Small businesses form majority of the businesses world-wide.
They contribute to the success of most world economies greatly. In developing countries, they are drivers of the economy. Therefore, they are a very critical part of the business society. Despite their critical importance to our society, small businesses are not as complex as they may sound. Individuals, who in most cases are the owners, run a majority of those businesses. Consequently, their Organizational Structures are quite simple. In the Case under analysis (Sports Shop), the owner performs all the managerial duties whereas the employee tackles the mechanical activities of the business.
Organization Structure is the process that enables allocation of tasks and responsibilities to different departments in the organization. It influences division of labor to a great extent. This is because Organizational Structure sets clear guidelines as to what role each employee of the organization plays. In this case, it helps to avoid conflicts in the work place. Therefore, it provides a peaceful working environment.
A wrong Organization Structure may mean the end of business for the organization in question. This is because Organization Structure helps to specify who makes what decision and the reason for that. The Sports Shop Structure is simple as there are only two workers involved. It employs a centralized structure. Hence, the owner makes all the managerial decisions. He (the owner) is responsible for the running of the shop.
He only delegates the mechanical part to his employee. This structure ensures that the owner has full control and responsibility over the business. By making all the important managerial decisions, the owner remains sure that things will go right.
The assumption is that the owner undertakes only those activities that benefit the business and help it to grow.
As stated previously, small businesses are critical in most world economies, especially in developing countries. This is because they are productive in their areas of business. Since most small businesses sell proprietorships, their productivity heavily depends on the determination and diligence of their owners. In the recent past, small businesses have recorded high levels of productivity. This is because of the Governments’ efforts in encouraging entrepreneurship to create jobs. The cost of lending money has reduced greatly to enable Small-Scale Investors to invest more. Depressions in economies across the globe have led to massive job losses.
As a last resort, economies dedicate their time to small businesses.
Because of their manageable nature, small businesses have highly centralized and flat structures. In the Case above (Sports Shop), the employee has to be accountable to the owner. The owner has to be accountable to itself and to the customers. The owner has to be accountable to the employee to give him motivation for doing a good job. As much as it is the owner’s business, he also has to employ professionalism and to avoid subjectivity in the business. This will help him to avoid conflicts with his employee.
This is another type of accountability. The employee has to be accountable to the owner for any business carried out in his (the owner’s) absentia. The owner has to be accountable to the employee in terms of salary increment/payment. This means that the owner has to be considerate of the welfare of the employee in terms of safety and monetary security.
Planning is a major part of the organization. This is because, planning helps in the formulation of budgets, monitoring of operations and directing the future of the organization as whole.
Planning skills enable managers to visualize the future of the organization and set achievable goals. The owners of the small businesses do the planning. They decide what they intend to achieve in the short-run and the long run. They may involve the other employees as a source of information but they make the final planning decisions. In most small businesses, the owner’s experience in doing business affects planning. In addition, the environment in which business operates heavily affects it. As the business grows, it employs complex planning skills.
Business activities in small businesses follow a regular if not repetitive pattern. Consequently, their coordination requires less effort as the parties involved are accustomed to operating in the pattern. Coordination is also easy because of the small number of employee/parties involved in performing the various tasks. In this case, there are only two parties involved in the operations of the Sports Shop. However, the owner naturally supervises the operations of the business. Furthermore, the owner performs most of the activities, which makes coordination easier. Coordination is paramount in ensuring that operations are successful in an organization.
It helps to keep operations in line with the Vision and Mission of the organization. It also helps to marry operations with other related operations in order to complete projects successfully. In addition, coordination helps in controlling operations to ensure operations’ completion in time or as required. Finally, coordination ensures efficiency both in terms of time and cost.