Entrepreneurial organizational structure is defined as the framework or the layout of an entrepreneurial venture in the way it is arranged.
Entrepreneurship ventures are the soul of entrepreneurship. Whenever an entrepreneur builds out a certain venture, the order of the organization follows a certain pattern.
It is this pattern that then ultimately becomes the identification of the organization itself. Whenever an entrepreneurship venture is established, the entrepreneurial organizational structure becomes extremely significant because it is the unit that later on decides the success and failure of a certain venture.
- Entrepreneurial organizational structure is the basic framework of a specific business venture on the basis of whom the tenets of the venture operate.
- It provides information about the way an entrepreneur is operating in the business world.
- There are five major types of entrepreneurial organizational structure based on the types of management systems.
- Once you have stuck to a particular structure, the most essential thing for you is then to stick by its precept to expand your growth within it.
What Is Entrepreneurial Organizational Structure?
I will break it one by one for you. For this purpose, let us concentrate on the very term, “entrepreneurial organizational structure”.
Now, if we focus on this term, we find three different words with a differentiating nature. The first word is related to entrepreneurship. The second word then formulates an organization referring to an entrepreneurship venture or a business venture that is a part of entrepreneurship. Finally, the soul of the entire concept is the third word, “structure”.
Now if we combine the above two definitions then we get the overall definition as “an entrepreneurial organizational structure is defined as the overall structure or the foundation in which the entrepreneurship venture or a specific business is arranged”.
It talks about the basic order in which an entrepreneurship venture operates. There are different organizational structures of different business ventures. Each and every single venture is based on the pattern of the overall nature of the business.
Let us suppose that there is a specific business venture which is aimed at producing hand-crafted flowers. So, the organizational structure would include all the artists together who can make such handcrafted flowers that can be delivered to the clients at the right time.
This way, the organizational structure becomes functional i-e: each and every artist performs the specific function of creating handcrafted flowers so they are grouped together with this task.
Types Of Entrepreneurial Organizational Structure
There are five major types of entrepreneurial organizational structure:
- Functional Entrepreneurial Organizational Structure
- Divisional Entrepreneurial Organizational Structure
- Matrix Entrepreneurial Organizational Structure
- Geographical Entrepreneurial Organizational Structure
- Flat Entrepreneurial Organizational Structure
Functional Entrepreneurial Organizational Structure
This is the first and most common type of entrepreneurial organizational structure. Just the way its name indicates the very type. This type of entrepreneurial organizational structure is based on a similar function.
If there is a certain business venture which involves the idea of delivering a particular type of product or service, then all the individuals who have knowledge and skill matching that particular type are arranged together in the organization to perform one type of function.
Here, the end goal is completely defined. You have to deliver a fixed kind of product or service at the end of the venture. For that purpose, you only employ individuals who perform that same kind of function.
For a venture which involves delivering specific garments, you only employ the artisans who can prepare that kind of garments. They are arranged together to perform a specific kind of function. You set a target in front of them and they have to fulfill that in the course of a specific period. This way the organization operates impressively.
Divisional Entrepreneurial Organizational Structure
This is based on the conventional division of labor process. This type of structure works in organizations that have to go through different phases for the accomplishment of a certain product or they either divide their product range into parts.
In this case, the task is divided between individuals, and each division works separately from the other division since the overall product is going to be different.
Here, the concept of one unit diminishes and the concept of divided products comes forward. Divisional organizational structures are mostly employed in companies where the entrepreneur has to derive a different range of products from one single type of business.
Suppose that there is a certain garment industry that offers two different kinds of garments. One is traditional prey and the other represents chic. Now, the entrepreneur will not only mark the boundaries between the two products but will also separate the two divisions from one another.
This is because despite being included in the category of the garment, they are still of two different types. So, individuals from two different divisions will work for their creativity while being separated from each other in any way.
Matrix Entrepreneurial Organizational Structure
This type of organizational structure is a blend of the earlier mentioned two types of entrepreneurial organizational structure. Here, a matrix-like arrangement is formed and is usually adopted by larger companies where there are innumerable departments and every department has different functions plus alongside departments, there are divisions established between one another.
This type of organizational structure is adopted to extend the company’s motto and also helps the company is running effectively. Entrepreneurs in this category have already extended their business well and are just hoping to run the whole venture smoothly in the perfect order.
This is also the most expensive type of organizational structure. This means that you have to make use of a large number of resources, more monetary sources are required to run the venture carefully and brilliantly.
You can take examples of grand entrepreneurial organizations for this purpose. Consider Apple.Inc. The organization itself has enormous departments on the basis of similar types of functions including design, software testing, repairing, programming e.t.c.
Each and every single department further divides the individuals into teams who are performing one specific kind of function. These functions then combine to form a division and these divisions are the body of the whole organization which is standing before us today.
Geographical Entrepreneurial Organizational Structure
This type of entrepreneurial organizational structure is based on the geographical distribution of a business venture. On the basis of the difference that exists between different geographical areas, the ventures exist randomly in certain geographical areas. They function independently without each other. The function of these kinds of business ventures often depends on the presence of the available resources within a certain geographical location. If you are unable to get the true connotation behind this kind of business venture, then let us take you into more depth. In these kinds of ventures:
- An entrepreneur starts a venture based on geographical location.
- He understands the resources offered by a specific geographical area.
- On the basis of the resources of the specific geographics, he, later on, creates a plan and then develops the entire venture.
It can also be the subsidiary of an already present business venture. This type of entrepreneurial organizational structure is usually adopted by entrepreneurs who have already established successful ventures at a single place and then want to extend their business by establishing ventures at some other places.
Coca Cola Corporation is the biggest example of this type of entrepreneurial organization structure. The venture is a global phenomenon and not only extends at one place but has a global reach by establishing its subsidiaries in nearly all countries of the world.
In each country, however, it has to keep in mind the geographical and cultural constraints and has to run businesses accordingly.
Flat Organizational Structure
This is the final type of entrepreneurial organizational structure. This type of entrepreneurial organizational structure doesn’t call for one single supreme authority or boss that is ahead for all.
Here, you find every other individual being a boss of their own selves. This type of venture is getting much popularity these days as corporate slavery is finally being questioned. It is an effective way of managing tasks and exchanging new ideas with one another.
This type of structure gives personal freedom to every individual so that they can easily think on a unique set of ideas. If a product idea is constituted by one individual over here, he finally transfers that idea or thought pattern to the main creator of the venture and after being approved, he starts acting upon the plan.
This type of structure is of great aid for those who want to explore their internal skills without being forced by the authorities to work. It is an effective method of running up an entrepreneurship venture because the individual skills are continuously reinforced to produce something that is unique.
A marketing agency adopts this kind of strategy where every marketer has to devise the perfect kind of strategy to attract more clients. On the basis of that, the ideas are then valued by the chief moderator and the marketer is allowed to work on the strategy if it looks feasible and flexible enough to work on.
Entrepreneurial organizational structure is a fundamental unit in deterring the overall capacity of an organization. It not only tells about the overall framework but also assists the clients in understanding the significance of a specific kind of venture for success.
It is necessary for an entrepreneur to have a fine idea about the kind of organizational structure because, without a foundation and framework, the effort seems incompetent.
The author is an M.Phil scholar conducting her thesis in Literature. As a sucker for literature, she swoons over Greek and South Asian fiction while reviewing books in her spare time. Her love for writing has made her expand her subject matter and now she pens her opinions frequently on business, finance, entrepreneurship, lifestyle, history, and literature. For a special connection with entrepreneurship, she opens up the details occasionally about it.