Types Of Organizations In The Business Environment

Explain the different types, size and scope of organisations

For-profit and Non-profit Organizations

They are various types of organizations in the business environment. When going into business, one ought to consider if they want a for profit or not for profit business. Entrepreneurs need to realize the difference between for-profit and non-profit business. The difference between these two is the reason for their existence. For-profit businesses are founded to generate income for the business owner and his employees in the business. On the other hand, non-profit organizations direct their earnings to meet humanitarian needs such as water, food, and environmental needs. For-profit organizations rely entirely on their credit, the income earned and investors to finance them while the non-profit majorly depends on grants and donations from well-wishers, the government, and other companies. For-profit organizations face tax rates by the government in different ways, but non-profit organizations can file for an income-tax exemption under section 50(c)3 according to Palmer & Randall (2002).

Non-governmental organizations (NGOs) are independent entities that do not depend on the government for funding. Although it's entirely not for profit organization, most of the NGOs are managed purely by volunteers.NGOs differ from the not-for-profit organizations in that the not -for-profit organization are either run by the government or funded partly by it while the NGOs have nothing to do with the state.

The SMEs ( micro, small and medium-sized enterprises) are those businesses that employ 250 employees and below, and their turnover is less than 50 million Euros (.Dana 2006)To determine if an enterprise is an SME  two factors are considered; turnover and staff headcount. According to the European Union, SMEs are more than the bigger companies by a great margin thus terming them as the best in enforcing competition and innovation economically.

These organizations are classified according to three sectors, which is the private, voluntary and public categories. Under the private category in the United Kingdom, the organizations include; partnerships, sole traders, companies, and franchises.

Partnerships are made up of two to twenty members. Although according to Mccahery &Vermeulen (2004)  the partnership act of 2002 allowed big companies to have more partners to enjoy the limited liability. In a partnership, business partners can be able to share the workload in the organization and share their different ideas to make growth. Partnerships are mainly ideal for the professional environment such as medical, accountancy and real estates among others. All partners in a partnership business share all the cost, profits, losses and debts in an equal way. They are two types of partnerships; the general and the limited partnerships. A general partnership is where all the partners are responsible for all the business obligations and risks. However, a limited partnership is where they are those that run the business directly, these members have control of what goes around in the business and are responsible for liabilities, and investors, who are passive in the business and do not assume liabilities like the general partners. A partnership has an advantage because it does not pay the tax directly from its income but partners do it by signing a Partnership Tax Return which shows each member’ share of profits and losses from the business.(Markman & Lesonsky 2010).

Different Types of For-profit Organizations

A sole- trader is where only an individual has full control of his business alone. This form of business is common among industries that do not involve in vast business activities. It is common in catering, construction, retail, and finance business. Sole trader business has a simple structure as it does not require much paperwork to set. Since an individual runs it, decisions are easily made, and there is a direct connection with employees and the customers. The business owner gets to enjoy all the profits on his own and face the risks involved. The only disadvantage in this business is that the owner makes all the decisions and takes much of personal time since just the owner manages it. Only one person for the business also contributes finances. This type of business is inexpensive to set up as it does not require much and the sole trader meets upon all the aspects.

A Private limited company is a business entity whose finances are separate from the business owners’ finances. The Tesco PLC Company falls under this type of company. This type of business is guided by a constitution that outlines the relationship between shareholders and directors of the company. In this business, the number of shareholders is 50, and it limits the owner liability to their shares (Clayton 2008). This business is incorporated meaning that it is an independent body in that, even tho the owner of a business dies, the business has continued existence. These private limited companies have lower tax rates as compared to other business types. Every private company must be registered with the Registrar of companies according to Mason 2009).

Franchising is where one uses another firm business idea for a certain time span. It is more of hiring ideas to other businesses legally. For example, someone with a good idea licenses another to carry his idea in his or her area. The franchising company gives equipment to the franchisee who has in return provides money for the capital. In this case, the franchisor does not risk capital but gets a part of the sales. On the other hand, the franchisee gains benefits by trading with a well-known brand and takes pleasure in a native monopoly.

Organizations are structured in a way that the goals of the organization are met, and the work is performed in the best way possible. Organizations can be large, small or even medium sized. However, how they perform depends purely on the decisions made regarding the structure . in every organization, no matter the size of the organization, responsibilities are determined by what the employees do and who they communicate with and as for the managers, how employees report to them. The operations also determine the size of the organization carried out, the employees who work under it and the market reach of the organization. The goal of the largest organization is efficiency in operations and reaching to a greater market while on the other hand, a small organization is mainly built on innovation.

Partnerships

Large organizations like the Tesco PLC Company have more employees thus offering more better and efficiency customer service. Product and service delivery needs improvement to increase the number of customers in an organization. Also, this requires more workforce. When customers are satisfied with the services of a particular organization, they stick for long and bring along other customers thus the organization makes more profits and reach a greater market share. Growth in the market share means that an organization is at spearheads in the competition sector thus more sustainability is realized in an organization. Also, large organizations can invest in more products that are a complex and high quality which results in stabilizing the market and deters competition (Goodhart & Tsomocos 2012).

Small organizations assign more tasks to employees in the front line, such that one employee is responsible for various tasks. Due to the small workforce in these organizations, most of the decisions are centralized due to few managers in these organizations. Therefore, most of the decisions here might not be fair to all employees leading to deteriorating of work. Although due to the proper flow of communication in the small organization, profits are realized tho the market share doesn't improve much due to the organization's limitation in size and technology. Sustainability in small organizations is realized due to the fact the managers responsible can manage the resources well while growth may not be realized due to the limitation of capital.

Medium sized organizations harbor between 50 and 250 employees. The goal of such organization is innovation and making profits. These organizations make better profits than the small businesses. The profits realized by this companies are not big but enough to sustain the organization. Job specialization is lower in the medium sized organization since they also have a fewer number of employees and this leads to the poor growth of the company.

As seen from the above, structures can largely determine the way the organization performs. Organizations take up different structures. Whatever the size of the organization, every organization should have a structure. These structures include functional, matrix, divisional and bureaucratic structures.

This structure involves grouping organization into different departments as per the function. For instance, grouping into finance department, product department, marketing department or sales department. These departments are managed independently where a different manager manages each departmental function. The different departmental managers’ report to the president of the company on activities in their departments. The most advantageous aspect of these structures is that it promotes expertise and specialization in the organization.

Sole Traders

Matrix structures involve circumstances where employees are supposed to report to both the functional and production manager. This structure involves working both horizontally and vertically. This helps employees to not only be responsible for the functions of their departments but also contribute to the overall performance of other activities in the organization. It helps all employees to contribute fully to the growth of the organization.

Divisional structures involve where are grouped according to their geographical regions or according to specific products involved. For instance in Tesco PLC Company, there is the divisional structure in the different regions that the company has retail stores globally. This region divisional manager reports to a central region executive. When it comes to specific products, an executive is usually in charge of all the activities involving that specific product. Grouping according to divisions helps to lessen the work in the organization.

This structure is involved with high-level formality in organizing its activities. It assumes a pyramidal structure where at the top is the most senior executive. This organizational structure is ideal for large organizations such as Tesco PLC Company. It involves consulting on all the levels before making a decision in the organization. This management structure assumes a hierarchical method. Where a different manager also heads every department

According to Eurofi(Great Britain) Limited (1988), international companies are the exporters and importers within a country; transnational companies are those that have invested in foreign activities, give decision-making to every foreign market despite having a central facility and global companies are those that are present in many countries and have invested. Global growth and developments in the international businesses have grown rapidly due to various reasons. First, in many countries, there has been saturation of products, and there is need to look for a new market in foreign countries thus growth has been realizing. Secondly, due to improved economic standards in some countries, they are now able to acquire high quality creating increased demands in their countries thus there is development in the international business and transnational business. Thirdly, there has been a development in the communication and transport sector in most countries.  It has led to consumers being more aware of products overseas creating consumer pressure. This calls for growth in the global organization.This has been the greatest advantage to Tesco PLC Company, more profits have been realized. Lastly, global growth and developments have been realized due to the reduction of trade barriers in most developing countries allowing international and transnational businesses to penetrate into those countries market.

Private Limited Companies

Franchising has a license to operate a business but using the name of the franchisee’s equipment, name, and the standard processes. It is more of a clone of the actual business while joint ventures are where two companies come to an agreement to do business together and help each other in it for a period. This happens when one partner could achieve the goals if it is done separately. Licensing is where an organization sells the right to produce the business product to the licensee for sovereignty. It differs from franchising in that franchisor deploys significant control of that business.

According to Porter (1980), suppliers, new devious buyers and substitutes are the elements of the business structure. He further identifies factors that could help beat the forefront in competition in the market. The first factor was to use the human and natural resources maximally, creating a domestic demand of their products, and lastly, an environmental structure by the government for the forces of fighting competition can thrive.

In business, excess supply causes prices to fall while excess demand leads to a rise in prices and the products quality. Economic operations are essential in the corporate business. There are two types, internal; this is savings that accumulate to an organization regardless of its environment. The other is external; they are those that bring benefits due to the structure of the organization. For example, in large organizations, it is possible to carry out complicated research and development. Economic operations are, however, disadvantageous because for a large company to reap the economies of scale, it has to be more complex as well, and this is expensive for an organization.

Stakeholders are those people who have an interest in the organization, in itself or its activities. Stakeholders may include employees, public, the government, customers, the press family, lenders or bondholders. Analyzing stakeholders helps in the business management. This analysis helps one to engage with the right individuals for the prosperity of the business. The first step in stakeholders’ analysis is the identification of stakeholders by pinpointing those people who are interested in the organization or have an impact on the organization. To be able to identify them, it involves, examining all people who have power over the business, interest, those affected by business activities and those who influence the direction of the organization.

The second step in this analysis involves classifying their power to the organization basing on priorities. Among the stakeholders identified, they are those that have the positive power to the organization while others have negative energy. By prioritizing the shareholders regarding power and interest, you can manage them, satisfying them, keeping others informed and monitoring those with less interest in the organization. To know their power and interests, a power/interest grid is used.

Franchises

The third and final step in the shareholder's analysis involves understanding the main stakeholders in the organization. This will help to learn on how to communicate with them, what motivates them and to know their take and feelings towards the organization. They also help to be able to realize how to gain support from them towards business activities. Understanding stakeholders aim at building a strong relationship with them. This step involves interacting with the stakeholders to get their opinions on different takes.

Functions in an organization ensure that the organization meets its objectives and aims by working together. Every department needs to correlate well with the other and work in unison to achieve the goals of the organization. Every function should be aware of the clear company objectives, and there should be reviews regularly to see if every function is working towards the organization's objectives. The various functions in Tesco PLC Company include

In Tesco PLC, the company has a marketing department. This is to sell the brand name of the organization, products, and services. Marketing helps to create awareness of the existence of the organization in the market and to reach a wider market niche. Proper marketing of the products of Tesco PLC Company has made it a multinational company.

This is responsible for recruiting and selection of the workforce of the organization. HRM   ensures the wellness of the employees of the organization while monitoring their behavior. Human resource management is responsible for offering training and motivations to the employees and their overall development

This department in the organization ensures that finances in the organization are well managed. The accounts are well filed and calculated as well as informing the organization of the profits and losses made in the organization. Keeping these records ensures that the organization can produce its financial statements for complying with the law and for tax activities. This section is also responsible for paying salaries and others allowances to its employees.

This department is responsible for general office management, handling emails and business calls and also producing the necessary documents for the organizations such as the newsletters.Also, this function serves the purpose of dealing with complaints from the customers and general queries. Being a multinational company, this department has helped Tesco by ensuring everything is in order especially feedback from customers.

This department is responsible for improving the already existing products in the organization and producing other better products to the market. This department is responsible for marking sure the organization is on par with the market trends in the market and any new technology in their area of specialization. This makes the organization be ahead in the competition market. A research department in Tesco PLC Company has done a good job in improving its merchandise as well as the grocery.

Classification of Organizations According to Three Sectors

Market structures affect the profits made by an organization and the decisions made regarding business performance. There are usually for market structures.

In this market structure, a single business controls the market fully.  In this instance, consumers have no other alternatives thus this business has the highest power in the market. These businesses increase prices by cutting out output.  Monopoly structures make a few assumptions that, it is the only business in the entire market and it can set its prices. The government regulates these structures to avoid a high escalation in prices.

This market structure has very few businesses in it. These organizations may choose to collude and do business together or compete against one another. In this market structure, competition is limited. It relies on the assumptions that only a few business take up the market and that the products may be either identical or differentiated.     

This market structure involves a market with a large number of small organizations. These organizations combined to determine the output in the market. This means that as a single business, the organization cannot determine market prices. This structure relies on the assumptions that the businesses deal with homogenous products and that customers have no preferences. It also assumes that the entry and exit from the business is free.

This is the most common market structure among many organizations. It involves where a significant figure of small organizations compete against one another. Monopolistic structures are different from the perfect competition, in that they have different products that are a bit similar. For instance, in Tesco PLC Company, its competitors deal with groceries but different products from those of Tesco. The difference in products enables these organizations to have different product prices. They base their assumptions mainly on the fact that consumers will portray product preferences and that these businesses deal with products that are different from others.

The PESTEL model is an instrument utilized by marketers to find out the external environmental figures that have an effect on the organization. Tesco PLC uses this tool to gauge its external environment.The outcomes of which is used to distinguish dangers and deficiencies which are used as a major aspect of the SWOT examination. The external environmental factors are P (Political), E (Economic), S (Social), T (Technological), E (Environmental) and L (Legal).

There are about to what degree an administration of a state intercedes in the economy. These include; labor laws, policies by the government, trade and tax policy and laws concerning the environment. Every organization should have the capacity to react to the present and future enactments and make changes where appropriate to be par with the law.

Private Organizations

These factors mainly affect an organization in the way it carries business. These factors are inflation of prices as well as commodities in the market, how people manage their incomes, exchange and interest rates in the market among others. These factors determine how profitable business is.

These factors portray the way of life of the public that surrounds the organization, which is where it is located. Social aspects include social economics, how developed the population is, age, literacy levels, living conditions, the way of life and social classes. This may have a great impact on the organization, especially when targeting the customers.

Tesco PLC Company needs to focus on the latest trends in the technological world. There is a need for an organization to be on par with the developing tech in the market. An organization needs to pay close attention to any new developments not only in digital technology but also in others areas like production or logistics as well as manufacturing sections.

These factors may affect an organization, and that’s why there is need to consider them. It includes factors such as the climate of the surrounding and other ecological factors such as the disposal of waste. This in one way or another may affect the smooth running of the business.

These are crucial factors to consider. It is always good to know the legal laws in the area where the business is located.Familiarizing with the laws saves the organization from incurring a legal cost. The most important of these factors is the healthy and safety regulation as well as the environmental regulations. Abiding by these regulations helps the organization to avoid pitfalls with the law.

There is a need for the Tesco PLC Company to gauge itself to know how well it is positioned in the world market no matter its size in the market. According to Bertelsen (2012), all organizations have objectives that include making a supportable upper hand over their rivals. This obliges organizations to create compelling business methodologies that endeavor their favorable operational circumstances over contenders while limiting their hindrances. A successful key improvement technique that connects inward authoritative qualities and shortcoming, with outside circumstances and dangers, is SWOT examination. SWOT (strengths, weaknesses, opportunities and threats) examination aids in proper decision making in an organization.

In identifying its strengths, Tesco PLC Company needs to identify the advantages that their business has that make them unique and better than other organizations. Identifying that one thing that Tesco PLC does in a much better way than its competitors. This unique attributes in an organization come from the company’s ability and the capacity of knowledge that that company has regarding its area of specialization. Tesco PLC Company can identify this from its internal environment as well as from their customers.

Voluntary Organizations

The internal environment and the customers can do an excellent job in identifying the weaknesses of the company. Shortcomings in the business are what your competitors could use to do better than you in business did. A business should evaluate on what to improves and the do’s and don’ts in the organization. For an organization to be able to come up with its weaknesses helps largely in making the organization a better place in the market among its competitors.

A business needs to be able to spot good chances I the market. It calls upon reviewing the business strengths and picking a viable opportunity from the strengths. Opportunities in business could arise from a few alterations in the regulations by the government in the area of specialization of the business. For example, in the case of reduction of certain trade barriers, it could mean the business would be able to penetrate into new areas and make something good out of it. Any new change in technology in the market or change in lifestyle of the target customers could create new and better opportunities for the business.

For Tesco PLC Company to do better, there is need to identify any potential threats in the market. It calls for self-examination by the business to identify any obstacles that it could be facing in the market. Competitors could be a threat as well, and that is why a business needs to know what their competitors are doing in the market. To be able to cope with threats, the company needs to identify if its products and services are of high quality and the purpose they serve to their customers. Improving in these areas could help a business to thrive better among its competitors. This last step helps a business to identify the dangers that could hinder it from achieving the desired goals.

Conclusion

For an organization to be at the front of competition from other companies, there is a need for a good relationship between the organization and the environment, both internal and external. This is what has led Tesco PLC Company to be a leading retailer in the world since it can realize its objectives and goals by doing a proper analysis of its environment and working on its strongholds and shortcomings.  

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