A Level Business Revision Notes PDF

A level Business Unit 2 chapter 13: Organizational structure What is organizational structure? The way in which a company or organization is organized, including roles responsibilities and relationships between people (employees) Delegation...

A level Business Unit 2 chapter 13: Organizational structure What is organizational structure? The way in which a company or organization is organized, including roles responsibilities and relationships between people (employees) Delegation Interpersonal Mintzberg Informational Decision making Basic terminology: span of control: The number of employees directly managed by one supervisor or manager. - narrow: less people to manage, easy to monitor, easy to communicate, easy to evaluate and assess work. - broad: vice versa Ethical method =>evaluate employees on Broad Narrow performance/productivity Unethical => employee favoritism/ Discrimination and unfair dismissal A broad span of control allows less stress on employee as the workload is reduced on every employee as a result of a wider span of control, however if a narrow span of control is introduced a single employee will have a greater workload than Before resulting in much more pressure on employees  chain of command: The Line of authority within an organization that defines who reports to whom. Long chain of command Short chain of command Faster communication Quick decision making slow communication Slow decision making Level of hierarchy: the different layers of management and staff within an organization, form top executives down to the lowest level employees Promotion (good) Demotion (bad) Accountability delegation: The process of assigning Responsibility and authority to someone else to carry out a specific task Accountability: The obligation to explain, justify, And take responsibility for one’s actions Managers: line managers: Directly manage core operations and employees, focusing on achieving departmental goals. Staff managers: provide specialized support and expertise to line managers, focusing on strategic and administrative functions  project managers: manages specific projects, coordinating resources and efforts across various departments to achieve project-specific goals Hierarchical structures: Advantages Clear chain of command: provides a clear line of authority and responsibility Defined roles: Employees Know their specific roles and duties, leading to organized workflows Opportunities for advancement: Clear structure for career progression and promotion Disadvantages Slow Decision-making: Decisions need to pass through multiple levels, which can slow down process Rigidity: Can be inflexible and resistant to change Communication Barriers: Information may get distorted as it moves up and down the hierarchy Functional structure (Departmental structure) An organizational structure that groups employees based on their functions or departments, such as marketing, finance and production  Advantages * Specialization: Employees become experts in their specific functions * Efficiency: Streamlined Processes within each department can lead to high efficiency * Clear career path: Employees have a clear path for advancement within their function Disadvantages * Silo mentality: Departments may not communicate well with each other, leading to a lack of coordination * Limited viewpoint: Employees may focus only on their departments goals rather than the organizations overall objectives * Duplication of Effort: Different departments might work in similar tasks independently, leading to inefficiencies Product based structure An organizational Structure where the company is divided into units based on different products or product lines, each with its own functions  Advantages * Focus on product lines: Each product line has dedicated resources and management * Flexibility: Can quickly respond to market changes and customer needs for each product * Accountability: Clear responsibility for product performance Disadvantages Resource duplication: Multiple product lines may duplicate functions and resources Internal competition: Product lines might compete for resources and attention Complexity: managing multiple product lines can be complex and challenging Matrix structure An organizational structure that combines 2 or more types of structures, Typically functional and product-based, to leverage the benefits of both. Finance HR (6) Marketing (7) Operations Project manager A 3 4 3 4 4 Project manager B 2 KLMNOPQ ABCDEF Unused and duplication of results and competition Duplication of resources and competition  NOTE: Managers and employees in a hierarchical, Functional and product based business structures do not choose who they work with ONLY in a MATRIX structure do the employees and managers have choice with whom they work with Additionally matrix structures are temporary structures which are meant for a specific project within a business Advantages Flexibility: Combines the strengths of functional and product based structures, allowing adaptability Efficient use of Resources: Resources can be shared across projects and departments Enhanced communication: Encourages collaboration and communication between different departments Disadvantages Dual Authority: Employees may have to report to 2 or more managers, leading to confusion and conflicts. Complexity: Managing a matrix structure can be complicated and challenging Power struggle: Potential for conflicts between managers over resources and priorities Centralization and decentralization Decision Strategic decision Long term Operational decision Departmental based Tactical decision Ground level  Centralization A structure where decision making authority is concentrated at the top levels of management Decentralization A structure where decision making authority is distributed throughout various levels in the Organization, allowing lower levels to make decisions Centralized organizational structure Advantages Consistent decisions: Uniformity in decision-making as decisions are made from a central point Control: Greater control over operations and policies Clear directions: clear, focused direction and strategy from top management Disadvantages Slow response: Decision-making can be slow, as it needs to pass through the central authority Reduced innovation: Less autonomy for lower level employees can stifle creativity and innovation Bureaucracy: Can lead to bureaucratic inefficiencies and red tape  Decentralization organizational structure Advantages Faster decision making: Decisions can be made quickly at lower levels Empowerment: Employees feel more empowered and motivated with greater responsibility Adaptability: More responsive to local conditions and changes in the environment Disadvantages Inconsistent decisions: Potential for inconsistent decisions across different departments or regions Coordination challenges: can be challenging to ensure all parts of the organization are aligned with overall strategy Resource duplication: risk of duplicating efforts and resources across different units Delegation Advantages Empowerment and development: Empowers employees and helps in their professional development Efficiency: Frees up managers to focus on higher level tasks and strategic planning Increased motivation: Employees may feel more trusted and motivated when given responsibilities  Disadvantages Risk of management: if not properly managers, delegation can lead to errors and mismanagement Accountability: Difficulties in holding employees accountable for delegated tasks Training needs: Employees may require additional training to handle delegated responsibilities effectively Factors affecting organizational structure ( this section is essential for evaluation) The organizational goals and strategies Size of organization Nature of a business external Environment ( Market condition, Competition and regulations) Organizational culture Management style Employee skills and capacity Unit 2 Chapter 14 Business Communication Communication is effective only if the message has been received and understood by the receiver, and the sender knows that it has been understood Methods of communication Spoken Written communication Electronic communications Visual communication  Spoken Advantages Immediate feedback: Allows for real-time interaction and instant feedback Personal touch: Builds rapport and fosters personal relationships Disadvantages No record: Lacks of permanent record, making it hard to refer back to Misinterpretation: Non-verbal cues can be misinterpreted When appropriate: During meetings, interviews, or negotiations where real time interaction is crucial When building relationships and addressing sensitive issue Written Advantages Permanent record: provides a documentated record that can be referred to later Clarity and precision: Allows time to carefully choose words and structure Disadvantages Time-consuming: Takes time to draft, review, and revise. Delayed feedback: Does not allow for immediate feedback When appropriate For formal communications such as contacts, reports, and memos When detailed instructions or records are needed  Electronic communication Advantages Speed: Allows for instant communication across distances Convenience: Easy to use and accessible from various devices Disadvantages Information overload: Can lead to an overwhelming amount of messages Security risks: Potential for data breaches and privacy issues When appropriate For quick updates, emails and online meetings When needing to communicate with remote teams or distribute information widely. Visual communication Advantages Engagement: Captures attention and can be more engaging than tectonic. Simplification: Can simplify complex information through diagrams, charts and images Disadvantages Misinterpretation: Visuals can be misinterpreted without accompanying text Cost and time: Creating high-quality visuals can be time- consuming and expensive When appropriate For presentations, training materials and marketing content When needing to explain complex data or ideas clearly  Formal channels of communication One way communication Two way communication Horizontal communication Vertical communication Problems with one way communication The receiver cannot question the meaning of the message or ask for further explanation There is no discussion between the sender and receiver The sender is not sure that the message has been received , understood and acted upon It is usually associated with authoritarian managers Problems with two way communication It is time consuming and employees may have to stop work to attend meetings It may be inappropriate for some messages that give clear information that cannot be argued with and requires no discussion Horizontal communication Advantages collaboration: promotes teamwork and collaboration among peers Problem solving: Facilitates quick resolution of issues at the same organizational level Disadvantages informal spread of information: can lead to rumors or incomplete information spreading Conflict: Potential for conflicts if not managed properly  When appropriate For coordinating tasks and projects among team members When encouraging peer-to-peer learning and collaboration Vertical communication Advantages clarity: Clear chain of command and responsibility Alignment: ensures alignment its organizational structures Disadvantages Bureaucracy: Can be slow due to multiple levels of approval Distortion: information may get distorted as it moves up or down the hierarchy When appropriate For communicating organizational policies, goals and directives When providing performance feedback or reporting issues to higher management Barriers of communication Differences in language or vocabulary can cause misunderstandings Different cultural backgrounds can lead to misinterpretations Environmental factors such as noise, distance or physical separation Emotions such as anger or stress can affect communication Too much information can overwhelm and confuse recipients Absence of response or feedback can lead to misunderstandings  Solutions to barriers use simple language an provide translations if necessary Promote cultural awareness and sensitivity training foster a culture of open communication tools and streamline organizational process Encourage regular feedback and confirm understanding Promote emotional intelligence and provide support to managers Informal communication Advantages Speed and flexibility: allows for quick and flexible communication Relationship building: Fosters a more personal and relaxed communication environment Disadvantages Lack of documentation: informal communication are often not recorded Potential for miscommunication: can lead to misunderstandings or incomplete information When appropriate For casual conversations, networking and team building activities When fostering a collaborative and open workspace culture Factors affecting Trust and credibility perception and attitude Time constraints Emotional state Organizational policies Feedback mechanism interpersonal relationship  Unit 2 Chapter 15 - Leadership Leadership Leadership is the Process of influencing and guiding individuals or groups towards achieving common goals. It involves setting a vision, inspiring, and motivating people and making strategic decisions to drive an organization forward Informal leadership Informal leadership refers to the ability of an individual to influence and lead others without having an official leadership title or position. Informal leaders gain their influence through personal attributes, expertise, or relationships rather than formal authority The great man theory The great man theory is a leadership theory that suggests leaders are born with inherent traits and qualities that make them effective leaders. According to this theory: - The ability to lead is inherent and cannot be taught - leaders are just born with the right traits and abilities for leading: Charisma, Intellect, Confidence, communication skills and social skills - Leaders are viewed as heroic, intelligent and destined to rise to leadership when the situation arises.  Trait theory Trait theory suggests that effective leaders possess specific characteristics or traits that distinguish them from non-leaders. These traits can include qualities such as: Initiative Determination and energy Good judgment and decision making skills Flexibility Creativity Charisma Emotional intelligence Drive and motivation to succeed Confidence, honesty and Integrity Behavioral theory It focuses on the behaviors and actions of leaders rather than traits or characteristics. It suggests that effective leadership is based on learned behaviors and can be developed through training and experience Behavioral theory suggests that a leader uses three sets of skills to lead their followers technical skills (knowledge of the business process or technique Human skills (Ability to interact with people) Conceptual skills ( ability to create new ideas to solve problems)  Contingency Theory contingency Theory asserts that’s there is no single best way to lead. Instead, effective leadership depends on the context and specific situational factors. Leaders must adapt their style and approach to the circumstances and the needs of their followers Factors may include Levels of experience and maturity of the subordinates The relationship between leader and followers Amount of time needed to complete the task The level of power of the leaders position Power and influence theory Power and influence theory explores how leaders use different forms of power and Influence to achieve their goals and motivate their followers. This theory examines the sources of power (e.g. positional, personal) and the tactics leaders use to exert influence. Sources of personal power Expert knowledge of the leader Charm of the leader Source of positional power Transactional leadership ( give something get something) Transactional leadership is a management style where leaders reward or punish employees based on their performance. Leaders set clear goals, and workers are motivated by incentives for meeting them or consequences for not. This approach focuses on tasks, structure, and short-term results. Transformational theory Transformational Theory, also known as transformational leadership, describes a leadership style where leaders inspire and motivate followers to achieve extraordinary outcomes and, in the process, transform both the leader and the followers. The transformational leader demonstrate the importance of Charisma in influencing subordinates Inspiring workers towards achieving the leaders Vision Stimulation in the working environment but offering new challenges for employees Understanding individual needs of each team member Emotional intelligence Emotional intelligence is the ability to recognize, understand, manage and influence one’s own emotions and the emotions of others 4 main EI Competencies that managers should try to develop and improve on: Self awareness - Knowing what we feel ourselves and using that to guide the decision-making, having a realistic view of our own abilities and having self confidence Self management - being able to recover quickly from stress, being trustworthy and conscientious, showing initiative and self control Social awareness - sensing what others are feeling, being able to take their views into account, being able to get on with a wide range of people Social skills - handling emotions in relationships well, accurately understanding different social situations, using social skills to persuade, negotiate and Lead EI Self Social Awareness Management Skills Awareness Unit 2 Chapter 16 - HRM Startegies Approaches to HRM HRM ( Human Resource Management) Strategies are plans and actions designed to integrate and align the management of Human Resources with strategic goals and objectives of an organization These strategies encompass areas such as Recruitment Compensation Training Employee relations Performance management To ensure the organization attracts, develops and retains the talent needed for success. Hard and Soft HRM Hard HRM is an approach to a human resource management that emphasizes the quantitative, calculative and business-strategic aspects of managing people. It views employees primarily as resources to be managed to achieve organizational goals, focusing on control, efficiency and cost effectiveness Soft HRM is an approach to human resource management that emphasizes the qualitative, developmental and employee-centered aspects of managing people. It views employee as valuable assets and focuses on their development, motivation and well-being to achieve long term organizational success. Employment contracts Employment contracts are formal agreements between employers and employees that outline the terms and conditions of employment. These contracts typically include details about the job responsibilities, compensation, benefits, work hours and termination procedures and they provide legal protection for both parties. Receives all benefits Types of contracts : Permanent and full-time contracts (36+ hours) Part time, temporary or zero hours contracts Receives No benefits Shamrock organization  Core managerial and technical employees, who must be offered full-time, permanent contracts with competitive salaries and benefits Outsourced functions fulfilled by independent providers or for workers, who may once have been employed by the company Flexible workers on temporary and part time contracts, who are called on when the situation demands their labor Flexible employment contracts Flexitime arrangements Home working Annualised hours contracts Job Sharing compressing working hours Shift work Employee measurement Measurement, causes and consequences of employee performances Labour productivity Absenteeism Wastage rate ( the proportion of materials that are wasted and the proportion of total output that is damaged) Quality levels and reject rates ( Proportion of output that is of unacceptable quality) Consumer complaints as a proportion of total customers served Comparing an individuals performance against pre-set targets  Strategies for improving employee performance Hard HRM strategies — Target driven incentives — Cost Control Measures — Short term contracts — Standardized training programs Soft HRM strategies — Employee development programs — Flexible working arrangements — Comprehensive Employee Benefits — Focus on work life balance — Recognition and reward system — Participative decision making Management by objectives (MBO) Management by objectives (MBO) is a management approach where managers and employees collaboratively set specific, measurable goals for a defined period. Performance is then measured and assessed based on the achievement of these objectives. Advantages Provides clear, measurable goals for employees and managers, which helps in aligning individual objectives with organizational goals. Facilitates better performance evaluation by setting specific criteria for success Encourage communication and collaboration between managers and employees in setting and reviewing objectives  Disadvantages setting and reviewing objectives can be time consuming for both managers and employees. Can lead to rigidity, with employees focusing narrowly on set objectives and neglecting other important tasks May emphasize Quantitative goals over qualitative aspects such as creativity, teamwork and employee satisfaction IT in HRM Changing role of IT & AI in HRM Keeping employee records on databases Recording flexible work schedules and holidays on planning software Recent IT application in HRM Recruitment Training and employment employee performance management Future of IT and AI in HRM AI and interview AI chat-bot and employee queries AI and facial or biometric tracking Evaluation of increased use of IT in HRM The Use of IT frees up HRM time for more important strategic issues. It can reduce social and personal contact between HRM and employees and make the HR managers seem remote