Unit 1 – The Business Environment P3
P3- Describe how two businesses are organised.
Organisational structures range from functional, geographic, product and type of customer.
Formal organisation is used within a business as it enables employees to work towards
definite goals, which are compliant to the organisation. It sets out authority and
responsibility allowing employees to know who they report to.
An organisational structure enables the employees to understand the way the chain of
command works within their organisation. The structure is based on the structure within an
organisation and allows more senior employees to delegate tasks to lower employees within
their command chain. An organisational structure is important as it finalises the
responsibility employees have and also enables employees to know who they report to in
different situations. This improves the quality of communication as it becomes faster, as the
correct person is contacted and there will be reduced misinterpretation as messages are
passed through only the required people. Organisational structures can be flat or tall within
an organisation. A flat organisation structure has few levels of hierarchy but a wide span of
control for employees. This enables the organisation to communicate quickly and cheaply.
Tall organisational structures have many levels of hierarchy and reduced span of control for
employees. This enables for closer supervision on employees and also employee’s
responsibilities and control are set out more clearly.
Within an organisational structure functional areas are used. Functional areas within a
business are departments that are responsible for different aspects of the organisation.
They distribute employees by the skills they have allowing an increase in productivity and
cost effectiveness. Tasks that need to be carried out can be distributed into their correct
department which is efficient and cost effective. This is because; employees with the right
skills are quickly designated to the task. Functional areas can be based on geographic
location and product or service division. If an organisation is worldwide, functional areas
may be categorised using geographic location. This is because the task may be needed to be
carried out differently due to different needs of the customer. If an organisation is large,
functional areas may be categorised using the different products or services the
organisation has available. This enables the different departments to become specialised on
individual products. The functional areas can also allow for different departments to be
outsourced. This is because it is clear to the business to see what departments they have
allowing them to change them with ones from external sources. The benefit of this to the
business is that they will reduce their costs and also their time efficiency as an outsourced
department won’t need to be managed as much as internal departments via the
organisation. Functional areas may be split into; finance, marketing, production, customer
service, sales and human resources departments:
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P3- Describe how two businesses are organised.
Organisational structures range from functional, geographic, product and type of customer.
Formal organisation is used within a business as it enables employees to work towards
definite goals, which are compliant to the organisation. It sets out authority and
responsibility allowing employees to know who they report to.
An organisational structure enables the employees to understand the way the chain of
command works within their organisation. The structure is based on the structure within an
organisation and allows more senior employees to delegate tasks to lower employees within
their command chain. An organisational structure is important as it finalises the
responsibility employees have and also enables employees to know who they report to in
different situations. This improves the quality of communication as it becomes faster, as the
correct person is contacted and there will be reduced misinterpretation as messages are
passed through only the required people. Organisational structures can be flat or tall within
an organisation. A flat organisation structure has few levels of hierarchy but a wide span of
control for employees. This enables the organisation to communicate quickly and cheaply.
Tall organisational structures have many levels of hierarchy and reduced span of control for
employees. This enables for closer supervision on employees and also employee’s
responsibilities and control are set out more clearly.
Within an organisational structure functional areas are used. Functional areas within a
business are departments that are responsible for different aspects of the organisation.
They distribute employees by the skills they have allowing an increase in productivity and
cost effectiveness. Tasks that need to be carried out can be distributed into their correct
department which is efficient and cost effective. This is because; employees with the right
skills are quickly designated to the task. Functional areas can be based on geographic
location and product or service division. If an organisation is worldwide, functional areas
may be categorised using geographic location. This is because the task may be needed to be
carried out differently due to different needs of the customer. If an organisation is large,
functional areas may be categorised using the different products or services the
organisation has available. This enables the different departments to become specialised on
individual products. The functional areas can also allow for different departments to be
outsourced. This is because it is clear to the business to see what departments they have
allowing them to change them with ones from external sources. The benefit of this to the
business is that they will reduce their costs and also their time efficiency as an outsourced
department won’t need to be managed as much as internal departments via the
organisation. Functional areas may be split into; finance, marketing, production, customer
service, sales and human resources departments:
Page 1
