Organisational Structure
Analyse organisational structures through hierarchy, chain of command, span of control, centralisation and decentralisation in changing business contexts.
- Syllabus
- First assessment 2019
- Course
- Business XBS11/YBS11
- Level
- AS
Exam points
- Assess centralisation and decentralisation through decision speed, local knowledge, control and consistency.
- Apply hierarchy, chain of command and span of control to organisational growth and business context.
1.3.4.3a - Organisational structure question 1
[Maximum number: 10]
Source for use with Section B
Extract C
About Skechers
Skechers is a global footwear company that designs and develops shoes for men, women and children. It sells its products online and in more than 2,700 shops in 170 countries through its established distribution channels. The annual sales revenue of the business increased from $3.52bn in 2016 to $4.16bn in 2017.
Skechers' marketing department uses both primary and secondary market research. Focus groups and interviews are used during the design stage to collect opinions on new shoes before they are launched onto the market. Focus groups are also used to gain feedback on the performance and comfort of existing styles of shoes. Since 1992 when it launched its first shoe, the company has diversified into several new lines, targeting different market segments and different activities.
The range is updated regularly and includes shoes for walking, work and casual wear. The portfolio includes 3,000 different styles of footwear for all ages that offer quality and comfort. Its best-selling shoe is the Go-Walk brand, sold globally. More recently the company has designed and sold shoes for athletes and is now competing with companies such as Nike and Adidas.
Organisation of Skechers
Although Skechers has offices and shops globally it has maintained a centralised organisational structure. At the corporate headquarters in California, USA, Skechers research, design, and develop the shoes as well as controlling global marketing campaigns and operations. Offices based in South America, Europe and Asia oversee the regional operations.
David Weinberg is the Chief Operating Officer (COO) based in the USA head office. He is responsible for the day-to-day operations. These include planning Skechers policies and objectives and developing financial and distribution strategies to expand the business.
Assess the extent to which a centralised organisational structure may benefit Skechers.
Indicative content guidance
Answers must be credited by using the level descriptors (below) in line with
the general marking guidance. The indicative content below exemplifies
some of the points that candidates may make but this does not imply that
any of these must be included. Other relevant points must also be credited.
Knowledge, Application, Analysis, Evaluation – indicative content
• A centralised structure is an organisational structure where
business decisions are made at the top of the hierarchy by
senior management/or at the headquarters of a business.
• Skechers have a centralised approach as their headquarters in
the USA is where major operational and marketing decisions
are made.
• A benefit of having a centralised structure is that Skechers can
keep some control over the 2,700 shops and 3,000 ranges of
shoes by implementing common policies for the business. This
provides consistency for the business.
• Skechers can benefit from economies of scale if the range is
standardised and the marketing can be organised centrally.
A reduction in unit costs may help reduce prices or increase
profitability.
• A centralised approach usually speeds up the decision-making
process which may be important in the industry that is
continually subject to changing trends and fashions.
• However, lack of authority lower in the hierarchy may
demotivate the mangers in the offices in South America,
Europe and Asia. This may lead to lower productivity and
higher unit costs for Skechers.
• A centralised approach may lead to slow decision making if
problems need to be referred to head office. This may damage
customer relations if customer service suffers.
• Local managers around the world may have a better
understanding of customer needs in their area.
• It may be of benefit to decentralise some of the decision
making to respond to its customers’ needs and preferences at
a local level.
Level
Descriptor
0
No rewardable material.
Level 1
1–2
Isolated elements of knowledge and understanding – recall based.
Weak or no relevant application to business examples.
Generic assertions may be presented.
Level 2
3–4
Elements of knowledge and understanding, which are applied to the
business example.
Chains of reasoning are presented but may be assertions or incomplete.
A generic or superficial assessment is presented.
Level 3
5–7
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
Analytical perspectives are presented, with developed chains of
reasoning, showing cause(s) and/or effect(s).
An attempt at an assessment is presented, using quantitative and/or
qualitative information, though unlikely to show the significance of
competing arguments.
Level 4
8–10
Accurate and thorough knowledge and understanding, supported
throughout by relevant and effective use of the business
behaviour/context.
A coherent and logical chain of reasoning, showing cause(s) and/or
effect(s).
Assessment is balanced, wide ranging and well contextualised, using
quantitative and/or qualitative information, and shows an awareness of
competing arguments/factors, leading to a supported judgement.
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