Edexcel GCSE Business Studies Unit 4

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  • Created on: 10-05-13 19:25

Organisational Structure

Organisation chart - diagram showing the structure of a business

Hierarchy - the levels of responsibility in an organisation

Chain of command - the route by which decisions are passed between the different levels in an organisation

Span of control - how many other people someone is responsible for

Subordinate - a person who is directly responsible to a person of higher authority

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Organisational Structure

Tall structures have more layers, and are more complex.

Advantages of tall structures

  • lots of opportunities for promotion
  • it is easier to check everyone's work because there are managers and supervisors at each level

Disadvantages of tall structures

  • it creates a long chain of command, meaning that decisions take a long time to reach workers at bottom of hierarchy
  • people's position is seen as a status symbol, leading to clear divisions between managers and workers
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Organisational Structure

Flat structures mean that each manager has a wider span of control.

Advantages of a flat structure

  • fewer managers are needed, which saves money
  • having more responsibility increases job satisfaction

Disadvantages of a flat structure

  • fewer opportunities for promotion
  • can lead to over-work and stress
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Organisational Structure

A centralised organisation is one where branch managers have little decision-making power - they are strictly controlled by head office.

Advantages of centralised organisations are:

  • decisions can be taken with an overview of the whole company
  • decision-making and communication can be quick

Disadvantages of centralised organisations are:

  • business opportunities may be lost because people are not allowed to make any decisions
  • job satisfaction may be lost - staff don't feel involved

A decentralised organisation is one where the power of decision-making is shared out to more people.

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Maslow divided human needs into categories, and said that to motivate workers you must meet these needs.

Maslow's Hierarchy of Needs


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Communication - passing information between two people

One way communication - when the receiver of a message has no chance to respond

Two-way communication - where there is an opportunity for the receiver to give a response

Advantages of two-way communication

  • tasks get done effectively and efficiently, with fewer mistakes
  • it creates good employee relations - workers feel listened to

Sometimes, communication in a business is not effective. Possible barriers to effective communication are:

  • the sender not explaining themselves properly
  • the receiver not understanding the jargon used
  • a problem with the medium (receiver doesn't receive message)
  • the message getting distorted in its transmission
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If employees receive too much communication they may end up suffering from 'information overload'. This is when employees receive so much data and information that they can no longer process it effectively. This can be stressful for the employee involved.

The purpose of communication

  • to provide and collect information about the business
  • to give instructions
  • to ensure that all workers are working towards the same goal

The consequences of poor communication

  • misunderstandings
  • time wasted
  • costs increasing
  • inefficiency
  • low levels of motivation


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Remuneration - payment to employees

Wage - usually paid on a weekly basis, per hour or by output (how much you make)

Benefits of piece rate

  • workers work harder
  • it's fair - hard workers are paid more than lazy ones

Drawbacks of piece rate

  • can result in poor quality work
  • firms have to spend more money on quality control

Salary - usually calculated on an annual basis and paid monthly

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Sometimes workers are paid in accordance to their performance. Some examples are:

Commission - sales people are paid a basic salary plus a commision (a percentage of the value of sales)

Bonuses - extra payments over and above the basic wage/salary

Performance-related pay - payment for reaching an agreed target

Share option schemes - workers are allowed to have shares in the business (makes employees feel part of the business)

Another method of payment is fringe benefits, which are non-monetary rewards such as a company car or a store discount.

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