized operational staff versus skilled tech profiles).
2. b) Apply Mintzberg's typology of coordination mechanisms (mutual adjustment, direct supervision, standardization of work processes, outputs, and skills) to this case. Determine what the primary coordination mechanism should be between the kitchen and the delivery drivers, and what it should be between the app development team and the marketing team.
3. c) Given an expansion plan to open three new kitchens in other cities, assess whether the startup should replicate the current structure departmentally by function or evolve towards a divisional structure by geographic area, justifying the impact on overhead costs and quality control.

At "Mecanizados del Norte S.A.", an automotive company with 60 employees, an organizational audit was commissioned following a generational handover in general management. The report yields the following conclusions:

1. The official organizational chart states that shifts and machine assignments are decided by the Plant Manager; however, in practice they are resolved daily by two veteran female assembly line operators without any formal title or responsibility bonus.

2. Urgent orders do not go through the Sales Director (as stipulated in the procedures manual); instead, sales reps contact workshop technicians directly via instant messaging, bypassing middle management.

3. The system operates with great operational agility, but when a serious manufacturing defect occurred that cost the company €45.000, no manager assumed contractual liability for the defective batch.

1. a) Critically analyze the rift between the formal and informal organization in this case. Justify why this informal structure arose and evaluate why, despite providing day-to-day flexibility, it is unfeasible for a company subject to strict quality audits and civil liability requirements.
2. b) Explain the labor, psychosocial, and compensation risks that the company assumes by keeping the two veteran operators exercising de facto managerial functions without backing in the formal organizational chart.
3. c) Design an organizational redesign plan to align the formal structure with operational reality without hindering process agility or demotivating the staff involved (include job definitions, formal delegation mechanisms, and an incentive system).