Types Of Organizations And Their Functions - Business Management

The aim of this unit is to provide students with background knowledge and understanding of business, the functions of an organisation and the wider business environments in which organisations operate.

Students will examine the different types of organisations (including for profit and not for profit), their size and scope (for instance, micro, SME, transnational and global) and how they operate.

Students will explore the relationships that organisations have with their various stakeholders and how the wider external environments influence and shape business decision-making. The knowledge, understanding and skill sets gained in this unit will help students to choose their own preferred areas of specialism in future studies and in their professional career.

Different types of organizations and their nature

Organizations can be described as groups or structures set up with the purpose of achieving certain goals or objectives. There are different types of organization and purpose. These different organizations include private organization, public organization, voluntary sectors, cooperative business, and other charitable organization. All these forms of organization are differing in their nature and their structure too (Shopify, 2018). The entire organization has a different structure and formation in nature. The different structure in starting up the venture includes partnership, sole traders, and private and public limited company form of business.

Different types of organization vary from large organization to small sized organization. The goals and objectives of all these organizations also vary from the services provided by them. Some are locally operating their business whereas some are expanding their business in the international market. In these organizational, the structure will also be different. Organizations have the functional structure, divisional or matrix structure in their management. This structure will be chosen according to the size and operations of the business. 

The sole proprietorship business is a legal set up where the business is owned and controlled by the single person. The business owner is not legally separated from the business and its activities. Therefore, the owner will be personally liable for the business debts. Another form of business that is the partnership is governed by the deed made by the partners. Irrespective of the deed, partners are liable to share equal profits and losses in the firm. All the decision in the business is done by the mutual consent of the partners. The partnership firm can have the legal existence when registered under the law. Company form of business can be of two types that is the private and public limited company (Binder, 2016).

For example, the John Lewis Partnership deal in the retails industry having employee more than 100000 in the business. This organization size is big as compared to the sole proprietorship form of business and considered as the medium-sized organization. The aims of business are to provide the quality product and service in the market. At present company is planning to explore new areas and market of New Zealand (Evans, 2016).

Companies have a separate legal existence than its owner. The ownership and management in the company form of business is different from each other. Shareholders and investors are the owners of the business and directors have the responsibility of handling the management affairs in the business (Seidl, 2016).

Comparison of private, public, and voluntary organizations

The purpose of the private organization is to serve the society but with the motive of earning, the profits from the market by hook or crook. Private limited companies normally are a small organization in their nature and size of the business operations as their liability is limited by the shares. The business is limited to the small number of shareholders that is 50. Many small-medium enterprises operate under the private limited company as it provides the safeguard from the personal liability and helps to reduce the risk (Belal, 2016).

One of the examples of the private limited company is Brakes Group, which are dealing in the food industry having the employer base of 10000. In this company, the majority of the funding was given by the Bain Capital. The company is dealing in distributing the food, drink and other products, which are mainly related to the catering in the UK. The company is following the matrix structure in their organization and taking the advantage of both the functional and divisional structure. The company has different sites and distribution center in which a functional manager or a divisional manager working at the same level and covering some of the same managerial territory (Giaoutzi, Storey, and Nijkamp, 2016).

Another example for the private company can be taken is of the Virgin Atlantic, which is providing its services in the airline sector. The company has an employee base of 9000. The majority of the shareholders in the company are virgin Group with 51% of the holding of the company. The company is aiming to provide the good stuff to its customer by offering good quality services at a low cost. The company is working as a strategic business unit as it is operating differently and independently from its parent company. The company is getting the competitive advantage by using this model in the business. The company is able to generate the quality and value services by giving importance to customer needs and their demand (Virgin Atlantic, 2017).

On the other side, a public company is also start up with the aim of earning profit but they also focus on providing the welfare services in the society. Both the organization aims to have the profits in their businesses. Their operations are based on the trend, fashion, technology etc. In public limited companies, the liabilities are extended up to the shares held by the shareholders. Their personal assets will not get affected in case of dissolution of the company. The company has the legal form of existence and the company can call money from the market by offering the shares to them. These shares can be traded in the market (Kono, 2016).

Examples from different sectors of the industry

Standard Chartered is one of the examples in public companies, which is providing its products, and service in finance. The company has a large customer as well as employees (Standard Chartered, 2018). The company has expanded its business worldwide and have a large reach in the market. The company aims to provide their financial services internationally. The company has usi3ng the divisional structure as it has more than 1200 branches in 70 countries (Standard Chartered, 2018).

Another example is from the sector of the supermarket industry that is Tesco Plc, which is providing the groceries and general merchandise in a large range. Tesco Plc is having the hierarchical structure in the organization, which reflects the large size of the business. Even in-store level, there are four layers of management. This structure fulfills the requirement of the company vision and mission statement by expanding in a large area while providing the variety of goods at one store only. The company has opted for this hierarchy in structure due to the large scale and various departments, which has to be handled by using the hierarchy in nature. All the relevant information will be transferred through this structure only (Research Methodology, 2016). 

The charitable organization or the not for profit organization are made with the purpose to do the welfare of society rather than having financial gains. These organizations can be differentiating with the profit organizations on the basis that their primary motive is not to generate the profits for the business owner rather to work for public benefit. Cooperatives businesses are set up with the aim to assist to a particular community or society (Soomro, Shah, and Ahmed, 2016).

Stafford and Rural homes are providing the housing services in the area of Stafford. The company core value is to being approachable, supporting, empowering, and respecting. Stafford and Rural home manage to provide more than 6000 homes to the people (Best Companies, 2018).

Another example can be taken is of Fair ways which are providing the comprehensive range of services to the children and young people. In this, they are giving the social care, support them, and give education and training services. This organization has more than 250 staff, which are providing the services and looking after children and young people per year along with their families and foster careers (Best Companies, 2018).

From the above discussion, it can be concluded that there are different types of organization with different purposes. These organizations include public, private, and voluntary organization. All the organization follows the different structure and has different forms and legal structure. Sole traders do not need to register themselves under the area whereas company form of business must have the legal existence and approval before starting the venture. All the business form has its own advantages and disdavantages. The scope and size of the business will also vary from each other. Partnership has their partners, which are working with the mutual consents and are liable for all the expenses and losses of the firm. On the other hand the company form of business has their members and shareholders who invest their fund in the bruises and liable to only the amount of shares held by them. Their personal asset will get not get affected. From the above examples, it can be understood that not only the structure will be different but their functions and aim will different from each other. Some organizations are working for earning the profit in the market whereas charitable organizations are working for the welfare of the people.  

References

Belal, A.R. (2016) Corporate social responsibility reporting in developing countries: The case of Bangladesh. Oxon: Routledge.

Best Companies. (2018) About Fair Ways [Online] Available from: https://www.b.co.uk/company-profile/?Fair-ways-101878 [Accessed on: 14^th August 2018]

Best Companies. (2018) About Stafford and Rural Homes [Online] Available from: https://www.b.co.uk/company-profile/?Stafford-&-rural-homes-72977 [Accessed on: 14^th August 2018]

Binder, J. (2016) Global project management: communication, collaboration and management across borders. Oxon: Routledge.

Chron. (2018) Different Types of Organizational Structure [Online] Available from: https://smallbusiness.chron.com/different-types-organizational-structure-723.html [Accessed on: 14^th August 2018]

Evans, T. (2016) Professional discretion in welfare services: Beyond street-level bureaucracy. Oxon: Routledge.

Giaoutzi, M., Storey, D.J. and Nijkamp, P. (2016) Small and medium size enterprises and regional development. Oxon: Routledge.

Kono, T. (2016) Strategy and structure of Japanese enterprises. Oxon: Routledge.

Research Methodology. (2016) Tesco Organizational Structure [Online] Available from: https://research-methodology.net/tesco-organizational-structure/ [Accessed on: 14^th August 2018]

Seidl, D. (2016) Organizational identity and self-transformation: An autopoietic perspective. Oxon: Routledge

Shopify. (2018) Business Structures [Online] Available from: https://www.shopify.com/guides/united-kingdom/business-structures [Accessed on: 14^th August 2018]

Soomro, Z.A., Shah, M.H. and Ahmed, J. (2016) Information security management needs more holistic approach: A literature review. International Journal of Information Management, 36(2), pp.215-225.

Standard Chartered. (2018) About us [Online] Available from: https://www.sc.com/en/about/ [Accessed on: 14^th August 2018]

Standard Chartered. (2018) Standard Chartered Plc - Company Profile, Information, Business Description, History, Background Information on Standard Chartered Plc[Online] Available from: https://www.referenceforbusiness.com/history2/74/STANDARD-CHARTERED-PLC.html [Accessed on: 14^th August 2018]

Virgin Atlantic. (2017) Annual Report [Online] Available from: https://virginatlanticannualreport17.com/ [Accessed on: 14^th August 2018]