Business Structure Selection and Organizational Division Methods
Factors for Choosing a Business Legal Structure
There are a number of factors to consider when choosing the appropriate legal form for a business:
- Type of Activity: By law, some activities are mandated to use specific legal forms.
- Number of Participants: Some legal forms require a minimum number of partners or shareholders.
- Promoter Responsibility: Depending on the legal form adopted, liability will be limited or unlimited.
- Nature of Partner Relationships: In some cases, the importance lies in the relationship between partners rather than solely the capital contribution.
- Economic Requirements: The financial and administrative requirements involved in adopting the legal form.
- Tax Aspects.
Internal Sources of Business Funding
The sources of financing generated by the company itself include own capital, reserves, and other similar items.
Defining Capital and Reserves
- Capital: Represents the contributions made by the owner, partners, or shareholders to the company. In structures that limit the responsibilities of their members, the amount of capital serves as the guarantee the organization offers to third parties.
- Reserves: Defined as all of the company's own resources, other than capital, derived from income for the year while pending distribution.
Departmentalization: Definition and Main Types
Departmentalization is the division of the company into distinct departments according to various criteria:
- By Functions: Grouping activities based on the different functional areas available to the company (e.g., marketing, finance, operations).
- By Territory (Province/Area): Grouping activities according to the territorial area, as these areas often have specific characteristics. This is common in the area of marketing.
- By Type of Products: Since products sometimes differ considerably, it is advisable to create special departments for certain product groups.
- By Production Processes: Because the development of a product often requires going through different phases, it may be advisable to group these phases into specialized departments.
- By Market Segment: A firm can direct its output to different types of markets, for example, large supermarkets, small shops, or direct sales to the public.