Strategy illustration Strategy theory

The structure of business

In the UK and most other countries business is structured in such a way that most activity takes place within the private sector with decisions being made by the market. Private sector businesses are owned by individual owners and shareholders, who seek to make a profit or achieve other objectives.

Companies are owned by shareholders who appoint directors to look after their interests. The Board of Directors appoints specialist managers to run the company.

Some businesses (although fewer these days) have a top down hierarchical structure. These are organisations with a number of layers within them, and a downward flow of communication. In an organisation structured in this way decisions and instructions flow from the top, and people lower down the organisation are reluctant to make decisions for themselves.

In contrast, many modern organisations are organised in a more democratic way. Layers of the hierarchy have been stripped out, and often employs are organised into work teams. A team member may also be part of other teams at the same time. In these new forms of democratic organisations there is a multi-channel flow of communication.

The private sector: Consists of sole trader, partnership, private companies, public companies, and franchises. These are owned by individual business owners and shareholders who seek personal objectives such as making a profit.

The public sector: Consists of organisations that are owned by the government on behalf of taxpayers and other citizens. A good example is the BBC.

Supporting Documents

These downloads will help to put strategy theory into context using real world examples from real businesses.

Leading a revolution in banking
Intelligent finance logo

Discover how Intelligent finance applied strategy theory to prosper in the financial services industry by downloading our premium case study.

The marketing mix in the food industry
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Discover how McCain Foods applied strategy theory to succeed in the food & drink industry by downloading our premium case study.

Using sponsorship to increase brand awareness
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Learn how Infiniti applied strategy theory to thrive in the automotive industry by downloading our premium case study.

Meeting customers' needs in growth markets - online gaming
BT logo

Learn how BT employed strategy theory to prosper in the telecommunications industry by downloading our premium case study.

Live, breathe and wear passion
Diesel logo

Discover how Diesel used strategy theory to prosper in the fashion industry by downloading our premium case study.