Business Organisations: Structure, Advantages, Disadvantages Analysis

This report provides a comprehensive analysis of different types of business organizations, including sole traders, partnerships, public companies, private companies, and voluntary organizations. It details the advantages and disadvantages of each structure, offering insights into their operational characteristics and legal frameworks. The study further examines the organizational structures of Merrill Lynch's clients, Aviva plc and JP Morgan, focusing on the functional and divisional structures. It explores the relationships between different organizational functions, such as marketing, HR, and finance, highlighting how these interactions contribute to overall business performance and strategic alignment. The report concludes by summarizing the key findings and providing references to relevant sources.

INTRODUCTION
Business environment can be define as that environment in which an organization exist and have
a threat related to macro and micro factors. The report will give the details of different types of
organisations. The advantages and disadvantage of different types of organisation. Further the
study will give the difference between organisational structure based on their objective, size,
scope and legal structure. The report will also give organisational structure of Merrill Lynch
clients and their relationship between different organisational structure.
Task 1
LO2 Different types of organisations and their advantages and disadvantages.
Sole trader
A sole trader is a person who sets his own business. They employee other people for
work but they are the owners. As for a sole trader the business is owned by himself and grown by
the owner itself any profit or loss all are beard by owner itself (Prajogo, 2016).
Advantages- The sole traders are their own boss. All profits is kept by the owner only. As they
are the owners it is easy for them to change the business structure. The process of setting up as a
sole trader is easier than setting up limited company.
Disadvantages- All the risk is beard by the owner only so it is very risky. Decision making is
very difficult for a sole trader as all the decisions are taken by owner only. Raising sources for a
sole trader is difficult.
Partnership firms
A partnership is a relationship between the individuals who agrees to share the profit of a
business. In partnership whether it is a loss or profit, all is beard by partners according to their
partnership deeds(Deasy and et.al., 2016).
Advantages- Each partner files the profits or losses of the business on his or her own personal
income tax return. Management is good in partnership firm as all partners take interest in
managing the business affairs. Sharing of risk as, all the risk is shared by partners.
Disadvantages- There is no legal status in partnership firm. Partnership firms not exist for an
infinite period of time. Liability of partners in partnership firm is unlimited as any partners can
be called to pay the debts.
Public company
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The objective of public company is to provide good quality products to the customer at
reasonable prices. In public company the ownership is shared by shareholder, the board, the
management the public shareholders. NHS is publicly funded health care system for England. It
is the largest single payer health care system in the world (Hillary, 2017). It also deals in tertiary
sector.
Purpose- The purpose of public company is to serve the public. Profit making is not their sole
aim. The objective of NHS is to improve lifestyle, health outcome and well-being of people.
Legal entity- NHS has been established under health and community act, 2003. It has the
primary purpose to provide service to NHS patients.
Advantages- public company can raise large amount of capital. There is more growth and
expansion opportunities in public firms. Shareholder have limited liability.
Disadvantages- There are many legal formalities in staring a public company. Public company
can grow very large which results in mismanagement and slow decision making. Original owners
may lose control on business.
Private company
The objective of private company is to provide high quality products to customers by
charging high prices. Merrill Lynch is an American investment company. The firms headquarter
is in new York city. Private company deals in tertiary sector as they provide job opportunities to
people.
Advantages- Private company has a separate legal entity. Private company easily transfer their
shares. Formation of private company is easy. Decision making is very fast in these type of
organisation.
Disadvantage- Administration cost is high in private company. Shares of a private company are
not listed on stock exchange. There is poor protection of members in private organisation(Belás
and et.al., 2015).
Voluntary Organisations
A voluntary group or union is a group of unions who enters into an agreement as
volunteers to form to accomplish a purpose. The purpose of voluntary organisation is not to earn
profit but to do social welfare. Oxfam is a voluntary organisation working together with partners
and local communities in more than 90 countries(Jaakkola and et.al., 2016). Their aim is to
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change the world by mobilizing the power of people against poverty. This organization also
deals in tertiary sector.
Advantages- The co operations is owned and managed by its members. Voluntary sectors are
very flexible in their working.
Disadvantages- These organisations are less reliable as compared to other sectors due to funding
problems and personal difficulties. There is lack of proper accountability in some voluntary
sector organisations.
Public company Private company Voluntary organisation
Objective The objective of NHS is
to keep people healthy
and reduce health
inequalities.
The purpose of the
Merrill Lynch Wealth
Management “Risk and
allocate resources which
can be utilise effectively.
Oxfam is to help create
lasting solutions to the
injustice of poverty.
Size The size of NHS
company is very large.
They have around
1,50,000 doctors and
3,20,000 nurses and
midwives.
The size of Merrill
Lynch is medium. They
have around 15,100
employees.
The size is very large as
Oxfam is an
international
confederation of 19
organisations.
Scope The scope of NHS is to
improve the quality of
services. Care for
children and young
people. Support families
from poor
outcomes(Epifanova and
et.al., 2015).
The scope for Merrill
Lynch is to strengthens
its networks to financial
advisors. And to provide
best financial services to
its customers.
The scope of Oxfam is to
saves life and rebuild
livelihood at the time of
crises.
Legal
Structure
NHS took legal form
under national health
service act 1948. Today
Merrill Lynch has
attempted to limit
customer rights, laws
Oxfam have
responsibility in law of
charity. The company
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the legal structure is
NHS is governed by the
present version of the
National health service
act 2006.
which are best suited to
customer protection.
Merrill lynch continues
to use choice of law
provisions.
follows the charities
protection and social
investment act 2016.
TASK 2
Organisational structure of Merrill Lynch clients and their relationship between different
organisational structure.
Aviva plc
Aviva plc is a British multinational insurance company headquartered in London,UK.
Aviva is the largest general insurer and pension provider. Aviva plc is the client of Merrill Lynch
organisation.
The organisational structure followed by the Aviva plc is functional organisational
structure(Hillary, 2017).
Functional organisational structure
The functional structure is followed by the Aviva plc. In this type of structure there is an
hierarchy which has been followed. The top most position is of CEO which makes all the
decisions. All the managers lie below them. Aviva is been engaged in following this structure.
This helps them in making the relationship between managers and CEO better. It makes the work
more flexible. On the top there is CEO and further his functions are divided into marketing, sales
and services.
Figure 1 functional Structure.
(Source: Functional structure, 2015.)
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JP Morgan
JP Morgan is an American multinational investment bank which provides financial
services, the company is headquartered in New York city(Prajogo, 2016). JP Morgan is one of
the client of Merrill Lynch. The organisational structure followed by the JP Morgan is divisional
structure.
Divisional organisational structure
Figure 2 Divisional structure
(Source: Divisional structure. 2014.)
This organization structure is based on dividions. The divisions can be geographically
divided. It makes work better of company. which supports the product line or geography(Belás
and et.al., 2015). The divisional structure is useful for JP Morgan that any failure in one division
doesn't directly affect the other divisions. The divisional structure is useful for JP Morgan as it
provides greater operational flexibility.
Merrill Lynch relations with various organisational functions are as follows
Marketing with HR- There is a close connection between HR and marketing as collaboration
between HR and marketing leaders creates more effective execution, higher productivity and
innovation. Human resources finds the best people who build and promote the Merrill Lynch
brand while marketing creates and delivers the brands message to customers. As when there is
any job vacancy the HR will adopt marketing strategies to promote the job. HR adopts different
marketing strategies to promote their products.
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HR with Finance- There is a relation between HR and finance. As for a company to do business
task finance is very necessary because without availability of funds business activity can not be
carried out. HR and finance department work towards the ultimate goal of achieving higher level
of performance and profitability. HR department can benefit from finance department as how to
structure bonus schemes and strategies(Eling and Schaper, 2017).
Marketing with research and development- Research and marketing are inter-related with
each other as the R&D department helps in developing new techniques in Merrill Lynch which
can be promoted by the marketing department. Research and development brings knowledge to
bring new opportunities to the organisation. Research and development assist HR in making
new policies according to new market trends.
CONCLUSION
From the above study it can be concluded that there are different types of organisations
ie, sole trader, public company, private company, partnership firms and voluntary organisations.
And further the report concludes about advantages(Belás and et.al., 2015) and disadvantages of
different organisational structures. Organisational structure of Merrill Lynch clients ie, Aviva
and JP Morgan. And the structure followed by JP Morgan is divisional organisational structure in
this all the functions are divided.
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REFERENCES
Books and Journals
Belás, J., and et.al., 2015. The business environment of small and medium-sized enterprises in
selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management.
Deasy, S. and et.al., 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9.247.042.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Epifanova, T.V. and et.al., 2015. Modernization of institutional environment of entrepreneurship
in Russia for development of innovation initiative in small business structures.
Hillary, R., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Jaakkola, M. and et.al., 2016. Is more capability always beneficial for firm performance? Market
orientation, core business process capabilities and business environment. Journal of
Marketing Management. 32(13-14). pp.1359-1385.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics.171.
pp.241-249.
Online
Functional organizational structure. 2015. [Online] Available through:
<https://www.upcounsel.com/functional-organizational-structure>
Divisional organizational structure. 2014. [Online] Available through:
<https://courses.lumenlearning.com/boundless-management/chapter/common-
organizational-structures/>
(Eling and Schaper, 2017)
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