Business Functions & Definitions

Business: Cambridge International GCSE (2027 Exams), topic 2.2.2

Business Functions and Definitions

A business is not just organised into a hierarchy. It is also organised according to the different functions (roles) of different parts of a business. E.g a business might have a sales division, a customer service team and a human resources team. Some key definitions are:

Functional areas

There are four main functional areas in most businesses:
Marketing – responsible for identifying customer needs, promoting products, and generating sales.
Operations – responsible for producing goods or services efficiently.
Human Resources (HR) – responsible for recruiting, training, and managing employees.
Finance – responsible for managing the money, budgets, and financial planning of the business

Chain of command

Chain of command refers to the line of communication from the top of the hierarchy all the way to the bottom.
Directors are at the top, and operatives are at the bottom.
A long chain of command is typical in a tall hierarchy.
While a short chain of command is found in a flat hierarchy.

Span of control

The span of control is the number of employees that a person in a position of power is responsible for.
This number depends on the type of organisational structure at a business.
A wide span of control means a manager oversees many employees, usually in a flat structure.
A narrow span of control means a manager oversees fewer employees, usually in a tall structure.

Delayering

Delayering is when an organisation decides to remove a layer in the hierarchy.
Often, companies remove a layer of middle managers. This can reduce labour costs and shorten the chain of command.

Delegation

Delegation means giving responsibility for certain tasks or functions to someone lower down in the organisational hierarchy.
A manager may delegate responsibility for part of a project to someone lower down the hierarchy.
Effective delegation can improve motivation and efficiency by empowering employees and allowing managers to focus on higher-level decisions.

Test yourself on Business Functions & Definitions

Which of the following may exist in an organisational structure split by function?

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