Understanding business Organisation
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This essay aims to introduce the different types of businesses. The advantages and disadvantages of each type of business will be evaluated to understand their nature. Businesses like a sole trader, limited company, partnership, etc. will be discussed in the essay. The organizational structures like flat and tall structures will be compared with examples of different organizations. Different business functions of an organization will be discussed in the essay too. It will include functions like human resource management, operations, and finance (Fareri et al, 2018). With the discussion of these functions, their impacts on the functional management activities and employees of an organization will be discussed too. The essay will also include a discussion about organizational culture and the way positive culture impacts the success of an organization. The last section will be comprised of different examples from the industry practices of all concepts discussed within the essay like culture, structure, functions, and different forms of business.
There aredifferent types of businesses like a sole trader, partnership, limited company, etc. A sole trader refers to a single person who starts the business and manages its all functions on its own. The biggest advantage of a sole trader business is that it is easy to set up and involves very little formalities. Also, it has complete privacy because all information stays with the entrepreneur only. The major disadvantage of a sole trader is that it involves unlimited liability and getting financial help is tricky in the business. Partnership, another business type, refers to a business in which two or more people agree to start a business venture with an aim of profit-making. In a partnership business, all the partners are responsible for liabilities and profits equally (Ilcheva 2020). The advantages of a partnership business include its high degree of flexibility and freedom of fewer formalities. It means that the partners do not need to do much paperwork. The disadvantages of a partnership business include joint liabilities for debts of the business and the risk of disagreement among the partners over the terms and conditions of the business. A limited company is another business type that refers to a structure of business having its own legal identities that are separate from its directors and shareholders. The limited companies are governed by the constitution and company laws. The advantages of this type of business, people are responsible for their liabilities, and also this type of business has more opportunities to grow as compared to sole trader and partnership. The disadvantages of a limited company include that it involves a lot of complications in setting up the business. For example, Microsoft is a successful and renowned partnership business (Belo and Alves, 2019). On the other hand, Nike is an example of a limited company business and one of the renowned sole traders in the industry is Walmart.
The organizational structure is a system that demonstrates the way activities within the company are directed to achieve the aim and objectives of the business. There are mainly two types of organizational structures including tall and flat structures (Lee and Day, 2019). The tall structure has many levels of hierarchy within the organization whereas, the flat structure of the organization has a limited number of hierarchical levels. The span of control in tall organizational structures is narrow, but in flat structures it is wide. The speed of making decisions in a tall structure is slow because the management needs to consider different levels of personnel. On the other hand, the decision-making process is fast because it has a wide span of control. The cost of managing a tall organizational structure is relatively much higher than managing a flat organizational structure. It is because the layers of staff are more in tall structures. As compared to flat structures, tall organizational structures have high opportunities available for promotion. Flat structures have limited opportunities. Majorly, differences between tall and flat organizational structures depend upon the layers involved in the organizational hierarchy of tall structures, and the span of control. The structure that organizations should use depends upon the nature of business, its size, and a lot of other factors. For example, in the manufacturing industry, all the unicorns majorly prefer to follow tall organizational structures. The organizations which use this structure include Toyota Motors, Walmart, HUL, Volkswagen, Tata, etc. In the IT industry, organizations mainly prefer to use a flat structure (Papachartofyli 2018). Examples of IT organizations that use flat organizational structure includes Valve, Buffer, Zappos, etc. Companies from different industries prefer to use tall or flat structures based on company requirements. Both the structures have their own merits and de-merits which the organizations consider before choosing a relevant structure for the company.
A business has many functions like human resource management (HRM), operations, marketing, etc. Human resource management is one of the most important functions of an organization which includes managing the employees of an organization and issues related to them. Human resource management is a very vast functional area that includes tasks like hiring, recruitment, selection, providing compensation and benefits, managing performance of personnel, looking over employees' safety, training, and development, employee motivation, etc. but it is not limited to these (Idrees et al, 2018). Operations is another important business function that includes managing the process of creating goods and services of the organization to satisfy the customers. Operations include a whole process of heavy planning, organization of activities, coordinating with other departments, and controlling the business resources to produce goods and services. Marketing is also a significant business function that aims to bring value to the target customers of the business. Marketing involves communicating with customers and delivering them the business offerings. Human resource management directly impacts the employees and organization in terms of performance. Human resource policies and practices have negative and positive impacts on both people and organizations. The operations function has more impact on the organization instead of people. High operational efficiency positively impacts organizational success. The marketing function has impacts on the organization and individuals both because it is kind of a bridge between the business and customers (Dronova and Horiashchenko, 2021). For example, FedEx, a renowned company falls under the list of organizations which has the most effective human resource management. McDonald’s is an example of having an effective operational strategy which is one of the major success factors for the business. Apple, on the other hand, can be taken as an example of the effective marketing strategies of the company.
Organizational culture refers to the way employees behave in a business. The culture of an organization mainly includes its assumptions, values, beliefs, and the ways in which employees interact with each other, and with people in the external environment. The culture of an organization also includes its vision and mission. Organizational culture gets reflected in the ways employees perform certain tasks and activities (Lubis and Hanum, 2020). Managing positive culture in the organization is very important because it impacts all the aspects of the business including employee benefits, organizational success, contract terms, etc. An organization needs to align organizational cultural values to what employees expect from the organization. This alignment is necessary to make the employees feel supported, comfortable and valued. The culture of an organization always is the indicator of the satisfaction of employees. A healthy and strong culture cultivates an environment in which the level of job satisfaction of employees remains high, employees are more engaged, and the productivity level of employees is high. This way, a positive and healthy organizational culture leads the organization high on the path to success. A positive organizational culture helps to foster connections with external parties, encourages the employees to talk about the issues and challenges they are facing which enhances the effectiveness of communication. Google is the best example of an organization with an amazingly positive culture. Google is known for its excellent organizational culture and because of this, the employees of Google are most enthusiastic, skilled, and hardworking. The values and norms of google are so perfect that it keeps its employees satisfied, gives them the flexibility of working according to their ease and makes them fully satisfied with their jobs (Fesharaki 2021). It can be said that Google has the gold standard culture which is one of the major reasons for its success.
This essay concludes that the types of business, organizational structure, the culture of the organization, and different business functions are important concepts to expand the base of management knowledge. The essay has identified that the three major types of business types include sole trader, partnership, and limited company among which limited company has the most growth opportunities than other two types of businesses. In regards to organizational structure, it has been identified that both tall and flat structures have their advantages and disadvantages and an organization cannot choose one based on just that. Instead, many factors need to be considered while choosing the structure. It has been identified that the HRM function is associated with employees, the marketing function is mainly to communicate with customers, and production is associated with the creation of goods and services of an organization. It has also been found out that positive organizational culture is highly important for an organization to succeed.
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