8/13/2019 Unit 1 - B.O

http://slidepdf.com/reader/full/unit-1-bo 1/5

Business Organisation

UNIT -1 

Business:-

The Business Enterprise is a part of society and the business environmenthas direct relationship with the business. The environment may imposevarious constraints on business, where business enterprises do not haveany control on environment. Therefore adaptability to the environment isessential for any business. A business may be defined as an institution

organized and operated to provide goods and services to the society with

the objective of earning profit.

L.R. Dickson has defined:-

 “Business as a form of activity pursued primarily with the object ofearning profit for the benefit of those on whose behalf the activity isconducted. “Business involves production  and/or exchange of goods andservices to earn profits or in a broader sense, to earn a living. Profit is notthe sole objective of the business. It may have other objectives likepromotion of welfare of the workers and the general public. Businessactivities include production and distribution of goods and services whichcan satisfy human wants.

The term business denotes purchase and sale of goods whereas „business‟ includes all activities form production to distribution of goodsand services. It embraces industry, trade and other activities like banking,transport, Insurance and warehousing which facilitates production anddistribution of goods and services.

According to F.C. Hopper

“The whole complex field of   commerce and industry whichincludes the basic industries, processing and manufacturing

industries, and the network of ancillary services: distribution,banking, insurance transport and so on, which serve and interpenetrate the world of business as a whole” are called  businessactivities.

According to Boono and Krutz,

8/13/2019 Unit 1 - B.O

http://slidepdf.com/reader/full/unit-1-bo 2/5

“Business comprises of all profit seeking activities that provides

 goods and services necessary to an economic system. It is

economic pulse of the nation. Profit is a mechanism for motivating

these activities.”  

Organisation

An Organisation is a social unit of people, systematically structured andmanaged to meet a need or to pursue collective goals on acontinuing basis.

All organizations have a management structure thatdetermines relationships between functions and positions, and subdividesand delegates roles ,responsibilities,  and authority to carry out

defined tasks. Organizations are open systems in that they affect and areaffected by the environment beyond their boundaries. The word is derivedfrom the Greek word organon, which means –  a compartment for aparticular task.

There are following types of organisation structure :-

1.  Pyramids or hierarchies

2.  Committees or juries

3.  Matrix organizations

1.  Pyramids or Hierarchies  -A hierarchy exemplifies an

arrangement with a leader who leads other individual members of

the organization. This arrangement is often associated

with bureaucracy. 

These structures are formed on the basis that there are enough

people under the leader to give him support. Just as one wouldimagine a real pyramid, if there are not enough stone blocks to hold

up the higher ones, gravity would irrevocably bring down the

monumental structure.

So one can imagine that if the leader does not have the support of

his subordinates, the entire structure will collapse.

8/13/2019 Unit 1 - B.O

http://slidepdf.com/reader/full/unit-1-bo 3/5

2.  Committees - These consist of a group of peers who decide as a

group, perhaps by voting. Committees are often the most reliable

way to make decisions.

3.  Matrix organization:-This organizational type assigns each

worker two bosses in two different hierarchies. One hierarchy is

"functional" and assures that each type of expert in the organization

is well-trained, and measured by a boss who is super-expert in the

same field. The other direction is "executive" and tries to get

projects completed using the experts. Projects might be organized

by products, regions, customer types, or some other schema. 

As an example, a company might have an individual with overall for

Products X and Y, and another individual with overall responsibility

for Engineering, Quality Control etc. Therefore, subordinates

responsible for quality control of product X will have two reporting

lines.

Business Organisation

A Business organization is a group or a unit of people working togetherwith a common objective of profit maximization. but profit maximizationis not the only objective..they also satisfy human needs and wants byproducing goods and services

Types of Business Organisations The main types of business organisation in the private sector in the are:

1. Sole traders2. Partnerships

3. Companies or Joint Stock Companies

4. Cooperatives

8/13/2019 Unit 1 - B.O

http://slidepdf.com/reader/full/unit-1-bo 4/5

1.Sole Trader

The sole trader is the most common form of business ownership and is

found in a wide range of activities

No complicated paperwork is required to set up a sole trader business.

Decisions can be made quickly and close contact can be kept with

customers and employees.

All profits go to the sole trader, who also has the satisfaction of building

up his or her own business.

But there are disadvantages. As a sole trader one has to make all the

decisions , and may have to work long hours. 

2.Partnership 

A partnership can have between two and twenty partners. People in

business partnerships can share skills and the workload, and it may be

easier to raise the capital needed.

Partnerships are particularly common in professional services e.g.

accountants, solicitors, vets.

3.Companies

A company is owned by shareholders who appoint Directors to give

direction to the business.

A company is a legal body in its own right with an existence that is

separate in law from its owners. The company will thus be sued and can

sue in its own name. 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 typically smaller than public companies.

Shares in a private company can only be bought and sold with permission

of the Board of Directors.

The main advantage is that large amounts of capital can be raised very

quickly.

4.Cooperatives

According to the International Labour Office, a cooperative organization is

 “an association of persons, usually of limited means, who have voluntarily joined together to achieve a common economic end, through the

8/13/2019 Unit 1 - B.O

http://slidepdf.com/reader/full/unit-1-bo 5/5

formation of a democratically controlled business organization, making

equitable contributions to the capital required and accepting a fair share

of risks and benefits of the undertaking.”