The purpose and types of business organisation
Syllabus area A1
- Define business organisations and explain why they are formed.
- Describe common features of business organisations.
- Outline how business organisations differ.
- List the industrial and commercial sectors in which business organisations operate.
- Identify the different types of business organisation and their main characteristics
(i) Commercial
(ii) Not-for-profit
(iii) Public sector
(iv) Non-governmental organisations
(v) Co-operatives
Business Organizations and the reasons they are formed
As per Buchanan and Huczynski, “Organisations are social arrangements for the controlled
performance of collective goals.”
The three key aspects of this definition help classify and separate a business organisation from a
mere group:
1. Collective Goals
The goal of an organisation defines the purpose of their existence, for instance, a public school’s
goal
, is to ensure that the maximum number of students gain access to education for free.
A sole trader would not be considered as an organisation based on Buchanan and Huczynski
definition as it lacks the element of collective goals.
2. Social Arrangements
Organisations are not a one man show or a single person working alone; they have group of
people
working together with a shared purpose. Whether it is a formal or an informal organisation
structure
depends on the size and management.
3. Controlled Performance
A set of systems and control procedures must be set in place for an organization to achieve its
goals.
For example, money managers may have an aim to generate more returns than the benchmark
returns. Dominos has a target of delivering a pizza within 30 minutes so it needs to time its
deliveries
accordingly. Why do we need Organizations?
Organizations enable people to do the following:-
1. Sharing of skills and knowledge
Organisations enable people to perform a task which they would not have been able to do on
their
own. Organisations help in sharing knowledge with other people.
2. Specialisation
Syllabus area A1
- Define business organisations and explain why they are formed.
- Describe common features of business organisations.
- Outline how business organisations differ.
- List the industrial and commercial sectors in which business organisations operate.
- Identify the different types of business organisation and their main characteristics
(i) Commercial
(ii) Not-for-profit
(iii) Public sector
(iv) Non-governmental organisations
(v) Co-operatives
Business Organizations and the reasons they are formed
As per Buchanan and Huczynski, “Organisations are social arrangements for the controlled
performance of collective goals.”
The three key aspects of this definition help classify and separate a business organisation from a
mere group:
1. Collective Goals
The goal of an organisation defines the purpose of their existence, for instance, a public school’s
goal
, is to ensure that the maximum number of students gain access to education for free.
A sole trader would not be considered as an organisation based on Buchanan and Huczynski
definition as it lacks the element of collective goals.
2. Social Arrangements
Organisations are not a one man show or a single person working alone; they have group of
people
working together with a shared purpose. Whether it is a formal or an informal organisation
structure
depends on the size and management.
3. Controlled Performance
A set of systems and control procedures must be set in place for an organization to achieve its
goals.
For example, money managers may have an aim to generate more returns than the benchmark
returns. Dominos has a target of delivering a pizza within 30 minutes so it needs to time its
deliveries
accordingly. Why do we need Organizations?
Organizations enable people to do the following:-
1. Sharing of skills and knowledge
Organisations enable people to perform a task which they would not have been able to do on
their
own. Organisations help in sharing knowledge with other people.
2. Specialisation
