people in business revision guide - normanhurstsch.co.uk · it sells the chocolate bars for more...

A292

Mr E Botha

Normanhurst School

People in Business Revision Guide

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The examination is called Unit A292: Business and People. What will the exam be like?

The examination will last for 1 hour.

There will be a total of 60 marks. The marks will count for 25% of your overall score in GCSE Business Studies.

There will be two main questions. Each of these will be divided into a number of parts.

The questions will be based on a business context. Some information will be given about the business and then a question will follow.

What will the exam test? The examination tests three skills: 1. Knowledge: How well you can define business terms and can explain business ideas. Example.

You might be asked to define what is meant by the term ‘redundancy’ or to explain the advantages of sole proprietorships.

2. Application: How well you can use your knowledge to explain a business situation. Example. You might be asked to explain how changing a business from a partnership to a private limited company affects the liability of the owners for any debts that the business has.

3. Analysis and evaluation: This is about weighing up advantages and disadvantages, in order to make judgements. You may need to recommend what a business should do and then give your reasons why you think this is the right thing to do. Example. You could be asked to recommend a method of selection to use to choose between people who have applied for a particular job. You may be asked to judge if a business is using the best methods of motivating the workers it employs.

The marks for the different skills on this paper are: Knowledge – 27 marks Application – 19 marks Analysis and evaluation – 14 marks How difficult will the questions be? The questions in this examination will vary in difficulty. Some are used to test F and G candidates, and some are there to challenge A and A* candidates. The exam board spend hours to make sure that the examination will be a fair test of what you should be able to do. They are not trying to catch you out. How much should I write? The number of lines that are provided for your answer is a good guide as to how much you should write. If there are ten lines and you only fill two of them, you may not have developed your answer as fully as you should.

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Part 1 The Business First of all, what is a business? “A business is an organisation that produces either goods or services” Goods – you can touch and feel goods, e.g. chocolate bars, cars, iPods. Service – you can’t touch services, e.g. insurance, haircut, fixing a car. Sometimes a service can also contain a good. When you go to a restaurant, the food is the good and the person's bring it to you is a service. In the same way, your teacher gives you a service by teaching you Business Studies. He or she also gives you a good by giving you a textbook. Businesses exist

to make money

to provide employment

to create goods and services Businesses do all of these things by adding value. For example Cadbury’s buys milk, cocoa beans, sugar, plastic etc. From this, it makes chocolate and wrapping It sells the chocolate bars for more than it bought the raw ingredients for. In other words, it added value. The milk, cocoa beans, sugar and plastic Cadbury’s use are all examples of raw materials.

Industrial Sectors Primary sector – The first stage of production involving the extraction of the raw materials and natural resources. Examples:

Fishing

Farming

Forestry

Mining/mineral extraction - e.g. mining for coal, or extracting oil

Secondary sector – The second stage of production, where the raw materials are manufactured into finished products. Examples:

Car manufacturers

Furniture manufacturers

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Primary

sector

Secondary

sector

Tertiary

sector

The three sectors depend on one

another

Electrical appliance manufacturers Tertiary sector – The third stage of production, where a service is provided for consumers Examples:

Retailing

Banking

Insurance

Travel

Entertainment

Hotels

etc. De-industrialisation – The reduction of importance of the secondary sector of business activity in a country, i.e. closing factories. Interdependence – The way in which businesses in the three different sectors depend on each other. For example, the tertiary sector relies on the secondary sector for manufactured goods; the secondary sector relies on the primary sector for raw materials. Specialisation – Where a business concentrates on one particular activity. Chain of production – This is how products move through the sectors. For example, food is grown in the primary sector, then it’s processed/packaged in the secondary sector, and then it’s sold in the tertiary sector (e.g. a restaurant/supermarket). Added value – When a business increases the value of the inputs. For example, making a car from pieces of metal, plastic, glass etc., and selling it for more than the input costs (e.g. raw materials)

At each stage of a product’s life value is added

Value Added

Changes in UK employment 1. In the past, the majority of people in the UK worked in the primary and secondary sectors, in

industries such as farming, mining and manufacturing. 2. Increased mechanisation/automation meant less people were needed to work in UK primary and

secondary sectors. For example, tractors, combine-harvesters etc. now enable one farmer to do the same amount of work as 20 farmers could do in the past.

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3. In addition, we now import lots of goods from low-cost countries, as they can produce them for less money. This again means less people are needed to work in UK primary and secondary sectors.

NOTE: In the UK the average wage is £200 a day. In China it’s £1 a day. This is why China can produce goods cheaper than the UK.

4. The UK started to concentrate on more skilled professional jobs and export its knowledge and

expertise. Because of this, and the fact we have high levels of education, the UK concentrates on tertiary-sector industries. De-industrialisation has taken place in the UK: we have closed our factories.

5. Over 70% of employed people work in the tertiary sector. Aims and Objectives of Businesses Business objectives – are what the business is trying to achieve. They may be over a short or long period of time and include making a profit and providing a service. Mission statement – is a brief summary of the main objectives a business or organisation has. Satisficing – this means that a business will make enough profit to enable it to meet its needs, and not make as much profit as possible. Market share – this is the amount of a market a business controls. It is measured as a percentage. Examples of business objectives –

Profit

Growth

Survival

Provide a service Profit – A company may want to maximise profit but they must be careful that customer do not think that they are being too greedy. Growth – Growth is important to businesses as it is an important way of raising profits. Growth can take different forms:

Sales growth

Increased market share

Elimination of competition Survival – is important for new businesses but in most cases should only be seen as a temporary, but vital, objective. Providing a service – this is important in businesses that see customer satisfaction and earning a good reputation as a high priority. It can also help to increase profits as good service can lead to customers coming back again and again (repeat purchase).

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How stakeholders affect businesses Stakeholders – An individual or group of people who have an interest in a business.

Different stakeholders have different objectives: Workers objectives - may be better pay, security and safe/hygienic conditions. Managers’ objectives - may be better pay, performance of the business, hardworking staff and customers. Owners’ objectives - may be profit and growth. Customers’ objectives - may be low prices and better service. Suppliers’ objectives - may be for businesses they supply to grow so they will buy more. Government’s objectives - may be for all businesses to succeed so they will pay more taxes and have to pay less unemployment pay Local community’s objectives - may be business development and prosperity, less crime and a cleaner environment

Stakeholders

Workers

Owners

Customers

Local Community

Government

Managers

Suppliers

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Social enterprise

Do all businesses try to make as much profit as possible? Who gets the profits from the business? What is this magazine? Why was it set up? “The Big Issue produces a weekly entertainment and current affairs magazine which vendors buy from us for 70p and sell to the public for £1.50, keeping 80p for themselves. We believe in offering ‘a hand up, not a hand out’, but we also recognise that earning an income is the first step on the journey away from homelessness” Adapted from: www.bigissue.co.uk

The Big Issue is an example of a social enterprise. A social enterprise is an organisation that is operated for the benefit of the community. Types of ownership Introduction There are four main types of business ownership: sole traders, partnerships, Private Limited Companies (Ltd) and Public Limited Companies (PLCs). There are also public corporations and worker co-operatives. Unincorporated Businesses 1. Sole Traders 2. Partnerships Features of Unincorporated Businesses

Unlimited liability - The owners of the business are personally liable for any debts which the business may have.

Income tax is paid on the profits which the business may make.

Continuity - the business, in its present form, ceases on the death of one of the owners.

Financial information remains private to the business.

Bankruptcy occurs when the business can’t pay its debts.

http://www.bigissue.co.uk/

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Incorporated Businesses 1. Private limited company (Ltd) 2. Public limited company (Plc) Features of Incorporated Businesses

Limited liability - the liability of the owners of the business (the shareholders) to pay off its debts is limited to the amount of money which they invested.

Corporation tax is paid on the profits which the business may make

The business is a separate legal entity from its owners.

Financial information is available to shareholders and the public (if they request to see it).

Insolvency - This situation occurs when the business is unable to pay its debts.

Finance can be raised through the sale and issue of shares. Types of Businesses 1. Sole traders - Business owned by one person. Usually a small business, for example builders,

painters, hairdressers, window cleaners. 2. Partnerships - Owned by a minimum of two and a maximum of twenty people. Not all partners

need to have an equal share. Examples of Partnerships: doctors, dentists, solicitors and accountants. Set up via a Deed of Partnership, which is a legally-binding agreement which:-

Provides information on the way in which the business operates.

States how profits and losses will be shared amongst partners.

Details how much capital each partner has contributed to the business. 3. Private Limited Company - A Private Limited Company (Ltd) cannot sell its shares on the Stock

Market. Advantages: Limited liability; easy and inexpensive to set up; ownership and control are closely connected (e.g. Board of Directors are usually the main shareholders); small and less bureaucratic than PLCs (e.g. decisions can be taken more quickly).

Disadvantages: Lack of capital due to no share issue; no benefit from economies of scale (e.g. bulk buying, cheaper borrowing)

4. Public Limited Company - A Public Limited Company (PLC) can sell its shares on the Stock

Market. Examples of PLCs include Boots, Tesco and British Petroleum.

Advantages: Limited liability; can raise large amounts of capital from share issue; benefit from economies of scale.

Disadvantages: Become too large resulting in bureaucracy; conflict of interest between shareholders and the Board of Directors; possibility of takeover or merger because shares can be bought by anyone.

http://www.bp.com/home.do?categoryId=1&contentId=2006973

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5. Public Corporations

Owned and controlled by the Government

The Corporations get some money from the Government, but they also make money themselves.

Any surplus money goes to the Government

6. Worker co-operatives

Owned and controlled by the workers

The worker get all the profits

They have unlimited liability (so they have to pay for any losses the company makes too).

There are no shareholders (so they can’t sell shares to raise money)

Types of integration and growth Growth of Firms There are three ways firms can grow:-

= Merge with another company This is when two companies agree to join together

= Grow internally e.g. they could open new shops or factories

= One company can takeover another

company They do this by buying shares in that company

This is sometimes called an acquisition

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Types of integration

Location of business Choosing the right location is crucial to business success. Some companies operate all over the world, so will look at the factors listed below locally, nationally and internationally. In addition, some companies are “footloose” and often change, for example, where they manufacture things. 10 factors affecting the location of businesses: 1. Cost - Shops in busy/rich shopping areas can cost lots to rent, for example, Oxford Street is the

most expensive in London. 2. Access to raw materials - If a company needs lots of raw materials to make its products, it may

choose to locate near to where these raw materials are produced. 3. Customers – Many companies, such as retailers, need to locate near to customers (i.e. near to

the market they serve). 4. Availability of labour - Some occupations need skilled workers, and therefore locate near to

where skilled workers live. E.g. high-tech workers in Seattle (the home of Microsoft). Some companies need cheap labour, so locate in low-wage countries.

5. Climate and physical geography - For example, we can grow grapes in some parts of southern

England, but in the mountains of Scotland we’re often limited to forestry and sheep farming. 6. Transport and infrastructure - It’s important for companies to be able to get their products to

customers, so companies need roads, railways and ports nearby.

Backwards vertical integration e.g. BMW buys a steel manufacturer

Forwards vertical integration e.g. BMW buys car dealerships

Diversification e.g. BMW buys

a clothes manufacturer

Horizontal (lateral) integration e.g. BMW

Buys another car manufacturer

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7. Tradition – some places have been making the same product for years. For example, Switzerland is famous for making watches.

8. The nature of the product - This is when a product has to be made in a certain area. For

example, ships must be built in deep-water ports. 9. Government policy - In areas of high unemployment, the government often acts to encourage

companies to locate in these areas. For example, they have set up Regional Development Agencies, who can:

Give grants to encourage inward investments (from foreign companies or from companies located elsewhere in the UK).

Give grants to new business start-ups.

Organise/pay for training.

Improve infrastructure. 10. Local government – The local government (e.g. Wandsworth Council) could help businesses in

the following ways:

Give grants to new business start-ups.

Offer reduced “uniform business rates”.

Promote the area (e.g. create websites, advertise in magazines etc.) to encourage businesses, tourists and events to come to the area.

Building industrial estates or technology parks.

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Part 2 People in Business

Stages in Recruitment There are TEN stages in recruitment: 1. Needs analysis - How an organisation decides how many and what type of workers it should

employ. (E.g. the NEXT Store Manager thinks… “Christmas is coming up, we need 5 extra sales staff”)

2. Job description - A document describing the job: title of the job, details of

who the employee reports to (their manager) and the duties/responsibilities/tasks they have to do.

3. Person specification - A document stating the ideal person for the job: qualifications, experience, knowledge, skills and qualities needed. 4. Advertising the job – This involves writing the job advert and choosing the right media. The advert should contain the following: Duties, Qualifications needed, Experience needed, Description of the work, Salary details, Hours, Place of work and how to apply. Job adverts can be in local newspapers, in shop windows, in job

centres, on the internet etc. etc. 5. Reviewing CVs, letters and application forms – This will be done by comparing the data on the

applications to the person specification. 6. Interviewing the candidates - The applicant meets people from the firm for a discussion. Often

the interviewers ask all the candidates the same questions and then can compare the answers that they give. The employee sees the candidates, and can judge how well they present themselves and communicate.

7. Testing the candidates - Sometimes companies will test the candidates. These tests could

include: Maths test, English test, typing test and asking them to make a short presentation. 8. Selecting the applicant - The process of choosing between candidates. 9. Offering the job - Once the company is sure they have found the right

person/people, they will offer the job. This will usually be made on the phone, with a confirmation letter send shortly after.

10. Checking references - Someone who knows the applicant well will

provide a reference that will describe the qualities of the applicant: Honesty, Reliability, Punctuality, Skills, Team-working ability etc.

Other key terms Internal recruitment – When an organisation appoints someone it already employs to another job within the organisation. External recruitment – When an organisation appoints someone who is not employed by it.

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Recruitment agency – A specialist agency that carries out all the tasks involved in recruitment and selection of workers for an organisation.

An example of a job advert An example of a job application form

Motivational techniques

(a) Maslow’s hierarchy of needs

Self-actualisation – the drive towards creative self-fulfilment

Esteem – Feeling self-respect and respect for others

Social – the desire for giving/receiving friendship/love

Safety – the sense of being in a secure environment

Physiological – basic essentials such as food, shelter and water (b) Non-monetary motivation: Job rotation - This is when one worker does lots of different jobs. If they work in a car factory, in the morning they might fit wheels, in the afternoon they might fit windscreens, the next morning they might fit engines.

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Job enlargement - This is when someone’s job increases in respect to the amount of different tasks they do. Although they might do more tasks, they do not get more pay. Job enrichment - This is when someone is given more responsibility. When this happens, they may have to be trained to undertake their new job. Team-working and team-building - This is when groups of workers get together to bond. It might involve a group trip or perhaps joining the company football team. Award schemes - This is when someone is rewarded for doing an excellent job. The rewards may take the form of certificates or Employee of the Month. Promotion - This is when someone is given a new, more senior job. Usually they are given a pay rise too. Working environment – Companies need to make sure the place of work is pleasant. For example, a good temperature, comfortable chairs etc. Leadership - Sometimes people can be inspired to work harder by their managers. Leadership styles Democratic leader - Guide rather than dictate, consulting widely and encouraging everyone to participate in the decision-making process. For example, Mahatma Gandhi.

Laissez-faire leader - Leave decision-making to subordinates, allowing them to be creative, but also providing few guidelines. For example, Nelson Mandela

Autocratic leader - Takes decisions without consulting colleagues who are lower down the hierarchy. For example, Adolf Hitler. (c) Paid (monetary) Motivation Below are the various ways you can get paid: Time rate - The worker is paid a set amount of money for each hour worked. E.g. £5.40 an hour. Overtime pay - The worker gets paid more if they work more than their usual hours – it is sometimes paid when people work during weekends or late into the night.

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Salary - When a person is paid a certain amount for a year’s work, and that amount is divided into 12 monthly instalments. E.g. £30,000 p.a. (p.a. means “per annum” or per year). Employees receive a ‘payslip’ each month explaining how much Tax and National Insurance has been taken off their salary. Piece rate - This is when a worker is paid for each individual task they complete. E.g. a worker may be

paid for each pair of shoes he/she makes. Commission - This is when a worker gets paid for each item they sell. For example, a car salesperson may be paid commission for each car they sell.

Bonus - This is an extra lump sum of cash that is paid in addition to normal pay. It is usually paid when a worker has reached a specific target. Sportsmen get a bonus if they win. Profit-sharing - If you work for a firm and they make a profit, sometimes they will share it between their employees. E.g.

Waitrose employees get a share of the company’s profits. Fringe benefits or perks - In addition to being paid in money, some firms give their employees additional things. For example, a company car, private healthcare, staff discounts in their shops etc. Exam Tip! A payslip – you may be asked to fill a blank one in:

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Training and staff development Well educated and well trained workers are more productive and are less likely to make mistakes. This is why training is so important. Eight possible training needs: 1. Technical skills – to operate machinery etc. 2. Personal skills – to be able to communicate better. 3. Management skills – to manage others, control budgets, solve problems etc. 4. Induction (new workers) – to introduce them to the organisation. 5. Group working – to help people work in team situations. 6. New product training – so people know about new products they have to sell. 7. Flexibility – to train workers to do a variety of jobs. 8. Re-training (new skills) – a job someone once did may no longer exist; so they will need to learn

new skills or else face being made redundant. Types of training

On-the-job training The training is done at the place the employee works. It might be they are given help by a more experience employee; or it may be that they ‘shadow’ another worker and ‘watch and learn’ and ask questions. Alternatively, they may receive coaching.

Advantages Disadvantages

Training is given one-to-one

Cheaper (no travel or hotel costs)

The worker is still productive whilst training

Trained in the “ways of the firm”

The trainer may be distracted from their job

The quality of the trainee’s work may be poor (e.g. a trainee)

Not all jobs are suitable (e.g. Trainee Doctors could make dangerous mistakes)

Off-the-job training The training is done away from the place the employee works. It might be they go to a different site (e.g. a college or specialist training centre); or it may be that they stay on-site but go to a place that is dedicated to training, such as a lecture room or resource centre.

Advantages Disadvantages

Experts provide training

The trainee has access to specially-designed training equipment

The workers often enjoy a change of environment

Usually more expensive because of fees, travel and hotel costs

Worker is not benefiting the company whilst training

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Life-long learning During the course of your life, you may have numerous jobs, and each of these jobs may require different skills. This is why the government encourages people to continue to learn throughout their lives. (This is also why you all have a Record of Achievement file at school, so you can prove you are multi-skilled.) Types of qualifications 1. Academic qualifications – such as GCSEs, AS Levels, A2 Levels

and degrees. 2. General vocational qualifications – such as GNVQ (General

National Vocational Qualifications), vocational A levels and vocational GCSEs. The idea of these qualifications is to equip people with the skills to work in particular industries (e.g. Leisure and Tourism GNVQ should give students an insight into that industry). The government has identified six key skills: communication, application of numbers, information technology, working with others, improving own learning and performance, and problem solving. Many businesses look for candidates with these ‘transferable’ skills.

3. Vocational qualifications – such as training to be a plumber or a hairdresser. Many of these qualifications are NVQs (National Vocational Qualifications).

Staff appraisal Many companies run staff appraisal sessions (usually at least once a year). The employee will meet with their boss, they will assess how well they’ve been doing and how they could improve performance. At these meetings targets are agreed, and training needs may be identified. Some staff receive performance-related pay. The appraisal may help the company establish whether they have met the criteria to receive this money. Investors In People (IIP) If a company meets certain targets for staff training/development (i.e. the planning, implementation and evaluation of training is of a high standard), they can be awarded IIP status. Most good employers have IIP status – so it’s a good thing to ask in job interviews. (Southfields Community College has IIP status.)

Employment Law There are certain things employers must do, such as

Pay their employees at least the minimum wage

Ensure their workers are safe (health & safety laws)

Give each employee a ‘contract of employment’ - This is a written document that explains what is expected of the employee AND the

employer, and includes such things as: salary details, hours/days of work, job title, job description, dress code, disciplinary procedures etc.

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There are also specific laws employment laws:

Law Main point of this law

Equal Pay Act 1970 Ensuring men and women are paid the same amount for doing similar work

Sex Discrimination Act 1975 Preventing men and women being treated differently from members of the opposite sex

Race Relations Act 1976 Preventing people of one race, colour, nationality or ethnic origin being treated differently

Disability Discrimination Act 1995

Ensuring that equal opportunities are given to disabled people

Employment Rights Act 1996

A firm must give a worker a “statement of particulars” within 8 weeks of starting work

Health and Safety at Work 1974

Employers must protect employees from dangers in the workplace

Minimum Wage Legislation

Prevents workers from being exploited by employers, and outlines the MINIMUM hourly rate employees have to be paid

Trade Unions Trade unions are organisations that represent the interest of workers. What do trade unions do?

1. They act as pressure groups 2. They seek to influence the Government to make laws that are in the interest of their

members. E.g. Asking the Government to limit working hours 3. They protect the interests of their members.

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Benefits of union membership

Strength in numbers

Expert advice and support about the rights of workers

Money to help pay for court cases

Trained people to negotiate with employers

Possible discounts in shops and lower rates of interest on loans If the union and the employers cannot agree on certain things, the union can take industrial action. The three main types of industrial action are detailed on the next page: 1. Strike - Workers refuse to work.

2. Overtime ban - Workers refuse to work any overtime. 3. Work to rule - Workers will only do what is in their job description.

What is a single union agreement? This is when all the employees in a company belong to the same trade union. This makes it easier for the company to resolve disputes as they only have to deal with one trade union.

ACAS (The Advisory, Conciliation and Arbitration Service) This is an independent, statutory body which is made up of employers and trade union representatives under an independent chairman.

Acas has a range of services which can help individuals or groups of employees to avoid or resolve problems and disputes in the workplace. The Acas helpline offers free, confidential and impartial guidance on employment rights and workplace issues. They provide general information on employment rights and responsibilities and can also help employees and employers who are involved in an employment dispute to identify practical ways of sorting out the problem.

http://www.acas.org.uk/index.aspx?articleid=1461

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If an employer and an employee need external help to resolve a problem, Acas can often assist them to find a solution that is acceptable to both. Communication Communication is very important in business. Just think of all the different methods of communication used at Southfields Community College. One-way communication

When a message is sent, but no message is received in return

Example – Tannoy announcements in school

Good for giving information Two-way communication

When the person receiving the message can respond to the sender

Example – Teachers discussing how to reward students for good work

Good for ensuring information is understood and solving problems External communication

Takes place between one person in an organisation and someone outside that organisation

For example: Mr Draper telephoning someone at the OCR exam board Internal communication

Takes place between people within an organisation

For example: Mr Draper meeting with Ms Valin to discuss the GCSE exams Direction of internal communication Horizontal Communication with someone on the same level of the organisation’s hierarchy

Vertical Communication between people on different levels of the organisation’s hierarchy This could be upwards This could be downwards

Formal communication When the official means of communication within an organisation are used E.g. letters, official meetings and reports Formal communication Communication that does not use the official methods of communication E.g. conversations a break or social events ICT Developments in Business

What are the advantages of using ICT?

Productivity is high

Better quality presentation

Easy to share information

Large amounts of info can be processed quickly

Communication can be faster

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Marketing directly to large numbers of people

Workers have more flexibility about where to work

Less office space is needed What are the disadvantages of using ICT?

Cost and time to train people

Expensive to buy the technology

Technology becomes out of date very quickly

Technical problems

E.g. Server down

Hackers can (sometimes) steal personal information

Health and safety issues e.g.

Eye strain

Repetitive strain injury

(RSI) Advantages of working from home

Worker saves time by not having to travel to work

The worker saves money by not having to travel to work

The workers have more freedom about how much they work and what hours they work

There may be fewer distractions at home than in a busy office environment Disadvantages of working from home

The worker may not be able to exchange ideas with fellow workers if he or she does not see them very often

Some workers need discipline of clocking on and off

There may be lack of space or facilities at home

There may be distractions from family and friends (and TV and pets and chores!) The worker may miss the social side of working with other people Changes in working patterns

All of the things listed below are INCREASING

Part-time employment - Many people want part time jobs, especially students and parents of young children. And more and more companies are offering part-time positions.

Tele-working - This is when people work from home using technology to make this possible. For example, e-mail, fax, phone/mobile phone etc.

Outsourcing - This is when companies choose to contract out jobs to other firms. For example, cleaning contractors to clean offices, and call centres in low-wage countries.

Job sharing - Increasingly people don’t want to work five-day weeks (especially people who have young children). Because of this, people can often arrange to share jobs. E.g. each employee works 2½ days each.

Short-term contracts - Companies increasingly offer employees short-term contracts. E.g. A six-week contract to work before Christmas.

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Women in work – more women are working that ever before. Key phrase - Labour flexibility

Lots of companies look for flexible employees.

These are people who are; - willing to work flexible hours - work flexible dates/days - able to carry out a wide range of jobs.

Organisational charts

It shows clearly who is responsible for which functions and tasks

It shows who works for who

It indicates the line of communication that should be used

It shows how different departments are linked together

Advantages of tall structures

The lines of communication and responsibilities are clear

The span of control is likely to be narrower than flat structures. This means the manager will not have to look after so many people

There will be plenty of opportunities to gain promotion

Advantages of flat structures

Communication from top to bottom will be quicker

Fewer mistakes in the communication will occur as messages don’t pass through as many layers

People at the bottom will be encouraged to share ideas

The wider spans of control of managers, the more they will have to delegate work

Owner

Store

manager

Shop

worker

Shop

worker

Store

manager

Shop

worker

Shop

worker

Store

manager

Shop

worker

Shop

worker

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Span of control This describes how many people report directly to the line manager. It does not include people further down the organisational chart. So, in this example, Mr Stanley’s span of control is three. Hierarchy - This describes how high up or low down someone is in an organisation. Authority - This is the power to make decisions. Accountability - You’re in charge, and if things go wrong it’s your responsibility. De-layering - When one or more levels of authority are removed from the hierarchy. Chain of command This is how instructions are passed from one level to another. For example, the Owner tells the Store manager; the Store manager then tells the Shop worker.

Owner

Store

Manager

Shop

worker

Shop

worker

Store

Manager

Shop

worker

Shop

worker

Store

Manager

Shop

worker

Shop

worker

Mr Stanley HOD

Mr Bragg Class Teacher

Ms Adams Class Teacher

Ms Nightingale Class Teacher

Line manager

people in business revision guide - normanhurstsch.co.uk · it sells the chocolate bars for more...

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