Cambridge A Level Business 9609: Unit 7 Full Notes (Expanded)

7.1 Organisational Structure

7.1.1 Relationship Between Business Objectives and Organisational Structure

Organisational structure: The formal system that outlines how tasks are divided, coordinated, and
supervised within a company. It defines roles, responsibilities, communication flow, and decision-
making authority.

Purpose and Attributes:

 Flexibility: The structure should be adaptable to changes in the internal and external
environment. For instance, during a crisis or rapid market change, a flexible structure enables
faster decision-making and adaptation.

 Meeting the Needs of the Business: The structure must reflect the company’s size,
objectives, and strategy. For example, a start-up might need a flat structure to promote fast
decision-making.

 Allowing for Growth and Development: A scalable structure enables expansion into new
markets, product lines, or geographical areas.

 Encouraging Intrapreneurship: Flat structures with fewer layers promote creativity,

autonomy, and employee engagement, which are essential for fostering intrapreneurship
(entrepreneurial behaviour within an organization).

7.1.2 Types of Organisational Structures

1. Functional Structure:

 Organises employees by business functions (e.g., marketing, finance, HR).

 Advantages:

o Specialisation improves efficiency.

o Clear roles and responsibilities.

o Easy supervision within departments.

 Disadvantages:

o Poor communication across departments.

o Coordination issues in cross-functional activities.

o Can lead to departmental silos.

2. Hierarchical Structure:

 Organised in layers with a clear chain of command.

o Flat: Few levels, wide span of control.

o Tall (Narrow): Many levels, narrow span of control.

  Advantages:

o Clear reporting lines.

o Easy to manage large organisations.

 Disadvantages:

o Slower communication in tall structures.

o Flat structures can lead to overloaded managers.

3. Matrix Structure:

 Combines functional and project-based structures. Employees report to both functional and
project managers.

 Advantages:

o Improves interdepartmental collaboration.

o Efficient use of resources.

o Flexible and dynamic.

 Disadvantages:

o Dual authority can create confusion.

o Complex to manage.

Structures by:

 Product: Divided by product lines. Suitable for diversified product offerings.

 Function: Grouped by department. Works well for focused, single-product businesses.

 Geographical Area: Ideal for multinationals with operations in various regions.

Reasons for Structure Change:

 Business expansion.

 Cost reduction (e.g., through delayering).

 Introduction of new technology.

 Mergers or acquisitions.

Features of a Formal Structure:

 Levels of Hierarchy: Number of layers in the organisation.

 Chain of Command: Path through which decisions and communication flow.

 Span of Control: Number of people one manager supervises.

 Responsibility: Being assigned a task.

 Authority: Power to make decisions.

  Delegation: Assigning authority to subordinates.

 Accountability: Being answerable for outcomes.

 Centralisation: Decisions made at the top level.

 Decentralisation: Decision-making spread across various levels.

7.1.3 Delegation and Accountability

Delegation: Transfer of authority and responsibility to another person to carry out specific activities.

Accountability: Obligation to report and be answerable for results.

Relationship: Delegation involves giving responsibility to subordinates, but accountability remains

with the manager.

Advantages of Delegation:

 Frees up senior management time.

 Develops employee skills and confidence.

 Faster decision-making.

 Improves motivation and job satisfaction.

Disadvantages of Delegation:

 Risk of poor performance if not trained.

 Possible lack of control.

 Confusion if authority is unclear.

7.1.4 Control, Authority and Trust

Span of Control vs Levels of Hierarchy:

 Wide span: Manager supervises many; faster communication but harder to control.

 Narrow span: More control, closer supervision, but slower decision-making.

Authority vs Responsibility:

 Authority: Power to make decisions.

 Responsibility: Obligation to complete a task.

 One should not be given responsibility without authority.

Control vs Trust Conflicts:

 Too much control reduces innovation.

 Too much trust can result in poor performance if accountability is weak.

 Balancing both ensures effective management.

7.1.5 Centralisation and Decentralisation

Centralisation: Decision-making is retained at senior levels.

 Advantages:

o Uniformity and consistency.

o Easier to control and coordinate.

o Strong leadership.

 Disadvantages:

o Local needs might be ignored.

o Slower decision-making.

Decentralisation: Decision-making is distributed to lower levels.

 Advantages:

o Faster response to local conditions.

o Empowers staff.

o Improves motivation.

 Disadvantages:

o Potential inconsistency.

o Less control by senior management.

7.1.6 Line and Staff

Line Functions: Directly related to core business (e.g., production, sales).

Staff Functions: Provide advice and support (e.g., HR, IT).

Conflicts:

 Line managers may feel undermined by staff.

 Miscommunication can cause inefficiencies.

7.2 Business Communication

7.2.1 Purposes of Communication

Communication is essential for:

 Delegating tasks.

 Setting goals.

 Motivating employees.

 Decision-making.

 Managing performance.
  Building relationships internally and externally.

7.2.2 Methods of Communication

1. Spoken: Face-to-face, meetings, phone.

 Advantages:

o Instant feedback.

o Personal and persuasive.

 Disadvantages:

o No permanent record.

o Can be misunderstood.

2. Written: Letters, reports, emails.

 Advantages:

o Documented.

o Can be referenced later.

 Disadvantages:

o Time-consuming.

o No immediate feedback.

3. Electronic: Emails, messaging apps, video calls.

 Advantages:

o Fast and efficient.

o Can be done remotely.

 Disadvantages:

o Technical issues.

o Overuse can lead to information overload.

4. Visual: Charts, graphs, infographics.

 Advantages:

o Easy to understand complex data.

 Disadvantages:

o Might need explanation.

7.2.3 Channels of Communication

Vertical Communication: Between different levels.

Horizontal Communication: Between same-level individuals.
One-Way Communication: No feedback expected (e.g., notice).
Two-Way Communication: Feedback is encouraged (e.g., meetings).

Problems with Channels:

 Message distortion.

 Delays.

 Lack of clarity.

7.2.4 Barriers to Communication

Barriers Include:

 Language differences.

 Noise/distractions.

 Poor listening skills.

 Use of jargon.

 Lack of trust.

Overcoming Barriers:

 Use clear, simple language.

 Active listening.

 Provide feedback opportunities.

 Training and development.

7.2.5 Role of Management in Communication

Roles Include:

 Choosing the right methods.

 Ensuring message clarity.

 Encouraging feedback.

 Monitoring communication effectiveness.

Influence on Efficiency:

 Clear communication reduces errors.

 Motivates employees.

 Improves coordination and performance.

7.3 Leadership

7.3.1 Purpose of Leadership

  Provide direction and vision.

 Motivate and guide employees.

 Maintain morale.

 Ensure coordination.

Leadership Roles:

 Directors: Make long-term strategic decisions.

 Managers: Implement plans and supervise departments.

 Supervisors: Oversee daily activities.

 Worker Reps: Represent workforce in decision-making.

Qualities of a Good Leader:

 Communication skills.

 Integrity.

 Confidence.

 Visionary thinking.

 Decision-making ability.

7.3.2 Theories of Leadership

 Trait Theory: Leaders are born, not made (focuses on characteristics).

 Behavioural Theory: Effective leadership can be learned (focuses on actions).

 Contingency Theory: Best style depends on the situation.

 Power and Influence Theory: Leaders derive authority from formal position or personal
traits.

 Transformational Theory: Leaders inspire change by motivating followers to exceed

expectations.

7.3.3 Emotional Intelligence (EQ)

Goleman’s Four Competencies:

1. Self-Awareness: Recognising one's emotions.

2. Self-Management: Managing impulses and moods.

3. Social Awareness: Understanding others' emotions.

4. Social Skills: Managing relationships effectively.

High EQ is associated with better leadership and employee relations.

7.4 Human Resource Management (HRM) Strategy

7.4.1 Approaches to HRM

Hard HRM:

 Treats employees as cost.

 Focus on output and efficiency.

 Little communication.

 Advantages:

o Cost-effective.

o Easy to control.

 Disadvantages:

o Low motivation.

o High turnover.

Soft HRM:

 Employees are valued assets.

 Focus on development and motivation.

 Advantages:

o Higher morale.

o Better performance.

 Disadvantages:

o Costlier.

o Time-consuming.

Flexible Working Contracts:

 Advantages:

o Reduces fixed costs.

o Increases adaptability.

 Disadvantages:

o May reduce loyalty.

o Difficult to coordinate schedules.

Measurement of Poor Performance:

 KPIs, attendance, customer complaints.

Causes:

 Poor management.
  Inadequate training.

 Low morale.

Consequences:

 Reduced productivity.

 Increased absenteeism and turnover.

Strategies for Improvement:

 Training and development.

 Appraisal systems.

 Incentives and rewards.

 Better leadership.

Management by Objectives (MBO):

 Process of setting goals collaboratively.

 Progress reviewed regularly.

 Advantages:

o Clarity of goals.

o Motivates employees.

 Disadvantages:

o Time-consuming.

o May ignore long-term vision.

Role of IT and AI in HRM:

 IT: E-recruitment, training platforms, data analysis.

 AI: CV screening, chatbot interviews, performance tracking.

 Benefits:

o Efficiency.

o Data-driven decisions.

 Challenges:

o Privacy issues.

o Over-reliance on tech.