Different Types of Organisations in the UK Market Place - Term Paper Example

Business Environment/Organisational Purposes of Business Table of Contents Task1. Organisational Purpose of Businesses 3 1 Identify the Purposes ofDifferent Types of Organisation 3 1.1.1 Private Organisation 3 1.1.2 Public or Government Organisation 6 1.1.3 Voluntary and Charitable Organisations 7 1.1.4. Co-operatives 7 1.2 Describe the Extent to Which an Organisation Meets the Objectives of Different Stakeholders 8 1.2.1 Investors 8 1.2.2 Employees 8 1.2.3 Suppliers and other creditors 9 1.2.4 Customers 9 1.2.5 Governments and their agencies 9 1.3 Explain the Responsibilities of an Organisation and Strategies Employed to meet Stakeholders Requirements 9 1.3.1 Meeting Legal Requirements of Country(s) 10 1.3.2 Safety of Products and Services Offered 11 1.3.3 Ethical Practices 11 1.3.4 Meeting Stakeholder Interests 11 1.3.5 Dealing with Potential Conflicts of Interests 12 References 13 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 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). In case of public limited company, it can be asserted that the organisations have the opportunity running business operation on public fund. Thus, it can be asserted that this is the advantage of a limited organisation (Hannigan, 2012). 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. Sole trader businesses, being the simplest form of organisations, have certain advantages, such as easy set-up, minimal set-up costs, minimal interventions of the legislatives and limited administrative barriers in terms of trademark, copyright as well as other similar restrictions applicable in other cases, being dependent on a centralised decision making process controlled by the entrepreneur. On the other hand, sole trader businesses have few disadvantages too, which can be identified as high dependency of the firm’s performances on the owner, which means that personal assets can used to satisfy the debts of the business, offering limited protection to the entrepreneur. Additionally, limited interferences from the statutory norms also increases transparency issues in the business process of sole trader (Hannigan, 2012). 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). Advantages of this type of organisation can be identified in terms of greater managerial potentiality owing to the fact that partners have the ability to control the business affairs better than in the case of one sole trader. However, formation of such an organisation is subjected to extensive written agreement to avoid possibly high chances of conflict. It is in the same context that this type of business formation requires active involvement of solicitors and professional advisors at almost every stage of decision-making (Hannigan, 2012). 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). In case of private limited company, there are certain advantages and disadvantages. A limited company has its advantages of being an independent entity with a separate identity to that of its founders, which in turn limits the liability of the owners to pay for the damages incurred by the company. To ensure that the company has a separate identification, registration is necessary under the UK legislation. The registration also makes this form of businesses eligible for tax benefits. Nevertheless, as limited companies require disclosing their annual accounts publicly, it benefits the competitors to implement aggressive standards in their marketing strategies (Hannigan, 2012). 1.1.2 Public or Government Organisation Public sector refers to government-owned organizations and government-provided services in general, which can be either listed or unlisted in the stock markets to be eligible of selling their shares publicly (Hannigan, 2012). 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). As per the UK legislation, this sort of organisations should have a share capital amount of minimum £50,000. While this particular factor along with the company being eligible for extensive legal interventions from the statutory bodies, pose significant disadvantages, it also holds an advantage of re-registering as a private limited organisation as per the UK legislation (Hannigan, 2012). 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, AIDS-Free 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 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 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 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.). 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 anti-discriminatory 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.). 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 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). 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. Co-operatives. [Online] Available at: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31678/11-1401-guide-mutual-ownership-models.pdf [Accessed June 01, 2014]. Hannigan, B., 2012. Company Law. Oxford University Press. 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-external-stakeholders [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]. 1HSE, 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]. 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_StakeholderEngagement.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]. Read More