Cambridge IGCSE Business Studies 2.2 Organisation  and management

2.2.1 – Draw, interpret and understand simple organisational charts

Definition of Organisation Structure

Organisation structure refers to how responsibility and authority is shared in a business organisation. 

This is often displayed in the form of an organisational chart. The 2 common type of charts are

• Tall organisational charts – These have a long chain of command and a small span of control
• Flat organisational charts – Short chain of command, wide span of control

Advantages of an organisational chart 

• Shows how everybody is linked together in a business
• Lines of communication are clear
• Motivational as employees can see where they belong and can plan their career paths

Chain of Command – is how the power and authority is passed down from the top of the organisation (managers) to lower employees

Span of Control – The number of employees working directly under a manager.

Levels of Hierarchy – Number of layers in an organisation structure

 

Advantages of short chain of command

• Faster communication – Communication is quicker and more accurate since it is passed on by fewer people.
• Stronger relationship between high-level managers and employees – This is because there are fewer levels between managers and employees.
• Each manager is responsible for more employees – This encourages them to delegate (pass down) more work to employees.

De-layering – removing an entire row of management

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2.2.2 – The role of management

Roles of managers in a business.

1. Planning

• Set goals for the future of the organisation.
• Give the business a sense of direction and purpose (e.g. we will aim to increase sales by 10% by next year.)

2. Organising

• Organising of people and resources so that the business operates efficiently (Managers can’t do everything, they must delegate tasks to other employees)

3. Coordinating

• Making sure all departments are working together to achieve the overall objectives and plans of the organisation. (e.g. Manager makes sure marketing and operations department work together to plan for a new product launch)

4. Commanding

• Guiding, leading and supervising of employees in the organisation. (Managers need to make sure that employees are doing their work!)

5. Controlling

• This involves monitoring performance to ensure that objectives will be met.

 

Delegation – Passing down authority and responsibility to a subordinate (employee)

Advantages of delegation

• More time for manager to do other tasks
• More interesting and rewarding work for employee (motivational)
• Employee feels trusted (motivational)
• Trains employee to do important tasks.

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2.2.3 – Leadership styles

There are 3 main leadership styles – Autocratic, democratic and laissez-faire

Autocratic – Leader is in charge and gives orders to employees

• Makes decision alone
• Everything depends on the leader
• May de-motivate employees
• May be an advantage for some businesses where decision needs to be made quickly

Democratic – Other employees involved in decision making

• Communication between managers and employees
• Future plans are discusssed with other employees
• Motivates employees because they are involved in making decisions.
• Sharing of ideas within the business.
• Can delay decision making

Laissez-Faire – “let it be” Leader sets objectives and employees makes decision and organise their own work.

• Can be useful when creative ideas are needed
• Highly motivational for employees as they control their own working life
• Poor coordination and decision making
• Relies on good team work

Leadership style may be dependent on various factors. e.g.

• Type of business (creative or supply driven)
• Nature of task (requires cooperation?)

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2.2.4 – Trade unions

What is a trade union?

Trade union – Group of workers who have joined together to ensure their interest are protected.

Why join a trade union?

• Improved conditions of employment
• Improved work environment
• Improved benefits
• Improved job satisfaction
• Advice/financial support
• Strenght in number (many employees will join)

Disadvantages

• Cost money to be a member
• May be forced to take action e.g. strike even if you don’t agree