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

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.

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?)

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