Advantages And Disadvantages Of An Entrepreneurial Business Construction
A business construction pertains to how the enterprise is organised with regards to who makes the decisions and instructs which part of the business. Usually drawn as a diagram, it shows the relationship between resolution maker(s) and different departments within the business.
The entrepreneurial enterprise construction
Within the entrepreneurial enterprise structure, any resolution that needs to be made is made centrally, either by one person or at head office, the results of which are then communicated to workers. This is probably the most 'rigid' of organisational buildings, as workers have little to no say or input in the determination-making process, instead having to just observe any orders which are issued.
The entrepreneurial enterprise structure is most commonly found in sole traders with just just a few workers, or in organisations which have to make selections shortly similar to publishing the place there may be often valuable little time available to discuss things in meetings when there's a deadline that has to be met. In this instance, somebody has to make a decision rapidly without having to discuss or justify it.
For a sole trader, they're typically the only owner of the business, and so what they are saying goes. Because they own it, nobody has the creatority to block or delay their decision. Whilst many may invite advice from the individuals they make use of, they'll usually have an idea in their minds already about what they would like carried out, and so will probably just make the decision straight away themselves.
Advantages of the entrepreneurial business construction
The main advantage of the entrepreneurial business construction is the ability to make choices quickly. Without lengthy meetings and discussions, or proposals sat waiting for approval, selections can be made pretty much instantly and modifications put into place. This allows companies to quickly adapt to any change in market conditions. It's also a leadership type which is used by governments in emergencies, with virtually all nations having laws in place which permit laws to bypass parliament or equal bodies and be enacted when speed and response time is high priority.
Another advantage is that it is likely one of the least costly business structures available, and in most cases would be the least expensive option. This is because there are not any layers of center managers to pay or maintain (e.g. company vehicles).
Thirdly, eachbody is aware of who is in charge and who they're accountable to, removing the chances of confusion being created if completely different department heads requested for different things from workers (e.g. the head of the production department asks workers to improve the quality of the product by spending more time on each, at the same time as the head of the finance department asks for elevated output to generate more revenue).
Disadvantages of the entrepreneurial enterprise construction
Despite its advantages, there are a number of disadvantages to the entrepreneurial enterprise structure.
Because of its autocratic nature, with workers being told what to do with no input on the decision, there's always a real hazard of them shedding morale and motivation if they strongly disagree with the decision. The extent of their discouragement will depend upon a number of factors akin to how strongly they disagree, as well as the quantity of clarification (if any) they get as to why that exact resolution was made.
These making the decisions may not know as much about the problem, market conditions etc. as they think they do. Whilst they make fast decisions, they don't seem to be necessarily one of the best selections, and it may be better for the enterprise to have a specialist manager in place who is an skilled in a particular area.
It could additionally not be a suitable organisational construction if the enterprise grows, as the choice makers have simply too many decisions to make. As said earlier, choices might be made shortly in an entrepreneurial business structure. But when there are so many choices to be made causing delays as different workers wait for answers, it may very well be quicker to nominate a manager and delegate responsibility to them for making sure decisions.
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