The purpose and types of business organizations

Question 1

What is an organization?

Answer 1

A “social” arrangement which pursues collective goals which control its own performance and which has a boundary separating it from its environment.

Question 2

How do organizations differ?

Answer 2

1. Ownership
2. Control
3. Legal Status
4. Activity
5. Profit or not for profit organizations
6. Size
7. Source of finance
8. Levels of technology

Question 3

What is a public sector organization?

Answer 3

organizations that are owned or run by central or run by local government or governmental agencies ( they work for the welfare of the people)

Question 4

What is a private sector organization?

Answer 4

organizations that are NOT owned or un by the central or run by the local government or government agencies.

Question 5

Who are shareholders?

Answer 5

• Shareholders are owners but have limited rights over the day to day running of the business.
• they provide capital and receive a return.
• they can be large institutional investors ( such as insurance companies & pension funds, private individuals or employees).

Question 6

Who are directors?

Answer 6

• appointed by shareholders to run the company
• board of directors controls management and staff
• accountable to shareholders
• has responsibilities towards owners and employees

Question 7

Name the 2 types of directors?

Answer 7

1. Executive

2. Non - executive

Question 8

Advantages of limited companies?

Answer 8

1. Separate legal personality
2. Ownership is separate from control
3. No restrictions on size
4. Flexibility
5. Limited liability

Question 9

What is an NGO?

Answer 9

• Non governmental organization

- is a legally constituted organization of people acting together independently from any form of government.

Question 10

Features that a Co-operative society and mutual associations have in common?

Answer 10

• open membership
• democratic control
• distribution of surplus in proportion to purchase
• promotion of education