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Business Organization and Structure

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Business Organization and Structure

  • By
  • April 2011
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Chap 1. Business Organization
And structure


Definition – 'An organization is a social arrangement which pursues collective goals, which controls its own performance and which has a boundary separating it from its environment'. Boundaries can be physical or social.

Key categories:

Not for profit
Public sector
Trade unions
Local authorities
Mutual associates
Organizations owned or run by the government (local or national) or government agencies are described as being in the public sector. All other organizations are classified as the private sector.

Limited liability
Limited companies (denoted by X Ltd or X plc) are set up so as to have a separate legal entity from their owners (shareholders). Liability of these owners is thus limited to the Amount invested.

Private v public
Private companies are usually owned by a small number of people (family members), and these shares are not easily transferable. Shares of public companies will be traded on the Stock Exchange.

2. Organizational structure

Henry Mintzberg believes that all organisations can be analysed into five components, according to how they relate to the work of the organisation and how they prefer to coordinate.

Strategic apex
Drives the direction of the business through control over decision-making.

Drives efficiency through rules and procedures.

Operating core
Performs the routine activities of the organisation in a proficient and standardised manner.

Middle line
Performs the management functions of control over resources, processes and business areas.

Support staff
Provide expertise and service to the organization.

3. Structural forms for organizations
Scalar chain and span of control

As organisations grow in size and scope, different organisational structures may be suitable.

The Scalar chain and Span of control determine the basic shape....

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