Chapter 1 : The Business Organisation

1.1 What is an organisation?

Organisations are social arrangements for the controlled performance of collective goals. As there are no widely accepted definitions of organisation, some term can also be used such as organisation refers to a group arranged for efficient work or a process to achieve stated objectives. Organisation also means there is structure and order.

The key aspects of the definitions are as follows:

1. Collective goals- defined primarily by their goals. For example, a hospital has a main goal of treating people.
2. Social arrangements- Working alone are not an organisation. Organisation’s structure is to enable people to work together to achieve a common goal. For example, a football team’s common goal is to win a match by scoring more goals than their opponents.
3. Controlled performance- Organisation has systems and also procedures to make sure they achieve their goal in a time frame.
4. Boundaries

1.2 Why organisations are needed?

- To achieve results where team work is needed

An organisation also enables people to:

1. Share skills and knowledge- People from different departments under the same flagship can share their skills among themselves.
2. Specialise- Individuals with specialise skills can work together to achieve a better results in an organisation to achieve the common goal
3. Pool resources- A group of employees with different skills used to achieve the common goal

1.3 Classifying organisation by a profit orientation

Profit seeking or non profit seeking

Profit seeking

Main objective is maximising wealth and expanded into three primary objectives:

1. to continue in existence
2. to maintain growth and development
3. to make profit

Non profit standing (NPO)

Financial objective is not primary.

Seeking to satisfy particular needs of their members

Examples of NPO:

1. Old folks home
2. Orphanage

One specific category of NPO is mutual organisations. Mutual organisation is an organisation with no shareholders. It is formed by a group of people to provide a range of services that serves the interest of their members and decisions are made mutually

1.4 Classifying organisations by ownership/control

Public Sector

Providing government services and thus controlled by the government

Examples are the police force and military

Private Sector

Non government and is part of the nation’s economy

Co-operatives

An autonomous association of person united voluntarily to meet their common needs and aspirations through a jointly owned and democratically controlled enterprise.

2.1 Main Functions within an Organisation

a. Research and development- Improving existing products and developing products

b. Purchasing- Buying goods and services for the business need

c. Production- Converting raw materials to finished goods

d. Marketing- Identifying market needs, market research, product design, pricing, promotion and distribution

e. Administration- Administrative support and processing transactions

f. Finance- Bookkeeping, financial reporting and control, budgeting and raising the capital

g. Human Resources- Recruitment, training and development

2.2 Co-ordination

The regulation of diverse elements into integrated and harmonious operations

Mechanism for co-operations:

1. regular meeting between managers of different department
2. effective communications
3. clear, well-documented and reporting lines
4. supervision

Co-ordination can be achieved by:

1. Standardised work process
2. Standardised outputs
3. Standardised skills and knowledge
4. Direct supervision
5. Standardised adjustment

3.1 Different levels of planning

a. strategic planning- long term, looks at the whole organisation and defines resources requirements

b. tactical planning- short term, looks at divisional level and specifies how to use resources

c. operational planning- very short term e.g. Like a daily basis, in fine details and mainy concerned with control

3.2 Nature of Strategic Planning

a., long term perspective

b. looks at the whole organisation as an individual product and market

c. sets the directions of the whole organisation and integrate its activity

d. consider views of stakeholders and shareholders

e. analyses the organisation’s resources and defines resources requirements

f. relates the organisation to its environment

g. looking at gaining sustainable competitive advantage

3.3 The Strategic Planning Process

Breaks down to three distinct steps

1.Strategic Analysis- three key areas

1. to identify opportunity and treats
2. to identify strength and weaknesses
3. to understand stakeholders expectation

2.Strategic Choice

1. What is the basis of our strategy? How are we going to compete?
2. Where do we want to compete? Which country, market and products?
3. How to get there?

3. Strategic Implementation

Once determined, long term plans have to be translated into actions and strategy may involve major changes.

By : Yong Shien