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7115 · 2.2

Organisation and management — practice questions

Practice and worked examples for 7115 Organisation and management. Short previews only — attempt the full question in MarkScheme against the official scheme.

Worked example 1

Engineering firm wins defence contract needing multidisciplinary teams (engineers, procurement, legal) for 18 months while maintaining functional departments. Recommend a structure.

Show solution outline

Pure functional: Departments slow to integrate for contract — silo problem.

Pure project: Loses functional expertise depth when contract ends.

Matrix recommended: Engineers report to engineering head and project manager — flexible staffing across contract life.

Cost: Dual meetings, role ambiguity — needs strong 7.2 communication and 7.1.4 trust.

Worked example 2

StyleFast Ltd, a retail business, is considering delayering to reduce costs. Its current tall structure has 4 layers of management. The proposed flat structure would have 2 layers. Calculate the annual saving in management salaries if the change is made.

Current Tall Structure:

  • 1 General Manager: $120,000/year
  • 4 Department Managers: $80,000/year each
  • 12 Team Leaders: $50,000/year each

Proposed Flat Structure:

  • 1 General Manager: $120,000/year
  • 6 Senior Team Leaders: $65,000/year each
  • All Department Manager and Team Leader roles will be removed.
Show solution outline

Step 1: Calculate the total annual salary cost of the current tall structure.

  • General Manager: 1 x 120,000=120,000 = 120,000
  • Department Managers: 4 x 80,000=80,000 = 320,000
  • Team Leaders: 12 x 50,000=50,000 = 600,000
  • Total Current Cost = 120,000+120,000 + 320,000 + 600,000=600,000 = 1,040,000

Step 2: Calculate the total annual salary cost of the proposed flat structure.

  • General Manager: 1 x 120,000=120,000 = 120,000
  • Senior Team Leaders: 6 x 65,000=65,000 = 390,000
  • **Total Proposed Cost = 120,000+120,000 + 390,000 = 510,000∗∗510,000**

Step 3: Calculate the annual saving.

  • Annual Saving = Total Current Cost - Total Proposed Cost
  • Annual Saving = 1,040,000−1,040,000 - 510,000
  • **Annual Saving = 530,000∗∗530,000**

Conclusion: By delayering, StyleFast Ltd can save $530,000 per year in management salary costs. However, the business must also consider the non-financial impacts, such as wider spans of control for the new Senior Team Leaders and potential one-off redundancy costs.

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