A corporate system is a formal framework with procedures, processes, and communication channels which define how a business operates on a daily basis. A well-designed corporate system is able to be modified, improved and adapted to achieve specific business objectives. The system covers everything from the organizational structure reporting relationships, communications channels, task-management processes, policy creation, and enforcement to the overall culture of the business.
Large organizations often use a hierarchical structure that has distinct levels of management from entry-level employees to the highest executive levels. Others may have flat structures with little or no middle management levels which encourages open communication and collaboration. In a system that is based on processes, teams are focused on documenting and improving their internal processes in order to increase efficiency. Network-oriented methods rely on teams and projects that work together across traditional departmental boundaries to achieve business goals.
Documenting and establishing business systems can be a challenge, but the effort pays off in terms of improved performance. For instance, clearly defined roles and responsibilities help to ensure that tasks are assigned effectively. Documenting communication channels and protocol ensures that information is sent to the appropriate people, at the appropriate time.
Limited liability is a further benefit of business corporations when compared with other types of business entities, like sole proprietorships or joint partnerships. This means that the profits and control of investors are distinct from their ownership in the corporation. This safeguards their assets if the business fails. Smaller companies might find it more cost effective to purchase pre-documented systems from a third party or join an existing franchise that has established business methods rather than creating their own.
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