Business Organization

I’m going to tell you what an organization is, describe the structure of an organization, define different types and forms of business organization, to tell you about such things as sole proprietorship, partnership and corporation. Early in human existence people learned that their individual efforts often fell short of success. They found that they were unable to accomplish many tasks that require more than individual effort. So, the necessity of group activity appeared relatively early in human existence. Cooperation is a prime element of a group of people who want to achieve more than they can act individually.

Today, this system of cooperation is much more complex than it was in the first attempts at organization. So, according to the basic definition, organization is an open, dynamic, purposeful social system of cooperation designed to enhance individual effort aimed at goal accomplishment; consists of the human element, the physical element, the work element, and the coordination element; transforms resources into outputs for users. The patterns of work divisions and their hierarchial arrangements constitute the basic components of structure.

Structure is the hierarchial pattern of authority, responsibility, and accountability relationships designed to provide coordination of the work of the organization. It can be considered the skeleton of the organizational body. Organizations create an officially sanctioned structure known as the formal organization: at the top of an organization there is the President, then go a few Vice Presidents who coordinate the Heads of Departments. Then go Supervisors and the lowest link of the structure – Operatives. Usually the structure of an organization is permanent and stable but in some cases a temporary organization may be created.

There are 3 types of organizations: manufacturing, merchandising and service. A manufacturing organization is an organization that produces goods through manufacture and provides clients with comprehensive services. A merchandising organization contributes to the sale of products to a retail consumer. A service organization provides services to consumers. Besides the types there are 3 forms of business organizations. They are sole proprietorship, partnership and corporation. A sole proprietorship is a business owned and managed by one individual.

That person may receive help from others in operating the business but is the only boss. He (or she) controls the operations, supervises the employees, and makes the decisions. The advantages of sole proprietorships are: ease of establishment, independence and secrecy. The main disadvantages are: often limited starting resources, the unlimited liability of a sole proprietor and the limited life of a sole proprietorship. The next form of business organization is a partnership. A partnership is a legal association of two or more persons as co-owners of a business for profit.

The partners share the profits and losses of the business and often the management responsibilities as well. Partnership range from small, two-person operations to international businesses with hundreds of employees. The main disadvantage of partnerships is the potential for interpersonal problems. No two people see things exactly the same way, and conflict among partners may hurt the company. The last form is a corporation. A corporation is legally chartered enterprise with most legal rights of a person, including the right to conduct business, to own and sell property, to borrow money, and to sue or be sued.

It is owned by shareholders who are usually liable for damages only to the extent of their holdings. No other form of business ownership can match the success of the corporation in bringing together money, resources, and talent, in accumulating assets and in creating wealth. So, I have come to the end, and I want to say that for running a business successfully you should know these things and to distinguish, for example, a partnership from a corporation, because it’s important to know about it in our modern time.