Business Environment/Organisational Purposes of Business
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Table of Contents
Task1. Organisational Purpose of Businesses ................................................................................ 3
1.1 Identify the Purposes of Different Types of Organisation .................................................... 3
1.1.1 Private Organisation....................................................................................................... 3
1.1.2 Public or Government Organisation .............................................................................. 5
1.1.3 Voluntary and Charitable Organisations ........................................................................ 5
1.1.4. Co-operatives ................................................................................................................ 6
1.2 Describe the Extent to Which an Organisation Meets the Objectives of Different
Stakeholders ................................................................................................................................ 6
1.2.1 Investors ......................................................................................................................... 7
1.2.2 Employees ...................................................................................................................... 7
1.2.3 Suppliers and other creditors ......................................................................................... 7
1.2.4 Customers ...................................................................................................................... 7
1.2.5 Governments and their agencies .................................................................................... 8
1.3 Explain the Responsibilities of an Organisation and Strategies Employed to meet
Stakeholders Requirements ......................................................................................................... 8
1.3.1 Meeting Legal Requirements of Country(s) .................................................................. 9
1.3.2 Safety of Products and Services Offered ....................................................................... 9
1.3.3 Ethical Practices ........................................................................................................... 10
1.3.4 Meeting Stakeholder Interests...................................................................................... 10
1.3.5 Dealing with Potential Conflicts of Interests ............................................................... 10
References ..................................................................................................................................... 12
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Task1. Organisational Purpose of Businesses
1.1 Identify the Purposes of Different Types of Organisation
The aim of this section is to identify the purpose of different types of organisations in the UK
market place. In this regard, it has been found that business organisations are segmented into
various sectors that include private, public, government, voluntary and charitable organisations
(Paxton & et. al., 2005; Mujica, 2004). To be noted in this regard, each of these organisations
work on the blend of different principles, which in turn gives rise to particular similarities as well
as dissimilarities between these entities. Correspondingly, the definition and the purpose of the
different types of organisations are illustrated below:
1.1.1 Private Organisation
Private sector organisations are established by entrepreneurs, identifiable as individuals or group
of individuals as a kind of investment, with the aim of earning profit and desired level of Return
on Investment (ROI) attainment. In context to the UK market, it has been observed that several
business entities are operating under the category of private sector organisation wherein the
primary aim of these types of organisations is to maximize profitability and ensure sustainability
(Mujica, 2004). The different types of organisations included under private sector are briefly
described below.
Public Limited Company (PLC)
The sole purposes of PLCs are inclined towards reducing risk factor by ensuring limited liability,
facilitating ROI and growth prospects. PLCs expect large number of investors and stockholders
in order to arrange for adequate capital, aimed at financial flexibility. PLCs’ are also motivated
towards securing and expanding their position in the market place targeting sustainable growth
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through customer satisfaction. It is also reckoned that the major purposes of PLCs not only
include expansion of business domestically but they are also driven by exploring the untapped
opportunities beyond the national boundary, continually enhancing the performance level of the
firm through profit sharing amid its investors, sales growth and augmenting customer satisfaction
among others (Mujica, 2004).
Sole Trader and Partnership Firms
On the other hand, sole proprietor organisations are generally formed by individuals in order to
maintain independency in terms of decision-making. In many instances, proprietors have been
observed to establish this kind of firm in order to avoid complex legal formalities such as tax and
duty. Besides, profit maximization is ascertained to be the ultimate objective related to this form
of business organisations in its short run. Similarly, partnership firms are formed in order to
reduce risk factor and to distribute responsibilities among partners, which can ensure profitability
(Jackson & et. al., 2011). Similar to sole proprietorship, partnership firms are also observed to
operate with the aim of ensuring the prosperity and profit maximization of all partners involved
in the partnership business focused on ROI in the short-term and sales growth as well as
customer satisfaction in the long-term (Mujica, 2004).
Private Limited Company
In the UK, private limited companies are encouraged to drive reliability among consumers in
order to expand business operations as their long-term goal. Private companies’ are smaller as
compared to PLCs. Moreover, it has been observed that the main purpose of private firms is to
reduce the level of risk by ensuring limited liability and maintaining responsibilities, focusing on
their vision, mission, aims and objectives (Mujica, 2004).
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1.1.2 Public or Government Organisation
Public sector refers to government-owned organizations and government-provided services in
general. Notably, it has been observed that the governmental organisations aims at improving the
fundamental conditions of UK market place such as International Affairs, Legal Counsel and
Prosecution, Legislative Bodies, Police Protection and Fire Protection among others. This type of
organisations work with the purpose of social responsibilities, environmental sustainability, and
corporate social responsibility based on the goals, values as well as their defined mission and
vision (Mujica, 2004).
Contextually, public corporation is identified as a governmental entity, which conduct
commercial activities on behalf of the government but there purpose is non-financial. Apart from
this, it is observed that purpose of public corporation is to accomplish non-financial long and
short-term goals for the society. Illustratively, Municipal Corporation can be defined as a local
government organisation, which is involved in performing various actions for the benefits of the
society (Mujica, 2004).
1.1.3 Voluntary and Charitable Organisations
In order to identify the purpose of the charitable firm, it has been observed that this type of
organisations is engaged in offering voluntary services. According to the analysis, it has been
identified that in UK market place several organisations perform voluntary services in order to
fulfil the requirement of needy and under privileged individuals through providing charitable
services (Paxton & et. al., 2005). For instance, Action on Disability and Development, AIDSFree World and United Kingdom Disabled People’s Council among others can be identified as
the key examples of non-governmental, voluntary or charitable organisation. Thus, it has been
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observed that the purpose of charitable organisations in UK is to promote social welfare through
social responsibilities, with no concern towards profit making or seeking for better ROI.
1.1.4. Co-operatives
Co-operative organisations, in general, refers to those organisations working on the principle of
mutual ownership, wherein its members, who might be the employees or the customers as well,
take active part in the decision-making as well as share profits earned by the organisation as its
stakeholders. As defined by International Co-operative Alliance, a co-operative organisation can
be identified with reference to the characteristics of “an autonomous association of persons
united voluntarily to meet their common economic, social and cultural needs and aspirations
through jointly owned and democratically controlled enterprise”. The purpose of this type of
organisations remains centred on the values of corporate social responsibility rather than on the
profit led motive. To be precise, these types of organisations work for social responsibilities
through self-help, ethical soundness in the community of its members promoting equality,
democracy, solidarity and equity (Department of Business Innovation & Skills, 2011).
1.2 Describe the Extent to Which an Organisation Meets the Objectives of Different
Stakeholders
In this section, the aim is to highlight the objectives of an organisation in order to meet the
expectation level of its stakeholders. It has been observed that stakeholders are the people, who
contribute their enormous amount of efforts that include both financial and non-financial support
in order to meet the organisational goals and objectives. Thus, stakeholders have also certain
expectation from the organisation for their contribution to organisation (Institute of Chartered
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Accountants in England and Wales, 2008). Stakeholders those expectations have been illustrated
below.
1.2.1 Investors
Investors’ are the stakeholders, who contribute capital and their valuable advisers in order to
accomplish organisational goal. Thus, it has been observed that organisations by declaring
dividends and interests are rewarded for their efforts and investments (International Finance
Corporation, 2007).
1.2.2 Employees
Employees are the representative of an organisation, who contributes plenty of hard work in
order to accomplish stability and profitability for the organisation. Thus, employees for the
dedicated efforts are provided remuneration, incentives, and retirement benefits among others
(International Finance Corporation, 2007).
1.2.3 Suppliers and other creditors
Suppliers are the backbone of an organisation. Organisations procure the materials needed for
their business operations through suppliers. Correspondingly, payment is made to suppliers for
the supply of materials to an organisation (International Finance Corporation, 2007).
1.2.4 Customers
Customers are the most important group of stakeholders without which no business organisations
can sustain their operations. Notably, customers often carve for superior quality products and
services at reasonable prices. Thus, organisations are committed towards producing products and
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services that are of superior quality and offer them to customers at reasonable prices
(International Finance Corporation, 2007).
1.2.5 Governments and their agencies
Government and their agencies allocate resources and provide authorization of trading to an
organisation. Thus, in return Governments and their agencies expect taxes and duties that the
organisations are obliged to pay (International Finance Corporation, 2007).
1.3 Explain the Responsibilities of an Organisation and Strategies Employed to meet
Stakeholders Requirements
In this section, the aim is to identify the responsibility of an organisation in order to meet
requirements of the stakeholders. Over the years, the need of stakeholder engagement has
increased from an organisational point of view especially in the developed countries like the UK.
In this regard, organisations are making strategic planning in order to attract the attention of large
number of stakeholders in a community. Accordingly, need for organisations to understand the
problems, alternatives, opportunities and solutions in order to meet stakeholders’ requirements
have grown. On the other hand, in order to meet stakeholders’ requirement the organisations
need to analysis several alternatives before decision-making. Moreover, most of the
organisations have stressed on maintaining their financial stability in order to provide substantial
remuneration to employees and fair return to investors (Revit-Nweurope, n.d.).
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1.3.1 Meeting Legal Requirements of Country(s)
Boutall (2009) postulated that the UK organisations have developed wide-range of
responsibilities in order to meet different stakeholders’ requirement. First of all an organisation is
required maintain and practices government policies ethically. Moreover, organisations are
focused on consumer legislation, employee legislation, equal opportunities and antidiscriminatory legislation, environmental legislation, health and safety legislation (Boutall,
2009). To be precise, it has been also observed that most of the organisations have shown their
endeavour towards building healthy and hygienic environment for their stakeholders.
Organisations in the UK are also obliged to abide by all measures and legislation enforced by the
government directed towards promoting health and safety of employees. Notably,
the Management of Health and Safety at Work Regulations 1999 defines the roles of employers
that should be complied in order to promote health and safety of workers at the everyday
workplace (HSE, n.d.). Similarly, Employers’ Liability (Compulsory Insurance) Act 1969
requires employers to insure workers against unforeseen injury of diseases that may arise during
the employment (1HSE, n.d.).
1.3.2 Safety of Products and Services Offered
On the contrary, organisation is responsible revealing equality at all levels of the organisations in
order to ensure fair and transparent treatment of all individual engaged in the business
operations. Apart from this, producing and implementing business policies and procedures,
utilising quality assurance mechanisms are used to meet the requirements of the stakeholders.
Moreover, through compliance, communication and timely responses organisations are satisfying
stakeholder objectives (Revit-Nweurope, n.d.).
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1.3.3 Ethical Practices
An organisation is liable to contribute towards the progress and prosperity of the community in
which it operates. It can execute several ways through contributing financial support or
physically contributing towards society. For example, most of the United Kingdom business
firms have done these activities through corporate social responsibilities (Boutall, 2009).
1.3.4 Meeting Stakeholder Interests
It has been also observed that organisations have also concentrated on health and safety issues of
their stakeholders. In order to do such several larger organisations have insured the life of their
employees and workers. This insurance strategy has enabled to augment their financial stability
to deal with health and safety issues of stakeholders. Besides, in case of any accident at work,
this insurance procedure has played a major helping hand for the stakeholders to overcome the
difficult situation. In addition, providing adequate return on the amount invested by the investors
is also considered as one of the major responsibility of an organisation. In order to meet the
responsibilities organisations can be seen to employ numerous strategies and policies strategizing
measures to ensure higher return, developing measures to build prosperous relationships with
government authorities, suppliers as well as customers (Boutall, 2009).
1.3.5 Dealing with Potential Conflicts of Interests
An organisation is also deemed as responsible to deal with potential chances of conflicts of
interests arising amid its stakeholders either externally or internally. To satisfy this particular
responsibility, organisations should implement strategies that aim at addressing as well as
acknowledging possible conflicts between the different roles bestowed on managers and
corporate stakeholders. These differences can be identified in terms of their legal, moral as well
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as job responsibilities. In acknowledging these potential chances of conflicts of interests,
organisations have further been observed to consider strategies like open communication
networks, third party reviews along with appropriate auditing, reporting and incentive policy
development (Healthknowledge, 2010).
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References
Boutall, T., 2009. Public Participation in Europe. Public Participation in the United Kingdom,
pp. 11-15.
Department for Business Innovation & Skills, 2011. A Guide to Mutual Ownership Models. Cooperatives.
[Online]
Available
at:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31678/11-1401guide-mutual-ownership-models.pdf [Accessed June 01, 2014].
Healthknowledge, 2010. Understanding Organisations: Identifying and Managing Internal and
External Stakeholder Interests. Identifying and Managing Internal and External Stakeholder
Interests.
[Online]
Available
at:
http://www.healthknowledge.org.uk/public-health-
textbook/organisation-management/5b-understanding-ofs/managing-internal-externalstakeholders [Accessed June 01, 2014].
HSE, No Date. Health and Safety Regulation. What Health and Safety Law Requires. [Online]
Available at: http://www.hse.gov.uk/pubns/hsc13.pdf [Accessed June 01, 2014].
1
HSE, No Date. Employers’ Liability (Compulsory Insurance) Act 1969. A Brief Guide for
Employers. [Online] Available at: http://www.hse.gov.uk/pubns/hse40.pdf [Accessed June 01,
2014].
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Institute of Chartered Accountants in England and Wales, 2008. Stakeholder Expectations of
Audit. Audit & Assurance Facility, pp. 1-17.
International Finance Corporation, 2007. Stakeholder Engagement: A Good Practice Handbook
for Companies Doing Business in Emerging Markets. Key Concepts and Principles of
Stakeholder
Engagement.
[Online]
Available
at:
http://www.ifc.org/wps/wcm/connect/938f1a0048855805beacfe6a6515bb18/IFC_StakeholderEn
gagement.pdf?MOD=AJPERES [Accessed June 01, 2014].
Jackson, L. & et. al., 2011. Building on your Business Idea. Cabinet Office, pp. 1-23.
Mujica, D. R. S., 2004. Partnerships and Companies a Comparative Approach to UK Business
Organisations. Mercatoria, Vol. 3, Iss. 2, pp. 1-14.
Paxton, W. & et. al., 2005. The Voluntary Sector Delivering Public Services. Joseph Rowntree
Foundation.
Revit-Nweurope, No Date. Working Towards More Effective and Sustainable Brownfield
Revitalisation
Policies.
Introduction.
[Online]
Available
at:
http://www.revit-
nweurope.org/selfguidingtrail/27_Stakeholder_engagement_a_toolkit-2.pdf [Accessed June 01,
2014].
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