F1

A) THE BUSINESS ORGANISATION, ITS STAKEHOLDERS AND THE EXTERNAL ENVIRONMENT

1) The purpose and types of business organization
a) Define ‘business organisations’ and explain why they are formed
a. Define Business Organization : A social arrangement for the controlled performance of
collective goals, which has a boundary separating it from its environment
b. Why:
i. Overcome people's individual limitations, whether physical or intellectual
ii. 􀁠 Enable people to specialise in what they do best
iii. 􀁠 Save time, because people can work together or do two aspects of a different
task at the same time
iv. 􀁠 Accumulate and share knowledge (eg about how best to build cars)
v. 􀁠 Enable people to pool their expertise
vi. 􀁠 Enable synergy: the combined output of two or more individuals working
together exceeds their
vii. individual output ('None of us is as smart as all of us').
In brief, organisations enable people to be more productive.
b) Describe common features of business organisations :
a. A group of people who come together to achieve a common goal
b. Organizations have a vision and mission.
c. They have a culture that is guided by their organizational values.
d. They develop strategies to achieve their goals.
e. They have a structure (departments, divisions, teams) and system to achieve the goals.
f. They get input, process it and then have an output.
g. They have customers for whom the product or service is developed.
c) Outline how business organization differs
Factor Example
Private sector: owned by private investors/shareholders
Ownership (public vs private)
Public sector: owned by the nation and managed by the government
By the owners themselves, by people working on their behalf, or
Control
indirectly by government-sponsored regulators
Activity (ie what they do) Manufacturing, healthcare, services (and so on)
Business exists to make a profit. An army or a charity, on the other hand, are not
Profit or non-profit orientation
profit-oriented
Size Small local business to multinational corporation
Company, or an unincorporated body such as a club, association, partnership or sole
Legal status
trader
Sources of finance Borrowing, government funding, share issues

Technology High use of technology (eg computer firms) v low use (eg corner shop)
d) List the industrial and commercial sectors in which business organisations operate
Industry Activity
 Agriculture Producing and processing food
Acquiring raw materials and, by the application of labour and technology, turning them into a
Manufacturing
product (eg a car)
Extractive/ Extracting and refining raw materials (eg mining)

Energy Converting one resource (eg coal) into another (eg electricity)
Retailing /
Delivering goods to the end consumer
Distribution
Intellectual
Producing intellectual property eg software, publishing, films, music etc
Production
Service These include banking, various business services (eg accountancy, advertising) and public
Industries services such as education and medicine

e) Identify the different types of business organisation and their main characteristics
2) Stakeholders in business organisations
a) Define stakeholders and explain the agency relationship in business and how it may vary in
different types of business organization
b)