1、Part A,The business organisation, its stakeholders and the external environment,Chapter 1,Business organizations and their stakeholders,1 Types of organisation,1.1 What all organisations have in common An organisation is :a social arrangement which pursues collective goals, which controls its own pe
2、rformance and which has a boundary separating it from its environment.,1.2 Why do organisations exist? Organisations can achieve results which individuals can not achieve by themselves. (a) Oraganisations overcome peoples individual limitations, whether physical or intellectural. (b) Organisations e
3、nable people to specialise in what they do best. (c) Organisations save time. (d) Organisations accumulate and share knowledge. (e) Organisations enable synerge. In brief, organisations enable people to be more productive.,1.3 How organisations differ Ownership (Public vs Private) Owned by the gover
4、nment (public sector organisations) Owned by private owners or shareholders (private sector organisations) Control Controlled by the owners themselves Controlled by people working on their behalf Indirectly controlled by government-sponsored regulators,Activity Profit or non-profit orientation Legal
5、 status Limited companies Partnerships Size,Sources of finance Borrowing from banks Government funding Issuing shares Technology Varying degrees of technology use,1.4 What the organisation does Organisations do many different types of work,2 Types of business organisation,2.1 Profit vs non-profit or
6、ientation Profit orientation Maximise profit (to owners) Non profit orientation Provision of goods / services (to public / beneficiaries),2.2 Private vs public sector Private sector Organisations not owned or run by central or local government, or government agencies. Public sector Organisation owne
7、d or run by central or local government agencies.,2.3 Private sector businesses A business organisation exists to make a profit. Costs should be less than the revenues. Profits are not incidental to its activities but the driving factor.,2.3.1 Legal status Someone setting up a business can choose to
8、 go into business alone, take on one or more partners who also share the profits of the business, or set up a limited company.,2.3.2 Limited companies A limited company has a separate legal personality from its owners (shareholders). The shareholders risk is generally restricted to the amount that t
9、hey have invested in the company when buying the shares. Limited liability,The ownership and control of a limited company are legally separate. Shareholdersare the owners but have limited rights, as shareholders, over the day to day running of the company.,Directors are appointed by shareholders to
10、run the company. Board of directors controls management and staff, and is accountable to the shareholders Executive directors participate in the daily operation of the organisation. Non-executive directors are invited to join in an advisory capacity, usually to bring their particular skills or exper
11、ience to the discussions of the board to exercise some overall guidance.,Operational management usually consists of career managers who are recruited to operate the business, and are accountable to the board.,2.3.3 Types of limited company Private limited companies (eg X Limited) Public limited comp
12、anies (eg X plc) They differ as follows: (a) Number of shareholders (b) Transferability of shares (c) Directors as shareholders (d) Source of capital A private companys share capital will normally be provided from three sources: the founder or promoter; business associates of the founder or employer
13、; venture capitalists A public companys share capital can be raised from the public directly, or through institutional investors, using recognised markets,2.3.4 Advantages and disadvantages of limited companies Advantages More money Reduces risk for investors Separate legal personality Ownership is
14、legally separate from control No restrictions on size Flexibility Disadvantages Legal compliance costs Shareholders have little practical power,2.4 The public sector The public sector comprises all organisations owned and run by the government and local government.,2.4.1 Key characteristics of the p
15、ublic sector (a) Accountability, ultimately, to Parliament. (b) Funding Raising taxes Making charges Borrowing (c) Demand for services: limitless (d) Limited resources,2.4.2 Advantages (a) Fairness (b) Filling the gaps left by the private sector (c) Public interest (d) Economies of scale (e) Cheaper
16、 finance (f) Efficiency,2.4.3 Disadvantages (a) Accountability Inefficiency may be ignored (b) Interference Politicians may not be familiar with the operation of a business and yet political pressures and indecision may influence adversely the decision making process. (c) Cost The public will demand
17、 as perfect a service as possible but will not wish to bear the cost involved.,2.5 Non-governmental organisations A non-governmental organisation (NGO) is an independent voluntary association of people acting together for some common purpose (other than achieving government office or making money).
18、Aimed at promoting social, political or environmental change.,Some organisational features of NGOs Staffing by volunteers as well as full time employees Finance from grants or contracts Skills in advertising and media relations Some kind of national headquarters Planning and budgeting expertise,2.6
19、Co-operative societies and mutual associations Co-operatives are businesses owned by their workers or customers, who share the profits. Open membership Democratic control (one member, one vote) Distribution of the surplus in proportion to purchases Promotion of education Mutual associations are simi
20、lar to co-operative societies in that they are owned by their members rather than by outside investors.,Questions,A limited company has a separate legal identity from its owners. True or false. A True B False Answer: A,Which of the following provides an example of a boundary separating an organisati
21、on from its environment? A A divisional structure B Systems and procedures C Factory gates D Recruitment policy Answer: C,Primary and secondary goals are equally important in an organisation. Is this statement true or false? A True B False Answer: B,Which of the following best describes the public s
22、ector? A Companies where profits are the driving factor B Companies which are owned by a wide proportion of the investing public C All those organisations owned and run by the government and local government D Businesses owned by their workers or customers, who share the profits Answer: C,3 Stakehol
23、der goals and objectives,Stakeholders are those individuals or groups that, potentially, have an interest in what the organisation does. Objectives must consider stakeholders. Johnson and Scholes identified three types of stakeholder: I C E,3.1 Internal stakeholders: employees and management Employe
24、es Managers 3.2 Connected stakeholders Shareholders (corporate strategy) Bankers (cash flows) Suppliers (purchase strategy) Customers (product market strategy) 3.3 External stakeholders Government Interest / pressure groups Professional bodies,3.4 Another approach Primary stakeholders: have a contra
25、ctual relationship with the organisation. Includes internal and connected stakeholders. Secondary stakeholders. Equates to external stakeholders. 3.5 Stakeholder conflict Between managers and shareholders,3.6 Stakeholder mapping: power and interest Mendelows Matrix,The matrix outlines how to approac
26、h each stakeholder Stakeholder mapping is used to assess the significance of stakeholder groups. Segment D: strategy must be acceptable key players Segment C: keep satisfied Segment B: keep informed Segment A: minimal effort Stakeholders may move from quadrant to quadrant.,3.7 The strategic value of
27、 stakeholders The firm can make strategic gains from managing stakeholder relationships. 3.8 Measuring stakeholder satisfaction Qualitative Quantitative,Questions,Which of the following is not a connected stakeholder? A Customer B Employee C Landlord (Lessor) D Shareholder Answer: B,Questions,If a s
28、takeholder has a high level of interest in the company and has high power under Mendelows stakeholder mapping grid, the stakeholder is classified as: A Minimal effort B Keep informed C Key players D Keep satisfied Answer: C,Which of the following is a connected stakeholder? A Professional body B Emp
29、loyee C Supplier D Manager Answer: C,Why can conflict between stakeholders be quite common? A Different shareholders will have different risk/return profiles B Managers do not need to take their views into account C Their interests will generally be widely different D All of the above Answer: C,Which of the following is regarded as a primary stakeholder? A One who is more strategically important than others B The government C One who has a contractual relationship with the organisation D An external stakeholder Answer: C,SUMMARY,
