gcse business unit 2 people part 1

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Unit 2 Chapter 9 People in Businesses

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Learning Objectives This chapter is about how growing businesses can benefit from managing and motivating people well At the end of this section you will Understand why businesses need internal structure Understand how this structure can affect how a business is managed Understand the benefits and challenges of centralisation and decentralisation

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Organisational Structure – Why do businesses need one? It makes it clear who is responsible for which department and which workers The workers know who to communicate with and take instructions from We can see how many departments there are and how many layers of management there are Organisational structure : the internal links between managers and workers showing lines of authority Layers of management : the number of different levels of management and responsibility Insert P131

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Organisational Structure – Why do businesses need one? This organisational structure has four layers of management; also known as levels of hierarchy Each manager is responsible for 3 people – this is called a ‘span of control of three’ Layers of management : the number of different levels of management and responsibility Span of control : the number of junior employees each manager is directly responsible for Insert P131

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Organisational Structure – Why do businesses need one? This organisational structure has less layers of management; it is a fairly flat structure A tall structure would have lots of layers Each manager has eight people working to him/her – this is a wide span of control The opposite is a narrow span of control The way the business is managed will have a big effect on the type of organisational structure If a senior manager wants to control people closely spans of control will narrow Tall organisational structure : many layers of management Flat organisational structure : few layers of management Narrow span of control : each manager has only a few people working to him Wide span of control : each manager has a lot of people working to him What kind of structure does this school have?

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There are benefits to both types of structure and every business will need to decide what is the most appropriate structure

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The coffee shop chain Martin Fisher’s business has grown steadily. He started by running one coffee shop in London and has now opened ten more around the city. When he only had two or three coffee shops he managed them all himself. He took the major decisions and his employees followed his instructions. However, the business is now so large that he has had to appoint branch managers for each of the coffee shops and a senior manager to be responsible for half of the branch managers. Martin is the line manager for the other branches. Martin finds that he is less involved in day-to-day issues in his coffee shops. Do you think that the span of control in Martin’s business has become wider or narrower as it has grown? Why? Answers might include: ● initially the span of control (for Martin at least) would have become wider as the business grew ● since appointing branch managers the span of control for Martin should have lessened considerably

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Organisational Structure – Centralisation or Decentralisation Some business managers think that all the important decisions should be taken from the head office (the centre of the organisation) Others think that the decisions should be made by those that are close to the ground that have a good understanding of their customers (away from the head office) There are benefits and challenges to both Centralisation : senior managers make all the important decisions Decentralisation : decision making is spread to managers in branches and divisions of the business

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The coffee shop chain Martin Fisher’s business has continued to grow. It now operates 15 coffee shops in London. Martin has found it increasingly difficult to manage the business despite having a senior manager to help him. He is considering decentralising the business. This would mean that employees in each of the coffee shops could take decisions on opening hours, the menu of food and drink to be sold, the organisation of employees to staff the coffee shop and managing the finances of each branch. Do you think that Martin should decentralise his business? Answers might include: ● yes, as the coffee shops’ managers (and other employees) might be motivated by this change ● yes, as it will allow the business’s staff to take decisions to sell products that are popular locally ● no, as Martin might want to retain control over the major decisions made in the business that he established

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Organisational Structure – Centralisation or Decentralisation In one year Tesco opening over 100 Fresh and Easy convenience stores in California This was the first time the UK based company had opened shops in the US Do you think the following decisions should be taken centrally in London or decentralised to Tesco managers in California Which goods should they sell? What prices should they charge? The total amount to be spent on the US expansion?

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La Redoute This company sells fashion clothing online and through catalogues. Why might La Redoute decide to decentralise if it opened high-street shops to sell its clothing? Answers might include: ● it may want its employees to be able to take decisions locally on what to sell to increase sales ● decentralisation might help to increase motivation of the company’s staff ● the company might become too large to manage centrally

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Assessment of Organisational Structure Complete short questions Complete long questions (print answers from book)