IB business 2.2 key terms

Tall organisation structure

IT means that there are many layers in the hierarchy and hence managers have a narrow span of control.

Hierarchy

In business, it refers to the organisational structure based on a ranking system. Each hierarchical level refers to a different rank with its associated degree of authority and responsibility.

Accountability

It describes the extent to which a person is held responsible for the success or failure of a task. it allows senior managers to have better control over the running of their organisations.

Organisation chart

It is a diagrammatic representation of a firm's formal structure.

Delegation

It is the empowerment of a person lower down in the organisational structure by passing on control and authority to complete a certain task or role.

Bureaucracy

It is the official administrative and formal rules of an organisation that govern business activity. It involves prescribed rules and policies, standardised procedures, and formal hierarchical structures.

Delayering

It is the process of removing levels in the hierarchy to flatten the organisational structure, thereby widening the span of control in the hierarchy.

Communication

It is the transfer of information from one party to another. The purpose or objectives of communication include to instruct, clarify, interpret, notify, warn, receive, feedback, review and, above all, to inform.

Flat organisational structure

It means that there are only a few layers in the formal hierarchy and hence managers have a relatively wide span of control.

Decentralisation

It occurs when decision-making authority and responsibility is shared out with others in the organisation.

Centralised structure

It occurs when the majority of decision making is done by a very small number of people (usually the senior management team) who held decision-making authority and responsibility.

Project- based organisation

It organises human resources around particular projects, each led by a project manager. Such structures allow businesses increased flexibility to adjust quickly to market changes and o adopt rapid innovations.

Matrix structure

It refers ti the flexible organisation of representatives from different departments temporarily working together on a particular project.

Shamrock organisation

It refers to Charles Handy's model that organisation are increasingly made up of core staff who are supported by peripheral workers, consultants and outsourced staff and contractors.

Chain of command

It refers to the formal line of authority, shown in an organisation chart, through which formal orders are passed down.

Span of control

It refers to the number of subordinates overseen by a manager, i.e. the number of people who are directly accountable to the manager.

Responsibility

It refers to who is in charge of whom and in what role or capacity, such as a finance director being responsible for the staff and the operations in the finance department.