Unit 1.3
How are businesses organised?
Organisation Structures
F
Our School: Organisation Chart
Rector
Depute
Head
Assistant Head
Teacher
PT English
PT Maths
PT Modern
Languages
Assistant Head
Teacher
PT Biology
Assistant Head
Teacher
PT Physics
PT Chemistry
PT Modern
Studies
PT History
Organisation Chart
F
This organisation chart of our school gives us a
snapshot of:

How the school/organisation is made up

Who is involved in the decision-making process

Who is responsible for what, for whom and to
whom
Organisation Chart
F
From this we can see:
 The departments within the organisation
 How the departments link together
 The lines of authority
 Who is in charge
 Who is next in charge
 Who comes next in the line of authority and who
they are directly responsible to/for
 The direct line relationship between the Principal
teacher and the staff in each department
Functional Areas of Business
All businesses must operate the following
activities and some will have departments solely
responsible for:




Marketing
Finance
Human Resource Management
Operations
F
Functional Areas of Business
F
Marketing:
These are methods used to
create an awareness of the
product and selling it at a price
which covers costs for the
business.
The price is one which
customers are able and willing
to pay, while satisfying needs
and wants.
Functional Areas of Business
F
Finance:



Obtaining
Recording
Analysing
 The funds available to the
company
Functional Areas of Business
F
Human Resource Management:

This department is mainly involved
with:
 Recruitment and selection
 Contracts of employment
 Training
 Trade unions
 Collective bargaining
Functional Areas of Business
F
Operations (Production)

This involves the taking of raw
materials and turning them into
something else. Normally
either
 a finished good, or
 a semi-finished good
Organisation Structures
C
Functional Relationships
This describes how each department
within an organisation makes its own
contribution to the organisation while
having links with the other departments,
eg Finance, Human Relations, Sales and
Production.
Departments and individuals co-operate
to help the business achieve its overall
aims and objectives.
Organisation Structures
G
Tall
 Traditional approach to the
layout of an organisation
 Long lines of
communication
 eg Armed Forces
Organisation Structures
G
Flat
 Approach used in
newer organisations
Fewer levels of
responsibility
 Fewer levels of
authority

Centralised Decision-making
Advantages
G
Disadvantages

Tight control


Ensuring aims and
objectives of the
whole organisation
are being met by all
Local branches
might not be
meeting the local
needs and wants

Employees may not
feel valued or that
their contribution
counts

Not competitive
Decentralised Decision-making
Advantages
G
Disadvantages

Quick response to local
needs


Motivation of
employees – feel their
ideas count and feel
involved in the business


More competitive and
may reduce costs
Loss of control at the
top
More organisation
required to ensure all
branches are meeting
aims and objectives of
the whole organisation
Types of Decision Making
 Strategic

Long-term decisions which help to achieve the
organisations aims and objectives
 Tactical

These are medium-term decisions which help
achieve the longer-term decisions
 Operational

These are the day-to-day decisions
G
Line Relationships
Shows the relationships that managers and
employees have with each other (vertical or
horizontal) and shows:



who has overall responsibility;
who is next in charge and so on;
who is directly responsible for what/whom.
G
Span of Control
Narrow

Advantages:




Control employees and
their tasks
Better
communication
Individual managers
have authority over
fewer people
Disadvantages:


Too many levels of
management
Difficult to run
C
Wide

Advantages:
 Fewer levels of
management
 More trust

Disadvantages:
 Those in authority
supervise more
people
 As fewer are
managers needed,
less chance of
promotion
Chain of Command
C
This is the level of command
flowing down from the top
to the bottom within an
organisation.

Levels through which
communication flows – up and
down

A long chain of command is a
disadvantage – distorted
messages!
Organisation Structures
Authority

Not everyone in the
organisation has this. This
gives a person the right to
delegate tasks to other
people and the right to
make decisions. With this
brings “responsibility”
C
Responsibility

We all have
responsibility but not
necessarily authority. We
are all responsible for:



our own actions;
our own health and
making sure we do not
cause harm/injury to
anyone else;
making sure that the
work we do is done
correctly and to the best
of our ability.