Understanding Business Organizations: Types, Structures, Functions, and Organizational Culture

This essay from Desklib discusses the different types of business organizations, including sole trader, partnership, and public limited company, as well as the differences between tall and flat organizational structures. It also explores the functions of different departments within a business, such as human resources and finance, and the importance of organizational culture in achieving success.

Essay Understanding Business
Organizations

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Discussing different type of business organization:....................................................................3
Identifying difference between flat and tall structure of business:..............................................4
Exploring different function of the business:...............................................................................5
Defining organizational culture and its importance in the business process:..............................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................1

INTRODUCTION
Business is one of the most common and important term in today's world, this simply
means dealing of goods and service in the market and generating surplus profit. Business
organization is structure of manufacturing goods and fulling the demand of the customer, this
may include different function like human resource, finance and operation to make this possible
(Cribb, Miller and Pope, 2019). This report will discuss type of business organization and its
different type of function. Later this report has discussed tall and flat structure of organization
and discussed different function of the business world. At last organizational culture and its
impact on business will be discussed.
MAIN BODY
Discussing different type of business organization:
Sole trader: sole trader is one of the most common type of business structure that include only
one individual who runs and manage business entity. Sole proprietor try to handle business
without any partner or public interference, these are usually small business owner run business
with family or one or two employees (Fjeldstad and Snow, 2018). Small coffee shop or general
store are run by sole trader. However, there are many large scale companies that run by sole
trader but with proper team of management. Sole trader enjoy surplus profit hence have to bear
losses as well, there are certain advantage and disadvantages as well, these are:
Advantage:
 Enjoy surplus profit alone/.
 Have freedom to make decision.
 Sole trader does not require any legal duties.
Disadvantages:
 Have to bear risk, failure and losses.
 Limited to expand due to lack of capital.
 Personal loan and limitation on financial capacity.
Partnership: Partnership is one of the most common but most powerful type of business
structure that include sole trader and one or more partner, this type of business enjoy certain
benefits but have to share profit as well. Partnership is successful type of business that allow sole
trader to either tie up with financial partner or two persons can start a new business firm under
partnership agreement. Partnership allows regular flow of capital which impact smooth business

operation, even expertise where shared among different partner. Mainly investor try to become
equity partner of the sole trader, there are certain advantage and disadvantages of partnership,
these are:
Advantage:
 Have financial benefit as no extra efforts will be required.
 Partnership firm are more capable to manage business operations even on international
market.
 Partners share losses with each other and manage risk together.
Disadvantages:
 Partnership means profit will be shared with partner.
 Partners may face conflict of interest allowing firm to end up in bad way.
 Too many legal procedure to form a partnership firm.
Public limited company (PLC): PLC is one of the most common type of business in the UK,
this is a corporation owned by common public. Anyone across the country can buy shares of plc
and can become part of the company, this type of business is uasally run by board of director
who have max. power and interest in the company (Harris, 2019). Plc allot unit in lisited share
market of the company, an individual can purchase those share and enjoy return on investment.
Some famous example of plc may include; Tesco plc. There are certain advantages and
disadvantages of public limited company (plc), these are:
Advantages:
 Do not have insufficient funds as shares are allotted to public.
 Capital can be easily raised through market with the help of unit.
 There is less chance of winding up because no personal interest is considered.
Disadvantages:
 May fail business operations due to lack of interest.
 Plc can be compulsory wind up if court make a decision.
 Lack of specific sum and high risk of investment.
Identifying difference between flat and tall structure of business:
Basis Tall Flat
Definition Tall structure means company
might have different level of
Flat structure means there
might be limited number of

hierarchy or different level in
one business unit (Lee, 2022).
level in the company and
might have less business unit.
Control In tall structure of the
company, narrow span of
control is adopted as tall does
not require much control in the
process.
In flat structure of the
business, there might be wide
span of control because units
are widely spread and need
more control over each unit in
the process.
Decision In tall structure, more time is
required to make an decision
because each unit have their
own changes in the decision
and final may delay.
In flat structure, decision are
taken quickly as there is
limited level and each level
take less time to provide final
conclusion.
Cost Managing tall structure is
costly to business as every
level required different budget
and cost to perform
expenditure.
Managing flat structure may
be less costly because there is
less level. However, cost is
also high here because of wide
spread of management in the
process.
Opportunity In this type of structure
opportunity flow from high to
low and this flow is quite
beneficial for the company and
other stakeholder.
In this type of structure,
opportunity are less because of
complexity in structure as too
wide too complex process.
Exploring different function of the business:
Human resource: Human resource management is one of the most important department of the
business, this not only manage people but this allows company to gain competitive advantage in
the market (Mathis and et.al., 2016). HR department plan betterment of people, from crafting the
best policy for company to providing solution to employee's query, HR department will work

effectively. HRM do perform basic function including hiring and selecting of talent, management
of talent and training and development to sharpen the skills of employee for better performance.
Finance department: finance department is most important pillar of the company, it is very
clear management of finance is most challenging task which need skills. Finance department not
only manage funds of the company, but they develop certain strategies to manage cost that occur
in the production and operation process (Officer, 2021). From managing capital to raising funds,
finance department have their own role and responsibility to keep business in smooth way.
Finance is oxygen needed by every other department.
Production and manufacturing department: production department can be seen in those
organizations who have product based structure, when production is done, company generate
max. profit by selling finished product and service. Production department have control over
company because they are performing most important task, this department design budget from
production, decide wages to worker and management of raw material to make company
internally stronger in the process.
Defining organizational culture and its importance in the business process:
Organizational culture is one of the most important element in the process to gain
success, in today's modern world, culture is demanded by every company because they know
diversity in the culture may bring competitive advantage to the business. It is very clear that
every business want diversity in the workplace but it is very challenging to manage cultural
diversity as conflict of interest can be seen in the process (Lubis and Hanum, 2020). Culture
allows business to work together with diverse background who have unique set of experience
providing company competitive advantages in the market. There are certain positive impact of
cultural on the business organization, these are:
Competitive advantage: Diverse culture is key to get competitive advantage in the market
because diverse culture have unique way of thinking and might carry insight of competitive
market. Working with these employees and understanding their behaviour allow company to
understand the market from where they belong to. Company get advantage if they consider
viewpoint of culturally diverse people in the workplace of the business organization.
Healthy workplace: business who promote diversity in the culture might have healthy
workplace because employee from different background have their own viewpoint and thoughts
which create uniqueness in the workplace. Healthiness is promoted with the help of culture,

working collectively with different employee may allow company to gain experience and
improve their performance in the market.
Better decision-making: decision-making is improved with the help of culture of the business
because each diversity have their own thoughts and viewpoint allowing company to make right
decision and gaining quicker success in the market. It is very clear that business might consider
decision of their own, but they understand and carefully examine viewpoint of each employee to
gain exact right insight of the industry.
CONCLUSION
This report has discussed business organization and its importance in today's world. Later
this report has discussed different types of business including sole trader, partnership, public
limited company and understand their advantages and disadvantages in the process. Later in this
report, difference between tall and flat organizational structure is been discussed with different
basis to understand it more clearly. Later different organizational function are been discussed
including human resource management, finance department and production and manufacturing
department and their role in the business to gain competitive advantage. At last organizational
culture and its importance is been discussed with positive impact.

REFERENCES
Books and journals
Cribb, J., Miller, H. and Pope, T., 2019. Who are business owners and what are they doing? (No.
R158). IFS Report.
Fjeldstad, Ø.D. and Snow, C.C., 2018. Business models and organization design. Long range
planning, 51(1), pp.32-39.
Harris, T., 2019. What is a company?. In Start-up (pp. 39-51). Springer, Cham.
Lee, S., 2022. The myth of the flat start‐up: Reconsidering the organizational structure of start‐
ups. Strategic Management Journal, 43(1), pp.58-92.
Lubis, F.R. and Hanum, F., 2020, December. Organizational culture. In 2nd Yogyakarta
international conference on educational management/administration and pedagogy
(YICEMAP 2019). Atlantis Press (pp. 88-91).
Mathis and et.al., 2016. Human resource management. Cengage Learning.
Officer, C.F., 2021. Finance Department. Mount Isa Hospital, Mount.
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