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Understanding Business Organizational Structure

The document discusses organizational structure and its functions in a business. Organizational structure refers to how a business is organized based on factors like ownership, management roles, and lines of authority. It involves grouping functions into departments with clear areas of responsibility and supervision. Organizational structure aims to ensure all business functions are performed efficiently and well. It also plays roles in achieving efficiency through grouping related tasks, harnessing experience by combining employees with similar skills, facilitating decision making, enabling top-down communication, and establishing span of control and accountability within management.

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James White
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6 views2 pages

Understanding Business Organizational Structure

The document discusses organizational structure and its functions in a business. Organizational structure refers to how a business is organized based on factors like ownership, management roles, and lines of authority. It involves grouping functions into departments with clear areas of responsibility and supervision. Organizational structure aims to ensure all business functions are performed efficiently and well. It also plays roles in achieving efficiency through grouping related tasks, harnessing experience by combining employees with similar skills, facilitating decision making, enabling top-down communication, and establishing span of control and accountability within management.

Uploaded by

James White
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Hannah Leigh B.

Mindoro, BSBA MA 4 Acctg 304, TTH, 10:00 11:30 am



Business Structure
Organization framework legally recognized in a particular jurisdiction for conducting commercial activities,
such as sole proprietorship, partnership, and corporation.
The way a business is organized.
The typical hierarchical arrangement of lines of authority, communications, rights and duties of an
organization. It determines how the roles, power and responsibilities are assigned, controlled, and
coordinated, and how information flows between the different levels of management.
Depends on the organization's objectives and strategy.
States who own the company, how profits are distributed and which managers perform what jobs.

The Function of Organizational Structure in an Organization
Organizational structure is a way of grouping and organizing an entity's functions to make sure they all get done
efficiently and well. You can group these into areas of responsibility and supervision. These areas are called
departments or teams. For example, a company may look and see that it needs to advertise, publicize, put on
events and perform sales. It may decide to group these functions together under a marketing department. There
are many ways to organize, but the commonality is grouping functions to ensure they are overseen and
performed.

The Roles of Organizational Structure in an Organization
Efficiency
Most companies need to make the most of various resources. A company will structure its organizational
according to products and services it offers. Organizing departments by customers is efficient because of
diversity. Product management duties may differ widely by customer type.
Harnessing Experience
Companies may arrange their companies by specific functions, such as marketing, accounting, finance and
engineering. The purpose of grouping departments by function is to use the experience of groups to accomplish
tasks and projects. A certain synergism exists when skilled employees of similar talents work together as a
whole.
Decision Making
Companies will often structure their organizations to make the best decisions possible.
Communication
Larger companies have many levels of management. Therefore, the most effective way to communicate is
usually from the top of the organization down. Executives create certain operational procedures which they
communicate to directors and managers. Managers, in turn, explain these operational procedures to
subordinates or hourly employees.
Span of Control
Organizational structure is used for span of control. Span of control pertains to the number of employees an
executive or manager oversees. This reporting structure is how companies establish accountability.

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