Different Organisational Structures (OCR GCSE Business)

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Lisa Eades

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Introduction to Organisational Structure

An organisational structure outlines the reporting relationships, roles, and responsibilities of employees
Businesses need to choose a suitable structure to enable them to effectively implement ideas and achieve their objectives
- They should consider how the structure may affect the management and effectiveness of operations and communication
- A well-designed organisational structure helps to provide clarity, efficiency and accountability

Organisational Structure: Key Terminology

Key Term	Explanation
Hierarchy	A hierarchy refers to the levels of authority within an organisation It describes the ranking of positions from top to bottom The higher the position in the hierarchy, the more authority and power it holds The hierarchy usually includes top-level management, middle-level management, and lower-level employees
Chain of command	The chain of command is the formal line of authority that flows downward from top management to lower-level employees It defines who reports to whom and who is responsible for making decisions The chain of command helps to establish a clear communication channel and helps to maintain accountability within the organisation
Span of control	The span of control refers to the number of employees that a manager or supervisor directly manages It is based on the principle that a manager can only effectively manage a limited number of employees A narrower span of control means that there are more layers of management A wider span of control means that there are fewer layers of management
Centralisation	A centralised structure is where a business is controlled by a small group of powerful senior managers Centralised structures tend to be tall, with defined layers of hierarchy
Decentralisation	A decentralised structure is where control of business operations is spread throughout the organisation, with decisions made at all levels of the hierarchy Centralised structures tend to be flat, with loose layers of hierarchy
Delegation	Where a manager gives authority to another person to carry out specific activities

Examiner Tip

In the exam, you may be asked to explain a reason for having an internal organisational structure. Explain questions, worth two marks, require you to make a correct point and develop it, usually within context.

An example answer might look like this:

An internal structure allows a business to organise its workers [1] so that they know their roles in relation to others in this large organisation with business facilities in several different locations across the country [1].

Tall Structures

A tall organisational structure has a long chain of command and a narrow span of control
- Tall structures have multiple levels of management
- They are common in large organisations with complex operations
  - E.g. Government agencies and universities

Diagram: a tall organisational structure

**Tall structures have a long chain of command and a narrow span of control**

Evaluation of Tall Structures

Advantages	Disadvantages
Provides a clear structure of authority and defined roles and responsibilities Promotes specialisation and expertise within each department or function Offers opportunities for career advancement and promotion within the organisation	Can create communication barriers between upper and lower levels of the hierarchy Decision-making can be slow as information must pass through multiple layers of management This can lead to bureaucracy and excessive levels of management

Flat Structures

Flat structures have a short chain of command and a wide span of control
- Flat structures have few levels of management
- They are common in small organisations or start-ups
  - E.g. Tech start-ups and small businesses

Diagram: a flat organisational structure

A flat sturcture has few layers of management — **Flat structures have a short chain of command and a wide span of control**

Evaluation of Flat Structures

Advantages	Disadvantages
Promotes a culture of collaboration and open communication Decision-making can be more efficient as communication is quicker Encourages creativity and innovation, as employees have more autonomy and flexibility	Employee and management roles may not be clearly defined, causing confusion Employees may need to take on multiple responsibilities, leading to burnout and stress

Why Businesses have Different Structures

Businesses choose different organisational structures for a range of reasons

The size of the business

Small businesses are likely to have loose, flat structures
- Workers often fulfil a range of roles
- The owner is likely to work closely with workers at all levels, with little attention to hierarchy
Larger businesses often adopt a more complex, hierarchical structure
- This is required to coordinate all the employees in departments or in different locations effectively

The industry in which it operates

Different industries have different operational needs
- E.g. A manufacturing company may require a clearly defined, tall hierarchy, while a technology start-up business may thrive with a flatter, more flexible arrangement

The business objectives

Businesses objectives can influence the choice of structure
- Businesses that focus on innovation may decentralise decision-making and adopt a flat structure
- Those whose objectives focus on improving efficiency may adopt a tall structure that maintains tight control
In many cases, a business's structure evolves over time, with layers of hierarchy added or removed (delayering) according to its needs
- Businesses that integrate with others often combine organisational structures, though redundancies due to duplication of jobs is common

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