Grade 10 – POB – Other Methods of Payment, What is a Business, Departments of a Business,
Responsibilities of Businesses, Aims/Roles of a Business, Organizational Structures
Trading/Payment Instruments – this refers to the various methods people use to make payments. The
different types of money used in payment for goods and services within a country are referred to as Legal
tender.
1. Bills of Exchange – this is a document instructing a person to make a payment to another person, a
certain amount of money at a particular time. It is mainly used to pay foreign suppliers owed usually
three months after the bill is written. A company wanting to buy goods overseas, but who does not have
the money to pay for the goods right now may send that company a bill of exchange. If the overseas
supplier accepts the bill, he would write accept on the back of the bill and send the goods to the
company who ordered them. When the time has passes and the bill is due for payment the supplier then
sends the request for the bill to be paid.
Advantages of Bills of Exchange
a) they allow foreign trade to take place which is important to the country’s economy.
b) the purchaser is able to receive goods without having to make payments immediately.
c) once the bill is accepted a contract is formed between the business and that supplier and therefore
must be paid when it becomes due.
d) the date of the payment cannot be changed.
2. Credit Cards – this is a card issued by a bank to customers who qualify for the card. The card allows
customers to pay for goods and services without the use of money. The bank pays the supplier of goods
and services on behalf of the customer and then sends a bill/statement to the customer, telling him/her
how much is to be repaid to the bank within a specified time. The term credit is used because the bank is
owed until it receives its money back from that customer.
3. Electronic Transfer – this is when a company or individual gives the bank instructions to pay money
out of their bank account into the bank account of someone else or of another company. In order for the
bank to pay over this money, the company or individual requesting the payment would have to provide
the bank with the following information for the person or company to be paid: a) the name of the
person/company to be paid, b) the amount to be paid, c) the name of the bank the payee has an account
with, d) the payee bank account number, e) the branch of the bank where that account is maintained.
4. Tele-banking and e-commerce – tele-banking is the process of managing bank account over the
telephone. Withdrawals and deposits can be made while talking to a bank employee over the phone.
Internet banking allows an account holder to do the same transactions, however the person is able to
carry out the actions on his own over the internet without talking to a bank employee.
Ecommerce – is when customers are able to view and purchase products online/over the internet on
various internet sites.
Home Work
List four Advantages of payment types two to four (2-4) listed above.
A Business is a firm/entity established to provide goods and services with the aim of making a profit.
Main Aims of a Business Organization
a) To provide a Good or Service
b) To make a Profit
c) To create employment
Main Functional Areas/Departments of a Business
Production Department
If a company is involved in manufacturing/making the products it sells, then the production department will co-
ordinate the work in the factory unit. Qualified persons will be employed to this department, who will be
responsible for ensuring that goods are produced within the scheduled time. Quality Controllers may also be
employed to ensure the company’s products are always made at high standards and also investigate customer
complaints and deal with goods that are returned as faulty.
Marketing & Sales Department (Advertising)
The aim of this department is to make potential customers aware of the goods and services the company offers
and to encourage consumers to buy these goods and services. Some companies may pay an advertising agency
to carry out this function for them.
Finance/Accounting Department
This department records all payments made by the business and all cash/cheques received by the business. The
department is concerned with invoices going in and out of the business and the recording, analyzing,
interpreting and reporting of all financial information. In most companies, the payment of wages is also one of
the responsibilities of the Finance/Accounting department.
Personnel Department
This Department is responsible for hiring suitable staff to carry out work in each department. The Department is
responsible for staff welfare and training and maintains employee records such as leave, sick leave and vacation
records, as well as employees’ resumes containing personal data.
Organization Structure
This refers to the type of design an organization uses to show the relationship amongst staff/personnel in a
company and the relationship between the functions these staff perform.
The organization structure is usually shown in a diagram known as the organization chart.
There are two (2) main types of organization structures. These are Formal and Informal.
There are Four Main types of Formal organizational structures:
1. Line Organization
2. Line and Staff Organization
3. Functional Organization
4. Committee Organization
Line Organization
This is a very old form of organization structure, in which authority and responsibility is delegated from top to
bottom. It is also known as a Scalar or Military organizational structure. The owner or chief executive will
instruct those below him/her, such as department managers (sometimes called line managers). They in turn will
instruct the less senior employees who will carry out the instructions (this is known as a narrow span of
control).
Owner/Chief
Executive
Sales Manager Office Manager Production
Manager
Sales Sales reception- Clerk Production Production
person 1 Person 2 nist worker 1 worker 2
Authority – having the right or power to command others.
Responsibility – being obligated to perform a duty (meaning you have no choice but to carry out the
task)
Span of Control – the number of staff/subordinates that a manager supervises.
Wide Span of Control – when one manager is responsible for supervising a large number of staff and
these staff members might be from different departments.
Narrow Span of Control – when one manager is responsible for supervising only one set of staff
usually in the same department.
Chain of Command – refers to how authority and responsibility is exercised within a company, usually
from top to bottom.
Delegating – This is the process of assigning one’s tasks to someone else who is capable and qualified
to do so. Tasks can only be delegated to persons who have the authority to carry out the task.
Line and Staff Organization Structure
This type of structure is a combination of the Line structure with other lines showing how other specialist staff
members work along with regular members of staff.
For example: if a company hires a team of research staff to ensure that the quality of its products is always
high, then this set of specialist will work alongside the production department which is already a part of the line
structure to help the line accomplish its goals.
Board of Directors
Managing
Director
Executive
Research Personnel Records Maintenance
Division
Manager
Production Marketing & Financial Purchasing
Sales Manager Controller Manager
Diagram showing Line & Staff Organization Structure
Functional Organization Structure
This type of organization divides the business into departments to carry out basic functions such as Finance,
Sales and Delivery etc. Each Department has its own managing director, who is responsible for that function
only. This type of organization can cause disagreements between departments and require a lot of cooperation
for the business to operate efficiently.
Managing
Director
Executive
Managing Managing Director Managing Director
Director (Sales) (Finance) (Production)
Sales
Finance Production
Manager
Manager Manager
Sales Accounting Production
Person Clerk worker
Diagram showing a Functional Organization Structure
Committee Organization Structure
In this type of organization structure different specialists or staff members work together in groups known as
committees to work on different aspects of the business operations. These committees are responsible for
advising and making recommendations to supervisors, managers and executives. Committees can be set up as
permanent arrangements or as temporary committees (known as ad-hoc committees) to examine an issue and
are then dissolved after completing the task.
Diagram showing a Committee Organization Structure
Public Staff Welfare
Relations
Ad hoc 2 Ad hoc 1
Executive
Senior Budgeting
Management
