Unit 1.3

How are Businesses Organised

What is an Organisational structure? In every business there is a number of employees each carrying out a variety of jobs. Businesses must ensure all employees understand where their place is within the business. Every business then must decide how to ORGANISE itself. This can be shown in an ORGANISATION CHART.

Board of Directors

Managing Director

Finance Marketing Operations HumanManager Manager Manager Resources

Manager

Cost Financial Advertising Sales Quality Production Training Recruitment

Accountants Staff Reps Control Supervisor Officer Administrator

Organisation Charts

An Organisation Chart shows ALL the people who work in an organisation

From the boss at the top ...

… down to the newest office junior or cleaner

Why have a chart?

who does what job who makes decisions who has authority over whom

So that people who work in the organisation or who have contact with it, know:

Most organisations have a few people at the top ...

(the ones who make the most important decisions)

and more at lower levels ... (where they may not make

any decisions at all)

What does an Organisation Chart

do?

The organisation chart answers these questions by displaying:

- Lines of Authority

- Lines of Responsibility

- Levels of Management

Workers need to know what jobs they are supposed to do, who is in charge of them, who they are in charge of and how they relate to the whole organisation

BOSS

Managers

Workers

This means that most organisation charts are roughly this shape ...

A Pyramid

And they look like this

Boss

Manager A Manager B

Workers X Workers Y Workers Z

(LOOK CLOSELY AT THE LINES!)

This chart shows that ...

The Boss has overall responsibility and has authority over everyone

Manager A is responsible to the Boss and is in charge of Workers X and Y ie has authority over them

Manager B is responsible to the Boss and is in charge of Workers Z ie he has authority over them

Authority

The power that an employee has to instruct others and take decisions

Responsibility

The obligation an employee has to carry out a range of tasks or duties (duties may include supervising other people)

Line Relationships

When a line is drawn between 2 levels, the person on the higher level is said to be the LINE MANAGER of the person below.

The Boss is Line Manager to Manager A and B

Boss

Manager A Manager B

Organisation charts can be described as FLAT ... Which means there are not many levels

between the top and the bottomLevel 1

Level 2

Level 3

Boss

Managers

Workers

Managers

Workers Workers

Or TALL ...

Which means that there are a lot of layers between the top and the bottom

For instance, the organisation chart for the army would show a tall structure ...

General

Colonel

Major

Captain

Sergeant

Corporal

Private

Flat Structure Tall Structure

Structures

Chain of Command

Each grade or level gets its instructions from the one above and passes them on to the one below - this is called the CHAIN OF COMMAND

Span of Control

The number of staff that a person is responsible for.

Boss

Manager A Manager B

The Boss has a span of control of 2 – it is very narrow

Manager A

W W W W WW W W WW

The Manager has a span of control of 10 – it is very wide

Advantages of a Flat Structure

Modern firms try to have a FLAT structure with fewer layers which means that

Decisions are made faster More people are allowed to make

decisions for themselves Communication is better

Disadvantages of a Flat Structure

Workloads are likely to increase – possible stress

Employees may feel isolated or ignored May not meet their line manager on a

regular basis Fewer opportunities for promotion

Advantages of a Tall Structure

There are many opportunities for promotion

Easier for managers to supervise staff Employees are more likely to know their

immediate boss

Disadvantages of a Tall Structure

A TALL structure has more layers which means

It takes longer to make decisions Fewer people are involved in making the

decisions ...It takes more time for information to

get from the top to the bottom and there is more chance of a

misunderstanding ...

MARKETING

Definition:

“Selling goods/services to customers which satisfy their needs and are of a quality such that the customer comes back but the goods do not!”

knowing about the product or service market research

and its market knowing what to produce product knowing how much to charge price knowing how to persuade people promotion to buy it knowing where to sell it place knowing how to get the best mix marketing mix of the

above (the 4Ps) knowing how to deal with consumers public relations knowing about the product or service market research and its market

Marketing involves the following range of activities:

Market Research A definition of market research is:

“Gathering, recording, analysing information about the possible market for a good or service.”

The following research techniques are commonly used:

Desk Research Field Research

Desk Research DESK RESEARCH involves the use of existing

information from:

Government statistics newspapers; magazines; Internet; published market research information - reports in various journals

showing trends in a range of markets for different products.

Desk research would be used when:

Market information already exists. It is cheaper to access existing information rather than generate

new information. It is easier to access - saves time.

Field ResearchFIELD RESEARCH is undertaken when companies/organisations find out market information for their own use - ie, they ask people’s opinions.

Field research can be carried out through:

The use of questionnaires - set questions are asked, face-to-face/by phone/by post.

Test marketing - try out the product on a small section of the market.

Consumer panel - a group of people are given a product and asked to comment on it in detail.

Field research is undertaken when: Information is to be gathered for a specific purpose. Information is to be linked directly to a product/service. Research is to be focused on a particular company’s needs.

THE MARKETING MIXProducts often succeed or fail due to the influence of the marketing mix and the balance of the 4 Ps - product, price, promotion and place.

Product It must be of the right quality to appeal to possible

customers.

Price The price must be set at the correct level. If the price is too high customers may not buy the

product. If the price is too low customers may get the wrong idea

- eg, poor quality. The price should be determined by the economic

concept of demand and supply.

Marketing Mix (cont)Promotion The best method(s) of advertising - ie raising customer awareness -

should be selected and may include: Newspapers radio Buses billboards shop windows magazines Endorsements special promotions Sponsorship

Place The product must be available for sale at the right place at the right

time. This must be the kind of place where the kind of people for whom the product or service is designed are likely to shop. Possible options for the correct ‘place’ would include:

wholesale outlet - Makro retail outlet - Woolworths mail order - Kays Catalogue

HOW ARE HUMAN RESOURCES ARE MANAGED? The main focus of this functional area is the

management and support of the workforce of a business. The human resource function includes a number of areas of responsibility which include:

RECRUITMENT TRAINING CONDITIONS OF SERVICE WELFARE

Recruitment & TrainingRECRUITMENT recruitment and selection process application forms interviews

TRAINING It is important to make sure that all employees are trained

properly to help the business achieve its objectives. The following are some examples of types of training which could be offered by a business to its employees:

Induction - as a new employee you are introduced into the ways in which your company works.

On-job training - training while actually doing your job. Off-job training - training away from the work place, for

example going on courses, going to college, etc.

Conditions of Service & WelfareCONDITIONS OF SERVICE legal conditions - contract of employment; rules/regulations that must be followed by all employees; procedures for grievance/complaints by/about employees.

WELFARE Keeping the workforce happy and well-motivated can be

achieved by using some of the following methods:

“open door” policy - allows employees to discuss various problems which may affect their work;

organising staff outings; organising staff social events.