1. Level 2 Business Studies 2.1 - AS90843 Demonstrate understanding of the internal operations of a large business

2. Organisational Structure Students will understand the types and features of organisational structures of business and their advantages and disadvantages: Identify the types of organisational structure ie functional, geographical, matrix Explain the features of an organisational structure ie hierarchical (tall or flat), span of control and chain of command Explain advantages and disadvantages of each type of structure

3. Organisational Structure The way the jobs, responsibilities and power within a business are organised. The levels of management and division of responsibilities within an organisation.

4. Benefits of Organisational Structures Makes clear who is responsible for which department and which workers. Makes clear who workers should communicate with and take instructions from. Makes clear how different departments and layers of management there are.

6. Hierarchy The layers of management are known as ‘levels of hierarchy’ The number of people a manager is responsible for is called a ‘span of control’.

7. Hierarchy The diagram below shows: there are four ‘levels of hierarchy’ and a ‘span of control’ of three This is a tall organisational structure Source: AQA Business Studies

8. Hierarchy The diagram below shows: there are three ‘levels of hierarchy’ and a ‘span of control’ of eight This is a flat organisational structure Source: AQA Business Studies

9. Flat vs Tall Organisational Hierarchy Tall Organisational Structure Flat Organisational Structure

10. There should be quicker communication through the business as there are fewer layers for messages to pass through. More responsibility is given to each manager and workers as senior managers cannot control everyone’s work all the time.

11. Flat Organisational Structure (continued) Workers may need training to take responsibility, which could increase levels of motivation. Appropriate for senior managers who believe that workers should be more involved in taking decisions.

12. Tall Organisational Structure It is easier to control fewer staff so managers can closely supervise quality. Responsibility is kept in the hand of senior managers so there is less risk of workers taking wrong decisions.

13. Tall Organisational Structure (continued) Training costs will be lower as workers will not have to be trained in how to take responsibility and decisions. Appropriate for senior managers who believe workers need to be controlled and told what to do.

14. Organisational Structure Centralised or Decentralised? How much power and authority is delegated at each level in the hierarchy will depend on whether the bosses want a centralised or decentralised structure

15. Centralised Structure All major decisions are made by one person or a few senior managers at the top of the hierarchy. Advantages: a. senior managers tend to have lots of experience and b. an get an overview of the whole business. c. policies will be uniform throughout the business. Source: Stuart King: Economics Form 5 Revision

16. Centralised Structure Disadvantages: a. decisions can take a long time to filter through to employees. b. business can be slow to react to change. c. central managers may lack specialist knowledge. Source: Stuart King: Economics Form 5 Revision

17. Decentralised Structure The authority to make decisions is shared out. Eg power to make decisions might be delegated to regional managers or to more junior employees. Advantages: a. employees can use expert knowledge of their area to make decisions b. decisions can be made quickly

18. Decentralised Structure Disadvantages: a. Inconsistencies may develop between departments or regions b. Decision makers may not be able to see the overall needs of the business.

20. Functional Organisational Structure Common in limited companies Each functional area does one part of the work of the business. eg, sales, marketing, customer service, operations, finance, human resources. Advantage: specialists can concentrate on their particular job. Disadvantage: different departments might not work well together. Manager ProductionSalesOperations Customer service MarketingFinance

22. Matrix Organisational Structure Based around tasks or projects and involve the creation of teams that include all the necessary specialists. Employees are encouraged to use their individual talents and skills and their job roles are likely to be more varied. Team working in a matrix structure can be very motivating.

23. Geographical Organisational Structure Divisions may be regional or national. Advantage: spreading the management between regions makes day-to-day control easier. Disadvantage: there can be wasteful duplication or resources between regions. YumYum Chocolates Head Office YumYum Auckland YumYum Central YumYum Wellington YumYum Porirua YumYum Downtown YumYum Lower Hutt YumYum Airport YumYum Upper South Is YumYum Lower South Is

25. Organisational Structure Communication flows – are the lines short and efficient Levels of hierarchy Spans of control – are they broad or narrow Workloads – make sure the work is spread evenly Job allocation – how many people are needed to complete the task Delegation – can it be used to motivate employees? Source: AQA Business Studies AS

26. Adjusting the organisational structure An organisational structure is not static and will evolve over time as changes occur, such as: 1. Growth of the Business 2. Market conditions change 3. Ownership changes 4. Customer’s needs change