Chapter 1, Problem 1RQ

To determine

Explain the four levels of activity in the pyramid representing the business organization and difference between horizontal and vertical flows of information.

Explanation of Solution

Business:

Business can be defined as a work that includes exchange or production of goods and services against a consideration called as money. The basic assumption for running a business is going concern.

The four levels of activity in the pyramid representing the business organization are as follows:

• Business operation: The lowermost level of activity in the pyramid is business operation. This level consist day-to-day oriented business operations of the organization.
• Operation management: This level manages the day-to-day oriented business operations. Operation management also performs the controlling function over day-to-day oriented business operations.
• Middle management: Middle management is responsible for short-term planning. This level of management is engaged in coordinating all activities required for accomplishing business goals.
• Top management: Top management is responsible for long-term planning. Goals and objectives of business are also set up by the top management.

Horizontal flow of information maintains operation level tasks. The information contains all the details regarding daily operations and flows across all the departments.

Vertical flow of information can go downward when top management specifies goal, strategy and goals to lower manager. Vertical flow of information can also go upward when operating staff delivers a summarized report to its senior manager. This report includes daily operation activities.