Business Organization| F1/FBT ACCA notes
What Is Business Organization

What Is Business Organization

An organization is an organized group formed by a gathering of people who share a set of common goals.
Organizations offer consumers goods or services (or both), to be able to govern their own performance and to provide a barrier between them and the environment. Organizations have an influence on the environment, and numerous environmental conditions have an impact on them.

Different Terms Of A Business Organization

The structure of a business organization is defined in different terms, most of the common terms for a business organization are discussed below.

In Terms Of Ownership and control

Some organizations are sole proprietorships and are owned and controlled by one owner while others are partnerships where two or more people jointly own and control an organization. Public listed companies are owned by the general public and controlled by the board of directors.

In Terms Of Activity

Different organizations provide varying goods and services. Some organizations are manufacturing concerns like General Motors and Ford while other companies provide services like law firms and audit firms.
So activity for an organization is maybe different from other organizations in a business

In terms Of Legal Status

Limited corporations and partnerships in the United Kingdom are founded under the UK Company Law, while partnerships are formed under the Partnership Act 1890.

In Terms Of Profit or Not-for-Profit Organizations

Some organizations exist to make a profit like Honda while other organizations exist to serve the society or environment like Red Cross and Make a Wish Foundation.

In Terms Of the Level of Technology

Various levels of technology are used by businesses. There are certain companies that use modern technology, such as Samsung and Airbus, while others, such as Walmart, use basic technology.

What Is Business Organization
What Is Business Organization

In Terms Of the Manufacturing Sector

Transforms raw materials into finished, saleable products with the use of equipment and labor. Ex Volkswagen Group.

In Terms Of the Extractive Sector

This industry derives its goods from natural resources such as the earth, the sea, and the air. It refines and extracts raw materials. Ex Shenhua Energy-Coal.

In Terms Of the Construction Sector

This industry is involved in the construction of bridges, skyscrapers, and highways. Ex Grupo ACS-Spain.

Retailing/Distribution Sector

This industry buys finished goods and sells them to the general population. Ex Tesco 

Service Sector

Groups that provide services to customers are included. Services can be of any type, including medical, legal, and other services. American Express.

Types of Different Sectors In The Business Organization

Following are the different sectors that are part of the business organization structure.

What Is Business Organization
What Is Business Organization

What Is the Commercial Sector In Business Terms

Organizations that make a profit are also known as value profit-making organizations such as Sole traders -Partnerships -Private limiteds -Public limiteds.

Profit is the goal of businesses in this industry. Their efforts are centered on the idea that their earnings should exceed their costs. These businesses exist to make a profit.

Types of organization in the commercial sector

Followings are the most popular examples of business organizations.

Sole Trader In Business Organization

The owner of the alone trader business is in charge of the company. The organization is owned and controlled by a single person. Despite the fact that other individuals work for the company, the owner is ultimately responsible for its success. Such businesses have unlimited liability, which means that the owner is responsible for all of the company’s debts. It is one of the most popular example of a business organization.

Partnership In Business Organization

When 2 or more persons pool their resources to collectively own and manage a firm, they form a partnership. As a result, the business’s liability is shared among the partners.

Limited companies In Business Organization

The power and authority of a business are legally separated into limited businesses. They are controlled by a Board of Directors and owned by shareholders who provide the fund to run the business. Limited companies can be divided into two categories:

  • Private limited company
  • Public limited company

Difference between Private and public companies

S.NOPrivate companyPublic Company
1Owned by Friends and familyOwned by the General public
2Privately (not on the stock market)On the stock market
3Venture CapitalistsInstitutional Investors
4Provide funds by foundersShared capital raised by public
What Is Business Organization

What Are Not-For-Profit Organizations In Business Terms

These organizations do not exist to produce money; rather, they exist to help society or the environment.

Public Sector Organizations

The government owns or has control over these entities. They work for the people’s benefit.

What Is the Mean Of Co-operatives In Business Terminology

An organization or association whose facilities and services are jointly owned and administered by those who use them.

If you are a student of FA1 then must read our notes for FA1 it will help you to understand all the concepts for the FA1 exam.

Chapter 1: Business transaction and documentation

Practice questions: Practice questions-chapter 1

Chapter 2: Asset and liability

Practice question: ACCA practice questions for Asset and liability

Chapter 3: Posting transaction & Double entries for sales, sales tax

Practice questions: FA1 exam question for posting transaction

Chapter 4: Receiving money and checking

Practice questions: Practice questions for Receiving money and checking

Chapter 5: Purchase day book and purchase return

Practice questions: Practice questions for the Purchase and purchase return day book