Business Organisation and Structure

Business organisation and structure

Having studied this chapter you will be able to:

• Ascertain the appropriate organisational structure for different types and sizes of business.

• Understand the concepts of span of control and scalar chains.

• Appreciate the differing levels of strategy in an organisation.

In a nutshell:

This chapter lays the foundation for an understanding of what organisations are, what they do and how they do it.

Business Context

Appreciating why organisations are structured in different ways will help with an understanding of how they should be managed.

Why does the organisation exist?

(a) Organisations overcome people's individual limitations, whether physical or intellectual

(b) Organisations enable people to specialise in what they do best

(c) Organisations save time, because people can work on together or do two aspects of a different task at the same time

(d) Organisations accumulate and share knowledge

(e) Organisations enable synergy: by bringing together two individuals their combined output will exceed their output if they continued working separately

In brief, organisations enable people to be more productive.

1 Organisations

1.1 Definition - 'An organisation is a social arrangement which pursues collective goals, which controls its own performance and which has a boundary separating it from its environment'. Boundaries can be physical or social.

1.2 Key categories:

• Commercial

• Not for profit

• Public sector

• Charities

• Trade unions

• Local authorities

• Co-operative societies

Lecture example 1:

Identify a 'real-world' example of the above categories of organisation.

Solution:

Organisations owned or run by the government (local or national) or government agencies are described as being in the public sector. All other organisations are classified as the private sector.

Limited liability

1.3 Limited companies (denoted