Functional economics of scale

Companies and businesses adopt different organizational structures when they pursue different strategy. In Kaye West University case, it has developed a strong student administration and services infrastructure while it aims to provide high quality and supportive education experience to all its students and to foster an environment that leads to outstanding research.

However, the Global Financial Crisis has caused Kaye West University to suffer a decline in the number of students’ intake. In addition, the increase in the university’s operating cost and decrease in state government funding have caused the University’s new Vice Chancellor to look into reducing the university operating cost. He had hired a firm of business consultants, Efficiency for You Consulting, to look into saving cost. In the following report, we will be discussing about different organizational structure that a firm can take.

Firstly, we will be discussing about the current organizational structure that Kaye West University uses for its student support services by defining what different types of organizational structure mean and providing justification to our explanation. We will also evaluate on the advantages and the disadvantages that current organizational structure has. Next, we will look into the organizational structure that Efficiency for You Consulting has recommended and provide a detailed outline of the organizational structure recommended. The advantages and disadvantages of the particular organizational structure will be assessed.

Finally, we will evaluate on the strategy that Kaye West University is pursing and whether the recommendation provided by Efficiency for You Consulting is suitable. Section B: Kaye West University Decentralized Organizational Structure Decentralization refers to the delegation of decision making of routine works to lower levels of managements (Iqbal 2005). Work units are created and each unit will be headed by a manager. Managers of each work unit have the power to act independently and make decisions (Management Study Guide 2008).

In Kaye West University case, decentralized and market-based work unit organizational structure best describe the student support services. The student support services are provided at faculty level, so that services provided are more relevant, timely and specific to student’s needs. Each support service is incorporated as a centre, with each having a manager in charge of the centre’s performance. The manager in-charge has the power to make decisions. This is similar to decentralization structure, where decision making power is delegated to lower management level and managers get to act independently.

Business (Market-Based) Work Unit Organizational Structure In market-based structure, employees will concentrate on understanding the needs of the particular group, unlike in functional work unit. It is a work unit based on particular market group (CliffsNotes 2000). Each centre is work units. The staffs will focus on meeting the needs of students of a particular faculty, providing customized assistance. The centres provide information or services that are tailored made to the students’ needs.

For instance, the counselling centres, where students will be counselled according to their academic circumstances, have counsellors with specialized knowledge of the particular degree they are pursuing. This is similar to market-based structure, where the staffs in the centre focus on the needs of students from a particular faculty. Advantages and Disadvantages of using Business (Market-Based) and Decentralized Organizational Structure The advantages of having a decentralized and market-based organizational structure are that students’ needs can be addressed timely, and more specific assistance can be given to them.

The managers, who understand certain procedures, are able to make rapid decisions to control the situations. Co-ordination of the different activities in the same faculty is also easier. Decentralization empowers the managers, and motivates them to strive harder (Jordan 2002). The staffs are more committed to serving one particular faculty students, providing services that are more customized to their needs and hence providing a high quality and supportive education experience to students. The disadvantages are that there may be lack of goal congruence and difficulty in communication of objectives between different faculties.