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Rationale

Learning Objectives and Outcomes

Teaching and learning Resources

Introduction
What is a business? Equally, what is business?
Criteria for evaluating what is or is not an excellent, competitive business
- Michael Porter
Organisational structures: roles, responsibilities, authorities
Non-incorporated Business
Incorporated Companies
The Company as a Holding Company
Cooperatives
Not-for-Profit Organisations
Company Law and Governance
References

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Business Organisations

Rationale

A business (also known as company, enterprise, or firm) is a legally recognized organization designed to provide goods, services, or both to consumers or tertiary business in exchange for money.[1] Businesses are predominant in capitalist economies, in which most businesses are privately owned and typically formed to earn profit that will increase the wealth of its owners. The owners and operators of private, for-profit businesses have as one of their main objectives the receipt or generation of a financial return in exchange for work and acceptance of risk. Businesses can also be formed not-for-profit or be state-owned.

Larger Map

The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope — the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness, or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings.

See also

Notes and reference

Learning Objectives and Outcomes

This is a non-taught unit designed for self-directed study by those planning to start their own business.

Knowledge

After completing this module, students will be able to:

Understand the concept of bureaucracy and how it affects the global economy
Understand the concept of business organisation's legal personality
Understand the main concepts of contract and company laws and governance
Understand company directors and secretary's legal rights and responsibilities
Define and evaluate what is or is not an excellent, competitive business
Identify and explain the main features of different forms of business organisation
Describe the main features of sole traders, partnerships, limited companies, public limited, cooperatives, and holding companies
Understand the differences between sole traders and partnerships
Understand the differences between non-incorporated businesses and limited companies
Understand the differences between non-profit and for-profit companies and organisations.
Outline the advantages and disadvantages of different types of business organisation,

Skills

After completing this module, students will be able to:

Form and register a new business organisation or company with an appropriate organisational structure
Apply the company and contracts laws to the business organisations as
Understand and apply Porter's generic strategies to business organisations

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Business environment

East Asia and Pacific, Eastern Europe and Central Asia, Latin America, Middle East and North Africa, South Asia

Introduction

Business organizations is an area of law that covers the broad array of rules governing the formation and operation of different kinds of entities by which individuals can organize to do business. The term is also used to describe the entities themselves. A variety of other terms are used fairly interchangeably to describe this area, including or business associations, business forms and business entities. Reference to a "business" entity usually (though not always) indicates that entity's status as for-profit, as opposed to non-profit.

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.

What is a business? Equally, what is business?

This may be answered simply by the term "activity". Commercial business is a human activity involving exchange for wealth creation and satisfaction of the parties to the exchange.

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 respect of three generic strategies.

Forms of Business

Businesses activities assume a form. The business takes shape as an organised and regulated body.

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

The different forms - non-incorporated and incorporated business organisations - determine legal responsibilities and modes of regulation. Company and associated law (see overhead projector transparencies). Also see Business Ownership: Private Sector.

1. 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).

2. They have major implications for society, democracy, owners, managers, employees, customers and stakeholders.

3. 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.

4. 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?

5. How can their accountability to shareholders, the community, employees, customers be safeguarded?

6. 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?