Business Organizations: Types, Structures, Functions, and Culture

This report provides a comprehensive analysis of business organizations, covering various types such as sole proprietorships, partnerships, and limited companies, along with their advantages and disadvantages. It delves into organizational structures, comparing functional, divisional, and matrix structures, and examines key business functions like Human Resource Management, Production, and Operations, highlighting their impact on organizational performance. Furthermore, the report emphasizes the significance of organizational culture in fostering a positive work environment, motivating employees, and driving business success. The conclusion underscores the importance of understanding business organizations for effective management and achievement of desired goals, noting how a well-defined organizational culture can enhance employee performance, productivity, and engagement.

Understanding Business
Organization

Table of Contents
Introduction......................................................................................................................................3
Main Body......................................................................................................................................3
References........................................................................................................................................7

Introduction
A business organization can be defined as an entity which is engaged in different
commercial, industrial and professional activities with a focus to achieve its objectives. It
involves efforts of individual in order to trade its goods and services for the attaining profits
(Martinez 2019). The report will cover different types of businesses and comparison of
organizational structures. Also, it will include several business functions and its impacts on the
working of company. Further, organizational culture and its positive impacts are briefly
explained in order to understand the benefits of building up an effective culture.
Main Body
a)  Sole trader: It is a type of business which is managed and controlled by one man who is
considered to be the 'owner'. The legal entity of business and owner is not separate from
each other which states that there existence are not going to hamper to each other in any
manner. The advantages and disadvantages of sole trader are explained below:
Advantages Disadvantages
 Complete control of owner on entire
business.
 Acquire the maximum profits as they
are divided.
 Owner can maintain high level of
confidentiality by keeping the
information private.
 Unlimited personal liability of owner.
 Access to limited capital.
 Managerial abilities & skills are
limited.
For example: Small businesses such as, a local grocery store, a local clothes store etc
 Partnership: It is a type of business organization which includes partners who have
agreed to work together with a mutual interest (Maloni, Hiatt and Campbell, 2019). This
includes the relationship between different persons who are in a agreement to share the

profits and losses of the business. The advantages and disadvantages of partnership are
explained below:
 Advantages  Disadvantages
 Profits and losses are distributed
equally among the partners based on
the agreement.
 Reduced financial burden because more
partners will bring more funds.
 Additional partners bring extra skills
and capabilities to the firm.
 This involves unlimited liability of the
partners.
 Threat to personal assets during the
time of bankruptcy.
 The element of 'lack of continuity'
exist.
Example: NotOnTheHighStreet.com is a partner firm in UK.
 Limited company: It can be defined as a company which is having a separate legal entity
apart from the owners. Major offerings from limited companies are protection and
flexibility. The advantages and disadvantages a limited company are explained below:
Advantages Disadvantages
 This type of company provides high tax
advantages.
 There is no threat to personal assets of
the shareholders.
 A limited company is considered to be
more credible because it becomes
recognisable and legal as per its
incorporation.
 It is difficult to raise capital because of
complicated process.
 It involves a lot of paperwork for its
working even after incorporation.
 For a short term contract, to run a
limited company is costlier.
Example: TESCO is one of the example of limited company.

b)
An organizational structure can be defined as a system that helps in managing how the
activities concerned to business will be directed so that objectives can be achieved. This helps in
defining the roles and responsibilities assigned to each employee (Iyamu, 2018). It is divided into
mainly three bifurcations which are functional, divisional structure. A functional organization
structure is the one in which high level of responsibility lies at the top and lowest level at the
bottom of hierarchy. A divisional structure includes different groups divided on the basis of
resources and functions in accordance to product line. A matrix structure is the one which
includes more than one line of reporting managers with diverse product lines and services.
These structures helps the organization in achieving its objectives with efficiency and
effectiveness. The contrast and comparison of functional and organizational structure is
mentioned below:
Basis of difference Functional Structure Divisional Structure Matrix Structure
Meaning This structure includes
grouping of job tasks
of similar nature on
the basis of functions.
This structure includes
classification of job
tasks on the basis of
different business
divisions.
This structure includes
cross functional teams
that are specially made
to execute a specific
project.
Formation It is formed on the
basis of functions
performed in an
organization.
It is formed on the
basis of product lines
or divisions.
It is formed by
choosing the
individuals based on
the need of the project.
Costs involved This structure is
economical because it
involves no
duplication.
This structure involves
huge cost as
duplication of work
exist in this.
This structure is
comparatively
expensive because it
includes dual
management.
Example TESCO ADIDAS NIKE

c)
Business functions can be defined as the operations that helps an organisation to ensure
proper functioning without any hindrances.
 Human Resource Management: It is one of the most significant business function
which is responsible for management of the employees (Nielsen, 2018). This function
specifically works for attracting potential candidates, administering employee relations
and maintaining peaceful working conditions in the organization. In context to
employees and the organization, HR experts play a major role in this by developing
effective training programmes. They make it sure that organization's culture and values
are not getting ignored in any aspect of its working. For the organization, it is a major
responsibility of HRM to ensure that they resolve conflicts, address inquiries from
employees and work in compliance with all the employment laws.
 Production: This is a function which is used by an organization in order to determine
that what amount of output should be generated with the given set of resources. This
business function works with a motive of optimum utilization of resource. The objective
is to produce maximum amount from the given amount of inputs (Bourne, Melnyk and
Bititci, 2018). This is a continuous function and involves heavy investment in company's
fixed assets. This function impacts at maintaining quality and quantity of goods
produced. As a business function, it is important to keep a check on the quality of
product at every stage of production.
 Operations: It is responsible for administering the process of creating the goods and
services. It majorly impacts on the process of planning, organizing, coordinating and
controlling resource requirement to produce goods and services (Hassan Zadeh and
Jeyaraj, 2018). This is a core business function as well as the responsibility of upper
level management to plan its operations strategy in such a way that it works in
accordance to business objective.
d)

Organisational culture is defined as the norms, values and attitude prevailing in the business
organisation which leads to enhancing the smooth functioning of the work in the business
organisation. The organisational culture plays an essential role in the guiding and informing all
the required information to all the workforce. It is also defined as the shared assumption, values
and belief regarding how the individual needs to behave and interact in the business organisation
also how the important decisions needs to be taken by them also how the particular task or
activities needs to be carried out effectively. Organisational culture plays an important role in the
overall growth and development of the business organisation through creating positive
workplace environment and also through making each and every employee aware of their role
and responsibility also. Having clarity about their roles and work helps the employees to
smoothly carry out their work and perform better leading to achieve desired goals and objectives.
In addition to this positive organisational culture also helps in motivating employees towards
utilising their full potential and enhancing overall performance of the business organisation
automatically leading business towards growth and success. In addition to this the organisational
culture also helps in creating the positive workplace environment in the organisation and directly
impacting the nature of the long term plans which helps in leading the business towards
achieving its vision effectively. The organisational culture also helps in successful
implementation of the policies and processes that allows the business organisation in successful
completion of their mission. Clarity of vision and mission statement and proper strategy
regarding achieving them will helps the business to move towards growth and success.
Organisational culture helps in creating opportunities for the employees for their further growth
and success and also enhancing their performance in the business organisation. In addition to
this, it is also analysed that the business that are having smooth organisational culture are tend to
be more successful rather than the ones not following organisational culture as it helps in
creating environment which leads to promoting the employee performance, productivity and
positive employee engagement. Also the organisational culture motivates each and every
employee to perform better.
Conclusion
From the above report essay it has been concluded that proper analysis and understanding
of the business organisation helps them in smoothly carrying out various activity and enhancing
the overall performance of the business organisation and also helps in achieving desired goals

and objectives. This report helps in analysing various advantage and disadvantages of various
kinds of business such as sole trader, partnership, limited company and so on. Also detailed
analysis of organisational structures along with the various business functions such as human
resource management, product operations, finance and so on and their impact on the functional
management activities on the organisation is also analysed in this report. In addition to this the
detailed analysis of organisational culture and its importance in the success of the business
organisation.

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