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Importance of Communication
• Communication is important
because it is about how
information is sent and received
within firms
• The way information is
communicated is often governed
by how firms are structured
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Forms of Business Structure
• Entrepreneurial - decisions made
centrally
• Pyramid - staff have a role, shared
decision making, specialisation is
possible
• Matrix - staff with specific skills join
project teams, individuals have
responsibility
• Independent - seen in professions
where organisation provides support
systems and little else
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Illustrating Structures 1
The Pyramid Traditional
view of
organisations
Decisions pass
down formal Information flows
channels from up formal channels
managers to from staff to
staff management
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Illustrating Structures 2
Entrepreneurial
Key Key
Quick to act but
worker worker
pressure on
decision makers
One or two
Most small Decision people make
businesses have this maker decisions
structure
Great reliance on
key workers
Key Key
supporting decision
worker worker
makers
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Illustrating Structures 3
Matrix
Marketing Production Finance
Project A
Project teams Staff with
created specialist skills
Project B
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Illustrating Structures 4
Independent
Not suited to most
Dr A businesses due to
lack of control Dr B
Support systems
to professionals
such as doctors
Dr D Dr C
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More on Business Structure
Centralisation Decentralisation
• Managers keep • Empowering and
control motivating
• Decisions are made • Freeing up senior
in the interests of
the whole business managers’ time
• Costs can be cut by • Better knowledge of
standardising those closer to
purchasing and so on customers
• Strong leadership • Good staff
development
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Channels of Communication
• Communication in organisations
follows paths or channels
• Communication between managers
and subordinates is known as
vertical communication
• This is because the information
flows up or down the hierarchy
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Channels of Communication
• Channels between departments or
functions involve lateral communication
• As well as formal channels of
communication, information also passes
through an organisation informally
• Communication is not complete until
feedback has been received
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