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.