Chapter 15 Internal Organisation

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iGCSE Edexcel Business

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iGCSE Business Studies:

iGCSE Business Studies Chapter 15 Internal Organisation

Slide2:

Read the case study P69 Class discussion

Slide3:

Formal Organisation Running a business involves planning, decision making, co-ordination and communication This means that if the business is large it needs to have a clear structure with different functions/departments The internal structure is known as the formal organisation Small businesses rarely need a formal organisation because the workers are all likely to be accountable to the owner If large businesses don’t have structure communications are likely to break down and mistakes will be made An organisation chart like this sets out the formal organisation

Slide4:

Organisation Chart The chart shows How the business is split into functions The roles of employees and their titles Who has responsibility (who is a manager) Who works to who Insert org chart from P70

Slide5:

Employee Roles & Responsibilities Each business will have different titles for their workers It will also depend on the size of the business Directors These are appointed by the owners to run the business Together with the chairperson they form the board of directors At the very top is the Chairman who does not have much to do with the day to day running of the business The person who has responsibility for day to day running is the CEO – Chief Executive Officer Then there will be someone who heads up each function called a Chief X Officer X is the department they head up Chief Finance Officer heads up the finance division Chief Human Resources Officer heads up the department that that looks after its people Chief Operations Office heads up Production They are in charge of their department and have overall responsibility for the success of that department Each of these will have managers who report to them Below them they will have workers reporting to them There may be lots more layers of managers and workers if the business is very large

Slide6:

Managers Managers are employed to get things done using the resources of the business as effectively as possible They need to plan, control, organise , motivate problem solve and make decisions Supervisors Supervisors monitor the work in their particular area Looking at the organisation chart the five factor supervisors manage 20 operatives (workers) They carry out managerial duties but at a lower level Operatives These are skilled workers who are involved in the production process Although we can see them at the bottom of the hierachy they tend to have more status than the general workers because they are often skilled General Staff These employees have no authority They may not have specific skills

Slide7:

Features of Organisational Structures Chain of Command Organisational structures show the chain of command This is the route through which orders are passed down in the hierarchy Orders flow down the way Information can flow down and up If the chain of command is too long messages may get lost or confused and making changes might meet more resistance lower down the chain Span of Control The number of people/subordinates a person directly controls is called the span of control If I manage 3 people I have a span of control of 3. If a business has a wide span of control the manager will be in charge of lots of people If a business has a narrow span of control the manager will be in charge of a few people When a manager has a very wide span of control it can cause difficulties because they may find it difficult to manage all of those people (6 is a good number!)

Slide8:

Features of Organisational Structures Flat and Tall Structures Organisational Structures can be flat or tall The first diagram shows a flat structure because there are only two layers and the span of control is very wide Communication will be better There will be less management costs because there will be less managers Control maybe more friendly and less formal because there is more direct contact between managers and workers Tall structures may find that communication is not as good because there is a long chain of command There are more managers therefore management costs will be higher There may be a clear route for promotion which might motivate staff (in a flat structure there may be little opportunity for promotion) Control might be more formal and less friendly because there is less direct contact between managers and subordinates

Slide9:

Features of Organisational Structures Delegation Delegation is when a manager hands a more complex task to a subordinate The manager still has responsibility to get the task done but he is asking someone else to do it Sometimes delegation can motivate workers if it is challenging and develops that person – they may feel good because they are trusted to do the task If the task is very mundane it may be demotivating to the person Organisation Charts and Growth As a business grows its structure will change It might start with a very flat structure with a wide span of control because it is small and cannot afford the management costs As it grows the structure is likely to become taller In recent years businesses have tried to keep their structures as flat as possible to reduce managerial costs Complete Q2 on P73

Slide10:

Read the case study P74. Write answers. Class discussion

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