Business organization structure

In business organization structure means the relationship between positions and people who hold the positions. It provides an efficient work system as well as a system of communication. The three forms of the organization structure are 1) line organization structure, 2) line-and-staff organization structure, 3) matrix organization structure.

A line organization structure is the one in which there is a direct two-way line of responsibility, authority and communication running from the top to the bottom of the organization. The main idea of such organization structure is to provide direct vertical relationship between the position and tasks of each level, and the positions and tasks above and below each level. A line structure clearly defines responsibilities and authority at each level; it is easy to understand as it provides one supervisor for each person. However, a line organization structure may have some disadvantages like certain inflexibility, too long chain of command and communication, few specialists or experts to advise people along the line.

To minimize the disadvantages of simple line organization structure most businesses today have both line and staff personnel and apply a line-and-staff organization structure. Line personnel perform functions that directly fulfill the main goals of the organization, which are making the product, distributing it, and selling it. Staff personnel perform functions that advise and assist line personnel in performing their tasks. Staff employees conduct marketing research, provide legal advising, hire personnel, and arrange for credit or advertising. Staff people usually serve advisory function, they usually cannot tell line managers or their workers what to do. Different organizations handle line-staff relations in different ways, designing systems that enable line and staff managers to co-operate and respond more quickly to market changes.

Today’s economy is dominated by new kinds of organizations in high-tech industries such as biotechnology, robotics and aerospace. Such businesses focus on developing new products, creativity, special projects, rapid communication and interdepartmental teamwork. All these factors caused the appearance of a new type of organization structure- a matrix organization structure. A matrix structure is the one in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of the line-and-staff structure. In other words, a project manager can borrow people from different departments to help to design and market new product ideas. This organization structure is now widely used in high-tech industries as well as in banking, management consulting firms, accounting firms, advertising agencies.

The international finance

The history of the international financial system is a complex one. Throughout this century there has been an increase in international links through both trade flows and capital movements. This has led to a rise in the degree of interdependence between different countries. As a result, the form which the international financial system takes has become more important in influencing standards of living in all countries throughout the world.

Capital flows. The movements of capital between countries are classified either as current account movements or capital account movements. Current accounts movements mean payments for imports and exports as well as the payment of interest and dividends. Capital account movements mean buying or selling of securities in one country by citizens of another country. Such transactions will also result in a net surplus or deficit for a given country. A net deficit of both current account and capital account transactions represents the net financial resources that have flowed out of the country; a net surplus represents the financial resources that have flowed into a country. Trading, nations have developed an accounting concept, called balance of payments, which records a country's trade and capital movement in relation to other countries. The part of the balance of payments which records imports and exports is called the trade balance. Deficits, which are said to be unfavorable, have to be financed. by borrowing from international organizations or by shipping gold or foreign money to the surplus country abroad. If the deficit has been financed and the surplus lent, the balance of payment is said to be in balance. Countries with a deficit are called debtor nations. Countries with a surplus are called creditor nations.

Fluctuations in foreign currency exchange rates All financial and economic transactions between countries are measured in terms of money. But each country has its own currency in which it will demand payment for net surpluses. The value of one currency relative to another depends on which country has a net deficit to the other. This relative value is indicated by the exchange rate, which represents the cost of one unit of a given currency in terms of another. Exchange rates fluctuate over time depending on changes in the net deficit and surpluses of different countries. The exchange rate is important because of its role in restoring a balance between deficit and surpluses.

The next field of the international finance is methods of payment that are agreed between the buyer and the seller (a. payment in advance, b. different types of letters of credit, c. payment upon shipment of the goods, d. documentary collections, e. open account); and the instrument (where instructions are written) by which the payment is made that is the method of settlement (payment by check, bank transfer, SWIFT, draft, bank money order, TT (telegraphic transfer), MT (mail transfer), Bill of Exchange). And at last, financial institutions act as financial intermediaries between potential lenders (savers) and potential borrowers. These institutions may be classified in a number of different ways: 1) by nature of the business transacted (banking, insurance, stock broking); 2) by the source and use of funds (local, foreign, demand or savings deposits); 3) by ownership (private or public, that is state owned or local/foreign); 4) by the nature of the market and the end use (retail or wholesale).