Business Organisations & Their Stakeholder Flashcards
CHAPTER 1 (23 cards)
What is organisation?
- Social arrangement
- Collective goal
- Control performance
- Separate boundary
What all organisations have in common?
- Variety of objectives & goals
- Different people do different things/specialise
- Keen to achieve good performance
- System & procedures
Why organisations exist?
Achieve results which individual cannot achieve by themselves
How organisations differ?
1) Ownership : Private vs public
2) Control : Owner vs Manager
3) Activity
4) Profit vs Non profit
5) Legal form
6) Size
7) Sources of finance
8) Technology
Types of business organisation
- Commercial
- Not for profit
- Public sector
- Charities
- Trade unions
- Local authorities
- NGO
- Co-operative societies & mutual associations
Profit VS Not for profit
- Owner
- Sources of funding (revenue vs donation)
- Goals
- Performance measurement
- Use of technology
Define public sector organisations
Owned or run by the government (local/national) or government agencies
Advantage of limited liability companies
- SH’s liability is limited to the amount they have invested into the company (Outstanding share)
- More money available for investments from SH
- Easier to raise capital from banks & other lenders
- Ownership & control are legally separated
Disadvantage of limited liability company
- Greater administrative burden & cost
- Lack of privacy as anyone can download FS
Public vs Private LLC
Public (plc) - Shares can be traded on a stock exchange
Private (ltd) - usually owned by a small no. of people, shares are not easily transferable
Features of co-operative
Business owned by workers/customers, who share the profit
- Open membership
- Democratic control (1 member, 1 vote)
- Distribution of surplus in proportion to purchases
- Promotion of education
- Social goals
What is mutual associations?
Exist for mutual benefits of their members
etc: saving & loan organisations
Define stakeholder
A person/group who have a stake in the organisation
Explain agency relationship
Separation between an organisation’s owners [principal] & those managing the organisation on their behalf [agent]
3 types of stakeholders [Johnson & Scholes]
a) Internal - involved directly within the organisation
- management
- employees
b) Connected - contractual relationship, both party have obligations
- shareholders
- debt holders
- intermediate & final customer
- supplier
c) External
- immediate community
- competitors
- government
- special interest groups
Uses of Mendelow’s Matrix
-Track the changing influences between different stakeholders
- Assess the likely impact that a strategy will have on different stakeholder groups
Explain elements in Mendelow’s Matrix
High I Low P = Keep informed
High I High P = Key player
Low I Low P = Minimal effort
Low I High P = Keep satisfied
Source of capital for private limited companies
- Founder/promoter
- Business associates of founder/employer
- Venture capitalist
Key characteristics of public sector
- Accountability - to parliament
- Funding
- Demand for services - practically limitless
- Limited resources - constraint on government expenditure
Advantages of public sector
- Fairness
- Filling the gaps left by private sector
- Best serve to public interest
- Economies of scale
- Cheaper finance
- Efficiency
Disadvantages of public sector organisation
- Accountability (less internal pressure or incentive to be efficient, losses are generally covered by taxpayers’ money)
- Political interference
- Conflict between economy of operation & adequacy of service (orang nak service perfect tapi tanak bayar mahal)
Define NGO
- Groups who primary aim is not commercial
- Diverse range of activity
- Not necessarily charities
Organisational features of NGO
- Staffing by volunteers as well as full-time paid employees
- Finance from grants/contracts
- Skill in advertising & media relations
- ‘National headquarter’
- Planning & budgeting expertise
