Page 92 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 2 People in business

Chief Executive
(CEO)
Human Operations Research and
Finance Marketing
Director Resources Director Management Development
Director Director Director
Recruitment Training Sales Manager Sales Manager Factory
Accountant R & D Manager
Manager Manager (North) (South) Manager
Credit Recruitment Training Supervisor Supervisor
Controller Cashier Administrator Administrator 6 Sales staff 4 Sales staff Team A Team B 3 R & D staff

11 Production 5 Production
workers workers

Figure 7.2 Detailed organisation chart

Simple hierarchical structures
Figure 7.2 shows a simple hierarchical structure. The main features of this

organisational structure are:
■ hierarchy
■ chain of command
■ delegation
■ span of control.

Hierarchy
90

KEY TERM This describes the different levels in an organisational structure. In Figure 7.2, each

of the five levels of the organisational structure is represented by a diff erent colour.
Hierarchy: the number of levels Production workers are at the lowest level of the hierarchy and the Chief Executive
in an organisational structure.
is at the top level. In larger organisations as you move from the top to the bottom

of the hierarchy there are more and more people at each level. This is because it is
not possible for one person or a group of senior managers to control the work of all
employees. Middle managers, and perhaps supervisors below them, are needed to
control employees.
The tasks become simpler as you move down the hierarchy so a wider span of

control is possible at the bottom than it is at the top. People who are on the same
level in the organisational structure have the same status. For example, in Figure 7.2
the Accountant, Training Manager and Factory Manager are of equal status.

There are many levels to an
organisation’s structure