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Structure in Business Organisations

In: Business and Management

Submitted By Timmm
Words 1622
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Section 1:
In today’s dynamic and increasingly globalised business environment, structure serves as an important operational vehicle through which a firm can effectively achieve its strategic goals. Miller (1988) asserts that a firm’s structure must be aligned with both its strategy and environment in order for efficient performance to be realised. Growth options, types of ownership, business processes and information systems are all underlying foci embedded within the analysis of business structure.
Child (2005) believes that at the core of structure lays a number of choices including the degree of specialisation and the nature of control mechanisms (cited in Needle 2010). A major determinant of these factors is the firm’s type of ownership or legal structure. Sole traders, traditionally associated with smaller firms, have unlimited liability and carry no legal distinction between themselves and the business. Conversely, larger corporations carry the advantage of limited liability while partnerships can have either limited or unlimited liability (Soyref 2012).
The size of a business may also determine its structural class, with ‘many small firms having no apparent structure at all beyond a centralised control system’ (Needle 2010, pg. 181). Miles and Snow (1992) identifies three major types of organisational structure- functional structure, which operates through centrally coordinated specialisation; divisional structure, which diversifies operations by either product type or geographical region; and matrix structure, which attempts to combine elements from both models. Needle (2010) explains however, that new blends of structural forms are constantly emerging as firms learn to adapt to dynamic market conditions.
In order to maintain a sustainable competitive advantage, businesses need to additionally undergo long-term growth. Organic growth entails expansion...

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