Ownership and

Organizational
Structure
A company's ownership and organizational
structure define how it is managed, who
holds power, and how decisions are made.
Understanding these elements is crucial for
any business to function effectively and
achieve its goals.

by RICHELLE PETALLO
Types of Ownership Structures

Sole Proprietorship Partnership Corporation

A business owned and Two or more people
operated by a single who co-own and A legal entity separate
individual who is solely operate a business, from its owners, with
responsible for all sharing profits, losses, shares of stock that can
aspects of the company. and decision-making be publicly traded.
responsibilities.
 Sole Proprietorship
1 Simple to establish 2 Full control
Sole proprietorships are the The owner makes all
easiest and most common decisions and is responsible
form of business ownership. for all aspects of the
business.
3 Unlimited liability
The owner's personal assets are at risk if the business incurs debts or
faces legal issues.
Partnership
Flexible Structure
Shared Responsibility Joint Liability
Partnerships can have
Partners share in the a varying number of Partners are jointly
management, profits, partners with different and severally liable
and losses of the roles and profit- for the business's
business. sharing arrangements. debts and obligations.
 Corporation
Incorporation 1
The legal process of forming a
corporation as a separate legal
entity. 2 Shareholders
Individuals or organizations
Board of Directors that own shares of the
3 corporation's stock.
Elected by shareholders to
oversee the corporation's
strategic direction and major
decisions.
 Limited Liability Company (LLC)

Limited Liability Flexible Structure Tax Advantages

Members' personal assets LLCs can have a single LLCs can choose to be
are protected from the member or multiple taxed as a partnership or
LLC's debts and members, with varying corporation, offering
liabilities. levels of control and potential tax savings.
profit-sharing.
Organizational Hierarchy and Roles

Shareholders Board of Directors Executives

Owners of the Oversee the company's C-suite leaders (CEO,
company who elect the strategic direction and CFO, COO, etc.)
board of directors. major decisions. responsible for daily
operations.
 Responsibilities of Ownership

Financial Management Ensuring the company's financial

stability and profitability.
Strategic Planning Setting the company's long-term vision
and goals.
Risk Management
Identifying and mitigating potential
risks to the business.
Talent Development
Recruiting, training, and
retaining a skilled workforce.
 TYPES OF ORGANIZATIONAL STRUCTURE

FUNCTIONAL:
Employees are grouped based on their specialized skills or
functions (e.g., marketing, finance, operations).

DIVISIONAL:
The organization is divided into semi-autonomous units based on
product lines, geographic regions, or customer segments.
 TYPES OF ORGANIZATIONAL STRUCTURE

MATRIX:
Combines elements of functional and divisional structures, often
used in complex organizations where employees report to multiple
supervisors.
FLAT/ HIERARCHICAL:
Describes the level of management layers within the organization. Flat
structures have few levels of hierarchy, promoting quick decision-making and
flexibility, while hierarchical structures have multiple levels of management.