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.

The use of social media in promotion
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Find out how National Trust used strategy theory to thrive in the non-profit industry by downloading our premium case study.

Protecting the marketing mix through intellectual property rights
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Discover how Intellectual Property Office applied strategy theory to succeed in the public sector industry by downloading our premium case study.

Meeting customers' needs
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Learn how Travis Perkins used strategy theory to succeed in the construction industry by downloading our premium case study.

Planning effective marketing strategies for a target audience
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Find out how adidas employed strategy theory to succeed in the sportswear industry by downloading our premium case study.

The use of the marketing mix in product launch
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Discover how NIVEA used strategy theory to thrive in the manufacturing industry by downloading our premium case study.