Chapter 7 –

Organisation
and
Management
Organisation structure
Lots of different types of businesses
New business start-ups, sole traders, partnerships, large multinational
organisations, public limited companies or government-owned enterprises.
All require employees to work for them.
What roles do these employees play in the organisation?
Who is in charge? Who makes the decisions?
In order to answer these questions, we need to look at the organisation
structure.
 Organisational Structure -
Computex plc, a large computer manufacturer based in USA
Activity -

Draw the organisational chart for a team

or society you are a member of, or you
could do it for Morna.
Remember to show:
• The different departments
• Who manages each department
• Who reports to each manager
There are Levels of
three key
principles
hierarchy
to Chain of
understandi command
ng
organisatio Span of control
nal charts:
 Levels of hierarchy
Key Term - Hierarchy
the number of levels in an organisational structure

 Shows the number of levels in the organisation structure.

 In the example earlier there are five levels of hierarchy.
 This means that there are five levels between the chief executive
officer and the factory workers.
 Each of these levels represent a level of management, which
means that there are four levels of supervision between the
factory worker and the chief executive officer, who runs the
entire organisation.
 The day to day control of the
employees becomes the responsibility
Key Term The of managers lower down the
Chain of hierarchy.
Command The COC describes the route through
- the route by which authority is passed down to
which these managers from the top
authority is Each person on the COC is directly
passed down responsible to the person immediately
above them and directly responsible for
the hierarchy the person directly below them
Activity from book -

PAGE 91 ACTIVITY
7.1
 Subordinate -
Key Term–an employee who is below another employee in the
organisation's hierarchy

Each manager is responsible for supervising a number of

employees.
Employees below a manager in the organisational chart are known
as subordinates
The number of subordinates that the manager is responsible for is
known as the span of control
Span of control

Key Term - the number of subordinates reporting to each

supervisor/manager

The span of control is said to be either wide or narrow.

If one manager is responsible for a lot of subordinates then this would be a wide
SOC
If one manager is only responsible for a few subordinates then this would be a
narrow SOC
 Remember...

The span of control refers to the

employees that a manager is individually
responsible for, not all of the employees
that are below them in the hierarchy.
Tall or flat
structure
Delayering
Centralised or decentralised
Duties of directors
• Lead the business
• Decide on the strategy of the
business
• Set the objectives that must be met
to achieve the strategy
• Meet with the shareholders at the
Annual General Meeting (for public
limited companies)
• Plan for the future growth of the
business
• Manage employees in their own
span of control
Key term

Duties of a Manager
• Run a business, department or functional area on a day-to-day basis
• Achieve the objectives or targets set by senior management
• Manage and motivate employees in their span of control
• Deal with any problems
• Provide directors with information to develop strategies for the future
•,nmbmhvgbnmm

Duties of supervisor
Receive instructions or targets from management
Ensure that employees complete the work they are given and the targets are achieved
STARTER – page 97, Activity 7.5
Answer questions 1 - 4
Group activity from kognity
The Role of managing (POCCC)
• Planning – looking at the current position of the business and identifying where it wants to
be, then developing a strategy for how that is going to be achieved. A good manager always
has clear aims or objectives and they will prepare a strategy for how they are to achieve them.
• Organising – A good manager will make sure that they use their time effectively to complete
their work. They will also organise the resources of the business as efficiently as possible
to keep costs low.
• Commanding – A good manager will have the respect of their workforce and will be able to
direct the staff on how they are expected to perform. They will also have to do this
while maintaining staff motivation.
• Coordinating - the process of bringing resources together to enable the business to produce
goods and services. In particular, the business’s employees need to be brought together,
instructed correctly and monitored in the most motivating way possible.
• Controlling – As well as being responsible for decision-making, managers also have to make
sure that all employees are working hard and that all tasks are completed on time and are of a
high quality.
Delegation
Passing authority down through the hierarchy to a subordinate
 Delegation -
Advantages Disadvantages
It reduces management stress and workload. There may be some situations where
managers cannot/should not delegate
responsibility.

It allows senior management to focus on key It is dependent on the quality/experience of

tasks. subordinates.

Subordinates are empowered and motivated. It may be harder in a smaller firm.

It allows for better decision-making or use of It may increase workload and stress of
resources (potentially). subordinates.
 Handout – delegation
Stick into notebook and write your answers
The Lawn Butler is a garden landscaping and maintenance business, based in Utah, USA. It was set up in 1999 by Seth Kehne as a small side project
during his last year at high school. It grew rapidly and by 2010 the business saw its annual revenue doubling from the previous year and it became a
private limited company. However, by 2012, decision-making was slow because the company still had no organisational chart. Kehne was still
making all of the decisions and there was no structure or process in place for communicating with the employees.

The first thing Kehne did was to design an organisational chart for the business, reducing the number of managers reporting to him directly from 20
down to 4. Duties were clearly defined, with specific roles given to specific managers. Delegation was now encouraged. Within two years, profits at
The Lawn Butler had increased by 50%. Labour turnover dropped by 20% and employee working hours dropped by up to 10 additional hours per
week, showing real improvements in efficiency. Kehne had said that both customer and employee satisfaction was at an all-time high after using the
chart.

Questions
• Outline two possible reasons why Seth chose not to delegate before 2012. [4 marks]

• Explain two reasons why the introduction of an organisational chart would have helped to increase profits for The Lawn Butler. [6 marks]
 AO1 Knowledge and
understanding AO2 Application AO3 Analysis
Award [1 mark] for each relevant Award [1 mark] for each relevant Award [1 mark] for each relevant
point [max. 2 marks]. link to the case study [max. 2 explanation [max. 2 marks].
marks].

Question 1 Relevant points might include:

Seth may have wished to retain control of the business [AO1] because it was still a private
limited company with Seth in charge [AO2].

Seth may have feared that if he delegated tasks and responsibilities, it could result in
failure [AO1]. As the business had seen an increase in profits with him in charge, he may
have not wanted to change [AO2].

The employees may have made mistakes that would affect the reputation of the business
[AO1]. The Lawn Butler is a service provider and as such its customer reputation is
important, so Seth may want to personally monitor the standards [AO2].
Book Activity – starter
Activity 7 . 6
Page 99
Leadership styles
 Leadership styles -
Start reading from the bottom of page 99 and all of page 100

When finished reading do activity 7.7 on page 101

Be prepared to explain to the class what each leadership style is

Autocratic leadership style
Autocratic leadership occurs when leaders make all the decisions and
do not involve the employees.

Communication is one-way and delegation is not used. It is common in

emergency situations where a fast decision is often needed if there is a
health and safelt issue for example.
Democratic leadership style
Democratic leadership occurs when leaders involve employees in
decision-making.
Communication is two-way, delegation is used and managers encourage
employees to share ideas.

Common in jobs where the workers are skilled, experienced and want to
be involved in the decision making
 Laissez-Faire
Laissez-faire leadership occurs when managers allow employees
complete freedom in how they complete the tasks.

From the French for ‘let them do it’, managers set the tasks and deadlines
but completely delegate the process of completing the task to the
employees and do not get involved.

Common in creative jobs – working in advertising, design, creating new

products
Which leadership style is shown in
the pics?
Quiz
https://quizizz.com/admin/quiz/5e7ca94ab5c836001cb7b1b2/leadership
-autocratic-democratic-laissez-faire?searchLocale=
 Advantages
Disadvantages
 Advantages
disadvantages
Activity -

7.7 page 101

Starter
Consider the following situations. Which leadership style
would be the most suitable? Discuss your reasons.

• The fire service are called to a major fire, involving the

evacuation and rescue of at least 30 people from a
burning building.

• An ICT company is trying to develop a new video

game app.

• A school is trying to improve its examination results by

finding out what sort of training the staff need.
Class activity
Read the case study on page 102 and answer a, b, c and d
Trade unions
A trade union is an organisation of employees who work together to
achieve improvements in pay and working conditions for its members

https://www.youtube.com/watch?v=1SAzPoYEG0I
Trade-unions help their members by doing the following
1. Negotiating with employers to improve pay and working conditions
(this is the main role of trade unions)
2. Resolving conflict – when disagreement happens between the
employer and employees that can't be resolved amongst themselves –
the trade union will try to negotiate a solution
3. Provides legal support and advice to its members – for example if an
employees gets unfairly dismissed the trade union will provide the
employee with legal specialists so that they can take the employer to
court
 the effects of employees being union
members Positive effects
May motivate employees because they have more job
security if they are part of a group. This would
encourage employees to be more productive.
Employees would be motivated by having their social
needs met (maslow) By being a member of a union,
employees can become part of a group, which would
allow the sharing of ideas.
As being a union member gives employees greater job
security, it can lower labour turnover and therefore
reduce labour and recruitment costs in the long term.
Negative effects
Trade unions have more power to demand higher wages,
pushing costs up for the business. This could force
businesses to lose profits or to raise prices.
Industrial action - for example strikes, can generate bad
publicity, which would be negative for the business.
If there is a dispute, union members may stop producing
goods – lowering output and therefore limiting the
amount of goods and services available to customers.
This can make the business less competitive.
 Activity
Case study
Qantas and the AIPA
In 2011, the Australian and International Pilots Association (AIPA) voted to take industrial action (action taken by
employees of a company as a protest, such as going on strike or working to rule) against Qantas Airways for the first time
since 1966. With the development of new routes to Japan, Singapore and Kuala Lumpur, Qantas had decided to move
away from its traditional bases in North America and Australia and reduce costs by outsourcing much of its airline
operations to locations in Asia and New Zealand, where the wage and capital costs were lower. As a result, over 1000
employees faced redundancy. Many employees believed that their job security was under threat and union members
decided to take action.
On 29th October, pilots for Qantas went on strike and the company was forced to ground all of its flights for three days. The
airline was forced to pay for accommodation for stranded passengers and refund many flights that were subsequently
cancelled. In addition, it lost a significant amount of business to rival airlines, such as Virgin Australia. The strike failed
but Qantas did experience financial losses of AU$194 million (US$195 million).
Questions
• Explain two possible effects that the industrial action taken by the AIPA may have had on Qantas. [6 marks]
• Consider the advantages and disadvantages of allowing its pilots to become members of a trade union. Do you believe
that it is beneficial for the business? Justify your answer. [6 marks]
Activity from book
Page 104

Activity 7.8
homework
Page 105

Question 1 and 2
Revision quizlet
https://quizlet.com/hk/345817413/igcse-business-section-2-flash-cards/