Importance of Communication

• Communication is important because it

is about how information is sent and
received within firms
• The way information is communicated is
often governed by how firms are
structured
 Forms of Business Structure
• Entrepreneurial - decisions made centrally
• Pyramid - staff have a role, shared decision
making, specialisation is possible
• Matrix - staff with specific skills join project
teams, individuals have responsibility
• Independent - seen in professions where
organisation provides support systems and
little else
 Illustrating Structures 1
The Pyramid
Traditional
view of
organisations

Decisions pass
down formal Information flows
channels from up formal channels
managers to from staff to
staff management
 Illustrating Structures 2
Entrepreneurial
Key Key
Quick to act but
worker worker
pressure on
decision makers

One or two
Most small Decision people make
businesses have this maker decisions
structure

Great reliance on
key workers
Key Key
supporting decision
worker worker
makers
 Illustrating Structures 3
Matrix

Marketing Production Finance

Project A
Project teams Staff with
created specialist skills

Project B
 Illustrating Structures 4

Independent
Not suited to most
Dr A businesses due to
lack of control Dr B

Support systems
to professionals
such as doctors

Dr D Dr C
 More on Business Structure

Centralisation Decentralisation
• Managers keep control • Empowering and
• Decisions are made in motivating
the interests of the • Freeing up senior
whole business
managers’ time
• Costs can be cut by
standardising • Better knowledge of
purchasing and so on those closer to
• Strong leadership customers
• Good staff development
 Channels of Communication

• Communication in organisations follows

paths or channels
• Communication between managers and
subordinates is known as vertical
communication
• This is because the information flows up
or down the hierarchy
Vertical/Lateral Communication
Organisation chart shows vertical (black
arrows) and lateral (green arrows)

Board of Directors

Finance Marketing Production

Finance Marketing Factory

Officers Assistants Operatives
 Channels of Communication
• Channels between departments or functions
involve lateral communication
• As well as formal channels of communication,
information also passes through an organisation
informally
• Communication is not complete until feedback
has been received