IGCSE Business Studies - 2.2.1 Simple Organisational Structures
IGCSE Business Studies - 2.2.1 Simple Organisational Structures
Objective: Interpret Simple Organisational Charts
What is an Organisational Chart?
An organisational chart is a diagram that shows the different roles and levels within a business. It illustrates the hierarchy of authority and reporting relationships. It helps everyone understand who reports to whom and the overall structure of the organisation.
Types of Simple Organisational Structures
There are a few basic simple organisational structures. The most common are:
Line Organisation: A straightforward structure where authority flows directly from the top down.
Functional Organisation: Groups employees based on their specialist skills or functions (e.g., marketing, finance, production).
Line and Functional Organisation: Combines elements of both line and functional structures.
Line Organisation in Detail
In a line organisation, there is a clear chain of command. Each employee reports to their direct superior, and this continues up to the top of the organisation. This structure is simple and easy to understand.
Suggested diagram: A simple line chart showing a CEO at the top, followed by managers, and then employees.
Position
Reports To
CEO (Chief Executive Officer)
N/A (Top of the hierarchy)
Department Manager
CEO
Team Leader
Department Manager
Employee
Team Leader
Functional Organisation in Detail
A functional organisation groups employees with similar skills and roles together. For example, all marketing staff will be in the marketing department, all finance staff in the finance department, and so on.
Suggested diagram: A chart showing different departments (e.g., Marketing, Finance, Production) with managers leading each department and reporting to a CEO.
Department
Position
Reports To
Marketing
Marketing Manager
CEO
Finance
Finance Manager
CEO
Production
Production Manager
CEO
Line and Functional Organisation in Detail
This structure combines the benefits of both line and functional organisations. Employees report to a line manager for day-to-day tasks, but they may also have specialist expertise and report to a functional manager for advice and guidance.
Suggested diagram: A chart showing a line manager overseeing team members, with functional managers providing specialist support to specific team members.
Interpreting Organisational Charts
When looking at an organisational chart, consider the following:
Chain of Command: Follow the lines to see who reports to whom.
Number of Layers: A longer chain of command might indicate a larger organisation.
Departmental Structure: Identify the different departments within the organisation.
Reporting Relationships: Understand who is responsible for what.
Advantages and Disadvantages of Simple Structures
Advantages:
Clear lines of authority
Simple to understand
Quick decision-making (especially in line structures)