BUSINESS ENVIRONMENT

Business Environment

Business Environment

Task 1- Organizational Purposes of Business

Purpose of Different Types of Organization

There are different types of organization which include non-profit organizations and profit making organization. In this regards, organizations in the non-profit sector is an organization whose mission is something other than making profit for its owners. The non-profit organizations can be defined as the term “nonprofit organization” begins when defining differences compared to normal business that is organization working for making profit. The boundary between the two types is unclear; non-profit organizations fulfill their mission, for which they were established. It is important that the activities of non-profit organizations must be clear and transparent that use funds received and must be listed on the website. Non-profit organizations are mainly in social services, education, health, science and research, culture, environment and sports (Doerr-MacEwen, 2007, 267). The non-profit organizations meet its mission of service requested, by precisely defining its mission that is to know the purpose for which it was established.

In relation to the purpose of profit making organizations, the profit making organization organizations are considered as entities which are organized that intend to do business for the purpose of profit. Moreover, from the process related perspective the focus of profit making organizations is on the set of actions or tasks that make profit for the organization (Holliman, 2010, 301). With respect to functional activities, the focus of the organization is on how companies like state authorities or businesses are used. Besides it, from the perspective of an institution, the profit making organizations are considered as a purposeful structure within a social context.

Organization and Objectives of Stakeholders

Creating value of stakeholders lies in the fact that the organization is able to achieve a return on capital higher than the cost of capital, which provides customers with a product or service at a price that guarantees a positive return. The organization should try to extend the lifetime of value creation. The longer this period is, the greater the return on shareholders receives. Such a positive difference that you can stay in the organization or pay the owners, it is the value that stakeholders are looking for. The mere creation of value of stakeholders, however, does not guarantee success. Equally important is to work on maintaining the value of what has been produced. On stage, it is necessary to maintain the value of managing for raising capital, efficient allocation of resources, improving cash management and payment of tax liabilities, effective risk management, knowledge and human capital (Koh, 2008, 129).

The primacy of shareholder value is not inconsistent with the expectations of other stakeholders. Entity managed with a view to the value you cannot afford to ignore other stakeholders. Doing so can result in paralysis of the management and operation of the company. Absence employee expectations can lead to abandonment of work, customers whose expectations are not met, go to the competition etc.

The priority of the organization is to maximize the value of equity. Management of the organization is responsible to the different ...