FY027 Different types of organizational structure in business Coursework Sample

Introduction OfDifferent types of organizational structure in business

Organizational structure strongly influences how work is structured, controlled, and regulated. By defining roles, duties, communication, and decision-making, they establish the organization's culture and effectiveness. Since organizational structure affects firm performance, adaptability, and success, managers, executives, and decision-makers must comprehend the variations between them (Alerasoul, et.al 2022). This portfolio aims to explain organizational paradigms in detail. Theory and practice are equally considered. This portfolio includes research papers, case studies, interviews, and reflective journal entries that show my engagement in the topic. Each piece of data enhances the understanding of organizational systemic dynamics.

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Purpose of the report

Corporate organizational structures are important to management; hence the research portfolio aims to inform readers. The report has these objectives to Learn about firm organizational structures from the report. It covers the structures' properties, benefits and downsides, and applicability to different business scenarios. Organizational structures are identified and explained in the study to clarify concepts. It ensures readers understand organizational frameworks' fundamentals (Khaksar, et.al 2023). Managers, corporate executives, and other decision-makers can use this material to make informed organizational structure decisions. It helps evaluate how well different organizational structures meet their goals and fit into their environment. To improve performance, business owner must understand an organization's structure. Dialogue, coordination, flexibility, innovation, and productivity are investigated in relation to organizational structures. It helps businesses determine the appropriate organizational structure. A company's strategy must match its internal architecture. Organizational form and strategic aims including low-price leadership, product differentiation, and market segmentation are examined in the portfolio. It helps organizations align their organizational structure with their aims. Users can assess structural challenges in their own organizations and find remedies with the study's material. Analytical reasoning and problem-solving skills are developed in efficient and effective organizations.

Organizational structure

Definition of Organizational Structures

The term "organizational structure" refers to the formalized system of roles, responsibilities, relationships, and channels of communication that exists inside a certain company. They explain how an organization's actions, functions, and processes are organized, coordinated, and controlled to achieve its objectives (Deng, Xu, and Han, 2023). An organization's structure is the blueprint by which its power, responsibilities, lines of communication, and systems of management are all laid out and maintained. In order to effectively allocate resources, coordinate activities, and attain organizational goals, it is essential to establish patterns of power and accountability. The structure of an organization greatly influences how tasks are divided, how knowledge is shared, and how decisions are made at all levels of the business. Each organizational structure has advantages and disadvantages that must be considered when making a choice, and these must be tailored to the organization's goals, strategies, and external environment. Effectiveness, cooperation, and overall performance can all be boosted through the careful design and implementation of an organization's framework.

Different structures of organization

An organization's size, industry, and strategic goals all have a role in determining how its internal structures are set up. Common types of organizational structures include:

Functional structure:In a functional structure, employees are separated into several groups based on the specific tasks they perform, such as marketing, finance, operations, and human resources (Mo?teanu, 2020). Key advantages include the dissemination of specialized knowledge, the improvement of efficiency within functional domains, and the establishment of unobstructed channels of communication across different departments. Still, it may cause limited coordination and decision-making, with authority resting with isolated groups or people.

Divisional structure:A divisional structure is a sort of organizational setup that classifies a business into sections based on product lines, regions served, customer profiles, and other similar criteria. Each department is run in part independently and is responsible for its own budget and operations. The aforementioned structure makes it easier to be adaptable, flexible, and focused on certain markets. However, there is always the chance that problems with resource duplication and coordination will arise.

Matrix structure:The matrix structure is a cross between a functional and a divisional organizational setup (Lee, 2022). Workforce members report to both a functional manager and a project or product manager due to the structure of the organization. Cooperation across departments, sharing of resources, and a nimble response to changing conditions are all made possible by the aforementioned framework. But it raises the possibility of role confusion, power struggles, and convoluted decision-making processes.

Network structure:Organizations in the network structure do a variety of activities through the use of strategic alliances, partnerships, and outsourcing. Using outside resources and experience, the fundamental goal is to increase productivity and competitiveness. This setup allows for a great deal of flexibility, as well as some financial savings and access to specialized knowledge. However, effective coordination, skilled relationship management, and the option of relying on external collaborators are all required for a successful deployment (García de Soto, et.al 2022).

Flatter organizational structure:The elimination of middle management in favor of a flatter organizational structure allows for more decentralized and transparent decision-making. This method's application boosts worker agency, stimulates creativity, and improves lines of communication. However, issues in managing large-scale organizations might arise from a lack of clearly defined hierarchical structures.

Types of organizations

• Sole Traders:

In terms of ease of formation and operation, the sole proprietorship (also known as a sole trader) is by and away the most common and basic business entity type (Mo?teanu, 2020). In this type of business ownership, one person is responsible for running a company and taking on all of the risks and rewards that come with it. The following are some of the distinguishing features of sole proprietorships:

• The business owner is personally liable for paying any and all tax obligations incurred by the company.
• When it comes to cash flow, it's clear that the company's proprietor pockets every last cent.
• The business owner is ultimately responsible for all strategic and operational decisions made by the company.
• The business owner has unlimited liability, which means they are on the hook for all debts and legal obligations that arise for the company.
• If one person owns and controls an organization, that person is considered the single proprietor.
• Partnership:

A partnership is formed when two or more people decide to go into business together and share the risks, profits, and obligations of the venture (Joseph and Gaba, 2020). A partnership can be identified by its core features.

• Each partner owns an equal share of the business and contributes capital, skills, or both to the operation.
• Partnerships are characterized by unlimited liability, which means that partners are personally liable for the debts and obligations of the business.
• Partnerships typically distribute decision-making authority according to ownership stakes or by reaching a group consensus.
• The partnership agreement should detail how the money will be split.
• Partners typically report their portion of any financial gains or losses on their personal tax returns.

Corporation:

A corporation, often known as a company, is a separate and distinct legal entity from its owners. Articles of incorporation are documents filed with the relevant government agency as part of the process of forming a legal entity (Mo?teanu, 2020). Among the many distinguishing aspects of corporations are those that allow them to:

• Shareholders make up the company's ownership structure; they purchase stock in the company to signify their stake in the company.
• The shareholders' personal assets are shielded from the debts and liabilities of the corporation according to the doctrine of limited liability.
• The shareholders of a corporation vote in a board of directors to govern the day-to-day operations of the business and make major policy decisions on the company's behalf.
• Commonly, dividend payments are used to transfer earnings to shareholders. These payments are made in direct correlation with the number of shares owned by each investor.
• Corporations must pay income tax on their profits, and shareholders may have to pay tax on dividends distributed to them.

Limited Company:

A business entity commonly referred to as a limited company or limited liability company (LLC) amalgamates features of partnerships and corporations (Soderstrom, and Weber, 2020). The business entity provides a restricted liability shield to its proprietors, while concurrently preserving adaptability in its managerial operations. Limited companies are characterized by several key features, which may include:

• The ownership of the business is vested in the individuals who hold ownership interests, namely the shareholders or members.
• Limited liability is a legal protection afforded to members or shareholders of a company, which serves to safeguard their personal assets from the debts and obligations of the company.
• The process of decision-making in limited companies is contingent upon the organizational structure, which may involve either member-based management or a board of directors.
• The allocation of profits can be executed among the members or shareholders in accordance with predetermined conditions.
• Corporate income tax may be imposed on limited companies, or alternatively, the profits may be distributed to the members or shareholders for individual taxation.
• Different forms of organizations possess distinct benefits, drawbacks, and legal ramifications.

The selection of the optimal structure necessitates a meticulous assessment of various factors, including but not limited to, liability protection, tax implications, management preferences, and long-term objectives (Schulman, 2020). It is imperative to seek guidance from legal and financial experts in order to guarantee adherence to pertinent laws and regulations.

Critical Evaluation of Different Types of Organizational Structures

One of the benefits of operating as a sole proprietor is the autonomy it affords business owners. They have complete control over making decisions and carrying them out. However, the idea of endless liability is the biggest drawback. When running a business as a sole owner, you take on personal responsibility for business debts. There is a risk that this may cause financial instability and stunt growth. In addition, the success of the business hinges heavily on the skills, abilities, and availability of the individual entrepreneur.

Partnerships make it easier to divide up responsibilities, resources, and expertise. They give you more leeway in making decisions and giving you access to more funding options. However, there could be challenges such partnerships face. The potential for disagreements among partners, which could slow down decision-making and slow the company's progress, is a major concern that needs to be addressed. Partners' individual assets may be at risk because of the unlimited liability inherent in a partnership. If a partner dies or is fired, the partnership may be dissolved or restructured.

Businesses offer protection for their shareholders' assets by imposing limits on the owners' personal liability (Lee, 2022). They can also attract capital by issuing stocks, which is a distinct advantage. Forming and maintaining a corporation requires spending significant time and money on meeting various legal requirements and formalities. Shareholders' influence on day-to-day operations may be limited by the presence of a board of directors, who may slow down the decision-making process.

LLCs combine limited liability protection with the flexibility to respond to changing circumstances. Members and shareholders receive the same limited liability protections enjoyed by companies. In addition, they have more discretion as managers and might choose to oversee daily operations themselves or delegate authority to directors. Small firms sometimes have more complex tax ramifications and more paperwork to fill out than sole proprietorships or partnerships.

Factors including business kind, planned growth, concerns about legal liability, and tax implications are just a few that should be taken into account when deciding on an acceptable organizational structure. It's crucial to give careful consideration to all of these elements before making a call. Limited liability is a benefit of incorporating or forming a limited company, but there are additional legal and administrative hurdles to overcome. Small firms or those in which the owner's exposure to personal liability is minimal may find success operating as sole proprietorships or partnerships. However, there may be limitations to these types of corporate arrangements in terms of growth and access to financing. The fact that there is no magic bullet has to be accepted (Gentile-Lüdecke, et.al 2020). Depending on the specifics of the organization, a hybrid business structure like a limited liability partnership (LLP) or a cooperative model may be the best option. It is crucial to get advice from legal and financial professionals in order to meet regulatory obligations and determine the best structure to fit one's individual needs.

Conclusion

Finally, this portfolio on corporate organizational structures should demonstrate the research growth. The author learned about organizational paradigms from scholarly publications, case studies, interviews, and diaries. LLCs, companies, partnerships, and single proprietorships are covered. Ownership, responsibility, decision-making, revenue distribution, and taxation were examined under different organizational forms. This portfolio shows my talents in analyzing and interpreting research, applying theoretical frameworks to real-world circumstances, and measuring organizational structure's impact on effectiveness and efficiency. Info graphics and PowerPoint presentations help simplify difficult ideas.

The portfolio prioritizes strategic problem-solving, organizational harmony, and decision-making. This strategy helps managers, executives, and decision-makers choose the optimal organizational structure to meet company goals and address problems. I learned organizational theory and managerial skills through this portfolio. My analysis of business models may increase productivity, decision-making, and a forward-thinking business culture.

References

• Alerasoul, S.A., Afeltra, G., Hakala, H., Minelli, E. and Strozzi, F., 2022. Organisational learning, learning organisation, and learning orientation: An integrative review and framework. Human Resource Management Review, 32(3), p.100854.
• Deng, S., Xu, J. and Han, Y., 2023. A proprietary component manufacturer’s global supply chain design: The impacts of tax and organizational structure. Omega, 115, p.102777.
• García de Soto, B., Agustí-Juan, I., Joss, S. and Hunhevicz, J., 2022. Implications of Construction 4.0 to the workforce and organizational structures. International journal of construction management, 22(2), pp.205-217.
• Gentile-Lüdecke, S., Torres de Oliveira, R. and Paul, J., 2020. Does organizational structure facilitate inbound and outbound open innovation in SMEs?. Small Business Economics, 55(4), pp.1091-1112.
• Joseph, J. and Gaba, V., 2020. Organizational structure, information processing, and decision-making: A retrospective and road map for research. Academy of Management Annals, 14(1), pp.267-302.
• Khaksar, S.M.S., Chu, M.T., Rozario, S. and Slade, B., 2023. Knowledge-based dynamic capabilities and knowledge worker productivity in professional service firms The moderating role of organisational culture. Knowledge Management Research & Practice, 21(2), pp.241-258.
• 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.
• Mo?teanu, N.R., 2020. Challenges for organizational structure and design as a result of digitalization and cybersecurity. The Business & Management Review, 11(1), pp.278-286.
• Schulman, P.R., 2020. Organizational structure and safety culture: Conceptual and practical challenges. Safety science, 126, p.104669.
• Soderstrom, S.B. and Weber, K., 2020. Organizational structure from interaction: Evidence from corporate sustainability efforts. Administrative Science Quarterly, 65(1), pp.226-271.