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ZAB101 - Agribusiness Management introduction to business structure & organisational design

Business structure

How an agribusiness is structured, in a legal sense, is important for a number of financial, taxation, asset protection and risk-exposure reasons. The following short video from the Australian Taxation Office explains why.

There are four main types of business structures that we will be learning more about in this module: - Sole trader, partnership, company and trust.

Further information about these and other legal structures in the agribusiness sector is provided by the Tasmanian Department of Primary Industries, Parks, Water and Environment (DPIPWE) in an article available by clicking on this link.

Decisions about which structure to choose will be largely dependent upon the scope and scale of the business you intend to run. Some of the factors that inform agribusiness managers in their decisions about what business structure to employ include:

Particularly in agricultural businesses, business structure is often predetermined by historical circumstance. For example, a farm that has been in the same family for generations is often owned under a family trust or company, because it is relatively easy to change the trustees /directors as each generation takes over custody. It can be expensive to change from one business structure to another because stamp duty and other costs are imposed when an asset like a farm is transferred into the name of another person or entity. If starting a new business, it is important to have an eye to the future as well as the short-medium term implications of each possible structure.

In planning the succession of a farm from one generation to the next, decisions often need to be made about changing that business structure, for example if several siblings are to jointly share a farm, there may be a need to formalise the structure so that the land is held by an independent entity – a trust or a company. The following Australian Tax Office video provides an overview of business structures and their tax implications for small businesses.

Task

In your Agribusiness Practice Journal, make some notes about examples of agribusinesses you know of. Are they sole-traders, partnerships, companies, trusts or a different structure? How and why do you think they are structured that way.

Organisational design

In previous modules, we’ve established that agribusinesses operate within certain geographic, climatic, economic, social, political, legislative and technological contexts.

We've also identified that agribusinesses thrive and survive because the owners and managers of those businesses are passionate about their ‘why’ and motivated to achieve their goals because they have a purpose. In this module, we have been learning about the different structures of businesses and the implications of those different structures on the complexity of their ongoing management, how income is taxed and how that structure might influence who you do business with.

Relevant to the HRM in Agribusiness unit you may also be doing this term, is the central importance of defining roles and responsibilities for every staff member, and how the business is structured hierarchically in terms of decision-making and power. The culture of the business is also critical, and this is usefully seen as an outcome of how the organisation works and its alignment with its core values, goal and purpose – it’s ‘why’.

TASKS

1. Watch the following videos on organisational design to understand how important it is to get this right, and how it impacts on decision making, communication and workplace culture.

2. In your Agribusiness Practice Journal, reflect back on the two family farms we looked at in a previous module – the Salatins in the USA and the Dunbabins in Tasmania. I realise you don’t have all of the details, but what do you think the organisational structure of these two family businesses would be based on what you do know of their business purpose and goals and the values they hold dear.

Alternatively, you can briefly describe the organisational design of a company or family business you are aware of in your Agribusiness Practice Journal, and jot down a few notes on the following: -

This brings us to a close for our current MyLO module. As you prepare for your upcoming fieldtrip to agribusinesses on the Cradle Coast, start to think about what information you will want to find out in preparation for your upcoming assignments.

Credits:

Created with images by StateofIsrael - "Agriculture" • Agence Producteurs Locaux Damien Kühn - "Farming Potatoes" • USDAgov - "LauraFoell_July2014 blog" • Judith Prins - "Sheeps" • Agence Producteurs Locaux Damien Kühn - "Farming Potatoes" • Disco-Dan - "Forest Harvesting (22)" • Greyson Joralemon - "Construction" • elizabeth lies - "untitled image"

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