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 labor (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 organization (that which appears on the organization chart: departments, hierarchy, written duties) and informal organization (real unwritten relationships: friendships, influences, customs). Give two examples of each in an educational center or a company you know, and explain why informal organization 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).

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 startup there are only two. a) Explain the difference between a vertical (tall) structure and a flat structure. b) Analyze 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.

“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 pesos, 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.