What does “Organizational Structure” mean?
Explicit and implicit institutional rules and policies designed to provide a structure where various work roles and responsibilities are delegated, controlled and coordinated. Organizational structure also determines how information flows from level to level within the company. In a centralized structure, decisions flow from the top down. In a decentralized structure, the decisions are made at various different levels.
Organizational structure does not just tell us who is in charge of a company or business, but it also dictates the financial liability of those who own or run the business. The organizational structure of a business dictates what tax rules that business will be subject to, what and how much paperwork will be required to comply with government regulations, the businesses avenues for raising money and what the owner’s personal liability will be. There are three types of organizational structure: 1. Sole Proprietorship a. Sole proprietorships are owned by one individual and are run under their direction at all times. The owner is personally responsible for all income, expenses, taxes, and liabilities associated with the business. 2. Partnership a. A partnership is formed when two or more individuals band together to run a business. Partners do not bear the liability or tax burden for their venture alone, but rather share it with the other partners. 3. Corporations a. A corporation is a cr
