Business Types and Functions: Understanding Business Organisation

cMGBBT0UBN: Understanding Business
Organisation
September 2022-2023
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INTRODUCTION
An entity established with the purpose of conducting business is a business organisation.
Such an organisation is built on a system of law that regulates contracts and trade, property
rights, and incorporation. Depending on how they were established, who controlled them, and
how they were managed, business organisations can be classified into a number of different
types. A corporation, a partnership, and a sole proprietorship are the three primary types of
business entities (Fayziev, 2020). Each type of corporate entity has benefits and drawbacks.
The essay will discuss various business forms, as well as their benefits and drawbacks. There
will be comparison of tall and flat structure of an organisation with their advantages and
disadvantages. Further, there will be discussion of different functions and its impact on
management activities on organisation and people within the business. Lastly there will be
brief regarding organisation culture and how a positive culture can impact on success of
organisation.
MAIN BODY
Any combination of businesses that a single person or group of people jointly control is
referred to as a business organisation. An organisation may own one or more businesses.
There can be only one organisation within a firm. There are various types of business
organisation available for individual to grow in the market. For further understanding the
three different types of business such as, sole trader, partnership and limited company in
detailed are mentioned below.
A sole proprietorship is straightforward to establish and dissolve, is subject to few
regulations, gives the owner complete discretion, and frequently incurs negligible operational
expenses. The owner is in responsible of keeping daily financial records, while the year-end
accounts are handled by a professional accountant (Matschke and Brösel, 2021).
Advantages- Get going right away; Fewer fixed overhead; Total command. Disadvantages-
Unlimited liability; Fewer tax planning opportunities; Barriers to finance.
A partnership is different from a sole proprietorship in that it involves two or more
people pooling their skills to jointly own and run the business. Due to their unlimited
responsibility, sole proprietors and single traders have similarities. Partnerships typically
have the benefits of shared accountability, lessened time demands on each partner, and a
higher degree of financial clout and specialisation. Making decisions, though, can be
challenging. Additionally, one partner can think the other isn't working hard enough or is

making an unfair amount of money. Advantages- Income splitting is a choice that has the
advantage of generating large tax savings; Partners' commercial dealings are confidential; In
the event that circumstances change, changing the legal structure is simple. Disadvantages-
The partners are fully liable for the company's debts; There is a chance of disputes and
tension between the partners and the management; Each partner represents the partnership on
behalf of the others and is accountable for their actions.
Limited corporations come in two varieties: private limited companies and public limited
companies. The latter are generally well-known businesses that operate on the stock market,
as opposed to the former, which are frequently small businesses that do not. These businesses
have their own set of legal rights and obligations and are registered with Companies House,
as compared to sole proprietorships and partnerships. The two equal parts of ownership are
represented by shares. Whoever holds one or perhaps more shares of company stock is
known as a shareholder (Davydova and Koneva, 2020) Advantages- The business owner
bears little accountability under a limited corporation; The law views a limited company
business as being separate from its owner; The director may put money into a corporate
pension plan before taxes as an owner of the limited firm. Disadvantages- Information
pertaining to people and companies will be made public; The requirements for accounting are
more difficult and time-consuming; Strict procedures must be followed when withdrawing
money out of the business.
Tall structures are hierarchically complex organisational structures. This style of
organisation is referred to as "traditional" and "mechanistic," among other things. The
number of employees who report to a leader has a short range of authority in a tall structure.
Many bureaucratic public sector businesses execute their operations with the help of an
enormous structure (Colpan and Hikino, 2019). Advantages- Smaller control horizons;
Everyone is aware of their roles and duties, and they are well stated. Disadvantages- Longer
communication channels; Due to the abundance of bosses, employees feel less motivated. A
tall structure is a hierarchically complex organisational system. In a tall structure, a restricted
span of control is seen. Making judgments in a tall structure takes longer since there are more
tiers of staff to take into account. Managing a tall structure is expensive due to the additional
layers of people involved (Bogoviz and et. al., 2019). There are many opportunities for
advancement in a tall structure.