When the external environment is unstable, an entrepreneur will need to design an organic business structure to stay competitive. This is needed to meet the sudden changes that could arise in its environment. Organic structures usually operate using cross functional teams which may dissolve and reform to meet the challenges posed by the external environment. On the other hand, entrepreneurs in stable environments, will benefit more from highly standardized processes.
Moreover, markets that require highly specialized knowledge can gain a more competitive edge by being decentralized. This is because it is impossible for one person to possess the amount of knowledge required by the market place. For example, doctors operate in decentralized environments.
Size of business
There are instances when the market demands a large size. For example a business that designs airplanes will need to be large to absorb the total costs to design the planes. On the other hand, there are businesses that do not do so well if they appear to be too large. For example, with professional services, consumers like the feeling of smallness because it indicates that the business is able to give them the personal attention they desire at an affordable price. The challenge for a professional service business is scaling while maintaining the personal touch consumers have come to love.