Types of Organisational Structure (Cambridge (CIE) A Level Business): Revision Note

The number of layers of management and supervision within an organisation

It shows how many steps there are from the top (senior management) to the bottom (operational staff)

A tall structure has many levels, while a flat structure has few, which affects communication, control, and decision-making speed

The chain of command is the formal line of authority that flows down from the top management to lower-level employees

It defines who reports to whom and who is responsible for making decisions

The chain of command helps establish a clear communication channel and helps maintain accountability within the business

Span of control refers to the number of employees that a manager or supervisor effectively manages

It is based on the principle that a manager can only effectively manage a limited number of employees

A narrower span of control means more layers of management

A wider span of control means fewer layers

Decision-making authority is concentrated at the top of the organisation

Senior management make most of the key decisions

Centralisation can promote consistency and control

Decision-making is distributed throughout the organisation

Lower-level employees have more decision-making power

Decentralisation can promote flexibility and innovation

Authority is the official power given to a person to make decisions and give orders

It flows down the organisational hierarchy and allows managers to direct others, allocate resources and take responsibility for decisions

Delegation is the process of passing authority from a manager to a subordinate

A manager gives responsibility for a task to someone else but remains responsible for the outcome

It helps develop staff and reduce the manager's workload

Accountability is the requirement to explain and take responsibility for actions or decisions

Even when tasks are delegated, managers are still accountable for results

Clear accountability ensures people are held responsible for their performance

Specialisation

• Employees develop expertise by working in specific departments such as marketing or finance

Lack of coordination

• Departments may focus only on their own goals, not those of the whole business

Efficiency

• Tasks are clearly divided, making it easier to train staff and manage performance

Slow decision making

• Decisions may take longer as communication must go through several layers

Clear chain of command

• Everyone knows who they report to and what their responsibilities are

Limited flexibility

• Employees may not easily adapt to changes or work outside their department

Accountability

• Managers are responsible for the performance of their department

Poor communication between departments

• Can lead to misunderstandings or duplicated work

Provides a clear hierarchy of authority and defined roles and responsibilities

Promotes specialisation and expertise within each department or function

Offers opportunities for career advancement within the organisation

All of the above increases efficiency and motivation

Can create communication barriers between the upper and lower levels of the hierarchy

Decision-making can be slow as information must pass through multiple layers of management

This can lead to bureaucracy and excessive levels of management

All of the above reduce efficiency and motivation

Promotes collaboration and open communication

Decision-making can be faster and more efficient

Encourages creativity and innovation as employees have more autonomy and flexibility

All of the above increases efficiency and motivation

This can lead to role ambiguity and a lack of a clear hierarchy

May not provide clear opportunities for career advancement or promotion

This may require employees to take on multiple roles and responsibilities, leading to burnout and overwhelm

All of the above reduce efficiency and motivation

Promotes cross-functional collaboration and communication

Allows for specialisation and expertise within each functional area

Enables efficient allocation of resources and coordination of multiple projects

All of the above increases efficiency and motivation

This can lead to conflicts over priorities and resources

This can create confusion over roles and responsibilities, particularly when multiple managers are involved

Requires a high degree of communication and coordination, which can be challenging

All of the above reduce efficiency and motivation

Focuses on specific products or product lines, allowing tailored strategies to meet customer needs

Can lead to duplication of resources, such as separate marketing teams for each product

Encourages accountability as each product team is responsible for its own performance

Risk of internal competition between product divisions, which may harm overall company goals

Enhances flexibility and responsiveness to changes in product markets

May result in inconsistent company-wide policies and standards

Improves decision-making speed, as product managers can act quickly without needing to consult other departments

Requires more managers and skilled staff, which can increase costs

Easier to measure performance and profitability by product

Coordination between products and company-wide strategy can be difficult

Allows decisions to be made closer to local markets, improving customer satisfaction

Can lead to duplication of roles and resources across regions

Helps the business respond quickly to local trends, laws and competition

Increases costs due to the need for multiple regional offices and management teams

Encourages stronger relationships with local stakeholders, such as suppliers and governments

May cause inconsistent messaging or branding between regions

Employees can develop expertise in regional markets and cultures

Communication and coordination between regions and headquarters can be challenging

Enables tailored marketing and product strategies to suit local preferences

Risk of regional teams prioritising local goals over global company objectives

As a company expands, more departments, roles and levels of management may be needed to handle increased complexity

Removing layers of management to make the business structure flatter

This can reduce costs and improve communication

A business may shrink its structure due to falling profits, meaning departments or jobs are removed to cut costs

Expanding into new regions or countries may require a regional structure to manage operations more effectively

Automation or new systems may reduce the need for some roles or change how teams are structured

When two businesses combine, the structure must be reorganised to bring people and processes together