What is Business Structure? The answer depends upon who you ask. Business Structure is “A system for conducting business affairs designed to maximize the productivity, reliability, and profitability of a company.” This definition does not give a clear picture of what Business Structure actually is.
According to the Business dictionary, Business Structure is defined as “A system of managing business affairs that aims to maximize profitability and reliability in a company.”
To understand what is Business Structure one must take into account several factors. First, a company’s success depends upon the activities it conducts to grow its operations and assets. Second, in business the different aspects of company growth are interrelated and dependent upon the decisions, actions, and practices of the business owners. These two concepts are not independent but dependent upon one another. The ability of a company to grow and expand depends, therefore, on the proper functioning of the different parts of the business organization-its Board of Directors, its managers, and its employees.
The term ‘management’ in relation to Company Structure refers to the company’s management. A manager is responsible for determining the direction and management of the company’s activities. Management also determines the allocation of resources among the various activities of the company. There is often a close relationship between management and owners or management and staff.
A board of directors is generally elected by the company’s management and consists of a number of members. The company’s management includes the CEO, the CFO, and other senior management. The board of directors may include members such as an attorney, a corporate investor, or other people having specialized knowledge with respect to the business. The purpose of these boards is to conduct the business of the company and to approve certain transactions and other actions by the management and officers of the company. They are also responsible for approving the company’s annual budget.
The term ‘corporation’ in relation to what is business structure refers to any legal entity that carries on business. An example of a company would be a partnership, limited liability company (LLC), corporation, or sole proprietorship. These are just some of the more common types of corporation structures. A limited liability corporation (LLC) has advantages over others, such as partnerships, in terms of liability protection for its owners. This type of structure permits the owners of the company to shield themselves and their partners from personal and business liabilities.
An important part of what is business structure is the decision-making process. Decisions that impact the company and its outcome must be made by the board of directors. The overall decision-making process must be informal and done through informal forms of communication, such as meetings and teleconferences.
What is the business structure is not solely a function of company management. It has other roles, including the forming of syndicates and the determination of the appropriate compensation for the executives and members of a company’s management. Syndicates are groups of people with similar goals who share in the company’s profits. The compensation of the company’s executives may also be determined by this structure.
What is the business structure is often viewed as a part of a company’s strategy, which seeks to create long-term value for investors. Therefore, it may not seem necessary at first glance to give much thought to the formation of a company’s management structure. However, the purpose of investing in a company is to see it succeed long-term and to see a return on investment (ROI) that exceeds the cost of capitalization (the amount spent to create the company).
A company’s management is made up of a CEO (Chief Executive Officer), a CFO (Chief Financial Officer), and a board of directors (also known as a management team). These four key players are typically appointed by a shareholders’ vote. Information about how the company’s main activities are managed is communicated to all stakeholders. Information on what is business structure is crucial to the success of these key players. For example, if one of the managers were to suddenly leave the company without notice, or the company had an unexpected downturn in its sales, then the CEO would have to make a leadership decision regarding the re-mergence of the company. This would require the CEOs and CFO to form and execute an effective succession plan.
In a smaller business, the owners may not see the importance of what is business structure. They may not see the need to form a management structure at all. Small companies have fewer executives and fewer stakeholder concerns than larger companies. However, these small companies do not typically operate in the same manner as their larger counterparts. Ownership is dispersed, meaning that one man can have control of a large part of the company and even own more than one-third of the company.
What is the business structure is important because it gives the owner an opportunity to receive dividends. This is often viewed as the best form of investment for the owner since he receives his money regardless of the company’s performance. A company’s directors generally invest their money in a wide variety of businesses and financial opportunities. Therefore, they can benefit from whatever knowledge they can gain about a particular business and its underlying issues. Having a mentor such as a former CEO can help owners become knowledgeable about what is business structure.