Business Studies - Section Nine - Questions

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What are the three main ways that businesses can be structured?

According to function(job role), product or region

Give one advantage and one disadvantage of each type of structure you listed in question 1

Function - Advantage = specialists can concentrate on their particular job.
Disadvantage = The different departments may not work well together

Product - Advantage = Managers can make decisions that are relevant to each product sector 
Disadvantage = There can be a wasteful duplication of resources between sectors

Region - Advantage = Spreading management between regions makes day-to-day control easier
Disadvantage = There can be a wasteful duplication of resources between regions

Explain what is meant be a business hierarchy 

A hierarchy within a business structure is the different levels of the structure and each level has responsibility and authority over the levels below. The higher up the hierarchy, the higher the authority. For example, the board of directors could be at the top, and the shop-floor workers at the bottom. 

Describe the differences between a centralised and decentralised organisation

A centralised organisation is where the people at the top of the hierarchy make all the major decisions. Whereas, in a decentralised organisation, decision making is more shared out with people on all levels of the hierarchy.

Give one advantage and one disadvantage that a centralised structure has for a business. Then do the same for a decentralised structure.

Centralised - Advantage = The people at the top of the hierarchy may be more specialised and better at decision-making.
Disadvantage = Staff at the bottom may feel de-motivated and not valued because they think there ideas are not good. It also means slower decision making.

Decentralised - Advantage = Decision making is done quicker and workers are more motivated as they feel they have more responsibility.
Disadvantage = The decisions makers may not see the needs of the overall business. It can also lead to inconsistency.

Describe how the structure of a business typically changes as the business grows 

As a business grows more levels of hierarchy build up, the business also tends to become more centralised as not everyone in the business is able to make the most important decisions especially as there are a lot more people.

Explain what is meant by delayering

When there are too many levels of hierarchy, and the business can't cope with them e.g. may be too expensive. They have to get rid of some layers of hierarchy. They usually remove them from the middle of the hierarchy as these are the least valuable to the business.

What does 'span of control' mean? And why might a wide span of control be a problem in a business?

Span of control is number of employees that reports to one manager on a level of hierarchy. If the span of control is too wide that means the manager has a lot of employees that they have to communicate with and be responsible for. This can lead to bad…

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