Understanding Business Organization: Types, Structures, Functions, and Culture

This report from Desklib discusses the different types of business organizations, including their advantages and disadvantages, as well as the various organizational structures and functions. It also highlights the importance of organizational culture in achieving success. The report includes examples from companies like Tesco and Asda.

Understanding Business
Organization

Table of Contents
Introduction .....................................................................................................................................1
Conclusion.......................................................................................................................................5
References ......................................................................................................................................6

Introduction
Business organisation is an legal entity incorporated in order to effectively carry out the
various business activity and operations. It is defined as the how the organisation are structured
effectively and it helps in achieving desired goals and objectives of the business organisation.
Business organisation are started with the purpose of satisfying the needs and wants of the
customers through offering quality goods and services to them.(Akhavan and Philsoophian,
2018). This report highlights the various advantage and disadvantages of the various kinds of
business along with the detailed comparison between the various organisational structure. In
addition addition to this various business functions is also highlighted. And the detailed analysis
of the organisational culture and how it leads to the success of the business is also highlighted in
this report.
a)
Business an legal entity incorporated in order to carry out various operations and satisfy
the needs and wants of the customers. There are various type of business such as sole trader,
partnership and limited company as mentioned below along with their advantage and
disadvantages.
Sole trader: The first type of the business is the sole trader, this type of business are owned and
managed by the single individual. Generally started with small amount of capital, owner himself
is responsible for all the profit and loss incurred in the business.
Example: Plumbers, electricians, gardeners are some of the example of sole trader
Advantage:
 These type of business requires relatively less paperwork to get started.
 Sole trader business also involves less registration fees.
 All the profit earned is retained with the sole trader himself
Disadvantages
 These kind of business includes unlimited liability
 In case of sole trader it is also difficult to get the financing
 Another disadvantages is that the sole trader are liable for the business debt
Partnership: These type of business are incorporated with mutual agreement among two or
more individuals to mutually carry out all the activities and operation(Dimitrova, 2019). All the
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decisions are taken with the mutual contest between both the partners. Also the profit and loss is
equally shared as per the partnership deed.
Example: Williams & Pottery Barn is one of the example of partnership business
Advantage
 The partnership company involves sharing of profit and loss among the partners
 Formation of business is easy and the cost involved is low
 Business involves less formal and little legal obligations
Disadvantages
 In case of partnership business the liability of the partners for the debt involved is
unlimited
 These kind of business also involves lack of stability
 There is also the risk of disagreement along the partners related to to decision-making
Limited company: Another type of the business is the limited company, these type of the
business organisation are owned and managed by the private individual(Meirysa and Wardarita,
2021). These business are started with the aim of satisfying the needs and wants of the customers
and enhancing overall profitability.
Example: Tesco is one of the example of private limited business
Advantage:
 The main advantage of these type of business is that these type of company provide
limited liability to the owners
 Limited company is an separate entity to the owner of the business
 These business aims at enhancing the overall profitability of the business
Disadvantages
 The main disadvantages of these type of business is that these kind of business are
difficult to set up
 These kind of business also requires huge amount of capital to get started
 These also involves lots of paper work in the process.
b)
An organizational structure of a company can be defined as a system or process which is
majorly concerned with managing and directing activities in order to achieve the goals and
objectives(Whitley, 2019). There are various types of structure that helps in running the
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organization in a smooth manner without any hindrances. An organization structure is mainly
divided into three bifurcations which are functional, divisional and matrix structure. A
functional organizational structure is responsible for assigning duties to different small groups
based on their areas of specialization. A divisional organizational structure means division of
groups according to the resources and function based on a product line. A matrix organization
structure can be consid3ered as a combination or functional and divisional having more than one
line of reporting managers as well as diverse range of product line and services. The contrast and
comparison between all the above structures is mentioned below:
Basis of difference Functional Structure Divisional Structure Matrix Structure
Meaning This structure includes
grouping of job tasks
on the basis of
functions of similar
nature.
This structure includes
classification on the
basis of different
business divisions.
This structure includes
execution of a specific
project through cross
functional teams.
Formation The formation of this
structure is done on
the basis of functions
performed in an
organization.
The formation of this
structure is done on
the basis of product
lines or divisions.
The formation of this
structure is done by
choosing the
individuals based on
the need of the project.
Costs involved This structure is
economical with low
costs involvement as
there is no existence of
duplication.
This structure is not
economical as
duplication of work
exist in this.
This structure is
comparatively the
most expensive
because it includes
dual management.
Example TESCO NIKE ADIDAS
c)
Business functions are the activities that are performed and carried out by a company.
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Human Resource Management: This function is considered as an important element of any
organization. Attracting talented candidates, managing employee relations and building a
peaceful environment is key function of HRM(Hazen and et. al., 2018). For example, in Tesco
all the HR experts are playing a major role in developing effective training programmes in
accordance with healthy culture and values.
Production: In production function, the major motive is to produce output with the optimum
utilization of resources. This function is considered as a continuous function which involves
heavy investment in the fixed asset(Kushida and Hirohara, 2020). In context to Tesco, the main
focus of the company is on maintaining the quantity and quality of goods produced. They are
constantly keeping a check on the quality of products at different production stages.
Operations: This function is considered as one of the important part of the business function as
it involves the process of creating goods and services. This function also focuses on the resource
requirement for the process of production(Agrifoglio, Metallo, and Di Nauta, 2021). In relation
to Tesco, operations is there core function which is responsible for planning the operation
strategy that is designed and executed in accordance with objectives of the company.
d)
Organisation culture can be defined as the set of values and practices that helps an
organization to improve its working patterns in order to achieve the goals(Freudenreich, Lüdeke-
Freund and Schaltegger, 2020). This basically works on the path of shared attitudes and beliefs
which are developed to create an essence of belongingness. Creating a great organization culture
also helps in developing and executing a plan to work towards the objectives. The values
inculcated among the employees through a culture have a strong influence on their performance
as well. An effective organization culture can be considered as a key element for making it the
core strength of organization(Lombardi, 2019). A great culture symbolizes positive attribute that
leads to efficient performance. It is considered to be a key advantages that helps in attracting
and grabbing great talent for the company. If a company is having a positive organization
culture, it will directly motivate the employees so that they can focus on their tasks and build a
good level of interaction with other people(Dhaka, 2018). This leads to developing high levels of
workforce engagement resulting to higher level of productivity. While implementing the policies
and processes, organization culture plays an important role in achieving the mission of the
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company. In addition to this, when it comes on building a good public image and reputation, a
strongly positive work culture environment helps the company in attaining that(Dhaka, 2018).
Organization culture is also playing a vital role in building a high-performance culture which
improves overall employee experience efficiently.
For example: Asda which is considered as one of the popular companies of UK, is
aiming at building an organization culture with an essence of equality and mutual respect among
the employees at workplace. This helps in increasing the level of motivation which directly
affects the performance levels of the employees in a positive manner at Asda. This is ultimately
helping the company in achieving high growth and productivity efficiency in regular basis.
Conclusion
From the above study, this has been analysed that in order to enhance the overall
performance of company it is highly important to understand the structure of business
organization. The report also helps in analysing the different advantages and disadvantages of the
various types of business organizations namely, sole trader, partnership, limited company and
many more. The detailed analysis of the different organization structure such as human resource
management, product operation, finance and so on is done in accordance with its impacts on
functional managerial activities in the report. In addition to this, a study and analysis of
understanding the importance of culture towards company and its employees in order to achieve
success is also done in detail. Therefore, a business organization helps in creating, coordinating
and developing efficient communication between different departments of the organization to
achieve success in result.
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References
Books and Journals
Akhavan, P. and Philsoophian, M., 2018. How to Increase Knowledge Management Maturity
Level?-An Empirical Study in a Non-Profit Organization. IUP Journal of Knowledge
Management. 16(3).
Dimitrova, V. E., 2019. March. The Impact of Couching on the Emotional Intelligence of
Managers in the Organization. In 2019 International Conference on Creative Business
for Smart and Sustainable Growth (CREBUS) (pp. 1-4). IEEE.
Whitley, R., 2019. On the nature of managerial tasks and skills: their distinguishing
characteristics and organization (pp. 337-352). Routledge.
Hazen, B.T and et. al., 2018. Back in business: Operations research in support of big data
analytics for operations and supply chain management. Annals of Operations
Research, 270(1). pp.201-211.
Agrifoglio, R., Metallo, C. and Di Nauta, P., 2021. Understanding Knowledge Management in
Public Organizations through the Organizational Knowing Perspective: A Systematic
Literature Review and Bibliometric Analysis. Public Organization Review, 21(1).
pp.137-156.
Freudenreich, B., Lüdeke-Freund, F. and Schaltegger, S., 2020. A stakeholder theory perspective
on business models: Value creation for sustainability. Journal of Business Ethics, 166(1)
pp.3-18.
Lombardi, R., 2019. Knowledge transfer and organizational performance and business process:
past, present and future researches. Business Process Management Journal.
Dhaka, R.S., 2018. The Information Commissions in India: A Jurisprudential Explication of
Their Powers and Functions. Indian Journal of Public Administration, 64(4), pp.703-
716.
Kushida, K. and Hirohara, M., 2020. Advanced Pharmaceutical Management Functions in Home
Pharmaceutical Care. Yakugaku Zasshi: Journal of the Pharmaceutical Society of
Japan, 140(7). pp.877-884.
Meirysa, S. and Wardarita, R., 2021. Social context and literature sociological functions in the
novel about you by tere liye. JPGI (Jurnal Penelitian Guru Indonesia), 6(3). pp.742-
747.
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