SS2 Third Term Commerce Lesson Note – Structure of Business

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WEEK 10

Topic: Structure of Business

CONTENT:

• Organizational Set up
• Authority
• Responsibility
• Span of control
• Inter and intra departmental communications

SUB- TOPIC: Organisational Set up

The organisational set-up of a business involves the allocation of responsibilities and functions to different components of an organisation and delegating authority to such position in order to ensure the smooth operation of the business so as to achieve the planned objectives. It can also be explained as an arrangement and interrelationship of various component part and positions of business.

Principles of Management

The principles of management were postulated or put forward by F. Taylor in 1911. These principles are:

1. Clarity of objectives: The aim and goals of any organisation the strategies and means of achieving them must be clearly stated. This will make the employees strive towards achieving the planned objectives.
2. Span of control: This is the number of subordinates under the direct supervision of a manager to ensure efficiency and effectiveness; the number of subordinates should be restricted to what is mentally possible for him/her to control. It should be kept as low as three to six.
3. Unit of Command: In this case, subordinates receive instructions from their boss only as dual command affect effectiveness.
4. Division of labour: The organisation will achieve efficiency if work is divided into the smallest possible units as specialisation increases productivity.
5. Authority and Responsibilities: Authority and responsibility should be properly stated and both should match each other, i.e. authority should be commensurate with responsibility for effective supervision.

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