Chapter 1

Question 1

What is an organisation?

Answer 1

An organisation is a social arrangement for the controlled performance of collective goals.

Question 2

What is PPP?

Answer 2

Public-Private Partnership: Collaboration between public and private sectors.

Question 3

What is PFI?

Answer 3

Private Finance Initiative: A way to create public-private partnerships by funding public infrastructure projects with private capital.

Question 4

What are QUANGOs?

Answer 4

Quasi-Autonomous Non-Governmental Organisations: Semi-public administrative bodies outside the civil service but receiving financial support from the government.

Question 5

In the Public Sector, what is ‘Value for money’?

Answer 5

Value for money includes economy, efficiency, and effectiveness.

Question 6

What is the difference between Unincorporated & Incorporated?

Answer 6

Unincorporated organisations include sole traders and partnerships, whereas incorporated organisations include private and public limited companies.

Question 7

What are stakeholders?

Answer 7

Stakeholders are people or groups with an interest in an organisation’s strategy and activities.

Question 8

How can stakeholders be classified?

Answer 8

Stakeholders can be classified as internal, connected, and external.

Question 9

What is the principal/agent problem?

Answer 9

The principal-agent problem occurs when managers (agents) manage an organisation to meet their own needs, not the needs of the owner (principal).

Question 10

What can be done to resolve the principal/agent problem?

Answer 10

Corporate governance, especially the use of independent non-executive directors, and incentive schemes (PRP and share options) can resolve the principal/agent problem.

Question 11

What is corporate governance?

Answer 11

Corporate governance is the system by which companies are directed and controlled.

Question 12

What are the three components of value for money?

Answer 12

The three components of value for money are economy, efficiency, and effectiveness.

Question 13

Describe Mendelow’s Matrix and its categories.

Answer 13

Mendelow’s Matrix categorises stakeholders based on their power and interest: minimal effort, meet minimum needs (satisfice), keep informed, and key players.

Question 14

What is the public sector?

Answer 14

The public sector is under government control.

Question 15

What is the private sector?

Answer 15

The private sector is not under government control.

Question 16

What are not-for-profit organisations?

Answer 16

Not-for-profit organisations are entities that do not aim to make a profit but rather to fulfill a social mission.

Question 17

Give examples of public sector not-for-profit organisations.

Answer 17

Examples of public sector not-for-profit organisations include government departments and QUANGOs.

Question 18

Give examples of private sector not-for-profit organisations.

Answer 18

Examples of private sector not-for-profit organisations include charities, mutuals, and cooperatives.

Question 19

What are the key performance frameworks for not-for-profit organisations?

Answer 19

The key performance frameworks for not-for-profit organisations include economy, efficiency, and effectiveness.

Question 20

What is a sole trader?

Answer 20

A sole trader is a person who owns and runs their own business as an individual.

Question 21

What is a partnership?

Answer 21

A partnership is a business arrangement where two or more individuals share ownership and operation responsibilities.

Question 22

What is a private limited company?

Answer 22

A private limited company is a type of incorporated business owned by shareholders with limited liability.

Question 23

What is a public limited company?

Answer 23

A public limited company is a type of incorporated business that can offer its shares to the public.

Question 24

What is X-inefficiency?

Answer 24

X-inefficiency occurs when an organisation is not producing output at minimum cost, often due to lack of competitive pressure.

Question 25

What is satisficing?

Answer 25

Satisficing is achieving a satisfactory level of performance rather than the maximum possible.

Question 26

What is sales maximisation?

Answer 26

Sales maximisation is focusing on increasing sales revenue rather than profits.

Question 27

What is PRP?

Answer 27

Performance-Related Pay: A type of incentive where employees are paid based on their performance.

Question 28

What are share options?

Answer 28

Share options are a benefit in which employees are given the right to buy shares in the company at a future date at a predetermined price.