Organizational structure of business and its development

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

Those who work in large enterprises in administrative divisions, it is probably clear what an organizational structure is. Some companies even present them to employees at welcome trainings. Let's try to figure out what it is.

Definition of concept

To begin with, let's define what the words "organizational structure of a business" mean. This is the division of an enterprise into various departments, divisions, workshops in order to ensure an orderly process of managing an economic object.

The organizational structure of a business implies a clear relationship between all departments of the company, as well as a designated definition of areas of responsibility.

What do you need

The business structure of an enterprise is designed to ensure the development of the organization as a whole. Its presence allows the responsible link to quickly make a decision, determine the area of responsibility and quickly transfer information to the desired structural unit.

The organizational structure of a company's business is not something static, it can change quite often, adapting to changes in the economy. This is due to the fact that any ambitious leaderstrives for his company to interact with other organizations as productively as possible, and for employees to perform their duties with high quality.

How the structure of an enterprise can change

The hierarchical structure is a combination of many departments, such as the sales department, production department, accounting department, the main function of which is to provide activities with resources.

Changes in the structure of the business may undergo if, to solve certain problems, by order of the head, process units are created that deal with more specific issues. For example, there may be a group of sales managers who work on individual orders. Such an organizational structure is called a matrix, or two-arm. It might look like this:

More about matrix structures

In this business organization, process units lease resources from core units to perform specific tasks. To implement such projects, groups of employees are created, which are allocated by the main divisions. Employees united in such groups are subordinate to both the main manager and the process manager.

In order to avoid misunderstandings, an agreement is concluded between the employee and two managers, on the basis of which the resource unit is responsible for the quality of the task being implemented by the employee.

The business structure, organized by matrix type, has a certainadvantage: the presence of clear requirements for process structural units increases the efficiency of the resource unit.

This type of organization is most widely used in engineering companies and where there is a high diversity of business processes. Such a structure is also useful in that it creates market relations between departments and reduces the number of senior and middle managers.

An example of a successful company that uses a project structure for various types of software products is MicroSoft.

Classification of company strategies

The structure of a business can also be classified according to the level at which strategically important decisions are made.

It is customary to distinguish three types of strategies:

corporate;

business;

Functional.

It is worth noting that in order to achieve success, all strategies must be closely interconnected and coordinated, and structural units must interact with each other. Next, we will tell you in detail about each of them.

1. Corporate strategy

This is the highest level in this classification within the framework of the concept of "business development structure". The corporate strategy determines the general direction of the company's development, the dynamics in its sales activities. One of the most important goals of the corporate strategy is to determine the direction of activity within the company and identify where investments should be directed.

Onthe following questions are solved at this level:

1) on the distribution of resources between structural units;

2) about changing the structure of the organization;

3) resolving issues related to merging with external structures.

2. Business (competitive) strategy

At this level, the organization's business behavior is developed, aimed at creating competitive advantages for a particular product market. As part of this strategy, the pricing policy is determined, it is decided, due to which it will prevail over competitors. At this level, a business plan is developed. In companies with one type of activity, corporate and competitive strategies are the same.

3. Functional Strategies

The structural divisions of the company are responsible for their development. The basis of the functional strategy is necessarily taken corporate and economic. It is designed to ensure the effective functioning of the unit within the framework of the business policy of the enterprise. Here it is appropriate to talk about the strategies of the financial department, the department of personnel management and marketing.

In particular, the main task of the production department may be to increase the quantity / quality of products. A financial strategy can be aimed at increasing profits and reducing costs.

Business development strategies. Species

At the level of corporate strategy, there are four approaches to the development of the company. Consider them.

1. Limited growth. Thisstrategy is chosen by companies with stable technology. Goals are determined depending on what has been achieved so far and are subject to adjustments if external conditions change. This is the easiest and least risky way to implement.

2. Growth. It is most successfully used in fast-growing industries where technology changes frequently. Here, the method of comparing the indicators of the current period compared to the previous one is used.

3. Reduction. This strategy is characterized by setting targets below those achieved in the past period. This way of development is chosen most rarely and is typical for companies where there is a tendency to reduce profits and there are no effective solutions to change the situation.

Within the framework of this strategy, they allocate:

1) liquidation (the company is no longer able to do business);

2) getting the maximum possible income in the short term (a business can bring significant income at minimal cost);

3) downsizing (the organization leaves one of the lines of business/structural unit).

4. Combined strategy. Characteristic of a large business (presence of several industries) and can be a combination of any three strategies.

Small business structure

Very often it is novice entrepreneurs who lose their investment in development and go bankrupt. This is largely due to the fact that the owners of these projects do not pay due attention to planning.

The business planning structure of both a small and a large company must contain the following items:

1) summary of the project, its description;

2) participant information;

3) description of the product or service to be introduced on the market;

4) competitor market analysis;

5) sales plan, media plan;

6) funding;

7) risk analysis.

On the benefits of planning

The structure of a business, even the smallest one, needs detailed planning for a number of reasons. Consider them.

1. A well-thought-out algorithm of actions and a preliminary analysis of the situation will help save money and evaluate the profitability of your project.

2. Planning helps to make the process of business development more predictable, to calculate possible difficulties. The presence of a ready-made algorithm allows you to make subsequent forecasts more correctly.

3. High probability of attracting investments: those who are ready to invest in the development of someone else's business speak the language of numbers. Only calculation will help confirm the profitability of the project.

4. By making a plan, you get a tool for business management.