Comparison of Different Organisation Types

2738 words (11 pages) Business Assignment

17th Apr 2020 Business Assignment Reference this

Tags: Business AssignmentsInternal AnalysisExternal AnalysisBusinessKFC

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Introduction

Environment is the set of factors those have influences on the activities of human as well as on the other elements of the society. Business is one of the most integral part of the society that also influenced by the activities of environment. Business environment is the combination of internal and external factors those influence the activities of the business organization directly or indirectly. Business environment is probably the most complex and competitive sector in this present era. Almost all the functions of business activities are influenced by the environmental factors. Because of the influence of the environmental factors the size, structure as well as the functions of the business organizations varies. Different types of business organizations can be seen with different purpose. Their legal structure and purpose will be critically evaluated in this task. Size of the organization varies according to the purpose of these organizations. Scope and the size of different types of organizations will also be analyzed in this report. Functions of the organizations and its structure and objective are interconnected. Their interrelation will also be analyzed in this task. For completing this task KFC, A multinational company, has been selected. All of the perspectives of this report will be discussed in perspective to this company.

Activity A: Report

Explain the different types, size and scope of organisations

Business organization not only starts with the aim of making profit but also there are different purpose and aim of a business organization. According to the aim and objective of a business organization the structures and types of business organization also varies. Some of the common three types of business organizations are privet limited company, public limited company and voluntary organizations(Hill and Westbrook, 2016). Purpose and legal formation of these types of organization is also different. According to the nature of the organization and the objectives of the organization the capital requirement of the different organizations varies. Capability of collecting funds is not same for all the organization. Some of the organizations enjoy special facilities from the government of a country according to the nature of the organization.

Types and purpose of different organizations are discussed here:

Public limited company

This is the largest types of business organization that has separate legal entity. Public limited company is the type of organization that can collect funds from public by selling share to them. People who purchase share form a public limited company is known as shareholders. Shareholders of the public limited company are the actual owner of the organization. For running the activities of the organization a legal body is made by the shareholders and they are given to the rights to take decision about various factors of the organization(Comstock and Moll, 2016). It can collect capital as much as it wants and there is no legal impediment to collect fund. Although the minimum number of shareholders is seven the maximum number of owners or shareholders are unlimited in a public limited company.

Purposes of public limited company

       Collecting large amount of capital

       Reducing barriers of collecting funds

       Expanding the functions of business organizations

       Increase profitability of the organization to a great extent.

       Enjoy limited liabilities

An example of public limited company in UK is HSBC bank that was established in 1865. It collects funds from public by inviting them to purchase share of this organization.

Legal structure of public limited company

A public limited company has separate legal entity and it needs minimum number of shareholders and the number is seven but there is no limit of maximum number of shareholders(Winch and Schneider, 2018). According to the company act it needs to prepare a memorandum and fulfill all the requirements of public limited company.

Private limited company

A type of organisation that can’t sale the share of the organisation and maximum number of shareholder is fifty is called as a public limited company.

Purpose of private limited company

       Distributing risk among the stockholders

       Collecting more funds than partnership and sole proprietorship business

       Making more profit and distribute them among the small number of shareholders

An example of privet limited company is European Metal Recycling that was established under the company act with unlimited liabilities. There is no separate legal entity of it like a public limited company and can’t invite people to purchase share.

Legal structure of privat limited company

This type of organization is established with unlimited liabilities. Minimum number of owners is two and the maximum number of shareholders it fifty. It can’t sale share to the public and can’t invite them to purchase share of the organization.

Volunteer organization

Business organizations mainly established and for making profit. All the organizations don’t run for making profit rather work voluntarily for the betterment of the society(Langlois and Robertson, 2017). These organizations are known as the volunteer organizations.

Purpose of volunteer organizations

       Work for the betterment of the society

       Work for solving some problematic issues of the society

       Enrich standers of living

       Make the whole world as a better place for living

A world vision has been established as a nonprofit or volunteer organization that works for the society and tries to solve different social issues.

Size and scope of a range of different types of organizations

As various types of organizations are established with different aim and work for achieving the aim of the organization it has different scope as well as size of these organizations is also different. For fulfilling the aim of the different types of organization the operation of the organization is operated. The size and scope of different types of organizations are evaluated and discussed here.

Scope of public limited company

As it has already mentioned in the above part of this report that public limited company is the largest form of business organization that enjoys the benefits of collecting a huge amount of capital as it wants(Whitley, 2019). There is no limit of the number of shareholders in a public limited company. For this reason the size of a public limited company is larger than any other forms of business organizations.

Collecting large amount of capital

As there is no limitation of fund collection in public limited company for this reason the organization can collect fund as much as it wants. There is no limit of owners or share holders in public limited company for this reason the organization can create a strong economic base. HSBE is a public limited company and can invite the general people for colleting capital.

Limited liabilities

In a public limited company the liabilities of a shareholders is up to the amount of share he has purchased from the organization and he don’t need to bear the liabilities of any additional amount of liabilities in the organization(Taylor and Thrift, 2018). In HSBC Company the liabilities of the shareholders is limited to the invested money.

Expanding business activities

As there is a strong financial base in a public limited company the organization don t think about the capital shortage in terms of expanding business activities. In a public limited company the growth is high rather than the other formats of organizations.

Scope of private limited company

Although there is less opportunity and scope in a privet limited company than the public limited company it still get greater scope than  the other forms of organizations. Size of a public limited company is smaller than the public limited company and the number of share holders is limited to fifty. Some of the scopes of it are discussed here.

Risk sharing

In a privet limited company the number of owners is more than the partnership and sole proprietorship organizations(Kurttila et al., 2015). As the number of owners is high the risk of the owners is also low than the other organizations.

Easy legal formation

In a privet limited company the organization needs fewer amounts of requirements of performing the legal activities. In a public limited company the procedure of forming the company is lengthy as well as complex than the privet limited company the initial capital requirements is also low in this organization. European Metal Recycling needed fewer formalities for starting as a privet limited company.

Scope of volunteer organizations

Volunteer organization doesn’t run for making profit like the other business organizations. As a nonprofit organization World Vision is getting a large scale of special benefits from the government as well as form the society(Pickton and Wright, 2017).

Large amount of donation

As this type of organization doesn’t have any capitals form the owners because there is no specific in these social organizations. In this recent time most of the business organizations perform CSR activities as well as individuals of the society also provide donations to the volunteer organization(Hill and Westbrook, 2016). For this reason a volunteer organization like World Vision get the opportunity to collect more funds.

Enjoy tax facilities

Government of UK provides special tax benefits to the volunteer organizations and these types of organizations needs to pay less amount of tax than any other forms of the organizations in te society. World Vision get the tax facilities from UK government.

Demonstrate the interrelationship of the various functions within an organisation and how they link to organisational structure.

Business organizations perform a number of functions to achieve the aim of the organization. One particular vision of an organization is set by the top management of the organization and all the functions are directed by the organization to achieve the vision(Žvirblis and Zinkevičiūte, 2016). According to the objective of the organization its structure is also differed and there is a linkage between the objective and the structure of the organization. Aim of the KFC Company is to produce quality food and to become the largest food chain in the world. Linkages between the functions and the objective as well as the structure of KFC Company are discussed here.

Functions of production and distribution department

KFC is one of the largest foods manufacturing supply chain in the world. Its aim is to provide the highest quality food and to become the number one food manufacturing and distribution chain in the world(Achrol et al., 2015). Production department of the organization play the role of producing quality foods and distribution department of KFC pay the function of distributing to the final target customers. It helps to achieve the goal of the organization.

Functions of financial department

As one of the largest food chain in the world KFC needs to perform a large amount of financial activities to reach the aim of the organization. Financial structure of the organization helps to perform financial activities properly and also enable KFC to keep enough working capital for the organization.

Functions of marketing and promotional departments

Marketing and promotional departments play the role of understanding the market demand and help the organization to act according to the demand of the market. In KFC Company marketing department play the function of determining or understanding the demand of the customers and promotional activities help the increase the brand image as well as the sales of the organization that ultimately helps KFC to achieve the aim of the organization(Kozlinskis and Guseva, 2014).

Conclusion

Different business organizations are established with different aim and according to the aim of the organization the size as well as the structure of the organization differs. Business environment of the organization influence the activities of the business organization toi a great extent and the success of the business organization largely depends on the extent to which the organization can cope with the changing situation of the organization. Various types of business organization and their activities as well as scope of different types of organizations are critically evaluated in this report. Linkages between the functions and the objective as well as the structure of a company has also discussed throughout this report.

References

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  2. Whitley, R., 2019. The institutional structuring of innovation strategies: business systems, firm types and patterns of technical change in different market economies. Organization Studies21(5), pp.855-886.
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  10. Hill, T. and Westbrook, R., 2016. SWOT analysis: it’s time for a product recall. Long range planning30(1), pp.46-52.
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