Chapter 7: organization and management

Organizational Structure: it refers to the levels of management and division of responsibilities

with a business.

The structure is represented on an Organizational Chart

What are the benefits of Organizational Structure?

1. All employees are aware of which communication channel is used

2. Everyone knows their position in the business (They know who they are accountable to
and accountable for)
3. It shows the links and relationships between different departments
4. Gives sense of belonging as all appear on the chart.

Organizational Chart:

1. Levels of Hierarchy is the levels of management in an organization

2. Chain of Command is the structure of an organization that allows instructions to be
passed from top management to low management
a. Tall Chain of Command
b. Short Chain of Command
3. Span of Control: is the number of workers working directly under a certain manager
a. Narrow Span of Control
b. Wide Span of Control

**** The wider the Span of Control, the Shorter the Chain of Command

Advantages of Short Chain of Command:

1. Communication is quicker so faster decision making

2. More delegation so subordinates will be more motivated and feel trusted
3. Better relation between top management and low level management
Disadvantages of Long chain of command:

1. Communication is slow thus slower decision making

2. Less Delegation thus worker will be demotivated and feel untrusted
3. Poor relation between top management and low-level management

Line Manager: are managers who have authority over people directly below them in the
organizational structure

Staff Manager: are specialists who provide support, information and assistance to line managers
(IT )

Role of Managers: (Marketing Manager, Finance Manager or HR manager)

1. Planning  Set aims and targets for the department

a. Increase sales by 10% in the first quarter of 2024  SMART
b. Reduce Expenses by 15% in the first six months of 2024 SMART
2. Organizing  organize resources, delegate tasks, organize people
3. Coordinating - make joint decisions
4. Commanding  follow up with workers, guide, supervise
5. Controlling - Evaluate
Delegation: giving subordinates the authority to perform a certain task

1. Employees might do a bad job - the manager should be responsible

2. Why do managers avoid delegation?
a. Workers might not be efficient
b. Feel the worker might end up in superior performance (feel afraid)
Why is it important:
1. Manager will have more time to focus on strategic issues
2. Workers become more motivated (Theory Y)
3. Workers will have a greater career opportunity

Leadership Style:

Autocratic Democratic Laissez-faire

Do it

Expects to be in Charge

His/her orders to be followed and

No questions

One-way communication no feedback

** It is suitable for crisis

** Demotivates

*** It fastens decisions making

Democratic: Manager allows worker to be INVOLVED

TWO WAY COMMUNICATION

Motivates workers

Slows down decision making process.

Laissez-faire

Worker will do whatever they want

Motivators

Lacks SUPERVISION  Mistakes could happen

Trade union:

A group of workers that join together to protect their interest

A Trade Union is a PRESSURE GROUP

Usually benefits of Joining TU:

1. Improved conditions (health and safety)

2. Improved conditions of employment (Working hours, holidays, wages)
3. Advice and support (unfairly treated, unfairly dismissed…)

Saudi Arabia 2023 - 40%  Purchasing Power is low  Business will have low profit bc of
low sales  OUTPUT decreases  GDP IS decreaseing

Retaj  15000

Joumana  10000

Wassim  5000
External Influences on Business Activity:

Chapter 27: Economic Issues:

Government Economics Objectives:

1. Low Inflation:
a. Inflation is a general increase in price levels in a country in a period time
b. Inflation  Less Purchasing Power  Demand will decrease  Profits will
decrease  Economic Growth / GDP will decrease
c. For This  LOW INFLATION

2. Low unemployment
a. Unemployment: is the people who are able and willing to work but cannot find a
suitable job
b. Government want Unemployment to be low
i. More Workers thus more output  Economic Growth
ii. Less Crimes and Social attitudes
iii. Better living Standards
iv. Less spending by the government (Unemployment benefit)
3. Balance of Payment is the difference between exports and imports
a. Exports  selling local goods/service abroad -- Brings $$$$$$$
b. Imports  buying goods/services from abroad - Paying $$$$$$$
c. Exports > Imports
4. Economic Growth
a. GDP  Gross Domestic Product is the total value of goods and services
produced in a country in a year
b. To measure Economic Growth , GDP is used
i. 2022 – GPD $1 billion
ii. 2023 – GDP $1.25 billion
iii. 2024 – GDP 2 billion