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 in relation to different types of organizational structures (AO2):

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

1. Flat or horizontal
2. Tall or vertical
3. By product, by function, or by region

• Appropriateness of different organizational structures given a change in external factors (AO3)
• Changes in organizational structures (for example, project-based organization, Charles Handy’s “Shamrock Organization”) (HL only) (AO3)

 Teacher only box

Note to teachers

Please note the following changes to the new syllabus (first exams 2024) in relation to this section of the syllabus.

• Matrix structure has been added to the list of terminology in relation to different types of organizational structures (AO2).

• Under types of organization charts (AO2, AO4), hierarchical structures has been removed in the new guide.

• As the CUEGIS concepts no longer feature in the new guide, the learning outcome How cultural differences and innovation in communication technologies may impact on communication in an organization (AO3) has been removed in the new syllabus.

• Appropriateness of different organizational structures given a change in external factors (AO3) has been added to the new guide.

• Finally, note that Changes in organizational structures (for example, project-based organization, Charles Handy’s “Shamrock Organization”) (AO3) has been elevated from an AO2 in the previous syllabus to an AO3 in the new guide. Also, note that in the new guide, this topic is now HL only.

Please note the above changes if/when referring to resources for the previous course, such as past IB exam papers and mark schemes.