2.2 Ways Businesses Structure the Working Environment

Question 1

Why is it important for businesses to have organizational structures?

Answer 1

Organisation structure = how a business
organises their employees
 An organisation structure determines:
- Who does what
- Who is responsible for whom and for what
- Who makes the decisions

Question 2

What is the hierarchical organizational business structure?

Answer 2

*Large businesses tend to use the hierarchical structure (also known as the vertical structure).

Features:
* Employees are arranged into layers and levels from senior management

*Positions, roles and responsibilities are clearly identifiable

• Span of control (number of employees reporting to a manager) is clearly defined
• Centralized decision-making (most decisions are made by senior management)

Question 3

What is the flatter organizational business structure?

Answer 3

• Smaller businesses tend to use the flatter structure.

Features:
* Improved communication due to fewer layers of staff

• Employees are now involved in the decision making
• Increased use of employee knowledge, skills and experience
• Workers feel greater levels of empowerment and motivation

Question 4

What is the network organizational business structure?

Answer 4

Features:
* Functions are outsourced (outside the company)

• Flexible and can adapt to changes in consumer
  demand and choice

Question 5

What is the matrix organizational business structure?

Answer 5

*Often used when businesses are undertaking a project or an assignment

Features:
* Forms a team of specialists from different functional areas (e.g. marketing, finance)

• Improved communication channels
• Interdepartmental rivalries (competition between departments are reduced
• Increased number of innovations being put forward due to the ‘cross-pollution’ of ideas