Enterprise structures

Ganzha Olena, student of 11 ЕП, “Economics and Business” department

Karaieva T.V., English language advisor – Cand.of Ped. Sc., associate professor

The basic enterprise structures are considered in the article. The description and explanation of each structure is given. Also the Business Process Modeling, which is the activity of representing enterprise processes, and its structures as well as activities are being provided in the article.

Enterprise structure is the key block for constructing entire organization including company code, business areas, fiscal year variants, controlling area and chart of accounts. Every enterprise has at least three fundamental structures: legal, managerial, and functional, that are used to describe its operations and provide the basis for reporting. These structures are implemented using the chart of accounts and organizations. Although many alternative hierarchies can be implemented and used for reporting, you are likely to have one primary structure that organizes your business into divisions, business units, and departments aligned by your strategic objectives.

It is also crucially important to take into account the following issues while making decisions on enterprise implementation such as line of business, business unit requirements for autonomy, business and accounting policies, business functions performed by business units and optionally, centralized in shared service centers and locations of facilities [1].

The first one under consideration is the legal structure. The corporation is owned by its shareholders who may be represented by individuals or other corporations. Other kinds of legal entities are sole proprietorships, partnerships and government agencies. Legal entities are also assigned responsibilities to account for themselves to the public through statutory and external reporting, to comply with legislation and regulations, to pay income and transaction taxes and to process value added tax (VAT) collection on behalf of the taxing authority.

Many large enterprises isolate risk and optimize taxes by incorporating subsidiaries. They create legal entities to facilitate legal compliance, segregate operations, optimize taxes, complete contractual relationships. Enterprises use legal entities to establish their enterprise's identity under the laws of each country in which their enterprise operates.

The second structure under consideration is the managerial one. Successfully managing multiple businesses require that you segregate them by their strategic objectives, and measure their results. Although related to your legal structure, the business organizational hierarchies do not need to be reflected directly in the legal structure of the enterprise. The managerial structure can include divisions, subdivisions, lines of business, strategic business units, and cost centers.

And, finally, the third one is the functional structure. A functional organization having been structured around people and their competencies usually involves both legal and business organizations. For example, sales, manufacturing, and service teams are functional organizations. The functional structure is implemented using departments and organizations including selling, marketing, projecting, costing and inventory taking.

Business Process Modeling (BPM) in engineering systems is the activity of representing processes of the enterprise, so that the current process may be analyzed and improved. BPM is typically performed by business analysts and managers who are seeking to improve process efficiency and quality. The process improvements identified by BPM may or may not require Information Technology involvement, although that is a common driver for the need to model a business process, by creating a process master. BPM models consist of simple diagrams constructed from a limited set of graphical elements. For both business users and developers, they simplify understanding business activities flow and process. BPM four basic element categories are flow objects (events, activities, gateways), connecting objects (sequence flow, message flow, association), swim lanes (pool, lane) and artifacts (data object, group, annotation) [2].

The following chart describes the Business Process Model structures and activities.