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Understanding Business Organisations – Essay

1. Introduction - Understanding Business Organisations – Essay

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When starting a business, the owner must consider the corporate organisation structure as one of the most essential factors. Companies and partnerships are the most prevalent forms of business ownership. Each kind of business organisation has benefits and disadvantages in areas such as establishing the company, paying taxes, and deciding liability for corporate commitments (Iranmanesh et al., 2021). In this respect, this essay will cover the three kinds of organisational types, with examples, as well as their positive and negative effects on business. In addition, the emphasis of this paper will be on human resource management, its effect on the management structure, and how it might influence the standard operating procedures of businesses. This essay will also discuss the good culture's effect on an organization and its operation. The critical comprehension and analysis will contribute to the essay's completion.

2. Different Types of Organizational Structure and Their Functional Process and Significance of Organizational Culture

Sole traders

A sole trader is a company owner that works for himself or herself. A user who runs a company as a Sole Trader is exclusively accountable for the obligations of the firm. Sole proprietorships, for example, are any small business, such as the freelancing industry or home health care services. The following are some advantages of sole proprietorships: A sole proprietor is not required to be registered and runs underneath the owner's legal identity. One-person businesses are easier to run (Dugar, 2021). Instead, sole proprietorships have several drawbacks, including The duty that solo proprietorship entails is unsettling, and a company cannot take an equity stake.


When two or more people work together to operate and profit from a company, they form a partnership. A partnership agreement equitably distributes revenues and losses among partners. In a multi-year, worldwide relationship, West Elm & Casper for example, collaborate on a broad range of content and product development. Partner firms may get a variety of incentives that have contributed to their growth (Yapanto et al., 2021). As a consequence, companies gain from the advantages. In contrast to a sole proprietorship, current members of a company may contribute more funds and resources as necessary. The company may achieve its planned objective or alter the present condition, and the partners may initiate change. In contrast, there are disadvantages, such as the fact that a partner cannot withdraw their wealth from the firm on their own and that diverse viewpoints may often lead to complications.

Limited Company

It's a sort of incorporation that limits others' liability for example AstraZeneca. This Limited Company has legal status, an unbroken existence, and the power to borrow money. Creating a firm may be costly, and motivating employees can be difficult (Kartika, Nadirah and Ramlan, 2021).

Tall structure

The number of subordinates reporting to a supervisor is limited by the tall structure. When it comes to hotels, Premier Inn, for example, is one of the most well-known. There are many different aspects that the firm may regulate via its hierarchical management structure (Gates et al., 2019.

Flat structure

A hierarchical organisation with fewer levels has a flat structure. The orgiastic setup is a framework, sometimes known as a broad spectrum of control. Flat structures have gained popularity in recent years as a more versatile option than tall structures. The hotel industry's flat organization has given everyone equal responsibilities (Bjørnstad and Ulleberg, 2021). The importance of organisational hierarchy and the scope of control are the two most essential determinants of whether a structure is tall or flat. Maintaining the very same layered structure in a design enables firms to benefit from the advantages and downsides of both systems.

Differences Between the Tall and Flat Structure

Workers can understand who is responsible for important decisions, who is responsible for certain responsibilities, and how advancements are earned within the organisation, which is one of the primary advantages of a tall structure. The primary advantage of a flat organization is that it enables lower-level employees to have a greater stake in the success of the business by providing them with more discretionary authority and the responsibility of making their own decisions. Flat organisational structures encourage more communication since there are fewer layers of administration through which essential messages must be transmitted (Bjørnstad and Ulleberg, 2021). Flatter constructions are more flexible and able to adapt to a wider range of circumstances. The faster the communication, the quicker the decisions that may be made, but the more work the managers may have to do. In contrast to the vertical structures typical of military organisations, horizontal organisations are more likely to take on a democratic disposition.

Human Resource Management

Organizational competitiveness may be enhanced by the management of the human resource, which is a key component of human resources management. Employee performance is aimed at enhancing an organization's long-term strategic goals. Experts who are ready to implement the organization's policies and practices handle a company's human capital. Human resources professionals may specialise in a variety of areas, including finding, attracting, choosing, teaching, and training employees (Vrontis et al., 2022). In the retail industry, for example, the HR department has been in charge of employee management. As a result, Sainsbury's is an instance of this kind of company.


Several different material and symbolic inputs must be merged throughout the production process of a consumable product. Increasing the value of something, whether it be a product or a service, contributes to an individual's overall usefulness. For instance, production may be implemented in many different kinds of businesses. For instance, in the manufacturing business, production is an essential factor that may contribute to the overall performance of the organisation (Mukumov et al., 2021). The effectiveness of lean manufacturing is directly proportional to an organization's ability to efficiently manage its resources and provide them promptly. According to the findings of the research, 81 per cent of the businesses surveyed believe that implementing a lean manufacturing strategy will increase their level of productivity.


Operations are in charge of product development, as well as quality assurance and customer support. Key elements of a corporate plan include distribution networks, advertising, finance and human capital (Mukumov et al., 2021). As a result of logistics, it is easier to handle commodities, services, and employees. An operations strategy may be used by any company, regardless of industry or economic area.

Organisational Culture

There are many aspects of an organization's culture that are mirrored in its members' self-images, their relationships with the outside environment, and their hopes and dreams for their future. There are acknowledged written and unwritten rules that have developed through time that serve as the foundation of culture (Hald, Gillespie and Reader, 2021). The culture of a firm is influenced by the actions of its leaders. Employees may be more successful in reaching their goals if a company's culture is well-established and well-rooted in the workplace.

Impact of Organizational Culture on Organizational Success

The culture of the organisation moulds its surroundings and directs the nature of its long-term objectives so that it may accomplish its mission and realise its vision. In addition, culture lays the groundwork for the rules and procedures that make it possible for the organisation to fulfil its daily objectives. Workers' potential, work motivation, and job satisfaction are the most significant characteristics for enhancing the performance of employees on the job. These aspects are created, enhanced, and deepened by an organisational culture that has a socio-moral environment that is supportive of employees (Zacharias, Rahawarin and Yusriadi, 2021). Companies that have a positive reputation among their existing workers, as well as their former workers, are more likely to hire new staff. People who are seeking a place that they can call home will be attracted to a company that cultivates a positive work environment and a feeling of belonging among its employees.

Employee morale and productivity may suffer as a result of excessive turnover, making it more difficult for those who remain to accomplish their jobs. According to some estimates, it costs between some week’s compensation to replace a salaried employee. However, other studies suggest that the price might be far greater (Zacharias, Rahawarin and Yusriadi, 2021). Employees that work in an organisation with a strong, healthy culture report higher job satisfaction, engagement, and, as a result of their employment, an increase in supply. Employees that are content and engaged in their jobs are more likely to go above and beyond what is required. 

3. Conclusion

The ownership structure is one of the most critical factors a businessman must undertake when starting a small organisation. The three most prevalent business formats are sole proprietorship, partnership, and corporation. The whole essay has discussed the many aspects of the sector. This article has detailed the many types of organisational structures utilising industry examples from the hospitality and hotel sectors in this respect. In contrast, this essay has examined organisational systems and established a comparison and concept between them. This Essay, on the other hand, has focused on the several key tasks of the human resource department, such as human resources, production process, and operations, and has emphasised the relevance and advantages via an example. This essay also discusses the notion of organisational culture, its importance in the organisational process, and how it impacts many aspects of the business.

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Bjørnstad, A.L. and Ulleberg, P., 2021. Effects of trust, structure and processes on effectiveness in a military organization: exploring a moderated mediation model. Leadership & Organization Development Journal.

Dugar, G., 2021. Intergenerational Transfer of Family-Run Enterprises in Slovenia in Comparison with German Law. Central European Journal of Comparative Law2(2), pp.27-37.

Gates, A.J., Wood, I.B., Hetrick, W.P. and Ahn, Y.Y., 2019. Element-centric clustering comparison unifies overlaps and hierarchy. Scientific reports, 9(1), pp.1-13.

Hald, E.J., Gillespie, A. and Reader, T.W., 2021. Causal and corrective organisational culture: a systematic review of case studies of institutional failure. Journal of Business Ethics174(2), pp.457-483.

Iranmanesh, M., Kumar, K.M., Foroughi, B., Mavi, R.K. and Min, N.H., 2021. The impacts of organizational structure on operational performance through innovation capability: innovative culture as moderator. Review of Managerial Science15(7), pp.1885-1911.

Kartika, D., Nadirah, I. and Ramlan, R., 2021. Registration Legality of Deed of Establishment of Limited Partnership from District Court to Ministry of Law and Human Rights. Randwick International of Social Science Journal2(1), pp.113-123.

Mukumov, A., Xujakeldiev, K., Xamidov, F., Narbaev, S. and Abdivaitov, K., 2021. Features of the organization of agroclusters in the structure of land management projects. In E3S Web of Conferences (Vol. 227, p. 01003). EDP Sciences.

Vrontis, D., Christofi, M., Pereira, V., Tarba, S., Makrides, A. and Trichina, E., 2022. Artificial intelligence, robotics, advanced technologies and human resource management: a systematic review. The International Journal of Human Resource Management33(6), pp.1237-1266.

Yapanto, L., Diah, A., Kankaew, K., Dewi, A., Dextre-Martinez, W., Kurniullah, A. and Villanueva-Benites, L., 2021. The effect of CRM on employee performance in banking industry. Uncertain Supply Chain Management9(2), pp.295-306.

Zacharias, T., Rahawarin, M.A. and Yusriadi, Y., 2021. Cultural reconstruction and organization environment for employee performance. Journal of Ethnic and Cultural Studies8(2), pp.296-315.

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