2. AC1.1: Identify the purposes of different types
of organisation
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3. There are broadly two types of legal entities:
1. Private Sector
2. Public Sector
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4. Public Sector:
Government run organisations at local, regional
and national level
Some services are exclusively provided by
public sector organisations
Most of the organisations charge minimal cost
to the customers (Perry & Rainey, 1988)
E.g: Royal Mail, Govt Corporations, Govt
Departments
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5. Private Sector:
Organisations are owned by individuals
Firms operate to generate profit while
providing services or selling goods
Individual owners reap the profit and income
from the company
Most of the businesses operate to cater
goods and services with better quality
(Stacey, 2007)
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6. Types of business organisation: Overview
Sole Trader
Partnership
Franchises
Co-operatives
Public sector
Public Limited Company (plc)
Private Limited Company (Ltd)
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7. AC1.2: Describe the extent to which an organisation
meets the objectives of different stakeholders
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8. Organisation consists a variety of stakeholders who
come with different needs and objectives
It is crucial for the firm to fulfil the needs and interests of
its stakeholders (Carroll, 1991)
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9. Stakeholders
Investors:
They provide the firm with capital
Investors are concerned with their return on investment, and risk
associated with it
They take decisions about buying or selling their investments
based on information
While they are invested in the firm, they need dividend from their
investments (Daft, 2010)
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10. Stakeholders
Employees:
Employees are concerned with their job stability, which is related
to the profitability of the firm
They are the driving power of the firm towards productivity
Employees are interested in compensation, retirement benefits,
and opportunities at workplace
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11. Stakeholders
Lenders:
Lenders need confidence on the organisation to decide whether to
further extend lending facility
They make use of the information to decide the viability of loan
repayment and interest payment by the firm
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12. Stakeholders
Suppliers and other trade creditors:
Integral part of the firm’s production and service delivery process
Need information which reflects the firm’s ability to repay trade
credits
Decide on the performance of the firm whether to continue the
relationship or not
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13. Stakeholders
Customers:
The primary objective of the firms is to cater to its customers
efficiently
Based on the firm’s performance, they decide their loyalty
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14. Stakeholders
Governments and their agencies:
Decide the regulations (tax rates, interest rates, etc) which affect
the operation of the firm
Need information about the activities of the firm
Examines the legal and regulatory compliance from time to time
Allocates resources to the organisation
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15. Stakeholders
Public:
Organisations have a long reaching impact on every member of
the society
Responsibility of the organisation to contribute towards community
development causes
Performance of the firms decide the employment level in the
society (Mitchell, Agle, & Wood, 1997)
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16. AC1.3: Explain the responsibilities of an organisation
and strategies employed to meet them
Employee
Responsibility
Govt.
Responsibility
Social
Responsibility
Environment
Responsibility
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17. There are four major responsibility of an organisation which
are handled by employment of proper strategies:
1. Employee Responsibility
2. Govt. Responsibility
3. Social Responsibility
4. Environment Responsibility (Leach, Stewart & Walsh, 1994)
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18. Employee responsibility:
Develop abilities and competencies of employees
Human resource development
Build better relationship between the organisation and the
employees
Govt. responsibility:
Abide by the regulations, law and order
Honestly pay taxes and duties
Help the govt. in developing the economy and employment
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19. Social responsibility:
Customer satisfaction
Social responsibilities (CSR)
Contribute towards developing the local communities
Environment responsibility
Take action towards reducing plastic usage, wastage, and harmful
materials usage, etc.
Take responsibility to plant trees
Increase awareness about environment within and outside the
firm (De Leede, Nijhof & Fisscher, 1999)
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22. References
Carroll, A. B. 1991. The pyramid of corporate social responsibility: toward the
moral management of organizational stakeholders. Business
horizons, 34(4), 39-48.
Daft, R. L. 2010. Organization theory and design. Stamford: Cengage
learning.
De Leede, J., Nijhof, A. H., & Fisscher, O. A. 1999. The myth of self-
managing teams: a reflection on the allocation of responsibilities between
individuals, teams and the organisation. Journal of Business Ethics, 21(2-3),
203-215.
Leach, S., Stewart, J. D., & Walsh, K. 1994. The changing organisation and
management of local government. London: Macmillan.
Mitchell, R. K., Agle, B. R., & Wood, D. J. 1997. Toward a theory of
stakeholder identification and salience: Defining the principle of who and
what really counts. Academy of management review, 22(4), 853-886.
Perry, J. L., & Rainey, H. G. 1988. The public-private distinction in
organization theory: A critique and research strategy. Academy of
management review, 13(2), 182-201.
Stacey, R. D. 2007. Strategic management and organisational dynamics:
The challenge of complexity to ways of thinking about organisations. New
Jersey: Pearson Education.
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