1. Organisational Structure of a Business

2. Specification Detail
 Organisational structure: the
importance of divisional structure,
levels of hierarchy, chains of
command and centralised v
decentralised systems

3. Why Do Businesses Need to be
Organised?
 As a business gets bigger it needs to be organised
 The structure determines:
 Who is responsible for what job and
 Who is responsible to whom

4. Organisational structure
 There are 3 main types of organisational
structure:
 Tall or Hierarchy
 Flat
 Matrix

5. Forms of Organisational Structure
Board Of
Directors
Managing Director
Directors
Managers
Supervisors
Workers
Hierarchy/Tall structure

6. Forms of Organisational Structure
Owners
Managers
Workers
Flat structure

7. Forms of Organisational Structure
RESPONSIBILITY & AUTHORITY
RESPONSIBILITY & AUTHORITY
RESPONSIBILITY & AUTHORITY
Support
R&D Transport
Services
BOD
Finance Production
MD
HRM Managing Sales
RESPONSIBILITY & AUTHORITY
Matrix structure

8. Organisational chart
 A _________ which shows the _________ structure of
an ______________
Diagram Internal Organisation

9. Forms of Organisational Structure
Board of Directors
Managing Director
Finance H. Resources Production Marketing Logistics
Director Director Director Director Director
Finance H. Resources Production Marketing Logistics
Manager Manager Manager Manager Manager
Staff Staff Staff Staff Staff Staff Staff Staff Staff Staff
Tall/Hierarchy structure

10. Forms of Organisational Structure
Owners
Finance H. Resources Production Marketing Logistics
Manager Manager Manager Manager Manager
Staff Staff Staff Staff Staff Staff Staff Staff Staff Staff
Flat structure

11. Chain of Command
 Line on which orders and decisions are passed down
 From top of hierarchy to bottom
Managing • The longer the chain the more
Director
complex communication is.
Production Messages get lost
Director
Production
• Operators/workers may not feel
Manager involved in decisions
Factory • May be hard for company to
Supervisor
change as more groups to resist
Machine changes
Operators

12. Advantages & Disadvantages
A d v a n t a g e s Disadvantages
Hierarchal Large organisations, usually secure Communication is slow
Structure Lines of communication clear Long chain of command
Flat Communication faster Needs all levels to function
Structure Short chain of command Reduced line of authority
Matrix Communication very fast No defined chain of command
Structure Encourages teamwork No defined line of authority

13. Summary Questions
Key questions:
1. What are the 3 main types of organisational
structure?
2. What is an organisational chart?
3. What is the chain of command?
4. Why do businesses have different types of
structures?

15. Centralised and Decentralised systems

17. TASK: Put the following statements into a chart
describing advantages and disadvantages of
decentralisation and centralisation
Centralisation
Advantage Disadvantage
decentralisation
Advantage Disadvantage

18. Centralised Organisations
Advantages Disadvantages
 Lack of motivation
 Tight control of
for managers
decisions  Central
 Decisions made
management may
by senior be “out of touch”
management  Slow to make
 Decisions are decisions
consistent

19. De-Centralised
Organisations
Advantages Disadvantages
 Increased  Managers may lack
motivation of experience
managers  Local decisions may
 Encourages local be inconsistent with
initiatives the overall business
 Decisions based on aims and objectives
more up-to-date  Duplication of
information functions and costs
 Decisions made
quicker