Page 96 - Cambridge IGCSE Business Studies

Cambridge IGCSE Business Studies Section 2 People in business

Flat organisations have few levels of hierarchy, which means the chain of
command is very short. Communication and decision-making are much quicker in
a flat structure because there are very few levels for these to pass through. Th ere are

fewer managers in a flat structure so the span of control is wide. An example of a
flat organisational structure is shown in Figure 7.5.

1

2 2 2 2 2 2 2

Figure 7.5 A flat organisational structure

ACTIVITY 7.5

Produce an organisation chart for your school or college.
Use your diagram to provide examples of hierarchy, chain of command, delegation and span of control.
Would you describe your school’s/college’s organisational structure as tall or flat? Justify your answer.

KEY TERM Delayering
Sometimes a business with a tall organisational structure will reduce the levels in
Delayering: reducing the size of

94 its hierarchy to save costs. This is known as delayering.
the hierarchy by removing one or
Delayering usually involves cutting out middle management. Middle
more levels – most oft en middle

management. management are often the managers of departments such as finance and marketing,
or managers of different units within a business.

Figure 7.6 illustrates the effect on an organisation of delayering. In this example,

level 3 has been removed from the hierarchy to reduce the number of levels from
five to four. The organisational structure might still be described as tall, but it is not

TOP TIP
as tall as it was before the delayering. You can see that level 3 is middle management
There are a lot of technical terms because it is between the senior management in level 1 and those workers at the
in this chapter. You will find
bottom of the hierarchy in level 5.
them easier to understand and
explain if you construct a simple
organisation chart.
1
2
1
3 2

4 4

5 5

Figure 7.6 The effect of delayering a hierarchical structure

There are several advantages and disadvantages to a business of delayering, as

showing Table 7.2.