Business Structure and Management Hierarchy

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary purpose of a business hierarchy?

To eliminate the need for management

To establish ranking based on status and authority (correct)

To create informal communication channels

To encourage horizontal movement among employees

In a chain of command, complaints always flow downwards.

False

What does the term 'span of control' refer to?

The number of subordinates a manager is responsible for.

A business with many subordinates under one manager will have a ___ hierarchy.

tall Signup and view all the answers

Which of the following describes decentralisation in a business?

The organization is divided into different regions with separate budgets. Signup and view all the answers

Match the terms with their definitions:

Hierarchy = A system of ranked status and authority Chain of command = Flow of information and authority in an organization Span of control = Number of subordinates a manager oversees Centralisation = Management is organized at a central office Signup and view all the answers

A wide span of control generally results in a tall hierarchy.

False Signup and view all the answers

What is the primary disadvantage of a tall hierarchy?

Limited autonomy for employees due to many management layers. Signup and view all the answers

What is the primary characteristic of centralisation in an organisation?

Key decisions are made at the Head Office. Signup and view all the answers

Decentralisation allows lower levels of management to make key decisions.

True Signup and view all the answers

Where are recruitment and account decisions carried out in a centralised organisation?

Head Office Signup and view all the answers

In decentralisation, divisions manage their own ________ and make relevant decisions.

budget Signup and view all the answers

Match the following terms with their descriptions:

Centralisation = Less delegation and decisions made at Head Office Decentralisation = Divisions operate independently without a Head Office Authority = Power to make decisions at local levels Branches = Locations that implement decisions from Head Office Signup and view all the answers

What significant advantage does decentralisation provide in dynamic markets?

It enables quicker decisions without central approval. Signup and view all the answers

Branches can make major decisions under a centralised structure.

False Signup and view all the answers

Which division holds its own budget when decentralised?

African division Signup and view all the answers

Study Notes

Structure in Business

Hierarchy: A business structure where employees are ranked according to status and authority. Higher levels traditionally hold more importance and authority than lower levels. Employees often seek upward movement in hierarchy to increase salary and improve working conditions.

Chain of Command

Flow of Information and Authority: The chain of command outlines the flow of information, power, and authority in a business. Those at higher levels have greater power and authority.
Delegation: Higher levels delegate tasks to lower levels in the hierarchy.
Flow of Communication: Complaints and status reports flow up the chain, while orders flow down. Both should be handled at the lowest possible level in the chain.

Span of Control

Defined Number: Span of control represents the number of subordinates a manager is responsible for.
Example: A Head of Department in a school might have 6 teachers reporting to them, therefore their span of control is 6.
Subordinate Delegation: This number defines how many subordinates a manager can effectively delegate to.
Hierarchy and Specialization: Small spans of control often lead to taller hierarchies and highly specialized jobs.
Flat Structure and Responsibility: Large spans of control result in flatter hierarchies and greater responsibility for employees

Decentralisation and Centralisation

Decentralisation: A business structure where the organization is divided into areas (e.g., North, South, East, West; UK, Europe, Africa) and each area has its own budget.
Centralisation: A business structure where the organization's management and administration are concentrated in one central head office. All areas share one central budget.
Geographic Decentralisation: Business divisions operating in different geographical locations without a single head office.
Centralisation Decisions: Key decisions are made at the central head office.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Explore the essential components of business structure, including hierarchy, chain of command, and span of control. This quiz will test your understanding of how authority and communication flow within an organization and the impact of these structures on management effectiveness.