ACCA

BUSINESS &
TECHNOLOGY
BISC TRAINING CENTER

Mr. Ha Long Giang, FCCA, CPA

www.bisc.edu.vn

085 8822 168

[email protected]

Business & Technology

PART A - THE BUSINESS

ORGANISATION, ITS
STAKEHOLDERS AND THE
EXTERNAL ENVIRONMENT

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 Business & Technology

Part A – Chap 1:
BUSINESS ORGANISATIONS
AND THEIR STAKEHOLDERS

EXAM FOCUS
 You need to gain a general understanding of what types of
organisations there are and how the activities of different
departments are aligned.
 You need to be able to recognise the advantages and
disadvantages of each structural configuration.
 Be aware of the links between organisational structure and culture.
Some structures encourage a certain cultural stance, e.g. functional
structure and role culture

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 0. OVERVIEW

ORGANISATIONS

WHAT ARE THEY? WHY DO WE NEED THEM? DIFFERENT TYPES

1. PURPOSE OF BUSINESS
ORGANISATIONS
What is a business organisation?

ORGANISATIONS are social arrangements for the controlled performance of

collective goals, which controls its own performance and which has a boundary
separating it from its environment

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 1. PURPOSE OF BUSINESS
ORGANISATIONS
Why do we need organisations?
Organisations enable people to:
Share skills and knowledge – this can enable people to perform tasks that
they would be unable to achieve on their own. Knowledge can also be
shared between all the people within the organisation.
Specialise – individual workers can concentrate on a limited type of
activity. This allows them to build up a greater level of skill and knowledge
than they would have if they attempted to be good at everything.

Pool resources – whether money or time.

This results in synergy where organisations can achieve more than the
individuals could on their own.

2. DIFFERENT TYPES OF
ORGANISATION

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 2. DIFFERENT TYPES OF
ORGANISATION
Commercial versus not-for-profit Commercial organisations

Commercial (or profit-seeking) organisations see their main objective as

maximising the wealth of their owners.

Sole traders
The organisation is owned and run by one person. In this type of organisation the
owner is not legally separate from the business itself. If a sole trader’s business is
sued by a customer, the customer is actually suing the owner themselves.

Partnerships
The organisation is owned and run by two or more individuals.
Traditionally, partnerships (like sole traders) do not have a separate legal identity
from their owners.

2. DIFFERENT TYPES OF
ORGANISATION
Commercial versus not-for-profit Commercial organisations

Commercial (or profit-seeking) organisations see their main objective as

maximising the wealth of their owners.

Limited liability companies

A company has a separate legal identity to its owners (who are known as
shareholders). The owner’s liability is limited to the amount they have invested
into the company.
In
Private limited companies (with ‘Ltd’ after their name) – these tend to be
the
smaller businesses, often owned by a few shareholders. Shares cannot be
UK
offered to the general public

Public limited companies (with ‘plc’ after their name) – these can be
much larger businesses. Shares can be offered to the general public,
meaning that there can be millions of different shareholders. This makes it
easier for the company to raise finance, enabling further growth

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 2. DIFFERENT TYPES OF
ORGANISATION
Commercial versus not-for-profit Not for profit organisations

Not-for-profit organisations (NFPs or NPOs) do not see profitability as

their main objective. Instead, they seek to satisfy the particular needs
of their members or the sectors of society that they have been set up to
benefit.

THE OBJECTIVES of different NFPs will vary significantly:

 Hospitals exist to treat patients.
 Councils may see their mission as caring for their communities.
 Government organisations usually exist to implement government policy.
 A charity may have ‘provision of relief to victims of disasters’ as its main
objective.

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2. DIFFERENT TYPES OF
ORGANISATION
Public versus private sector organisations

Public sector organisations

The public sector is the part of the economy that is concerned with
providing basic government services and is controlled by government
organisations.

The public sector will therefore normally include:

 police
 military
 public transport
 primary education
 healthcare for the poor .

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 2. DIFFERENT TYPES OF
ORGANISATION
Public versus private sector organisations

Private sector organisations

The private sector consists of organisations that are run by private

individuals and groups rather than the government..

The private sector will therefore normally include:

 businesses
 charities and
 clubs.

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2. DIFFERENT TYPES OF
ORGANISATION
Public versus private sector organisations

Non-governmental organisations (NGOs)

A non-governmental organisation is one which does not have profit as its

primary goal and is not directly linked to the national government.
NGOs often promote political, social or environmental change within the
countries they operate. ..

NGOs include:
 The Red Cross
 Doctors Without Borders
 Greenpeace
 Amnesty International

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 2. DIFFERENT TYPES OF
ORGANISATION
Co-operatives

Co-operatives are organisations that are owned and democratically controlled

by their members – the people who buy their goods or services. Each member
usually gets A SINGLE VOTE ON KEY DECISIONS – unlike companies where
shareholders get one vote for each share that they own.

They are organised solely to meet the needs of the member-owners, who
usually share any profits.

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3. SECTORS IN WHICH
ORGANISATIONS OPERATE
A further difference between organisations is the market in which they operate.
There are a large number of different sectors, which include:

 Agriculture – production, processing and packaging of foodstuffs.

 Mining – extraction and processing of minerals.

 Finance – this includes banks and other companies that profit through
 investments and the lending of money to others. .

 Retailers – sale of goods produced by manufacturers to consumers..

 Service – production of intangible goods and services...

 Transportation – movement of goods between locations.

This is not an exhaustive list, but it should give you some idea of the wide range
of activities that support organisations.

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 4. HOW ORGANIZATION DIFFER

Ownership – private sector organisations are likely to be owned by

individual owners or shareholders (depending on the type of organisation).
Public sector organisations will be controlled by the government, while
cooperatives will be owned by their member

Objectives – as mentioned, each organisation has very different goals.

This can range from the provision of social services (for charities and
public sector organisations) to the maximisation of owner wealth (for profit
- seeking organisations

Activities – the activities of an organisation will be designed to support its

objectives. This means that organisational activities are as varied as the
organisations themselves!

Size – organisations vary in size from large, multinational companies to

sole traders consisting of only one person!

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4. HOW ORGANISATION DIFFER

Sources of funding – public sector organisations will tend to raise money

from the central government. Private sector organisations, such as
companies and co-operatives, will most likely have to raise funds from
their owners. Charities are usually funded by donations.

Liability – the owners of sole traders or partnerships are liable for any
losses their businesses make. Owners of companies enjoy limited
liability

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 5. CHAPTER SUMMARY

ORGANISATIONS

NATURAL TYPES DIFFERENCES

Definitions • Ownership
• Social • Profit seeking v NFP • Objective
arrangement • Private v public sector • Activities
• Collective goals • Co-operative • Funding
• Controlled • NGOs • Size
performance • Liability

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See you next lession!

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