Organisational Structure

Organisation charts show the structure of the business and help the firm to spot communication problems and allow employees to see their position in the firm

  • By function
    • Usually in limited companies
    • Each functional area does one part of the work of the business
      • e.g. sales, marketing, finance, human resources
    • Specialists can concentrate on their particular job
    • Different departments may not work well together
  • By product
    • Usually in large manufacturers
    • Splits into different sectors
      • e.g. toys, clothing and home furnishings
    • Managers can make decisions relevant to each product sector
    • Can be a wasteful duplication of resources between sectors
  • By region
    • Usually in multinational businesses
    • Regional or national
    • Day-to-day control is easier
    • Can be a wasteful duplication of resources between regions
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Changes to Structure

  • Internal growth
    • More hierarchical
    • With more staff, managers will be needed to control them (this costs)
  • Integration
    • Duplicate departments and positions eliminated
    • Job functions realigned e.g. organised by product rather than function
  • Changes to products/services
    • Increased work flow- more staff- more managers
    • Existing product no longer provided: department removed
  • Changes to customer access
    • Online shopping or delivery service
    • Need management (addition of a service)

Senior managers at the top of a hierarchy can become very powerful, but relying too much on them can be detrimental if they begin to make poor decisions. Few managers can lead to slow decision-making. A business may then delayer their structure.

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Structure and Communication

Chain of Communication/Command (

  • Chain of people messages travel through to get from one layer of the hierarchy to another
  • Long chains mean messages take a long time to travel up and down the hierarchy
    • Those at the top and the bottom may feel isolated or demoralised
    • Messages may get distorted along the way
    • Messages may not reach their intended destination
  • Solved by delayering (removing tiers on management)

Span of Control (

  • Number of workers who report to one manager in a hierarchy
  • Wide span of control leads to a manager having to communicate with a lot of employees
    • Difficult to manage lots of employees effectively
    • Takes a long time to pass messages to all employees

Firms must find a balance between a tall and a flat organisation

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  • Written
    • Examples
      • Letters, e-mails, faxes, notice boards, memos, reports, social networks, texts
    • Advantages
      • Permanent record
      • Complex info can be studied 
      • Copies can be made and seen by many people
      • Can avoid confrontation
    • Disadvantages
      • Success depends on how clearly it was written
      • Feedback can be difficult to obtain
      • Can't check somebody understands the message
  • Verbal
    • Examples
      • Telephone calls, group meetings, video conferences, face to face, radio, announcements, public address systems, voice mail, lectures or presentations
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  • Verbal
    • Advantages
      • Info given quickly
      • Body language and intonation give context
      • Feedback easily obtained
      • Can check message has been understood
    • Disadvantages
      • No permanent record
      • Message may be forgotten
      • May cause confrontation
  • Visual
    • Examples
      • TV, diagrams, charts, films, posters, leaflets, body language
    • Advantages
      • Complex info can be summarised so info is absorbed quickly
      • Communicate feelings well (more impact)
    • Disadvantages
      • Images interpreted in different ways
      • Some people may find diagrams hard to understand
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Communication and ICT

Video conferencing

  • Saves people travelling long distances
  • Connection can fail
  • Equipment can be expensive or fail


  • No internet connection
  • Can attatch read receipts
  • Can send globally instantly
  • Permanent record
  • Info sent quickly
  • Large documents can be attatched to save postage costs
  • Limits on attatchment sizes

Social media

  • Messages and images quickly communicated
  • Cheap and popular
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Barriers to Effective Communication

  • Message may be badly worded or use technical jargon
  • Language or cultural differences
  • Staff physically separated, so less effective communication must be used
  • Receiever may be distracted so misinterpret the message
  • Contradiction between body language and words that confuses receiver
  • Lack subject knowledge so terminology is used or interpreted incorrectly

Effect on Business

  • Affect efficiency of business and motivation of staff
  • Excessive communication may mean not enough time spent doing actual job
  • Insufficient communication may result in poor decisions and low morale if workers are not being listened to
    • Leads to demotivation and decreased productivity
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