Business Revision

AS Business Unit 1 Revision

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Why Have A Structure?

  • A clear structure makes it easier to see which part of the business does what
  • An organisational structure is the way in which a business is arranged to carry out its activities
  • The choice of structure impacts the organisations culture-their ethos/beliefs
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Organisational Structure

What Does Organisational Structure Include?

  • The routes through which communication passes through the business
  • Who has authority/power/responsibility within the business
  • The roles and titles of people within the business
  • The people whom individual employees are accountable for and for those whom they are responsible
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  • Delegation is where managers give a portion of their work to their subordinates
  • Delegation can allow subordinates to gain more autonomy and become empowered leading to an increase in performance
  • Delegation is an aproach used by Democratic managers
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  • Consultation is where managers ask for and take into account subordinates' views
  • Consultation allows a manager to keep more control over a situation
  • Consultation is a technique used by Paternalistic managers
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Centralistion & Decentralisation

  • Centralised organisations are where most decisions are taken by senior managers at the top of the hierarchy
  • This leads to rapid decisions but low levels of consultation
  • Decentralised businesses gives more authority to workers lower down the hiearchy by delegating decisions
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Summary so far...

  • Organisational Design describes how a business is organised
  • Tall/Traditional structures have many levels in the hierarchy
  • Flat structures have few levels in the hierarchy
  • Centralised organisations are where senior managers make key decisions
  • Decentralised organisations are where workers have more authority to make decisions
  • Delegation is where managers give employees some of their work increasing their responsibilty
  • Consultation is where managers ask employees their opinions
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Economies Of Scale

  • These occur when mass producing a good results in lower average cost...

Average Costs fall per unit-Average Costs per unit=Total Costs/Quantity Produced

  • Economies of Scale occur within a firm (internal) or within an industry (external)
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Internal Economies Of Scale

  • " ability to produce units of output more cheaply..."
  • As a business grows in scale, its costs will fall due to internal economies of scale
  • There are many types of Internal Economies Of Scale:
    • Production/Technical Economies
    • Purchasing/Marketing Economies
    • Financial Economies
    • Managerial Economies
    • Risk-Bearing Economies
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External Economies Of Scale

  • "...those shared by a number of business in the same industry in a particular area..."
  • These are advantages gained for the whole industry, not just for individual businesses

i.e. Having specialist skills and labour, or being close to a similar business and being able to work together.

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Capactiy Utilisation

  • This looks at the amount a firm is producing compared with how much it could be producing given existing resources...
  • To increase capacity utilisation can increase production levels
  • It is necessary to ensure that there is a need for excess production
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Diseconomies Of Scale

  • Diseconomies of scale occur when firms become too large or inefficient
  • Average costs per unit start to rise
  • Types of Diseconomy of Scale:
    • Communication
    • Coordination and Control Problems
    • Motivation
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Capital Vs. Labour Intensity

  • Capital Intensive businesses are where there is a high level of capital equipment compared to labour input in the production process
  • Labour Intensive businesses are where there is a high level of labour input compared to capital equipment in the production process
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Lean Production

  • Lean Production looks at reducing all forms of waste throughout the production process...
  • Types of Waste:
    • Materials
    • Time
    • Energy
    • Human Effort
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Just In Time [JIT]

  • Goods are produced to order so stock levels are minimal
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Abrar-Ul-Haq Patel


Was good . Thanks

But wuld of been beter if u included pics n colour


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