Relationship Between Organizing Businesses, Structure Of Businesses And Employee Motivation.

Introduction to discussion

When a person wants to begin a business, he must take into consideration the different types of ownership and organizations. Ownership may be a sole proprietorship, a partnership, or even a corporation depending on the type of business. Once the business has begun, the structure of the business has to be equivalent to the type of business or managers who will be running the different parts of the business. In order for a business to run smoothly, managers must be able to understand technology, adapt quickly to changes, skillfully motivate subordinates, and realize the importance of customer satisfaction.

Levels of private ownership

The United States has more and more people trying to start a new business everyday (Boone and Kurtz, 2003). Before an entrepreneur is able to begin a small business, he needs to understand and choose the type of private ownership. Sole proprietorship is a form a business ownership in which the company is owned and operated by one person (Boone and Kurtz, 2003); this is known as the most common form of business in the United States. This type of ownership has unlimited personal liability for business debts. This disadvantage has no distinction in separating between the sole proprietor’s status as an individual, and as a business owner. The owner must operate within his personal funds or money borrowed from loan institutions. If the business fails to make profit and becomes unable to repay any of the loans borrowed, the loan companies have legal right to take all earnings and personal assets until the loan is paid off. This disadvantage also limits the potential for expansion for small businesses. A sole proprietorship has the advantage to allow management flexibility as well as the right to retain all profits, after payment of taxes. The legal process to start a sole proprietorship is easy. The minimum requirements simplify registration and license appropriation process. These advantages make many entrepreneurs want to start a small business in the United States.

Another form of private ownership is the partnership. This is an association of two or more persons who operate a business as co-owners by voluntary legal agreement (Boone and Kurtz, 2003). This form of business has mainly the same advantages and disadvantages as a sole proprietorship. Like a sole proprietorship, personal liability is high. Each partner has full responsibility for the debts of the business and may be legally liable for the actions of the other partners (Boone and Kurtz, 2003). If two people own the business and one partner does not want to be part of the business any longer, he must find someone to buy their share of the business in order for the business to remain a partnership.

A corporation is another option for an entrepreneur to begin a business. A corporation is a legal organization with assets and liabilities separate from those of its owner or owners (Boone and Kurtz, 2003). Corporations are able to access more financial resources by being able to have outside investments, such as stocks. This option allows ownership to be split up into sections, which allows limited personal liability and responsibility. If the business fails, owners only loose the money invested. Employees are able to work specialized skills because of the large number of employees and number of owners. This causes business managers not only to concentrate on specific tasks for employees but also allow them to gain experience on other projects. One main disadvantage of a corporation is the double taxation. Corporations must pay federal, state and local income tax of all profits, and the stockholder must pay personal taxes on profits received.

Structures of Businesses

Different types of businesses will have different types of structures, depending on the type of business being run. The types of organization structure can be classified into four types: line, line-and-staff, committee, and matrix structures. Line organization is the oldest and simplest form of organization structure. This structure establishes a direct flow of authority from the chief executive to subordinates. Line organization use a chain of command to delegate tasks as well as define which subordinate will report to which a manager. Decisions are made quickly because of authority and ability to control subordinates. A disadvantage of this type of structure does not allow managers to take full advantage of specialized skills. Because of this disadvantage, managers become over burdened with administrative details and paperwork, leaving them little time for planning (Boone and Kurtz, 2003). On the other hand, this type of structure is easy for both managers and subordinates to understand, which makes it an advantage for small businesses. The line structure is best used in small businesses, such as grocery stores, small car maintenance shops, local restaurants, and small law firms.

The second form of organization structure is line-and-staff. This structure combines the direct flow of authority of a line organization with staff departments that serve, advise, and support the line departments (Boone and Kurtz, 2003). In this type of structure, there are two types of managers, line manager and staff manager. Line managers work directly with functions of production, financing or marketing departments, which form part of the primary line of authority or the business organization, this can be closely defined as a line organization. Staff managers provide information, advice, or technical assistance to aid line managers. Although staff manager do not have authority to give orders outside their own departments, they still have some authority within their chain. The line-and-staff is an effective structure because of the line organizations capability of rapid decision making, direct communication with the expert knowledge of staff specialists and the employees having to report to one supervisor (Boone and Kurtz, 2003). Conflict between the line and staff managers could arise as a result