GCSE AQA Business Studies Unit 2: People In Business 2

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Organisational structure: By Function

You can organise a company by FUNCTION.

  • Seen alot in limited companies
  • each functional area does one part of work for the business (e.g. marketing/sales/opertions/human resources/customer service etc...)
  • Main advantage: Specialists focus on their particular job
  • Main disadvantage: Different departments might not work well together. 

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Organisational structure: By Product

You can organise a company by product. 

  • Common in large manufacturers with a variety of products. 
  • Product based structure spilts the organisation into different sectors (e.g. A department store could have Home Furnishings, Toys and Clothing and each of those could develop further e.g. Mens/Womens clothing)
  • Main advantage: Managers make decisions relevant to each product sector. 
  • Main disadvantage: Can be a wasteful duplication of resources between sectors. 
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Organisational structure: By Region

You can organise a company by REGION.

  • Usually seen in multinational businesses. 
  • Divisions can be regional or national.
  • Main advantage: Makes day-to-day control easier.
  • Main disadvantage: Can be wasteful duplication of resources between regions.
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Business Hierarchies

  • A hierachy is a series of levels within a business where each level has reponsibility and authority over the levels below. 
  • Generally, number of people on each level decreases as you move up. 
  • At each level, a certain amount of responsibilty is passed on to the level below.
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Centralised Organisations

  • In Centralised organisations, all major decisions are made by the people at the top of the hierachy. 
  • Advantages: Senior managers tend to have experience and have an overview of the whole busiess. Policies will be rigid and the same throught the business. 
  • Disadvantges: If all decisions are made by one or two people at the top decision making can be slowed down. Also, decisions can take a long time to filter through to employees. This means the organisation reacts slowly to change. 
  • Senior managers at top of hierachy can become very powerful. However, senior managers may lack in 'specialist knowledge' which is specific to  particular area/country which could lead to bad decision making. 
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Decentralised Organisations

  • In Decentralised authority to make decisions is shared out (e.g to regional managers or junior employees)
  • Advantages: Employees can use expert knowledge of thier sector/region to make decisions more quickly. 
  • Disadvantages: Incosistencies may develop between departments or regions. Also, decision makers may not be able to see the overall needs of the business. 
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Changing the Structure of a Business

  • The structure of a business can change over time. 
  • Businesses tend to become more hiararchial as they become larger. 
  • As a business grows and employs more staff managers may be needed to help organise and control things. 
  • Bigger the business, greater number of managers needed (greater the costs)
  • To overcome high costs, businesses delayer their structre - layers of management are removed. They may also decentralise and encourage groups of workers to take more responsibility for their own self-management. 
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How is a long chain of communication a problem?

  • Chain of communication: Chain of people messages travel through to get from one layer to another. 
  • Long chains mean messages can take a long time to travel up and down (leaving people feeling isolated and demoralsed) and there is also risk of messages being misinterpretated. 
  • Some firms try to solve this problem by delayering. 
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How is a wide span of control a problem?

  • Span of Control: Number of workers who report to one manager in a hierachy.
  • A wide span of control leads to a manager having to communicate with a lot of emplyees. 
  • Can take a long time to pass messages to all of the people under thje managers control. 
  • Can be difficult to manage a lot of emplyees eficiently. 
  • Firms must find a balance between a short chain of communication and a narrow span of control. 
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Staff Training: Induction

  • Induction training is for new staff
  • It introduces the new employee to the workplace. 
  • Usually starts first day of a new job. 
  • Includes introducing them to their fellow workers, telling them about company rules (health and safety), tour of the site and initial training on how to do their job. 
  • Should make a new employee feel welcome and comfortable at their new job. 
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Staff Training: On-The-Job

  • On-the-job training is learning by doing. 
  • Most common form of training. The person learns to do their job by being shown how to do it and then practising. 
  • Also known as internal training. 
  • Cost-effective for employer as employee continues to work whilst training. 
  • Often taught by an employee so bad working practises could be passes on or they could be taught incorrectly (not good). 
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Staff Training: Off-The-Job

  • When the person learns away from their workplace. 
  • More expensive than on the job and sometimes not directly related but often higher quality because its taught by people who are better qualified to train others. 
  • If the firm has its own training department then off-the-job training can be done internally (or in-house). 
  • Training that happens outside the business is called external training (e.g. a college course) 
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Staff Training: Appraisal

Three stages to the appraisal process: 

1) Worker and manager agree on the worker's performance targets for the year. 

2) During the year, training and other resources are provided to help worker reach target. 

3) At the end of the year they meet again to discuss how well the targets were met. 

  • Meet or Beat targets can be rewarded with higher pay or promotion. If a worker does not meet their targets the manager will decide what to do to help them improve. 
  • Appraisal meetings can cause problems if badly managed. If targets aren't realistic the worker probably wont meet them which can be demotivating. 
  • Lack of honesty can be a problem - workers might just tell managers what they want to hear and managers might try to avoid upsetting people. 
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Motivation: Remuneration

  • Paying staff money for the work they do is remuneration (or financial reward).
  • Increasing wage/salary can help to motivate staff. 
  • Other types of remuneration include bonuses and pension payments. 
  • Larger businesses have more money to spend on remuneration for staff. 
  • as a firm grows it will offer more financial rewards on top of basic pay. 
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Motivation: Training

  • Makes staff better at their jobs. 
  • Staff who are better at their jobs are generally better motivated. 
  • As staff learn new skills they may be promoted higher in the business. The extra pay and responsibility can help to motivate. 
  • Training also helps staff meet targets set in their appraisal. 
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Motivation and Different Styles Of Management

  • AUTORETARIAN (or autocratic) managers make decisions alone without consulting staff. can make workers feel their views aren't valid. 
  • PATERNALISTIC managers make decsions themselves but only after consultation with workers. 
  • DEMOCRATIC managers allow the workforce to have some influence over decisions. 
  • LAISSEZ-FAIRE managers allow workers to perform tasks as they see fit, offering help if needed. Not a great management style for people who need support. 
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Staff Retention

  • All about keeping hold of good workers by offering them a career path (promotion and motivation to work their way up the hierachy).
  • If the wokers leave the business will have to go through the whole recruitment and training processes (which could be expensive) to fill a vacancy which also takes a lot of time. 
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A set of 17 revision cards covering most aspects of people in business. The test yourself should encourage involvement and the information can be adapted for personal use eg creating mind map etc

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