Business Organisation Structures

Business Organisation Structures

• Sole Proprietorship: Owned and run by one person, with unlimited liability (personal assets at risk). Simple to set up, offering complete control. Limited access to capital.
• Partnership: Owned by two or more individuals, sharing profits and losses. Liability can be general (all partners liable) or limited (some partners have limited liability). Shared control and pooled resources.
• Limited Liability Company (LLC): Combines the liability protection of a corporation with the operational flexibility of a partnership. Owners (members) have limited liability, and the business structure is relatively easy to maintain.
• Corporation: A separate legal entity from its owners (shareholders). Offers significant liability protection. More complex to set up and maintain, with more regulatory requirements. Raising capital is often easier.
• Cooperative: Owned and operated by its members, sharing in the profits. Members have equal voting rights. Primarily focused on providing goods or services to members.

Management Principles

• Planning: Establishing goals, strategies, and action plans to achieve desired outcomes. Involves forecasting, budgeting, and identifying resources.
• Organizing: Structuring tasks, delegating responsibilities, and coordinating activities to achieve goals. Includes creating organizational charts, defining roles, and establishing reporting lines.
• Leading: Motivating and directing individuals and teams to accomplish organizational goals. Includes communication, delegation, conflict resolution, and performance management.
• Controlling: Monitoring performance, comparing actual results to planned outcomes, and taking corrective action when needed. Includes setting performance standards, measuring progress against targets, and implementing corrective measures if necessary.

Management Functions

• Strategic Management: The process of developing and executing strategies that guide the long-term direction of an organization.
• Operations Management: Managing the day-to-day activities of production and/or service delivery. Focuses on efficiency, quality, and cost.
• Marketing Management: Identifying and meeting customer needs and wants to drive sales. This includes market research, product development, pricing, promotion, and distribution.
• Financial Management: Managing the financial resources of an organization, including budgeting, investment decisions, financing, and financial reporting.

Organisational Culture

• Formal Culture: Explicitly stated in mission statements and written policies, impacting employees with rules about communication, behaviour, and decisions.
• Informal Culture: Found in unwritten rules and unspoken norms, influencing work styles, relationships, leadership values, and expectations.
• Strong Culture: Shared values, beliefs, and behaviors contribute to a high level of commitment and performance.
• Weak Culture: Little agreement on values and behaviours, causing inconsistency, potential conflicts, and difficulty with adaptation.
• Culture and Change: A key challenge in organizations undergoing change as established culture can resist innovation or change.

Types of organizational structures

• Functional Structure: Departments based on functions (e.g., marketing, finance, production). Suitable for smaller companies with a single product line.
• Divisional Structure: Organized into divisions based on products, services, regions, or customers. Better for larger companies offering multiple products or operating in diverse markets.
• Matrix Structure: Combines elements of functional and divisional structures, facilitating flexibility but potentially causing conflict when reporting lines overlap. Useful in projects or consulting firms.
• Network Structure: Loosely connected entities that collaborate to share resources and expertise. Commonly found in outsourcing arrangements or global settings.

Business Planning

• Market Analysis: Assess the target market, including customer needs, competitor analysis, and market trends.
• Competitive Advantages: Identify unique strengths and capabilities that allow the business to outperform competitors.
• Financial Projections: Estimate future revenues, costs, and profits, essential for securing funding and strategic decision-making.
• Marketing Strategy: Develop a plan for promoting the business and reaching the target market with products or services.
• Operational Plan: Outlining the day-to-day management of tasks, resources, processes, and human capital.

Leadership Styles

• Autocratic: Leaders make decisions independently, with minimal input from others. Control is centralized.
• Democratic: Leaders involve employees in the decision-making process. Collaborative approach valued.
• Laissez-faire: Leaders offer little guidance or direction to employees. Freedom and autonomy are given to workers.
• Transformational: Leaders inspire and motivate employees to achieve extraordinary results. Fosters innovation and change.
• Transactional: Leaders focus on rewards and penalties, primarily motivated by exchange.

Motivation Theories

• Maslow's Hierarchy of Needs: Motivated by fulfilling basic needs (physiological, safety) first, before progressing to higher-level needs (love, esteem, self-actualization).
• Herzberg's Two-Factor Theory: Motivators (recognition, achievement) lead to job satisfaction, while hygiene factors (salary, working conditions) prevent dissatisfaction but are not motivational factors.
• McGregor's Theory X and Theory Y: Theory X assumes employees dislike work and need close supervision. Theory Y suggests employees are inherently motivated.

Human Resource Management (HRM)

• Recruitment and Selection: Attracting and choosing qualified candidates for open positions within the company.
• Training and Development: Improving the skills and capabilities of existing employees.
• Performance Management: Establishing clear goals, monitoring progress, and providing feedback to improve work performance.
• Compensation and Benefits: Determining the pay structure and offering benefits to attract and retain quality employees.