BUSINESS MANAGEMENT

1. BUSINESS MANAGEMENT Unit 1 1.3 How are businesses organised?

2. Unit 1.3 WHY DO BUSINESSES EXIST? In this unit you will find out about: • Structures of a business – organisation charts • How the size of a business influences its structure • Line and lateral relationships • The functional areas of a business and how they operate • Marketing • Finance • Human Resource • Operations

3. What is an organisation chart? An organisation chart can be used the structure of an organisation or business and how it is organised. OBAN HIGH SCHOOL

4. Oban High School’s Organisation Chart: • Mr Bain is in charge of all staff in the school. • Mr MacPherson is the second in charge. He is responsible to Mr Bain and is in charge (responsible for) the other 3 Deputes. • The 3 boxes on the same line show that Mrs Leitch, Mr Mitchell and Mrs Lawson all have the same level of responsibility, and are responsible to Mr MacPherson and Mr Bain.

5. ABC PLC ORGANISATION CHART

6. Lateral and Line Relationships LINE RELATIONSHIPS: This refers to the links between bosses and the people who work for them. These lines tend to be vertical – up and down the organisation chart. LATERAL RELATIONSHIPS: This refers to the relationships between people on the same level in the chart and who have the same level of responsibility. These lines go across the chart

7. Organisation chart for Britesparks Department Store Line Relation- ship Lateral Relationship

8. What is the Chain of Command? • The chain of command refers to the lines of communications upwards and downwards from and to each of level of management. For example the way an instruction would be passed from the store manager, to the assistant manager to the Toy department manager.

9. What is the Span of Control • Span of control refers to the number of people a manager or supervisor has authority over and is responsible for.

10. Narrow Span of Control • Where managers or supervisors are responsible for a small number of people. • The Sales Manager is responsible for 2 Sales Supervisors and each Supervisor is responsible for 2 salesmen.

11. Wide Span of Control • Exists where each manager/supervisor is responsible for a larger number of people.

12. What is a Tall Structure of management • Tall management structures have many levels of management • Managers have a narrow span of control – they supervise a small number of staff. • They have authority over a small number of staff • Employees may not be able to show initiative • Communication between levels can take a long time

13. Example of a Tall Structure

14. What is a Flat Management Structure? • Flat management structures have fewer levels of management • Managers have a wide span of control – they supervise a large number number of staff. • They have authority over a large number of staff • Employees have the opportunity to show initiative • Communication between levels is quicker

15. Example of Flat Management Structure

16. TALL STRUCTURES Army Police Hospital Government FLAT STRUCTURES Bus Company Employment Agency Farm Charitable organisation EXAMPLES OF TALL AND FLAT ORGANISTION STRUCTURES

17. Responsibility means being answerable for actions and decisions taken by oneself and/or others. Most people have some responsibility, but it does not mean that they have authority. Authority means having the power/right to take certain actions and to delegate work to others. It also means having authority over staff. People with authority always have responsibility. Responsibility V Authority

18. FUNCTIONAL AREAS OF A BUSINESS The four functional departments found in a business are:

19. Functional relationships exists between departments When one department offers a direct service to other departments it is said to have a functional relationships with that departments.

20. Other departments in a business • Other departments will offer support to the whole business. These include: Administration – reception, record keeping, file management, word processing ICT – maintaining and purchasing computers, installing software, training staff,

21. Marketing Department Marketing can be defined as: Selling goods/services to customers which satisfy their needs and are of a quality such that the customer comes back but the goods do not!” This involves: • Market research • Product development • Advertising and promotion

22. about the product or service and its market what to produce how much to charge how to persuade people to buy it where to sell it how to get the best mix of the above how to deal with customers Market research Product Price Promotion Place Marketing Mix (4 p’s) Public Relations Functions of the Marketing Department Marketing involves the following range of activities: Knowing:

23. Market Research This involves the gathering, recording and analysing Information about the possible market for a good or Service. Market Research can be carried out in 2 ways: Desk Research Field Research

24. Desk Research This involves the use of information which already exists from: • Government statistics eg Census carried out every 10 years • Newspapers • Magazines • Published market research information • Reports from journals showing trends

25. When will desk research be used? Desk research will be used when: • Market information already exists Because: • It is cheaper to access information rather than generate new information • It is easier to access – therefore saving time

26. What is Field Research? This is when companies/organisations find out information for their own use – ie they ask people. Field Research can be carried out through: • Use of questionnaires – either face to face, but telephone, or by post • Test marketing – trying out the product on a small section of the market • Consumer Panel – a group of people are given a product and asked to try it and then comment on it in detail

27. Operations Department Operations can be defined as “The transformation of raw materials into a finished product - design, production and distribution This can be: • A physical product, for example a pair of training shoes; • A service, for example an insurance property. All businesses/organisations require to perform some kind of operation in order to carry out their business.

28. Example of Operations STAGE Making Shoes Offering an Insurance Policy Cut leather Customer query 1 2 Stitch together Find details 3 Add sole Provide quote 4 Package Complete forms 5 Store in warehouse Receive payment 6 Deliver to customer Issue Policy Whether you offer a good or a service you must follow a number of stages. This is called the OPERATIONS FUNCTION.

29. Human Resources Department The Human Resources Department has a functional relationship with all other departments. It is responsible for: • recruiting staff for all other departments • Looks after the welfare of all staff employed by the organisation • Keeps staff records • Organising Staff appraisal • Conditions of service

30. FINANCE DEPARTMENT The Finance Department is responsible for controlling the money coming into the business and going out of the Business. The Finance Department gets its funds from the buyers of the organisation’s goods or services.

31. Finance Department The Finance Department has a functional relationship with all other departments. It is responsible for: • recruiting staff for all other departments • Looks after the welfare of all staff employed by the organisation • Keeps staff records • Organising Staff appraisal • Conditions of service