Private Sector: The Organizational Structure Of A Private Sector

Private sector: “The part of national economy made up of private enterprises. It includes the personal sector (households) and corporate sector (companies), and is responsible for allocating most of the resources within an economy.” (WebFinance Inc, 2015) This sector includes all private holdings in which personal funds or loans have been used to maintain or set up the enterprise. This can include things such as houses, which people own, sell and buy, and whose funds contribute to the economy, but are privately owned. Limited companies and business partnerships are similar in that they are also privately owned by one owner/several owners, not the general public, and which can be manipulated by the owner’s personal funds and decisions.

Country governments and their departments and ministries manage, but do not own, the public sector. The police are an example of a public sector business – they are owned by nobody but the general public, and provide services and resources that cannot/are not provided by other companies e.g. passports are provided and paid for by the British government, not a separate company. The revenue/costs of public sector enterprises contribute to the economy and are funded through taxes paid via the

Official procedures, which all managing staff and owners must know, are followed by every employee and is referenced to in formal situations. Informal structure follows alongside this, brought about by natural human interaction and relationships. These structures filter down and branch out to each role and position for each employee, and in most cases allows for employees to be promoted/ report to a direct senior/ take a grievance issue to a higher port of call etc. Some examples of formal structure are: line organisational structure (also known as flat hierarchical), which is the structure in which there is a clear straight line of authority within the firm, and branches in things such as production and marketing (See Fig. 1); divisional organisational structure (also known as a functional organisational structure), which is where the line of authority can differ between different departments within the same company (See Fig. 2). This allows different managers for different projects or groups of people, which then all refer to a main person of authority. This type of structure can only really work if the workforce and type of work is flexible, and allows for different types of organisation in different departments (for example, if some work were to fall between two or more departments, a miscommunication caused by different structures wouldn’t affect productivity too much).