Business Organisation UNIT -1

Business:The Business Enterprise is a part of society and the business environment has direct relationship with the business. The environment may impose various constraints on business, where business enterprises do not have any control on environment. Therefore adaptability to the environment is essential 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 of earning profit for the benefit of those on whose behalf the activity is conducted. Business involves production and/or exchange of goods and services to earn profits or in a broader sense, to earn a living. Profit is not the sole objective of the business. It may have other objectives like promotion of welfare of the workers and the general public. Business activities include production and distribution of goods and services which can satisfy human wants. The term business denotes purchase and sale of goods whereas business includes all activities form production to distribution of goods and services. It embraces industry, trade and other activities like banking, transport, Insurance and warehousing which facilitates production and distribution of goods and services.

According to F.C. Hopper

The whole complex field of commerce and industry which includes the basic industries, processing and manufacturing industries, and the network of ancillary services: distribution, banking, insurance transport and so on, which serve and inter penetrate the world of business as a whole are called business activities.

According to Boono and Krutz,

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 and managed to meet a need or to pursue collective goals on a continuing basis. All organizations have a management structure that determines relationships between functions and positions, and subdivides and delegates roles ,responsibilities, and authority to carry out defined tasks. Organizations are open systems in that they affect and are affected by the environment beyond their boundaries. The word is derived from the Greek word organon, which means a compartment for a particular task.

There are following types of organisation structure :1. 2.

Pyramids or hierarchies

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 would imagine 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.

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 together with a common objective of profit maximization. but profit maximization is not the only objective..they also satisfy human needs and wants by producing goods and services

Types of Business Organisations

The main types of business organisation in the private sector in the are: 1. Sole traders 2. Partnerships 3. Companies or Joint Stock Companies 4. Cooperatives

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

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.