A corporate system is the formal process, structure, procedures and communication channels that define how a company’s operations are conducted daily. A well-designed system can be easily adapted and modified to achieve specific business goals. The system includes everything from organizational structure reports, reporting relationships, communication channels, processes for task-management creating policies, enforcement, to the overall culture of the company.
Large organizations use an organizational structure that is hierarchical and has distinct levels of management ranging from the lowest-level employees to the highest-level executives. Some organizations might have flat structures with little or no middle management levels, promoting open communication and collaboration. In a system that is based on processes, teams are focused on documenting and improving their internal processes to maximize efficiency. A network-oriented system uses projects and teams that collaborate across traditional boundaries of departments to achieve the business objectives.
It isn’t easy to design and document business systems however the effort is worthwhile in terms of improved performance. For instance, clearly spelled out roles and responsibilities helps ensure that tasks are appropriately assigned. Similarly, documenting protocols and communication channels makes sure that information gets distributed to the right people at the right time.
Another advantage of business companies, when compared to the earlier types of business entities, like sole proprietorships or joint partnerships, is that they have limited liability. This means that the investors’ control and profits are not tied to their ownership of the business and their personal assets should the business fail. For small businesses, purchasing pre-documented business systems from third-party vendors or buying into an existing franchise that has established business procedures, may be feasible alternatives to creating their own.