Business Organisations

These notes introduce various types of businesses. and offer initial reading for a new student of business studies.

A number of overhead projector transparencies are also available which summarise aspects of UK law on companies. Some summary notes on business analysis are also available.

What is a business? Equally, what is business?

Someone sets up and runs a business for a reason. They see an opportunity to produce goods and services that others may desire. In the marketplace, goods and services are bought and sold regulated by the rules of trading, legally defined obligations and basic ethical expectation. In exchange , income is allocated, wealth is generated. Both parties - buyer and seller - seek to be satisfied by the transaction.

Production here includes "service" as both involve transforming selected inputs (ideas, designs, materials, energy, skills, funds etc) into outputs. These outputs are valued by the business's owners, clients/customers and those with a stake in its continuance and proper operation; suppliers, creditors, employees, politicians and the local populace.

Those who start up a commercial business use their expertise, money /assets to add-value/make more money.

Non-profit making businesses - more socially and community oriented - have a purpose to protect others and give opportunity to those less able to compete in the hustle and bustle of a competitive market place. The young, the sick, the old, the people generally need to share in the general well-being of and organised, supportive community. Thus we have churches, health care, schools, charitable organisations and institutions of government - democratic or otherwise. These too have obligations to their "owners/stakeholders" to be efficient, do what they were set up to do, achieve their purposes and offer "value".

A successful business is one that survives and fulfils its purposes - to the satisfaction of those who own/control the business. The criteria will be defined specifically in terms of income generation, growth, number of customers served satisfactorily, profit etc.

The "in search of excellence school" have defined criteria for evaluating what is or is not an excellent, competitive business. The competitive situation in which businesses transact must also be understood. The five competitive forces classification of Michael Porter offers a useful framework for analysis as does his recommendations in repect of three generic strategies.

Forms of Business

Of course we can study

• organisational structures: roles, responsibilities, authorities. The specialist groupings/divisions manifested in a business organisation and how different parts of the organisation interact can be explored in terms of organisation theory.
• Several overhead projector transparencies are also available which summarise aspects of UK law on the formation and regulation of companies.

• Non-incorporated Business
  the sole proprietor and partnerships. The development of incorporation.

• Incorporated Companies
  The corporation is established as a legal personality and in terms of the legal status of ownership, membership, responsibilities to shareholders, ability to forge contracts, its purposes and scope of trading, Company Director and Management roles Executive and non-executive directors, Company Secretary

• The Company as a Holding Company
  Parent company, subsidiary and associated companies, PLCs, benefits of a holding company, annual accounts and accounting rules.

• Cooperatives and Not-for-Profit Organisations
  Co-operatives, central and local government departments and agencies and charities, churches, social care establishments, schools, clubs. Even for some of these the profit motive - or surplus of income over expenses is a significant organisational objective.

Company Law and Governance

• regulate the legal forms and characterise the scope of ownership, management responsibility and control - power and authority i.e. the governance of business and managerial behaviour and practice (as well as along with a lot of other things).
• They have major implications for society, democracy, owners, managers, employees, customers and stakeholders.

The prospects for societal change as a whole are determined by these structures and their regulation. The ownership structures represent a status quo that is very difficult to re-form. However the Thatcher government sought to radically restructure the Health Service, nationalised industries, schools and the delivery of local authority services by changing their funding arrangements, degree of centralisation of decision making and modes of supervision.

• With the demise of the soviet economies of Eastern Europe, the need to establish rights, obligations and protections in terms of participating in the ownership of companies becomes evident.
• Without company law, the backing of a legal system and a belief that the responsibilities of those running companies are regulated "fairly", who can trust those running companies?
• How can their accountability to shareholders, the community, employees, customers be safeguarded?
• Who can trust companies when they straddle national boundaries and can seek to avoid legal constraints by moving their resources and allocations around and by influencing governments?

References and WWW Resources