Business Finance - Chapter 1 (Topic-1)
1. What is Organizations?
Organizations: Organization is a social arrangement for the controlled performance of collective goals, which has a boundary separating it from its environment.
2.Why do organizations exist?
Organizations exist because they:
- Overcome people's individual limitations.
- Enable people to specialize
- Save time
- Accumulate and share knowledge
- Enable people to pool their expertise
- Enable Synergy
Now you have to know what is Synergy?
Synergy: Synergy means the combined output of two or more individuals working together exceeds their individual output.
3. What are the characteristic of organization?
As we read above in the definition of organization :
- Social Arrangement : Individual gathered together for a purpose
- Controlled Performance : Performance is monitored against the goals and adjusted if necessary to ensure goals are accomplished
- Collective Goals : The organization has goals over and above the goals of the people within it.
- Boundary : The organization is distinct from its environment.
4. How can we differ various types of organizations?
We can differ organizations in many ways. Here are some possible ways stated below:
- Ownership
- Control
- Activity
- Profit or non-profit orentation
- Size
- Legal Status
- Source of Finance
- Technology
4. Differences in What organizations do in different senario
| Industry | Activity |
| Agriculture | Producing & Processing food |
| Manufacturing | Acquring raw materials and, by the application of labour and technology turning them into product |
| Extractive/Raw Materials | Extracting and refining raw materials (eg. Mining) |
| Energy | Converting one resource into another |
| Retailing/distribution | Delivering goods and services to the end consumer |
| Intellectual Porduction | Producing intellectual property.(eg. software, publishing, flim etc.) |
| Service Industries | These include banking, various business services and public services such as education and medicine |
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