Agribusiness Management ZAB 101

Week 2 - Business Structure

How a business is structured, in a legal sense, is important for a number of financial, taxation, asset protection and risk-exposure reasons.

There are four main types of business structures that we will be learning more about in this topic:

One of the things we will be asking you to find out about when we do our agribusiness visits later this term is the way in which each business is structured, why they are structured that way and what are the implications for that business.

Some of the factors that inform agribusiness managers in their decisions about what business structure to employ include:

Decisions about which structure to choose will be largely dependent upon the scope and scale of the business you intend to run.

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.

Task 1

ATO Overview of business structures | 3:25 mins

Task 2

In your portfolio make some notes about examples of businesses you know of and how you think they are structured. Are they sole-traders, partnerships, companies, trusts or a different structure?

Business Organisational Design

So far in this subject we’ve established that agribusinesses operate within certain geographical, climatic, social, political and economic opportunities and constraints. Yet 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.

We have also learned about the different structures of business 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.

The final part of this introductory lecture is how we bring all of these things together to actually make the business function; how we organise the ‘who’, ‘what’, ‘where’ and ‘how’ of making the business ‘tick’.

We also need to introduce the ‘when’ into our agribusiness model at this point, because if we don’t set targets and timelines in things, particularly in agricultural production when timing is so critical, we will never achieve our goals.

The following video focuses on how organisational design is built from the perspective of the business goals and purpose. It starts by identifying the ‘strategies’ that will help businesses achieve their defined goals and, from that, how the business needs to be organised structurally, to achieve that. Relevant to the Human Resources Unity you’re also 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’.

Organisational Design | 5 mins | Watch the first 3 minutes.

The second video is a shorter animation explaining the importance of organisational structure as a key method of managing communications and clarity of direction of purpose across an organisation. It focuses on setting out clarity of expectations of staff members.

What is Organisation Design | 1:50 mins

Task

In your Portfolios, reflect back on the two family farms we looked at earlier – 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.

Jot down a few notes on:

Click here for the quiz to assess your understanding of this unit.

Credits:

Created with images by StateofIsrael - "Agriculture" • raedon - "macro shrub ornamental shrubs"

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