Advantages and Disadvantages of an Entrepreneurial Business Construction

What is a business construction?

A business construction pertains to how the business is organised with regards to who makes the selections and instructs which part of the business. Often drawn as a diagram, it shows the relationship between decision maker(s) and totally different departments within the business.

The entrepreneurial enterprise construction

In the entrepreneurial business construction, any determination that needs to be made is made centrally, either by one particular person or at head office, the results of which are then communicated to workers. This is probably the most ‘rigid’ of organisational buildings, as workers have little to no say or enter in the resolution-making process, instead having to just comply with any orders that are issued.

The entrepreneurial enterprise construction is most commonly present in sole traders with just just a few staff, or in organisations which have to make decisions quickly resembling publishing where there may be typically treasured little time available to discuss things in meetings when there’s a deadline that has to be met. In this instance, somebody has to decide quickly without having to discuss or justify it.

For a sole trader, they are usually the only owner of the enterprise, and so what they say goes. Because they own it, nobody has the writerity to dam or delay their decision. Whilst many could invite advice from the folks they make use of, they will often have an concept of their minds already about what they would like finished, and so will probably just make the decision straight away themselves.

Advantages of the entrepreneurial enterprise construction

The primary advantage of the entrepreneurial business construction is the ability to make selections quickly. Without lengthy meetings and discussions, or proposals sat waiting for approval, selections can be made just about instantly and changes put into place. This permits businesses to quickly adapt to any change in market conditions. It is also a leadership model which is used by governments in emergencies, with virtually all countries having laws in place which allow laws to bypass parliament or equal our bodies and be enacted when velocity and response time is top priority.

Another advantage is that it is one of the least expensive business structures available, and in most cases would be the most cost-effective option. This is because there are no layers of center managers to pay or maintain (e.g. company vehicles).

Thirdly, eachbody knows who is in charge and who they are accountable to, removing the possibilities of confusion being created if completely different division heads asked for different things from workers (e.g. the head of the production department asks workers to improve the quality of the product by spending more time on each, at the same time as the head of the finance division asks for increased output to generate more revenue).

Disadvantages of the entrepreneurial business construction

Despite its advantages, there are a number of disadvantages to the entrepreneurial enterprise structure.

Because of its autocratic nature, with workers being told what to do with no input on the decision, there may be always a real danger of them losing morale and motivation in the event that they strongly disagree with the decision. The extent of their discouragement will rely upon a number of factors similar to how strongly they disagree, as well as the amount of clarification (if any) they get as to why that exact determination was made.

Those making the decisions may not know as much in regards to the problem, market conditions etc. as they think they do. Whilst they make quick selections, they aren’t essentially the most effective choices, and it could also be better for the business to have a specialist manager in place who’s an expert in a specific area.

It may also not be a suitable organisational construction if the enterprise grows, as the choice makers have just too many choices to make. As stated earlier, choices may be made quickly in an entrepreneurial business structure. But if there are such a lot of selections to be made causing delays as different employees wait for solutions, it may actually be quicker to nominate a manager and delegate responsibility to them for making sure decisions.

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