be_1 organisations
Post on 08-Apr-2018
220 Views
Preview:
TRANSCRIPT
-
8/7/2019 BE_1 Organisations
1/21
Organizations
and their Objectives
Business Environment
-
8/7/2019 BE_1 Organisations
2/21
CATEGORIES OF ORGANISATION Organisation
An arrangement of people, pursuing commonpeople, pursuing commongoals, achieving results and standards ofgoals, achieving results and standards ofperformanceperformance.
Business involves people and resources to do oneof two things such as make (produce) items or goodsto be sold and provide services to be sold.
All organisations are affected by
the environment, government, individual
-
8/7/2019 BE_1 Organisations
3/21
Legal Form
-
8/7/2019 BE_1 Organisations
4/21
Sole Traders Features
A one-man business - risks
No separate legal entity
Small capital base
Owner is both entrepreneur and manager of business.
Examples as grocery shops, boutiques, barbers, etc.
Advantages
No formal procedures to start
Commitment and motivation
Close and quick to respond
Independence and self-reliance
Disadvantages
Total personal liability
Succession and illnesses
Financial
Skill
-
8/7/2019 BE_1 Organisations
5/21
Partnership Features
2 to max 20 owners or partners
No separate legal entity
A partnership agreement state the rules and avoidingpossible future disputes among the partners
Examples; dentists, lawyers accountants, architects, etc.
Advantages
More funds available & enhanced credit standing
Sharing of expertise, skills, experience, business contacts,etc. amongst the different partners
Sharing of risks
Disadvantages
Unlimited liability
Limited life
Dilution of control - each partner is held responsible for thedecisions of the other partners. All acts by any partner are
legally binding on all the partners
-
8/7/2019 BE_1 Organisations
6/21
Companies or Corporations Distinct artificial persons created in order to separate legal
responsibility for the affairs of a business from the personal affairsof the individuals who own or operate it. (Limited Liability)
Features Separate legal entity
Creation by incorporation - by lodging the MOA (companys constitution),
the AOA (regulations for management of company) Ownership by shares.
Public limited companies (plc) & Private limited companies (Ltd orLimited)
Advantages Limited liability of shareholders, ease of ownership transfer
perpetual life, wider source of capital Specialised management expertise and skills.
Disadvantages Higher cost and difficulty in running organisation
More government regulations - comply with Companies Act
Lack of secrecy information to shareholders, investors, gov.,
competitors, Taxation
-
8/7/2019 BE_1 Organisations
7/21
Companies or Corporations Private company
ownership is limited to between 2 and 50
shareholders cannot transfer their shares without consent
of the company
shares are not sold to the public
Public company
a minimum of 7 shareholders and no limit for maximum
shares are sold in public (sold on stock exchange)
-
8/7/2019 BE_1 Organisations
8/21
SIZESize can be viewed in terms of:
Numbers employedVolume of output, sales, revenue
Assets employedProfits earnedNet worth in real terms
-
8/7/2019 BE_1 Organisations
9/21
Type of Businesses Small businesses - a sole trader/partnership; sell
locally; employ less 50; e.g. computer trainers,solicitors and accountants. Etc.
Medium-sized businesses - employ between 50 and250; operate local and/or national level; e.g.
manufacturers, clothing, furniture, etc.
Large businesses have many factories/officesand outlets in one or more cities/countries;manufacturers, retail food outlets, financecompanies, etc.
National businesses - have household names;recognisable logos; large in size (workforce 250 ormore); branches/factories in major towns/cities.
Multinational - sells worldwide and operate in more
than one country.
-
8/7/2019 BE_1 Organisations
10/21
Advantages of a large organisation:
Sufficient resources to command a significant marketshare.
Wide variety of products, customer services, attractivecareer, develop high-quality personnel, for future topmanagement positions
Can provide for greater division of work and specialisation
Likely continuity of goods or services, management
philosophy, customer relations, not prone to sudden policychanges, etc.
-
8/7/2019 BE_1 Organisations
11/21
Disadvantages of a large organisation:
Management hierarchy -- problem of communication;control, direction by management
Widely diversified range of products or services - difficultto integrate common objective, management philosophyand culture
Time in maintenance of organisation administration,losing sight of setting objectives, planning
Tendency of ingrown and inbred - political, group- think,resistance to changes and developments
Junior management tasks (routine and boring). poorcareer development, earnings, rewards, promotioninformation, etc.
-
8/7/2019 BE_1 Organisations
12/21
ECONOMICACTIVITY
-
8/7/2019 BE_1 Organisations
13/21
Economic ActivityLevel of activity
1. Primary sector consists of industries that produce raw materials,such as crops and minerals.
Examples: oil extraction, wood felling, coal mining company
2. Secondary sector consists of industries that use the raw materialproduces by the primary sector, involved in manufacturing orconstruction, they manufacture the finished article or parts for furtherassembly and manufacture.
Examples: processing oil to produce petrol, chemicals, gas, etc.,construct buildings, building roads, etc.
3. Tertiary sector consists of distribution and service industries,involved in passing the goods from the producer to the consumer.
Examples: banking, tourism, hairdressing, teaching, office cleaning, taxadvice and the media.
-
8/7/2019 BE_1 Organisations
14/21
Economic ActivitySome important terms in economics:
Gross domestic product a measure of economic activity in a country.
De-industrialisation often used to describe the long-term decline in the importance of
manufacturing industry and the secondary sector in general.
Trade surplus / deficit an excess of exports over imports / when imports are greater than
exports.
Exchange rate the price of one currency in terms of another. If LI can buy you $1.50 in US
dollars, then the pound-dollar exchange rate is 1.50.
Sunrise industries:
rising new industries, such as information technology and genetics.T
heirimportance is increasing worldwide.
Sunset industries: gradually dying industries. In the Western economies they include heavy
industries such as steel and shipbuilding, whose prices have beenundercut for many years by more efficient producers in Korea and othercountries in the Pacific.
-
8/7/2019 BE_1 Organisations
15/21
THE PUBLICAND PRIVATE SECTORS
Private sector organisations
are usually set up for personal gain and
are funded by shares issued, loans from
banks, overdrafts etc. They are not ownedby the state or run by the state.
Public sector organisations
are usually set up in the interests of the
community and are funded wholly orpartly by the Government from public
funds and are answerable to a
government department or the Treasury.
-
8/7/2019 BE_1 Organisations
16/21
Private Sector Organisations
that seek profit for their proprietors
Sole traders
Partnerships
Private companies (not quoted on the stock market)
Public companies (plcs, mostly quoted on the stock market)
-
8/7/2019 BE_1 Organisations
17/21
Private Sector Organisations
with objectives other than purely profitCo-operatives
is the result of a voluntary linking together of consumers, producers or retailersinto a trading organisation, which is then used to represent its constituentmembers in the marketplace.
Features: Separate legal entity, Ownership by members
Management by management committee - elected by the members
Profits - divided among the members (dividends, bonus, etc.) or allocated toother funds constituted by the co-op.
Types Wholesale or retail of goods
Farming co-operatives
Producer co-operatives
Advantages: Benefits in production - Bulk buying, cost, negotiation, etc. Marketing - Joint advertising, promotional campaigns, patron, etc.
Disadvantages: Size - In rural areas, too small in terms of membership, capital resources and
business turnover, leading to many failures.
Inexperienced and incompetent management.
Keen competition from rival institutions.
-
8/7/2019 BE_1 Organisations
18/21
Private Sector Organisations
with objectives other than purely profit
Voluntary Organisations Non-profit driven, non-statutory, autonomous and run by individuals who
do not get paid for running the organisation
Features: Non-profit making
Dependent upon their members and supporters to survive
Individuals who do not make their living from their involvement
Type Charities
Criteria to be a charity:
a. Must fit under one of the four heads of charity: relief of poverty,education, religion, other purposes (public works, recreational and leisurefacilities, etc,
b. Public benefit
-
8/7/2019 BE_1 Organisations
19/21
THE PUBLIC SECTOR Refers to all publicly funded or publicly owned
bodies
Characteristics they are government owned and controlled
they are engaged in commercial (business) activities
they have socio-political goals alongside their primaryeconomic goals.
Organisations are owned by state (centralgovernment and/or local government)
Some provided services paid for by taxation,others levy charges on users directly (usually withsubsidy)
Examples: Civil service agencies, schools, armedforces, public libraries
-
8/7/2019 BE_1 Organisations
20/21
THE PUBLIC SECTOR Normally engaged in some form of
business related to utilities (e.g. water, gas, electricity, transportation,
communications)
A
dvantages Benefit consumers - main aim is not to earnprofits but provide services (protected frommonopolies or high prices)
Sense of responsibility to public
Large-scale enterprise (economies of scale)
Disadvantages Lack initiatives
Bureaucracy and lack flexibility
-
8/7/2019 BE_1 Organisations
21/21
The public sectorReasons for the growth of the public sector and
public spending
Industrialisation and urbanisation - pressures forincreased government intervention
Population profile Changes, old people, etc.
Political parties - Competition for public support bypromising better activities, services (health care,transport, etc.)
Pressures groups - to improve services
Welfare state - designed for society with people havingpaid employment, not with high levels of unemployment,as is now common.
top related