Pass 3 and Pass 4 for Business Environment - Level 3 Extended Diploma in Business.
- Describe how two businesses are organised
- Explain how their style of organisation helps them to fulfill their purposes
The organisation of a business is very important and can influence its success.
It is important that you explain to the new group of entrepreneurs what an organisation
structure is, its purpose and the various types of structures. You must also briefly explain the
role of the different functional areas. This task should be completed in the form of Report as
a word document.
You are required to complete the following for P3 and P4 as a written Report:
a) Provide organisational charts for your two chosen business organisations (P3)
b) Identify and explain the type of structure adopted by each organisation and how
the structure and strategic planning help the businesses to achieve their purpose
and aims. You should pay particular attention to Purpose and Strategic planning:
(mission and values; development of strategic aims and objectives; cascading of
objectives throughout the organisation; strategic planning process; use of SMART
(specific, measurable, achievable, resourced, time-bound) objectives) for each
organisation (P3, P4)
c) Briefly explain the purpose of the key functional areas (suggestions below) in each
organisation and how they make strategic plans.
o Marketing
o Production
o Customer Service
o Sales
o Human Resource
o Finance (P3)
This provides evidence for P3 and P4
Report
To; Group of Entrepreneurs
From; Conor Cunningham
Date; 13/03/2016
1.0 Terms of Reference
I have been asked to compile a report to a new group of entrepreneurs on what an
organisation structure is, its purpose and the various types of structures. This report will
also include a brief explanation of the role of the different functional areas within Newry
Mourne and Down District Council as well as Tesco. The evidence for Pass 3 and Pass 4 has
been outlined in the findings below.
2.0 Findings
,Conor Cunningham P3 + P4
Organisational structures
An organisational chart is a diagram which shows the structure of an organisation. It also
shows the relationships between different positions and jobs within the business. It usually
shows the line managers and workers who make up the organisation. For example, in Tesco
it may show the executives right down to the employees on the shop floor.
An organisational structure may show the relationships between the organisations staff.
Some of the following could be included;
Line; The direct relationship between superior and subordinate. For example, in
Tesco, the relationship between an engineer and their assistant.
Lateral; The relationship between different departments on the same level. For
example, in Tesco, the relationship between the Production department and the
Warehouse department.
Staff; The relationship between the employees in one department and the
employees in another. For example, in Tesco, the relationship between production
staff and warehouse staff.
Functional; The realtionship between specialist positions and other areas within the
company. For example, in Tesco, the relationship between the operations manager
and the finance manager.
When a business is producing an organisational chart, they must consider all areas of the
business so that it is as accurate as possible. A business should consider the responsibilities
of people in all departments and how each department relates to one another.
In addition to considering the areas of the business, the structure of the business should
also be studied. Types of structure include;
Functional; The business is divided into specialist areas. For example, in Newry
Mourne and Down District Council, the Human Resources department and the
Leisure department.
Geographic; The business is divided by its location. For example, Tesco is a wide-
spread company so may have different divisions which will report back to a head
office.
Product/Service; The business is divided in to the product or service which it
provided. For example, the Planning and Building Control department in Newry
Mourne and Down District Council.
, Conor Cunningham P3 + P4
Customer; The business is divided according to the different customers it deals with.
For example, Tesco will have a retail section to the public but will also have a section
which deals with funding from external sources.
Process/Equipment; The business is divided depeneding on the process it is
completing or the equipment it uses. For example, in Tesco, there is a Production
department and a Research department.
Matrix structure; This is when people with certain skills are taken together to work
in a team to complete a task. For example, the Production department in Tesco to
come up with a new production method of a product. This is a good structure for a
company like Tesco to have as it means people come together and share their skills,
creating a better product. However, employees may become confused due to
conflicting loyalties.
The functional activities within organisations such as Tesco and Newry Mourne and Down
District Council are usually split into departments which perform key roles. The functional
activities must all work together so that there is effective communication within the
business. It’s absolutely vital that the flow of work between functions is managed correctly
otherwise time is wasted and confusion sets in within the business.
Some companies may not have internal specialists to cover all of the functional activities to
make their business a success. For example, a company may have to employ a marketing
company to advertise their company as they have no staff themselves to carry out this
function. This will be an expense to the business however it is worth it when sales increase
and the business becomes more successful. Functional departments must be
interdependent and if the departments in Tesco and Newry Mourne and Down District
Council weren’t, both organisations would seize to exist.
Although organisational charts may help with planning and development. There are several
limitations;
An organisational chart only shows formal relationships and tells nothing of the
pattern of human relationships which develop
It shows nothing about the managerial style in the business
It can become out-of-date very quickly. For example, in a large organisation like
Tesco where staff change regularly
When starting a business or changing from one organisational structure to another,
businesses must consider the advantages and disadvantages of each structure (which will be
highlighted in this report) in meeting business aims and objectives. A type of structure for
one business may not be the best type for another which is why the organisational
structures of Tesco and Newry Mourne and Down District Council are different.
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