It has always been your dream to have your own business. You and your childhood friend Ravi have developed a product called Sunburst that
could be used by the growing solar energy industry Tanya, a friend you met through an alumni group, has experience in marketing. The three
of you agreed to form the startup team for Sunburst and you gather together one weekday morning to discuss the legal form and
organizational structure your business should take.
We’re going to need additional investors and expertise to get this business off the ground, Ravi says. We should develop a business plan
that will be attractive to potential investors and partners. They’re going to have concerns about joining a new startup, Tanya says. We
should work to address these from the start.
Ravi looks to you. Can you prepare a PowerPoint presentation for potential investors? Let them know what legal form the business is going
to take and explain why it works for our company. You should include your analysis on personal liability, taxes, interests of contributing
parties, and management of the business. We want them to know we’ve done our homework. (I have completed this already, proposed an LLC or
Tanya interrupts, the other thing is we have to decide what organization structure would best serve our goals. That’s right, Ravi says.
We’ve already identified innovation and timely customer service as our top priorities for Sunburst. We know we need staff to handle
product development, production, finance and accounting, and marketing and sales.
We’re definitely going to need human resources functions, Tanya says. Outsourcing is one option we should look into. We need to do some
research before we make a decision. Ravi looks to you again. I think we need to develop a clear mission statement and an organization
chart and explain the rationale for our decisions in a short paper. You’re the most detail-oriented. You think you can handle it?< Need
help on this section
Determine Your Organization’s Structure: Gather and Analyze Information
Now that you have decided on a legal organization form for your business, which currently has a single location, you need to decide on an
organization structure. Organization structure determines such things as what departments the organization will need, who will report to
whom, how many levels you will have in your organization’s hierarchy, and how many individuals will report to each manager (span of
control). An effective structure should promote communication and coordination of efforts across the entire organization. See:
Organization Structure and Design.
You begin your research by formulating a number of questions, the answers to which will be reflected in a short paper that includes your
mission statement, organization chart, and your rationale for these recommendations.
1. Sunburst’s primary goals are innovation and customer responsiveness. How should your mission statement articulate these goals?
How can this statement be drafted so that it is clear, concise, and meaningful to organization stakeholders?
2. What key tasks must be accomplished in order to meet the organization’s goals? What individuals or groups will have responsibility
for delivering these processes or items?
3. Will individuals have titles and, if so, which individuals? What will those titles be?
4. To whom will individuals report? Why?
5. What are the possible impacts of outsourcing the HR function? What are the pros and cons of doing so? Make a recommendation in
your paper. If you decide to keep HR in house, make sure its place in your business structure is reflected in your organization chart.
6. Consider all other relevant factors (for example, will your business structure be functional, centralized, or decentralized,
When you have formulated your preliminary thoughts and questions, begin your research. The resources below are a good start, but you
should also conduct your own research to enhance your knowledge and the final product.
When your research is complete, continue to the next step, in which you will write your short paper, which will include a mission
statement, organization chart, and summary of the rationale behind your decisions.
Blue highlights from above:
Organization Structure and Design
The structure of an organization plays a pivotal role in how everyday tasks are handled, in how resources are allocated, in employee
supervision and reporting, and in coordination amongst employees. It impacts employee behavior, demeanor, and psyche in ways that are
still being studied by theorists today. Organizational structure may play a role in employee motivation and even productivity.
A primary factor in creating and managing a new business involves choosing the best organizational structure for it. Some types of
business are better suited for a clear hierarchical structure, while others are more apt to work within a flatter organizational
structure, with fewer or even no levels of authority. From time to time, a business may reorganize, as online shoe retailer Zappos did
when moving from a hierarchy to a flatter “holacracy.” There were reportedly mixed results spurring from this major shift in business