Chapter 1 - The Business Organisation

Chapter 1 The Business Organisation

Part 1 The Nature of Organisations

1.1 What is an organisation?

• Organisations are social arrangements for the controlled performanceof collective goals. --Buchanan and Huczynski

1. Collective goals

• Organisations are defined primarily by their goals. Different organisations have different goals as their objective are different.
• GOALS need to be

Specific

Measurable

Attainable

Realistic

Timely

2. Social arrangments

• Organisations have structure to enable people to work together towards the common goals.
• large and small organisations will have formal structure to divide up resposibilities between the people concerned.

3. Controlled performance

• Organisations have systems and procedures to ensure that goals areachieved

*Additional Information

Organisation
Definition

(A)

• a group or institution arranged for efficient work.
• to organise = there is an arrangement of parts or elements that produces more than a random collection.

(B)

• a process - structuring and arranging the activities of the enterprise or institution to achieve stated objective.
• organisation = order or structure

Types of organisations

1. service companies
2. factories
3. retail companies
4. political parties
5. charities
6. local councils
7. army, navy or air force
8. schools

1.2 Why do we need organizations?

• Because it can achieve results that cannot be produced by individuals on their own.
• It enables people to:
  - Share skills and knowledge
  - Specialize
  - Pool resourses
• It satisfy social needs
• More efficient at fulfilling needs- the ability that organizations have of being able to employ the techniques of specialization and the division of labour
• Save time
• Pool knowledge
• Power centres
  

Specialization benefits the manufacturer in 3 ways:

• Encourage use of highly specific equipment
• Semi-skilled labour can be employed
• Workers are able to develop high level of expertise and increase their output per period

1.3 Classifying organisations by profit orientation

Profit-seeking organizations

• Organisations (companies/ partnership) see main objective as maximizing the wealth of their owners.
• Objective of organisations
  - Market standing
  - Innovation
  - Productivity
  - Physical and financial resources
  - Profitability
  - Manager performance and development
  - Worker performance and attitude
  - Public responsibility
• Objective of wealth maximization
  - Continue in existence
  - Maintain growth and development
  - Make a profit

Not-for-profit organisations

• They are unlikely to have financial objectives as primary, (NFPs or NPOs)
• To satisfy particular needs of their members or the sectors of society
• Examples of NFPs
  - Government departments and agencies
  - Schools
  - Hospitals
  - Charities
  - Clubs
• Mutual organisations- raise funds by members to provide services that serve the interest of their members
  - Building societies
  - Trade unions
  - Working-men’s clubs

1.4 classifying organisations by ownership/ control

Publish sector organisations

• Provide basic government services
• Controlled by government organisations
• Such as
  - Police
  - Military
  - Public roads
  - Public transit
  - Primary education
  - Healthcare for the poor

Private sector organisations

• Non-government organisations
• Part of a nation’s economy that is not controlled by the government
• Such as (profit-seeking or not-for-profit organisations)
  - Businesses
  - Charities
  - clubs

Co-operatives

• an autonomous association of persons united voluntarily to meet their common economic, social and culture needs and aspirations.
• Characteristics
  - Owned and controlled by their members (people who buy goods and use their services
  - Not owned by investors
  - To meet the needs of the member-owners
  - Not to accumulate capital for investors