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Different Organisational Structures (OCR GCSE Business)

Revision Note

Lisa Eades

Written by: Lisa Eades

Reviewed by: Steve Vorster

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 Tips and Tricks

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
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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    Author
    Reviewer
    Lisa Eades

    Author: Lisa Eades

    Expertise: Business Content Creator

    Lisa has taught A Level, GCSE, BTEC and IBDP Business for over 20 years and is a senior Examiner for Edexcel. Lisa has been a successful Head of Department in Kent and has offered private Business tuition to students across the UK. Lisa loves to create imaginative and accessible resources which engage learners and build their passion for the subject.

    Steve Vorster

    Author: Steve Vorster

    Expertise: Economics & Business Subject Lead

    Steve has taught A Level, GCSE, IGCSE Business and Economics - as well as IBDP Economics and Business Management. He is an IBDP Examiner and IGCSE textbook author. His students regularly achieve 90-100% in their final exams. Steve has been the Assistant Head of Sixth Form for a school in Devon, and Head of Economics at the world's largest International school in Singapore. He loves to create resources which speed up student learning and are easily accessible by all.