Understanding Business Structures and Organizational Models

Understanding Companies

What is a Company?

A company is an organization created by a person or a group of people to achieve specific objectives, typically economic, by providing inputs and generating outputs.

Classifying Companies

By Sector:

• Primary Sector: Obtaining natural resources and raw materials.
• Secondary Sector: Transforming raw materials into consumer goods.
• Tertiary Sector: Providing services to citizens (e.g., trade, transportation, administration).

By Number of Employees:

• Micro: Fewer than 10 employees.
• Small: Fewer than 50 employees.
• Medium: Fewer than 250 employees.
• Large: More than 250 employees.

By Ownership:

• Private: Capital and control are in private hands.
• Public: Capital and control are held by the state.
• Mixed: Capital is both public and private.

By Legal Form:

• Individual: Owned and operated by a single person.
• Corporate: Owned by multiple partners.

Legal Forms Explained:

• Individual Companies: Established by a single person conducting commercial activity.
• Corporate Enterprises: Formed by multiple individuals who contractually combine resources to pursue economic activity.

Company Effectiveness and Efficiency

• Technical Efficiency: Producing more goods than another company with the same resources.
• Economic Efficiency: Producing more goods at a minimum cost.

Organizational Structures and Models

Production Systems

• Artisanal Production: Predates the Industrial Revolution; now focuses on exclusive, high-priced items.
• Industrial Production: Originated during the Industrial Revolution; led to theories on production organization.

Key Organizational Concepts

• Ranking: Ordering personnel by levels of authority and responsibility.
• Departmentalization: Grouping individuals performing similar functions to coordinate tasks.

Organizational Models

• Linear/Military: A leader makes decisions and holds responsibility.
• Taylorism: A top-down organizational structure.
• Other Models: Line-staff, functional, committees, matrix, Toyota Production System.

Types of Organizational Charts

• Informative: Show the general company structure.
• Analytical: Show detailed structural information.
• Structural: Represent employee names and relationships.
• Functional: Include functions assigned to each department.
• Personnel: Detail departments and their managers.
• Partial: Represent only part of the company.
• General: Represent the entire company.

Structural Organization of People in Business

Formal Structure

The formal structure is the organization of workers into groups determined by company management, regardless of individual preferences.

Informal Structure

The informal structure is the spontaneous formation of small social groups among employees.