Business and Management Information

Business Organizations

Businesses are run by organizations.

Organization mean: A group of people that come together (not as a result of some accident rather formation of group itself is a thoughtful process) to achieve a unified goal or to fulfill some specific purpose.

Types of organizations

Organizations can be classified in different ways. It is up to the observer that from which perspective he is studying an organization. We can classify organizations on the following basis:

  1. Legal structure
  2. Liability
  3. Nature of Operations Manufacturing, Service
  4. Industrial sector Primary secondary tertiary
  5. Public or private sector
  6. Profit or non-profit
  7. Size
  8. Geographical area national local multinational

There are still so many other ways to classify organizations for example whether they are exempted from taxes or duties, organizational structure they posses, concentration of decision making power etc but the ones listed above are the most basic and important ways to classify business organizations and it will be good if we understand about them right at initial stage.

Legal structure means the status of an organization in the eyes of law and in which segment it places an organization. From legal point of view organizations can be of three different kinds:

  1. Sole traderships
  2. Partnerships
  3. Companies

From the perspective of liability of the owners towards the people outside the organizations (creditors, lenders etc), we have two different kinds of organizations in which owners of the organizations have:

  1. Limited liability
  2. Unlimited liability

Nature of business refers to the fact that whether business is manufacturing something or just providing services.

We can also classify organizations according to the industrial sector to which they belong. Industrial sector is of three different types:

  1. Primary industrial sector
  2. Secondary industrial sector
  3. Tertiary industrial sector

Organizations can also be classified on the basis whether the organization is owned by an individual or group of individuals i.e. private sector organization or it is owned by a government or by a body working under government i.e. public sector organization.

Most of the organizations exist to earn and maximize profits but some organizations exist for purposes other than making profits. Thus organization with profit motive are called as profit making organization and the ones with purpose other than profit are called non-profit organizations

We can find organizations of different sizes. Some are small where some are considered very large organizations. We can relate the term size to many different aspects such as we can relate it to the number of employees working in an organization. Size can also be in terms of products or services a certain organization is providing compared to others. It can also be stated as number of offices it has in a country or countries. We can also measure size in relation to the customer base of an organization etc.

Another way of classifying the organization is by observing their scope of operations. If it is limited to just one city then it can be termed as local organization but if operation of a certain organization are spread all over a country then it will be called national organization and if its operations are spread across the borders i.e. to other countries also and are controlled from one country then it will be termed as international organization and if organization carries its operations from different countries i.e. holds offices in different countries then it is called as multinational organization.