Understanding Business Organisation - Types, Structures, Functions and Impact on Success

This study material covers the types of business organizations, tall and flat business structures, business functions performed at Tesco, and the positive impact of organizational structure on success. The study material provides insights into the subject with relevant examples and references.

UNDERSTANDING
BUSINESS
ORGANISATION

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
Types of Business organisations............................................................................................3
TASK 2............................................................................................................................................4
Distinction between tall and flat business structure...............................................................4
TASK 3............................................................................................................................................5
Business functions performed at Tesco..................................................................................5
TASK 4............................................................................................................................................6
Concepts of Organisational structure and its positive impact over the organisational success.. 6
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business organisation is referred to an entity that is formed with an aim of carrying out
commercial activities. The motive of the business organisation is to earn profits while
maximising wealth. There are mainly three types of business organisation structure namely, sole
proprietorship business, partnership business and limited liability corporation. The study will
comprise of pros and cons of each organisation structure. Also, the study will throw light upon
the business functions followed at the primary organisation (Connelly and et.al., 2019).
The primary organisation considered for the study is Tesco. Tesco is a UK based
multinational organisation that is a part of retail sector. Tesco deals in sale of general
merchandises as well as groceries across the globe with the highest revenue generating
organisation in the UK.
TASK 1
Types of Business organisations
Business organisation is referred to an entity that deals in commercial activities with an
aim of earning profits. There are three broad categories for the legal status that can be acquired
by an organisation. The three types of business organisations are Sole proprietorship, partnership
and limited liability corporation.
Sole proprietorship business is referred to a type of business that is owned and operated
by a single person solely. It is considered as the easiest of all the business organisations to
establish and operate. The sole proprietorship business has its pros as well as cons. The sole
proprietorship business requires less documentation and also the profits under this business
structure is taxed once under the personal income of the owner. The disadvantage is that the
business organization might lack specialised skills to operate the business. Also, the sole
proprietor of the business organisation has unlimited liability which means that in case of the
organisation faces a shut down, then the proprietor will have to sell his personal assets to repay
the debts. An example of sole proprietor business can be a grocery store (Morakanyane, Grace,
and O'Reilly, 2017).
Partnership business is referred to a business structure that has two or more people to
operate and establish a business. Partnership business structure usually consists of a partnership
deed which is a mutual agreement between the partners for the profit sharing and business

operations. The partnership business has advantages as well disadvantages. The advantage of
partnership business is that it is easy to establish and it continues even after the death of any of
its partners. Also the risk bearing by all the partners is equal which is a benefit but so it the profit
sharing among them which can be considered a drawback (Ordonez-Ponce, Clarke and Colbert,
2021). Another disadvantage is that the business can witness disagreements and conflicts which
may affect the productivity of the organisation. An example of partnership business can be
Whatsapp.
Limited liability corporation can be referred to a business organisation which has a
separate legal identity from its owners and posses a common seal. The owners under a limited
liability organisation possess risk only upon their investments but have a protection against their
finances or personal assets of the owners. The various pros of establishing a limited liability
company are that it is tax efficient way of operating business and also has safety of the personal
assets. It also helps the business to have a professional status. The cons of Limited liability
company are that it is a very complex process to establish a limited liability company. The
limited liability organisation is required to appoint an accountant as well. An example of limited
liability corporation is Sainsburry.
TASK 2
Distinction between tall and flat business structure
An organisation follows an organisational structure that can be either a tall organizational
structure or a flat organisational structure. An organisation structure facilitates communication
and decision making at an organisation. Tall business structure is referred to a business structure
which is vertical or follows a business structure that flows from top to bottom. In tall business
structure the culture and goals are formulated by the top level management wherein the the
formulated strategies are communicated to the people at middle and low level management. Flat
business structure is referred to the business structure that is horizontal in nature. An
organisation with flat business structure is more likely to have a lesser number of managers and
supervisors. In a flat business structure the employees of lower and middle level have more
freedom and authority in contradiction to the rigid command chain that is followed by Vertical
business structure (Rahman, Islam and Abdullah, 2017).

Tall organisation structure has various pros and cons. Tall organisational structure
facilitates the organisation to have a clear chain of command where the employees understand
the person who formulates important decisions in the organisation as well as facilitates
employees to identify the people responsible for specific tasks. Tall business structure has a
disadvantage that this kind of organisation has various managers and hence decision making
becomes a time consuming process (Tajudeen, Jaafar and Ainin, 2018). It can also affect
motivation and morale of the employees of the organisation. An example of tall business
structure can be Tesco.
Flat business structure also has its pros and cons. The advantage of flat business
structure at the organisation is that it facilitates better communication in the organisation that
facilitates better opportunity for organisational growth. It saves time in the decision making
process of the organisation. The disadvantages of flat organization structure is that it consists of
less managers that may lead to inefficiency of the business. It may at times create confusion at
the organisation regarding the roles of the various employees. An example of flat business
structure is Tesla.
TASK 3
Business functions performed at Tesco
Each organisation performs various functions in order to accomplish the organisational
goals. Business functions help the organisation to acquire the aims and objectives through a
proper functioning. There are various kind of business functions such as sales, marketing,
finance, operations, customer service, etc. The various business functions performed at Tesco are
discussed below-
Finance function is followed by Tesco in order to maintain and assess an appropriate
financial position of the organisation. The finance department of Tesco consists of various book
keepers, tax attorney as well as accountants. The employees of finance department are required
to have a track of all the financial deals of the organisation. The finance function at Tesco is
important in order to ascertain the various cash in flows and cash out flows of the organisation
that can be helpful in liquidity management at the organisation (Sarja, Onkila and Mäkelä, 2020).
Operations function basically revolves around the warehousing and distribution function
of an organisation. The employees of operations and sales are required to manage and supervise

the storing and transportation of the various merchandises that the organisation deals in. The
operations and sales department of Tesco is responsible for planning and taking decisions
regarding the warehousing and transportation of the goods with the help of a suitable software. A
suitable software will facilitate the organisation to manage its inventory.
Sales function facilitates the organisation to build brand loyalty through its products in
the market. The sales department is responsible for establishing loyalty and trust between the
business organisation and the customers(Velikova, 2021). The sales department of Tesco is
responsible for enhancing the sales at the business organisation that will further generate better
revenues. Revenue generation is quite important for the business organisation in order to
generate profits.
TASK 4
Concepts of Organisational structure and its positive impact over the organisational success.
An organisational structure is basically defined as the appropriate way to behave in the
organisation. An organisational culture is basically a blend of various beliefs and values that are
formulated by the leaders and the managers at the organisation. The beliefs and values are
communicates to the other employees with the help of various methods in order to shape the
behaviour and understanding of the organisation. An organisational culture can be either
negative or positive. But the emphasis of the organisation is mainly upon the positive
organisational culture that helps the organisation to achieve success.
The positive organisational culture has various positive impacts over the success of
Tesco. The various impacts of positive organisational culture include enhancing employee
engagement at the organisation, attraction and retention of employees along with better
performance. A positive organisational culture is more likely to promote employee engagement
at the organisation. A better employee engagement will help in providing mental satisfaction to
the employees. A positive organisational culture allows the organization to attract and retain the
various employees due to their positive culture and work policies. The positive work culture of
Tesco is hence more likely to have better performance as the productivity and the performance of
the employees will increase (Zerjav, 2021).

CONCLUSION
The conclusion can be made from the study that understanding the business organisation
is quite significant. The study has discussed three types of organisations that can be chosen by a
business for establishment. The pros and cons of sole proprietorship, partnership and limited
liability company have been discussed in the report along with the organisational examples. The
report has further highlighted the two types of organisational structure along with distinction
between the tall organisational structure and flat organisational structure. The examples of both
the organisational structure have also been highlighted. The report has discussed various
business functions in the organisational context. The business functions highlighted in the report
in context of the primary organisation are finance, sales and operations functions. In the end, the
report has explained the concept of organisational structure along with the impact on its success.

REFERENCES
Books and Journals
Connelly, C. E. and et.al., 2019. Understanding knowledge hiding in organizations. Journal of
Organizational Behavior. 40(7). pp.779-782.
Morakanyane, R., Grace, A. A. and O'Reilly, P., 2017. Conceptualizing Digital Transformation
in Business Organizations: A Systematic Review of Literature. Bled eConference, 21.
Ordonez-Ponce, E., Clarke, A. C. and Colbert, B. A., 2021. Collaborative sustainable business
models: Understanding organizations partnering for community sustainability. Business
& Society. 60(5). pp.1174-1215.
Rahman, S., Islam, M. Z. and Abdullah, A. D. A., 2017. Understanding factors affecting
knowledge sharing: A proposed framework for Bangladesh’s business
organizations. Journal of Science and Technology Policy Management.
Sarja, M., Onkila, T. and Mäkelä, M., 2020. A systematic literature review of the transition to the
circular economy in business organizations: Obstacles, catalysts and
ambivalences. Journal of Cleaner Production. p.125492.
Tajudeen, F. P., Jaafar, N. I. and Ainin, S., 2018. Understanding the impact of social media usage
among organizations. Information & Management. 55(3). pp.308-321.
Velikova, S. K., 2021. Understanding the Impacts of Altering Safe Harbor Plans within Small
Business Organizations.
Zerjav, V., 2021. Why Do Business Organizations Participate in Projects? Toward a Typology of
Project Value Domains. Project Management Journal. 52(3). pp.287-297.