Internal organisational structure of business Unit 2
Yvonne Harvey, Contributor

Clement Radcliffe, principal of Clarendon-based Glenmuir High School, conducts a CXC seminar at the Girl Guides Association of Jamaica headquarters, on Waterloo Road, St. Andrew. - Junior Dowie/Staff Photographer

It's good to be with you all again. I will begin by stating the specific or learning objectives for this unit. The candidate should be able to:

1. Identify and state the characteristics of various forms of organisational units

2. List and discuss the relative advantages and disadvantages of different forms of organisations

3. Identify regulatory practices instituted by governments for the setting up of various forms of business enterprises

4. List and explain the major functional areas in business

5. Identify and interpret formal and informal relationships existing among employees of an organisation

6. Construct and interpret organisational charts

7. State the effects of growth on the organisational structure

8. State the nature and role of a management information system (MIS)

9. Discuss the benefits of MIS in a business.

*For general proficiency only

As we learned in a previous lesson, there are two sectors in a mixed economy, the private sector and the public sector. The main forms of organisational units vary from small to large businesses and fall under the two sectors as follows:

We will now begin looking at these forms of businesses, starting with the sole trader.

The Sole trader

The sole trader is the simplest, commonest and oldest form of business, where there exists only one owner.

This type of business is also known as the sole proprietor business. Examples: retailers, restaurant owners, barbers, taxi drivers, dressmakers etc.

Characteristics of the sole trader

1. The owner and the business are one and the same, that is they are not separate entities.

2. They are mostly small businesses that are established with very little capital.

3. Sole trader businesses are easy to establish as there are very few legal requirements.

4. This type of business is usually financed by the owner.

5. The owner makes all the decisions and manages the business himself.

6. The owner bears all the risks and has unlimited liability. This means that his liability in the business is not limited to his investment in the business, but may involve him having to sell his personal belongings to help out the business.

7. All profits belong to him as the sole owner.

8. Many sole traders are assisted by family members and paid employees who are few in number.

9. Sole traders often have to work long hours, rarely taking breaks or vacations.

10. Lack of continuity, that is, if he dies the business comes to its end.

11. The sole trader may do business under his own name. If he uses any other name, it must be registered with the registrar of business names.

12. Capital is normally raised from personal savings, inheritances and loans from family members and close friends.

Legal aspects

1. There are virtually no legal formalities for this type of business. However, depending on the type of business, a permit or a licence may be required.

2. The business and its owner are inseparable.

ADVANTAGES OF THE SOLE TRADER

1. The business is simple and easy to start.

2. Decision-making is quick and easy.

3. Close personal contact with employees and customers.

4. Flexibility of the business, e.g., in opening hours and in what is produced and sold.

5. Profits do not have to be shared.

6. Longer opening hours benefit customers.

7. Businesses of this type are usually easy to manage.

Although there are many advantages of this type of business, there are quite a number of disadvantages.

It would be good for you to do some research and see what disadvantages of the sole trader you can come up with. Next week, I will begin the lesson by listing them for you and then proceed to look at partnerships.

Take care until next week.

Yvonne Hardy teaches at Glenmuir High School.