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.,PartA,Thebusinessorganisation,itsstakeholdersandtheexternalenvironment,.,Chapter1,Businessorganizationsandtheirstakeholders,.,1Typesoforganisation,1.1WhatallorganisationshaveincommonAnorganisationis:asocialarrangementwhichpursuescollectivegoals,whichcontrolsitsownperformanceandwhichhasaboundaryseparatingitfromitsenvironment.,.,1.2Whydoorganisationsexist?Organisationscanachieveresultswhichindividualscannotachievebythemselves.(a)Oraganisationsovercomepeoplesindividuallimitations,whetherphysicalorintellectural.(b)Organisationsenablepeopletospecialiseinwhattheydobest.(c)Organisationssavetime.(d)Organisationsaccumulateandshareknowledge.(e)Organisationsenablesynerge.Inbrief,organisationsenablepeopletobemoreproductive.,.,1.3HoworganisationsdifferOwnership(PublicvsPrivate)Ownedbythegovernment(publicsectororganisations)Ownedbyprivateownersorshareholders(privatesectororganisations)ControlControlledbytheownersthemselvesControlledbypeopleworkingontheirbehalfIndirectlycontrolledbygovernment-sponsoredregulators,.,ActivityProfitornon-profitorientationLegalstatusLimitedcompaniesPartnershipsSize,.,SourcesoffinanceBorrowingfrombanksGovernmentfundingIssuingsharesTechnologyVaryingdegreesoftechnologyuse,.,1.4WhattheorganisationdoesOrganisationsdomanydifferenttypesofwork,.,2Typesofbusinessorganisation,2.1Profitvsnon-profitorientationProfitorientationMaximiseprofit(toowners)NonprofitorientationProvisionofgoods/services(topublic/beneficiaries),.,2.2PrivatevspublicsectorPrivatesectorOrganisationsnotownedorrunbycentralorlocalgovernment,orgovernmentagencies.PublicsectorOrganisationownedorrunbycentralorlocalgovernmentagencies.,.,2.3PrivatesectorbusinessesAbusinessorganisationexiststomakeaprofit.Costsshouldbelessthantherevenues.Profitsarenotincidentaltoitsactivitiesbutthedrivingfactor.,.,2.3.1LegalstatusSomeonesettingupabusinesscanchoosetogointobusinessalone,takeononeormorepartnerswhoalsosharetheprofitsofthebusiness,orsetupalimitedcompany.,.,2.3.2LimitedcompaniesAlimitedcompanyhasaseparatelegalpersonalityfromitsowners(shareholders).Theshareholdersriskisgenerallyrestrictedtotheamountthattheyhaveinvestedinthecompanywhenbuyingtheshares.Limitedliability,.,Theownershipandcontrolofalimitedcompanyarelegallyseparate.Shareholdersaretheownersbuthavelimitedrights,asshareholders,overthedaytodayrunningofthecompany.,.,Directorsareappointedbyshareholderstorunthecompany.Boardofdirectorscontrolsmanagementandstaff,andisaccountabletotheshareholdersExecutivedirectorsparticipateinthedailyoperationoftheorganisation.Non-executivedirectorsareinvitedtojoininanadvisorycapacity,usuallytobringtheirparticularskillsorexperiencetothediscussionsoftheboardtoexercisesomeoverallguidance.,.,Operationalmanagementusuallyconsistsofcareermanagerswhoarerecruitedtooperatethebusiness,andareaccountabletotheboard.,.,2.3.3TypesoflimitedcompanyPrivatelimitedcompanies(egXLimited)Publiclimitedcompanies(egXplc)Theydifferasfollows:(a)Numberofshareholders(b)Transferabilityofshares(c)Directorsasshareholders(d)SourceofcapitalAprivatecompanyssharecapitalwillnormallybeprovidedfromthreesources:thefounderorpromoter;businessassociatesofthefounderoremployer;venturecapitalistsApubliccompanyssharecapitalcanberaisedfromthepublicdirectly,orthroughinstitutionalinvestors,usingrecognisedmarkets,.,2.3.4AdvantagesanddisadvantagesoflimitedcompaniesAdvantagesMoremoneyReducesriskforinvestorsSeparatelegalpersonalityOwnershipislegallyseparatefromcontrolNorestrictionsonsizeFlexibilityDisadvantagesLegalcompliancecostsShareholdershavelittlepracticalpower,.,2.4ThepublicsectorThepublicsectorcomprisesallorganisationsownedandrunbythegovernmentandlocalgovernment.,.,2.4.1Keycharacteristicsofthepublicsector(a)Accountability,ultimately,toParliament.(b)FundingRaisingtaxesMakingchargesBorrowing(c)Demandforservices:limitless(d)Limitedresources,.,2.4.2Advantages(a)Fairness(b)Fillingthegapsleftbytheprivatesector(c)Publicinterest(d)Economiesofscale(e)Cheaperfinance(f)Efficiency,.,2.4.3Disadvantages(a)AccountabilityInefficiencymaybeignored(b)InterferencePoliticiansmaynotbefamiliarwiththeoperationofabusinessandyetpoliticalpressuresandindecisionmayinfluenceadverselythedecisionmakingprocess.(c)CostThepublicwilldemandasperfectaserviceaspossiblebutwillnotwishtobearthecostinvolved.,.,2.5Non-governmentalorganisationsAnon-governmentalorganisation(NGO)isanindependentvoluntaryassociationofpeopleactingtogetherforsomecommonpurpose(otherthanachievinggovernmentofficeormakingmoney).Aimedatpromotingsocial,politicalorenvironmentalchange.,.,SomeorganisationalfeaturesofNGOsStaffingbyvolunteersaswellasfulltimeemployeesFinancefromgrantsorcontractsSkillsinadvertisingandmediarelationsSomekindofnationalheadquartersPlanningandbudgetingexpertise,.,2.6Co-operativesocietiesandmutualassociationsCo-operativesarebusinessesownedbytheirworkersorcustomers,whosharetheprofits.OpenmembershipDemocraticcontrol(onemember,onevote)DistributionofthesurplusinproportiontopurchasesPromotionofeducationMutualassociationsaresimilartoco-operativesocietiesinthattheyareownedbytheirmembersratherthanbyoutsideinvestors.,.,Questions,Alimitedcompanyhasaseparatelegalidentityfromitsowners.Trueorfalse.ATrueBFalseAnswer:A,.,Whichofthefollowingprovidesanexampleofaboundaryseparatinganorganisationfromitsenvironment?AAdivisionalstructureBSystemsandproceduresCFactorygatesDRecruitmentpolicyAnswer:C,.,Primaryandsecondarygoalsareequallyimportantinanorganisation.Isthisstatementtrueorfalse?ATrueBFalseAnswer:B,.,Whichofthefollowingbestdescribesthepublicsector?ACompanieswhereprofitsarethedrivingfactorBCompanieswhichareownedbyawideproportionoftheinvestingpublicCAllthoseorganisationsownedandrunbythegovernmentandlocalgovernmentDBusinessesownedbytheirworkersorcustomers,whosharetheprofitsAnswer:C,.,3Stakeholdergoalsandobjectives,Stakeholdersarethoseindividualsorgroupsthat,potentially,haveaninterestinwhattheorganisationdoes.Objectivesmustconsiderstakeholders.JohnsonandScholesidentifiedthreetypesofstakeholder:ICE,.,3.1Internalstakeholders:employeesandmanagementEmployeesManagers3.2ConnectedstakeholdersShareholders(corporatestrategy)Bankers(cashflows)Suppliers(purchasestrategy)Customers(productmarketstrategy)3.3ExternalstakeholdersGovernmentInterest/pressuregroupsProfessionalbodies,.,3.4AnotherapproachPrimarystakeholders:haveacontractualrelationshipwiththeorganisation.Includesinternalandconnectedstakeholders.Secondarystakeholders.Equatestoexternalstakeholders.3.5StakeholderconflictBetweenmanagersandshareholders,.,3.6Stakeholdermapping:powerandinterestMendelowsMatrix,.,ThematrixoutlineshowtoapproacheachstakeholderStakeholdermappingisusedtoassessthesignificanceofstakeholdergroups.SegmentD:strategymustbeacceptablekeyplayersSegmentC:keepsatisfiedSegmentB:keepinformedSegmentA:minimaleffortStakeholdersmaymovefromquadranttoquadrant.,.,3.7ThestrategicvalueofstakeholdersThefirmcanmakestrategicgainsfrommanagingstakeholderrelationships.3.8MeasuringstakeholdersatisfactionQualitativeQuantitative,.,Questions,Whichofthefollowingisnotaconnectedstakeholder?ACustomerBEmpl
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