Business Environment. Understanding the Organisational Purposes of Business

Topics: Public company, El Corte Inglés, Privately held company Pages: 5 (1594 words) Published: January 18, 2012

In this assignment I am going to identify the purposes of different types of organisations, describe the extent to which an organisation meets the objectives of different stakeholders and explain the responsibilities of an organisation and strategies employed to meet them. I am also going to give examples based on my own personal experience.

Identify the purposes of different types of organisation

Business organisations can be divided mainly into two sectors. The private sector, which is formed by sole traders, partnerships, companies and franchises.
The sole trader is the most popular form of business ownership. This kind of business is managed by only one individual who puts all of his savings and his time into making it a success. He is his own boss but it also has a negative aspect which is that he has to deal with a lot of responsibilities. For example window cleaning, plumbing. Partnerships can have between two and twenty partners. There can be exceptions for some forms of partnerships such as big accountancy firms whose partners also enjoy limited liability. This means that they can only loose the amount of money that they have invested even if the business goes bankrupt. E.g. vets, solicitors. Companies are owned by shareholders who choose Directors to give direction to the business. The Chief Executive has the responsibility of making the most important decisions. Specialist Managers will be appointed to run the company on behalf of the Board. Shareholders put funds into the company by buying shares. Every company must register with the Registrar of Companies, and must have an official address. Private companies have Ltd after their name. They are normally smaller than public companies. Shares in a private company can only be bought and sold with permission of the Board of Directors. Franchises are businesses in which someone gets formal permission given by a company to sell its goods or services in a particular area. The business policies have to be the same in every establishment. The franchise pays a sum of money as capital and the franchisor is responsible of the equipment. The first one must buy a certain amount of supplies from the second in order to make sure that the quality of the product is the same as the original. This together with a percentage of the profits of the business goes to the franchisor. The advantages of Franchises are that they have a well-known name. For example McDonalds.

The main aim of all of these private organisations is to make a profit. Other goals consist on having a good customer service, gaining a good reputation, offering quality products, etc. Even when they do charity events these organisations earn a profit on the long run because of the positive publicity they obtain. This will make them increase their number of customers and make them look more competitive towards their rivals.

The public sector is made up of central government, local government and businesses that are owned by government. A Public Limited Company has its shares traded on the Stock Exchange, which can make it win a large sum of money in a very short period of time. On the contrary the original shareholders could lose the control of the business if large quantities of shares are bought as part of a takeover. To create a Public Limited Company the directors must apply to the Stock Exchange Council, which will check the accounts.

Non- Profit organisations receive donations or funds from groups or governments. All the money they earn from selling goods, which have usually been donated by the public, goes straight back into the organisation to improve the quality of their service. The aim of the public sector is not to generate a profit but also not to waste money just to generate enough to be able to continue with their community services.

Describe the extent to which an organisation meets the objectives of different stakeholders

A stakeholder is a...

References: The Times 100 Business case studies. Revision theory – Strategy theory.
VCE IT Lecture Notes – Organisational goals.
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