The organizational structure of a business shows the interrelationships and hierarchical arrangements within the firm. In order for employees to achieve the organization’s goals collectively, human resources need to be formally organized. The way in which people are organized determines who each employee reports to, and the breadth and depth of the authority each person has (if any).

The organizational structure of a business is usually illustrated using an organizational chart - a diagrammatic representation of an organization’s formal organizational structure. Hence, it shows the role(s) of each employee in the organization, responsibilities, and accountability (who each employee must formally report to).

The learning outcomes (or assessment objectives) for this section of the IB Business Management syllabus are:

• The following terminology to facilitate understanding of different types of organizational structures (AO1):

• delegation

• span of control

• levels of hierarchy

• chain of command

• bureaucracy

• centralization

• decentralization

• de-layering

• The following types of organization charts (AO2, AO4):

• flat / horizontal

• tall / vertical

• hierarchical

• by product

• by function

• by region

• Changes in organizational structures (such as project-based organization, Handy’s “Shamrock Organization”) (AO2)
• How cultural differences and innovation in communication technologies may impact on communication in an organization (AO3)