Understanding Business Organizations - Types, Functions, and Impact of Management Activities

This article discusses the different types of business organizations such as sole trader, partnership, limited liability partnership, and limited company. It explains their functions and the impact of management activities on marketing, operations, finance, and human resources. The article also provides references for further reading.

UNDERSTANDING BUSINESS
ORGANISATIONS

Table of Content
INTRODUCTION............................................................................................................................3
MAIN BODY...................................................................................................................................3
VARIETIES AND FUNCTIONS OF BUSINESS ORGANIZATIONS....................................3
IMPACT OF FUNCTIONAL MANAGEMENT ACTIVITIES.................................................5
CONCLUSION................................................................................................................................6
REFERENCES.................................................................................................................................7

INTRODUCTION
Business organization is an establishment which is formed for the motive of carrying on
business enterprise. Comparable companies are divined on the system of law contract and
interchange of governing and belonging rights. Business organization is how the business is
orthodox, and controlled. There are benefits and drawback in every category of business
organization. The citation of being organized is called organization. In business if one or more
than one person are controlling then business is called business organization.
MAIN BODY
VARIETIES AND FUNCTIONS OF BUSINESS ORGANIZATIONS
The types of business organization such as Sole trader, Partnership, Limited liability
partnership, and limited company.
Sole Traders
An employee who takes on the profession by their own (Kasahun and et.al., 2020). This
is the easiest form of business proprietorship, this is the business which is run by for their own
benefits. Sole trader is owned by one person and the person only pays the taxes on which the
business earns the profit like explained the person owns self ownership. The other name for sole
trader is individual entrepreneurship which are basically holding their own business entity, self-
employed person. In this business there is not any director who runs the company but a single
person. There are some characteristics of a sole trader such as full control because the business
ownership is owned by self, secondly the person who owns one business is not a separated legal
identity, they are considered the same.
Function of a sole trader;
A sole trader manages the business and takes the responsibility on self. The person will be
responsible for the transaction from the business's. As the individual sole is in-charge for every
liability and the debts which are experienced by the business. When the owner feels that it is time
to sell the product then only the product is going to sell.
Partnership
Partnership is based on the two types such as general and limited. Partnership is based on
when a business is run by two persons such as the both partners are dividing many things like
money property, etc. to the company when they both are running and the partners must be liable
on each other, each partner is answerable for all the debts. Who invests in the partnership are

very much responsible for the agreement between both as a security of own. Most of the partners
should limit their liability for business investment(Ruhland, Pascal, and Felix Wiese et.al
2022). Each of the partner may share the profit of the business. The main task of partnership is
that a person needs to find a liable partner on whom the person can gain trust. In partnership
business's a person has the full accountability for the actions. This business's are managed by two
or more peoples and it shares the profits and responsibilities in between every partner. Such as
doctors frequently form a restricted responsible partnership.
Features of partnership;
A business partnership requires a proper agreement between the partners which is a
alliance of two or more grouping. Sharing of profile which means the group has to share gains
and financial loss of the trading interest, and this is vital.
Limited company
Limited company refers to single company or a whole group of similar or different
companies that are controlled or managed together as one single organization (Mondliwa. and
et.al., 2017). It can also be referred to as a LC. It has its own identity or entity which is separate
from the owners of it. These are eligible to make their profits, held liable for any legalities and be
taxed. These kind of business structures offer a strong protection to the owners as they are not
held liable for any losses incurred, but in comparison to other structures the cost of forming a
corporation is always higher. An example of a limited company is, IKEA Ltd., which is a world
renowned name. It has many functions as it is one of the most complex business structures, some
of which are advantageous for the organization, employees and the shareholders and some are
disadvantageous. Some of these functions that only a limited company possesses are mentioned
in the discussion;
Firstly it limits the liability of the owners of the company in regards to the losses or debts,
but then the the profits too belong to the organization itself. As the owners have limited amount
of liability their personally owned assets do not tend to be seized for the payment of personal
debts. The ownership of the corporation is easily transferable to new owners if required. But
starting a corporation is expensive, complex and time consuming.
Limited liability partnership
This structure of business is very similar to the partnership structure of business discussed
above, only that the liability of the partner in this case is limited in accordance to the amount of

money invested by them in particular in the business (Junmin. and Xiao., 2017). In the case of
LLP the companies are implied to be registered at the companies house. Annual-reports or
accounts of the business need to be prepared and then filed for further tax evaluation and
understanding of the business. For example if a firm XYZ is an LLP, owned by X,Y and Z
according to an ownership ratio of 1:2:3, then the profits earned and losses incurred by the
business will be distributed among the partners in the same ratio. An LLP too has several
functions from which some of them are beneficial and some are not, to the organization and the
workers over there. Some of them are discussed below;
Limited liability of the members protects their personal assets in case of any liability
abundance on the business. The distribution of the profits and losses is in accordance to the ratio
they have decided by doing a written agreement. The LLP is separate legal entity, it can purchase
property, employ staff, as well as come into contracts, etc. Any LLP has to compulsorily have
two members, otherwise it has to be dissolved.
IMPACT OF FUNCTIONAL MANAGEMENT ACTIVITIES
The four major sectors an organization focuses on are marketing, operations, finance and
human resources. Further it is mentioned how the functions of management that are planning,
leading, organising as well as controlling affect the different sectors of the organization and the
employees working in it.
Marketing
This department is mainly concerned with finding, analysing and evaluating the needs
and requirements of the potential consumers and also focuses on promotion of the products and
services of the company (Deepak. and Jeyakumar., 2019). Marketing management is basically
analysing, planning, applying and controlling programmes that are precisely designed for the
purpose of bringing out the desired exchanges with the potential consumers for either personal or
mutual gains. An efficient marketing management ensures that various aspects in the market such
as labelling, branding, etc. are managed properly by the manager. Engagement of the employees
is very essential to grow one's business, it gives motivation and a sense of responsibility to the
employees, and hence maximizes their productivity.
Operations
This department focuses on the production of the goods or offering the services and if
they are of the required quality demanded by the customer or not (Barnes., 2018). The functions

that operations management consists of are operational planning, financing, designing of product,
control over the quality, forecasting, strategy development and lastly supply chain management.
This helps an organization to increase profits by reduction of the costs. The employees of the
organization are under supervision and also the employees are aware of the increase in profits,
hence the productivity rate increases.
Finance
This department is responsible for the money flowing within the organization, that is, the
management of the money that comes in and goes out of the organization (Shim., 2022). It deals
in raising finance, preparation of budgets, and preparation of final accounts. The functions of
financial management involve estimating requirement of capital, capital composition, selection
of fund sources, price controlling, pricing, investment of capital and management of funds. It
supports in profit maximization, increases the overall value of organization and enhances
economic stability. It assists the employees for acquiring funds and also managing those funds, it
also provides with insights for making necessary financial decisions and also helps them with
fund allocation and cutting down costs.
Human resources
This department focuses on the employees or human resource or personnel of the
organization, which basically involves focusing on recruitment, selection, training of staff,
organizational relationships and health as well as safety of employees (Mathis. and et.al., 2016).
Its functions involve employing, developing, compensating, amalgamating as well as
maintaining the human resources of an organization. Efficient HRM helps in satisfying the
employees and encouraging them for a successful company. Training, skills and knowledge help
in increasing the competitive advantage of the business. An efficient and proficient organization
knows that if the employees are trained, knowledgeable, productive and motivated, it helps in
their growth as well as the development and growth of the organization they are working in.
CONCLUSION
The business organizations are a complex structure to understand, the above discussions
briefly shows the different types of organizations and the differentiated functions followed by
those accordingly. Also the discussion focuses on the impact the functional management
activities have on the organization's working and the people working in it.

REFERENCES
Books and journals
Barnes, D., 2018. Operations Management. Macmillan International Higher Education.
Deepak, R.K.A. and Jeyakumar, S., 2019. Marketing management. Educreation Publishing.
Junmin, Z.H.A.N.G. and Xiao, Z.H.A.N.G., 2017. Limited Liability Partnership, Legal
Environment and the Value of Audit Insurance. Collected Essays on Finance and
Economics, 224(9), p.65.
Kasahun, Abraham Kamfeso et.al 2020 "The Impact of Working Capital Management on Firms’
Profitability-Case of Selected Sole Proprietorship Manufacturing Firms in Adama
City."Journal of Economics and Finance 11.1: 45-55.
Mathis, R.L. and et.al., 2016. Human resource management. Cengage Learning.
Mondliwa, P. and et.al., 2017. GROWTH AND STRATEGIES OF LARGE, LEAD FIRMS-
REMGRO LIMITED COMPANY ASSESSMENT.
Ruhland, Pascal, and Felix Wiese et.al 2022 "FinTechs and the financial industry:
partnerships for success." Journal of Business Strategy ahead-of-print
Shim, J.K., 2022. Financial management. Professor of Finance and Accounting Queens College
City University of New York.