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Applied Business Studies
Unit 12 Revision Guide
Ross Bateman

Specification

Unit 12 - Business Planning
Types of Organisational Structure
❖ You need to know, understand and be able to demonstrate how the structure of an organisation is
affected by the following three dimensions:
● tall as opposed to flat
● centralised as opposed to decentralised
● matrix as opposed to hierarchical
...

❖ How the organisational structure affects the flow of information through the organisation and the
ability for cross-functional teams to be used for projects
...

❖ The skills of effective management, including:
● technical skills – knowledge of products, subject area, the organisation
● communication skills
● organisational skills
● interpersonal skills
...

❖ The need for managers to consider the pros and cons of the following decision-making techniques
and to appreciate the situations in which each is appropriate, including:
● networks or Critical Path Analysis
● statistical process control
● decision trees
...

❖ How problems with authority can lead to the inability to use power to lead staff effectively
...

❖ How managers use power to achieve outcomes within organisations
...

❖ How each type of power affects:
● the interaction between managers and subordinates
● the willingness of staff to accept instructions
...

❖ The problems with particular leadership styles in given situations
...


Models of Motivation

❖ The theory of motivation as proposed in:
● Maslow's Hierarchy of Needs
● Herzberg's Two Factor Theory
● McGregor's Theory X and Theory Y
...
The need for
managers to recognise the different motivational needs of different people in the workforce,
including:
● skilled as opposed to unskilled staff
● manual or process-based as opposed to knowledge-based tasks
● old as opposed to young staff
● paid as opposed to volunteer staff
...

❖ How different organisational structures impact on employee motivation
...

❖ The problems with empowerment in terms of management control, devolution of power and
authority and acceptance of responsibility
...


Types of Organisational Structure
Spec Says:

Page 2

Unit 12 - Business Planning
❖ You need to know, understand and be able to demonstrate how the structure of an organisation is
affected by the following three dimensions:
● tall as opposed to flat
● centralised as opposed to decentralised
● matrix as opposed to hierarchical
...

❖ How the organisational structure affects the flow of information through the organisation and the
ability for cross-functional teams to be used for projects
...

❖ Levels of hierarchy: Refers to the number of layers of authority within an organisation
...

❖ Tall structures: Used for larger businesses, a long chain of command
...
More opportunities for promotion meaning more motivated workers
...
Workers feel undervalued leading to lower motivation
...

➢ Easier communication
...

➢ Lack of promotion prospects
...

❖ Matrix structures: Used for projects, split into clear mixed teams
...
Flexible way of working
...
Teams difficult to monitor
...

➢ Branches are the same, saving costs
...

➢ Low staff motivation due to no input
...

❖ Decentralised structures: Branches have more power
...
Workers better understanding of business
...
Core objectives of business possibly not followed
...

❖ The skills of effective management, including:
● technical skills – knowledge of products, subject area, the organisation
● communication skills
● organisational skills
● interpersonal skills
...

❖ Reporting: Report on performance of business, employee performance, write accounts
annually
...

❖ Monitoring: Monitor effectiveness of business, also includes evaluating: evaluating impact of
decisions & how to improve business performance
...
Good managers can also
listen effectively
...

❖ Organisational Skills: Need to be able to organise people
...

❖ Interpersonal Skills: Allows managers to work effectively with other people
...
Interact with all types of people
...


June 2007 Q1a, Q2a
January 2008 Q1a, Q1c
June 2008 Q1b
June 2010 Q1aii
January 2011 Q2a
June 2012 Q2c, Q3a
January 2013 Q2a, Q3b
June 2013 Q3a

Types of Decision
Page 4

Unit 12 - Business Planning
Spec Says:
❖ The different types of decision with which managers are faced:
● routine or non-routine
● tactical or strategic
● reactive or proactive
...


❖ Routine Decisions: Taken regularly, prepared for, usually lower level staff as smaller
decisions
...
g
...

❖ Non-Routine Decisions: Irregular, usually unexpected, usually higher level staff, big decisions
...
g
...

❖ Tactical Decisions: Short-term implications, not big impact on business, lower level staff
...
g
...

❖ Strategic Decisions: Long-term implications, big impact on business, senior management
...
g
...

❖ Proactive Decisions: Taken in advance, often high risk
...
g
...

❖ Reactive Decisions: In response to events, fast, often short-term
...
g
...

Critical Path Analysis (CPA):
❖ A method of calculating and illustrating how complex projects can be completed as quickly
as possible
...

➢ Use time efficiently by showing which tasks can be carried out simultaneously
...

➢ Complex activities may be difficult or even impossible to represent on a network
...

Statistical Process Control (SPC):
❖ Uses monitoring systems based on statistics to make sure that production is efficient and
meets quality standards
...

➢ Managers can use the information to decide if the current level of customer service is
satisfactory or not
...

➢ Survey might not be representative
...

Decision Trees:
Page 5

Unit 12 - Business Planning
❖ Comparing different possible decisions to work out which decision is better
...

➢ Encourages managers to be logical and consider all the possibilities
...

➢ Problematic if the business environment is too changeable, might not go to plan
...

❖ The problems with particular leadership styles in given situations
...


❖ Autocratic: Tell people what to do, might punish or reward
...

➢ Incredibly efficient & fast
...

➢ Can lead to resentment due to being bossy
...

❖ Paternalistic: Leaders take an interest in employees views, “father figure”
...
Low labour turnover
...
Experienced staff feel uninvolved
...

➢ Develops managerial skills in employees
...

➢ Possibly slow decision making
...

❖ Participative: Gives employees high degree of control over decisions
...

➢ Managers to utilise talents of subordinates
...

➢ Slow decision making
...

❖ Laissez-Faire: Power & leadership given to employees
...
Good for creative environment
...
Neglect planning, possibly detrimental
...

❖ How problems with authority can lead to the inability to use power to lead staff effectively
...

❖ How managers use power to achieve outcomes within organisations
...

❖ How each type of power affects:
● the interaction between managers and subordinates
● the willingness of staff to accept instructions
...

❖ Authority: A special form of power, in the sense that it gives people the right to give
commands which others accept as legitimate, involves voluntary agreement
...

❖ Subordinates will question managers and argue about decisions
...

❖ May ignore managers, leading to a lack of coordination and direction within the business
...
Threats & punishments, respect therefore
...

➢ Employees follow orders without question
...

➢ People don’t perform well in this environment
...

❖ Reward Power: Obey in return for improved pay promotion, recognition
...

➢ Employees show initiative & respond well
...

➢ May not be motivated by the money
...
Irreplaceable
...

➢ Staff accept instructions from the expert & value it
...

➢ Some managers with expert power try to prevent others from gaining particular
knowledge and skills
...
Staff may not be
willing to accept instructions
...
Right objectives are followed
...
Power only due to role, not skills
...
Staff willing to
accept instructions
...
Gives charismatic leaders
considerable power
...
Only based on charisma and not position
...

❖ How the models relate to employees of different types and personal motivation
...

❖ How different management or leadership styles may affect motivation
...

❖ The role of empowerment in developing motivation
...

❖ How managers need to consider when and how to empower
employees through delegation
...


Herzberg’s Two Factor
Theory
❖ Argued that there are motivators and hygiene factors
...

❖ Motivators = PPRRA
❖ Hygeine Factors = SSSCC

McGregor’s Theory X and Theory Y
❖ Argued the view on how managers view
subordinates
...

❖ Theory Y managers expect the best from
employees
...

❖ Job enlargement: Extends the range of duties associated with a particular job
...

■ Offering promotion
...

❖ Unskilled Employees
➢ Through lower needs of Maslow’s Hierarchy
...

❖ Knowledge-Based Workers
➢ Job Enrichment or higher needs of Maslow’s Hierarchy
...

❖ Older Employees
➢ Herzberg’s motivators
...

❖ Voluntary Employees
➢ Maslow’s Hierarchy
...

❖ Democratic, Participative & Laissez-Faire: Theory Y, main motivators: Herzberg & Maslow’s
...

❖ Tall Structures: Financial rewards, status and promotion
...

❖ Delegation: Giving authority to juniors for a specific task

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