Running Head: SMALL BUSINESS

Organisational Structure
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 Small Business 2

Executive Summary

In order to increase the efficiency the organisation structure creates a hierarchy based on the

effectiveness of the operations of business. The following report has used the four organisational

structures, which elaborate the impact on the small businesses. . The functional structure is used

to provide the focus on the employees and help them by achieving the common goals. The

changing organisational structure are used for structuring the error, haphazard manner and trail

of the organisation. Whereas, when the small organisation sells different products, then the

divisional organisational structure help the company to separate the roles by the different

products within the organisation. However, the matrix organisation has some disadvantages too

because it is based on the structure that is the most decentralised. In short, the organisational

structure is one of the most important aspects for the business because it provides a way which

can improve the productivity and management of the company.

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Table of Contents

Project Aim......................................................................................................................................3
Project Objectives............................................................................................................................3
Literature Review............................................................................................................................3
Functional Organisational Structure............................................................................................3
Changing Organisational Structure..............................................................................................4
Divisional Organisational Structure.............................................................................................5
Matrix Organisational Structure...................................................................................................5
Importance of Small Business in Organisational Structure.........................................................6
Better Communication Achieve by Structure..............................................................................6
Clear Employees Relationships...................................................................................................6
Expansion and Growth.................................................................................................................7
Efficient Task Completion...........................................................................................................7
Company Needs for Perfect Business..........................................................................................8
Growth......................................................................................................................................8
Managerial Influence................................................................................................................9
Problems Faced by Small Businesses with Organisational Structure.............................................9
Stage of Development..................................................................................................................9
Overall Business Strategy..........................................................................................................10
Size of Business.........................................................................................................................10
Conclusion.....................................................................................................................................11
Recommendation...........................................................................................................................12
References......................................................................................................................................13
Executive Summary.........................................................................................................................2
Background......................................................................................................................................4
Project Aim......................................................................................................................................4
Project Objectives............................................................................................................................5
Literature Review............................................................................................................................5
Functional Organisational Structure............................................................................................5
Changing Organisational Structure..............................................................................................6
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Divisional Organisational Structure.............................................................................................6

Matrix Organisational Structure...................................................................................................7
Importance of Small Business in Organisational Structure.........................................................7
Better Communication Achieve by Structure..............................................................................8
Clear Employees Relationships...................................................................................................8
Expansion and Growth.................................................................................................................8
Efficient Task Completion...........................................................................................................9
Company Needs for Perfect Business..........................................................................................9
Growth....................................................................................................................................10
Managerial Influence..............................................................................................................10
Problems Faced by Small Businesses with Organisational Structure...........................................11
Stage of Development................................................................................................................11
Overall Business Strategy..........................................................................................................11
Size of Business.........................................................................................................................12
Problems Faced During the Project...............................................................................................12
Conclusion.....................................................................................................................................13
Recommendation...........................................................................................................................14
References......................................................................................................................................15
 Small Business 5

Organisational Structure

Introduction
The organisational structure is a process that describes the throughout management and

structuring of the business. The organisational structure refers to both of the informal and formal

frameworks that quantify that how the system should be operated. Another use of organisational

structure is to identify that the staff members should need to play a role for the organisation

success whilst grouping together. Choosing the organisational structure is one of the key aspects

of the firm because not all the structures are one-size-fits-all the business owners and decision.

The owner should select the organisational structure on the needs of the firm.

Background

The history of the organisational structure has been revolving from all the small

businesses and the management were not their main concern at the start of their business. In

some of the organisations the approaches has enhance the value of the company and provided a

systematic platform according to their requirement. In the year of 1776, the modern capitalism of

the organisational structure take place with the division of labour. The files and rank are not just

the responsibilities because they also act symbiotically on different levels. However, the field of

organisational structure improves the strategies after 1980s.

Project Aim

The aim of the project in to identify the influence of the organisation structure withwithin

the small businesses.

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Project Objectives

 To understand and identify the different type of organisational structure

 To investigate and evaluate the structure of the organisation

 To identify and understand the impact of the organisational structure with respect

to the Royal Kitchen organisation

Literature Review

The small businesses can utilise three major types of organisational structure which

includes matrix, functional or divisional. In order to increase the efficiency the organisation

structure creates a hierarchy based on the effectiveness of the operations of business (Coetzer, et

al., 2017). There are many small businesses that operate according to their business approaches

and requirement that is why there is not a single way to solve all the problems related to the

small business. Moreover, all the organisational structure problem cannot be solve by providing

a standard solution. However, there are ways to determine the most common

nstructure4sstructures of the small organisation.

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Functional Organisational Structure

The development of the functional organisation structure is based on the hierarchy of the

job role of the staff members of business. The functional organisational structure is used so that

the groups of employees work together for achieving the common goals of the company. For

example, all the marketing employees of the company works on the same goal and provide

marketing related outcomes (De Vries, et al., 2018). This strategy will be considered even if the

organisation has only two or three employees working for the marketing role of the small

business, the organisation should put one person in charge such as the manager of the business.

The manager is responsible for motivating and achieving the goals of the organisation within the

require deadline. The functional structure is used to provide the focus on the employees and help

them by achieving the common goals. In above example the common goal is promoting and

marketing of the business.

Changing Organisational Structure

There are many small businesses whothat started their businesses by structuring the error,

haphazard manner and trail of the organisation. The owner can start the business with just by an

assistant and the owner itself until they understand and learn the roles of the employees must be

based on the organisation (Campbell, et al., 2016). When the small business starts and grows,

then it is simple to work according to the one organisation structure and move further by using

the other structure of the organisation. For example, if the small business starts the operation by

only proving services within the cities but later on the company start growing the business and

proving services to all over the state then it is necessary for the business to change their structure

which will help the organisation in achieving the company’s goals and fulfil the satisfaction level

of the customer.
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Divisional Organisational Structure

The divisional organisational structure is used to decentralise the outcomes of the

functional organisational structure, because the region and product are based divided by the role

of the employees, rather than the functionality of the small businesses (Shafie, et al., 2018). For

example, the United States is divided into four states which includes south, west, east and north.

It helps the companies to have employees in each and separate division. This strategies help the

organisations in providing specialistspecialisation to the particular region. If the small

organisation sells different products, then it will also help the company to separate the roles by

the different products within the divisional organisational structure.

Matrix Organisational Structure

The matrix organisational structure is based on the characteristics of the combination of

divisional and functional organisational structure. The matrix structure is more used so that the

company work as a team (Truant, et al., 2020). The matrix organisation provides a facility where

the department does not need heads but the teams has separate leader under different tasks. The

organisation also provide a way where the employees can bring together to solve a single

problem, but also have different roles for the business.

The matrix organisation has some disadvantages too because it is based on the structure

that is the most decentralised. The decentralised factor affect the business in a way where the

employees get confuse in identifying that who is the in charge of the task. However, the matrix

structure is also appropriate if the business is operated on the international level or provide

services on different geographical regions.

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Importance of Small Business in Organisational Structure

The business requires structures to be profitable and grow, otherwise the people will pull

in all different directions. The planning of the business structure is one of the key aspects of the

organisation which ensures that there are enough human resources that are capable and able with

the right skills in achieving the company’s target and goals (Yan and Yan, 2017). This also

ensures the responsibilities of the clearly defines goals. Each employees is assign with the

respected goals and description which outline the job and occupies the company organisational

chart.

Better Communication Achieve by Structure

Since the information of flow is essential for all the businesses to achieve the success, it

is important for the organisation to design the structure with clear and good communication

between the employer and employee (Mohamad Radzi, et al., 2017). For example, the analysis

department and financial planning might report the Senior Vice President and Chief Financial

Officer of marketing, because both of the members are the part of the high management of the

organisation and the team are dependent on their reports and management provided by the

financial planning of the business.

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Clear Employees Relationships

Reporting clear relationship is one of the most important factor for the small businesses

because it help the employees in understanding their responsibilities and accountability related to

the task. However, in some cases it creates difficulties for the employees to understand their

roles and responsibilities whilst achieving the task. These clear reporting of the employees

provide benefits to the managers in assigning and supervising the lower organisational level

(Tricker, 2016). This also provide benefits to the employees in knowing that who can turn for

help or direction. Furthermore, the managers are also aware about who is working outside the

scope of the company and authority, so that they should know that who is interfering with other

organisation and overstep their bounds with another mangers responsibilities.

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Expansion and Growth

The companies are considered the best who grow rapidly a make the best possible use of

their available resources, including the management talent. The company is known as sound

organisation whose structure ensures that the company has appointed the right staff for the right

positions (Radzi, et al., 2017). The structure cis also useful is suggesting the deficiencies and

weak spots in the current management of the company. The organisation structure must be

evolve around the structure and grows the company goals. Many times the company creates

more layers of management, when the single department is has dealing with so many other

individual reporting at the same time and the employee need the direction for the ache riving the

success.
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Efficient Task Completion

The completion of the project is can be achieve if the business is based on a well-

designed structure of the organisation. Project managers are consider the right person in

identifying the human resources available in completing the projects according to the

responsibility of each departments (Bozhilov, et al., 2016). Market research is required for

developing a new product from a project. It is the responsibility of the project manager to

identify that who is the best option who can provide the research and permission to obtain the

research on time.

Company Needs for Perfect Business

The companies in different industries require a different mixes of a relatively grater and

talented on the certain management functionalities. The software companies is based on a large

development staff (Truant, et al., 2020). For example, the reporting relationship structure is

developed by the team, so productively and creatively that they are consider to meet the deadline

and maximised the vital type of the company’s success. Sometimes the companies has to go

through a reorganisation phase on which the whole department and the individual are supposed

to repositioned on the organisational chart which also use the company for better human

resources an provide a way so that the operation run more smoothly.

The organisation structure is one of the best ways to create a proper communication chain

for the small businesses. The organisation structure is preferable by many businesses because it

work through a hierarchical structure that clears the authority and instruction process of the

organisation and make the business more effective. Following are some of the key aspects of the

organisation structure:
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Growth

The company’s that grows with a weak internal communication, administrative and

structure channels are stained on the point of inefficiency. The corporate productivity can be

maintain by a strong corporate structure which help the organisation to grow during the time of

structural improvements and growth which will be considered necessary for the growth of the

organisation.

Managerial Influence

The influence of the manager over their staff is the key aspect for the small businesses

because it helps the organisation in building the structure and enhancing the efficiency of the

growth of the organisation. Incomplete a weak management can led any business towards the

failure of organisation and the bad managerial decisions also affect the productivity and quality

of the products of the business. However, thee good managerial decision can lead to have a

positive impact on the growth of the organisation and improve the overall efficiency and

productivity of the business.

Problems Faced by Small Businesses with Organisational Structure

The organisational structure of the company can lead towards the success and failure of

the organisation. The decision making of the small businesses whilst choosing the organisation is

consider one of the most important aspect because selecting the right approach and strategy for

the business can provide the business success in all aspects (Radzi, et al., 2017). The structure

must has to be according to the business and owner’s goals and if the employees does not work
 Small Business 14

according to the goals that they will have a hard time in achieving company’s success. Following

are some of the effects of the influence of organisational structure on the small businesses.

Stage of Development

The organisational structure can dictate the needs of the development of the company

progress. The needs and growth of the customers emphasises the life cycle of the youth stage

(Bozhilov, et al., 2016). This may requires the owner to develop the structure of organisation by

increasing the customer service and managing the complaints and service strategies. At this stage

the owner4owner is still able to work and manage the control of the majority according to the

business company’s decision.

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Overall Business Strategy

The overall business strategy is the most important key aspect for both the small and big

organisation. This helps the organisation in identifying that what approach will leads the

company towards success and who can provide benefit by assigning a role in choosing the

organisational structure (Bozhilov, et al., 2016). For example, a productive placement and

aggressive marketing strategy may requires the efforts of multiple heads of departments and

ensure no plan for the company’s future ideas. However, if the company is using more

methodical strategy then it may require a more focused and smaller organisational structure that

can enhance the overall performance of the company. This is the way that how organisation can

avoid failures and can actively monitor all the details of survey progress and plan.
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Size of Business

Being a small company owner, the size of the company can have a huge impact on the

overall performance of the organisation. The influence of organisational structure mostly provide

benefits to the businesses but in some cases the disadvantages of the influence can lead to

completely closure of the business (Truant, et al., 2020). If the small business is based on a small

group of employees then the organisational structure does not affect the performance and

management functions of the business. However, a large organisation requires the structure that

focuses on depth of the growth of organisation with different components to communicate with

one another effectively. For example, a complete kitchen service requires floor manager, kitchen

manager, general manager and bar manger to run the overall establishment of the organisation

and divide the work according to the employees’ task and skills.
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Problems Faced During the Project

Creating and managing a business is a great daunting task which can become difficult and

challenging for the organisation. There are some of the common problems faced during the

project. The most common problem faced was the absence of clear direction whilst choosing the

organisational structure tools and model. As the organisational structures is not same for all types

of business, that is why it is very important and time consuming to choose the right structure

which the enhance the efficiency and productivity of the small businesses.

Conclusion

The following report concluded that the small businesses can use the organisational

structure which can enhance or increase the efficiency the organisation structure creates a

hierarchy based on the effectiveness of the operations of business. This use of functional

organisational strategy will be considered even if the organisation has only two or three

employees working for the marketing role of the small business, the organisation should put one

person in charge such as the manager of the business.

Whereas, if the small organisation sells different products, then it will also help the

company to separate the roles by the different products within the divisional organisational

structure. The organisational structure also provide a way where the employees can bring

together to solve a single problem, but also have different roles for the business. However, the

matrix organisation has some disadvantages too because it is based on the structure that is the

most decentralised.

The planning of the business structure is one of the key aspects of the organisation which

will help the business in ensuring that there are enough human resources that are capable and
 Small Business 18

able with the right skills in achieving the company’s target and goals. Furthermore, the reporting

clear relationship is one of the most important factor for the small businesses because it help the

employees in understanding their responsibilities and accountability related to the task.

The companies has to go through a reorganisation phase on which the whole department

and the individual are supposed to repositioned on the organisational chart which also use the

company for better human resources an provide a way so that the operation run more smoothly.

In short, the organisational structure is one of the most important aspects for the business

because it provides a way which can improve the productivity and management of the company.

Recommendation

The planning of the organisation is the best approach to improve and identify the

organisational structure and it will help the organisation in growing the business productivity.

The small business should create and optimise the organisational structure on the design and

goals of the company. Using this approach will allow the company to create a staff and

management structure according to the business model.

The organisation should pretend that their structure work according to the customer

requirements and will help the company without regard the best staff. The overall structure will

helps the organisation in identifying that what approach will leads the company towards success

and who can provide benefit by assigning a role in choosing the organisational structure. The

influence of organisational structure mostly provide benefits to the businesses so it is preferable

for the businesses to use approaches for managing the goals of the organisation. The organisation

structure is preferable by many businesses because it work through a hierarchical structure that
 Small Business 19

clears the authority and instruction process of the organisation and make the business more

effective.
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References

Bozhilov, M. and Ozuem, W., 2016. Organisational Structure in Small and Medium Enterprises.

In Handbook of Research on Entrepreneurship in the Contemporary Knowledge-Based

Global Economy (pp. 68-87). IGI Global.

Campbell, J.M. and Park, J., 2016. Internal and external resources of competitive advantage for

small business success: validation across family ownership. International Journal of

Entrepreneurship and Small Business, 27(4), pp.505-524.

Coetzer, A., Kock, H. and Wallo, A., 2017. Distinctive characteristics of small businesses as

sites for informal learning. Human Resource Development Review, 16(2), pp.111-134.

De Vries, H. and Van der Poll, H.M., 2018. Cellular and organisational team formations for

effective Lean transformations. Production & Manufacturing Research, 6(1), pp.284-307.

Mohamad Radzi, K., Mohd Nor, M.N. and Ali, S.M., 2017. THE IMPACT OF INTERNAL

FACTORS ON SMALL BUSINESS SUCCESS: A CASE OF SMALL ENTERPRISES

UNDER THE FELDA SCHEME. Asian Academy of Management Journal, 22(1).

Radzi, K.M., Nor, M.N.M. and Ali, S.M., 2017. The impact of internal factors on small business

success: A case of small enterprises under the FELDA scheme. Asian Academy of

Management Journal, 22(1), p.27.

Shafie, N.A., Mohd Sanusi, Z., Johari, R.J., Utami, W. and Ghazali, A.W., 2018. Effects of

organisational structure on social value: Mediating role of financial performance.

Management & Accounting Review, 18(3), pp.1-30.

Tricker, R., 2016. ISO 9001: 2015 for small businesses. Taylor & Francis.
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Truant, E. and Broccardo, L., 2020. Innovation strategy and organisational structure: insights

from an Italian family firm. International Journal of Entrepreneurship and Innovation

Management, 24(2-3), pp.172-188.

Yan, J. and Yan, L., 2017. Collective entrepreneurship, environmental uncertainty and small

business performance: A contingent examination. The Journal of Entrepreneurship, 26(1),

pp.1-26.