1. Chapter 1 Business organisations and their stakeholders
Qiang Jiang
School of Business
Sichuan University, China

2. Topic list Purpose of business organisation
Types of business organisation
Stakeholder goals and objectives

3. 1 Purpose of business organisation
A social arrangement which purses collective goals, which controls its own performance and which has a boundary separating it from its environment
Preoccupied with performance, meeting or improving their standards
contain formal, documented systems and procedures
People specialise in one activity
Variety of objectives and goals
Obtain inputs, process them into outputs

4. 1 Purpose of business organisation
Why do organisations exist
Overcome people’s individual limitations
Enable people to specialise in some actives
Save time
Accumulate and share knowledge
Synergy: by bring together two individuals their combined output will exceed their output if they continued working separately

5. 1 Purpose of business organisation
How organisations differ
Ownership
Control
Activity
Profit or non-profit orientation
Legal status
Size
Sources of finance
Technology

6. 2 Types of business organisation
Profit vs non-profit orientation
goal
Profit orientated
Non-Profit orientated
Primary goal
Maximise profit
Provision of goods/services
secondary goal
Output of goods/services
Minimise cost of primary goal

7. 2 Types of business organisation
Private vs public sector
Private sector: organisations not owned or run by central or local government, or government agencies.
Public sector: organisation owned or run by central or local government or government agencies.

8. 2 Types of business organisation
Legal status
Sole traderships
Partnerships
Limited company

9. 2 Types of business organisation
A limited company has a separate legal personality from its owners .the shareholders cannot normally be sued for the debts of the business unless they have given some personal guarantee. their risk is generally restricted to the amount that they have invested in the company when buying the shares .

10. 2 Types of business organisation
Characteristics of limited company
Shareholders are the owners
Directors are appointed by shareholders to run the company
executive directors
Non-executive directors
Operational management
career managers

11. Types of limited company
X limited(private)
X PLC(pulic)
Number of shareholders
Small number
Wider proportion of the investing public
Transferability of share
Transferable with the consent of the shareholder
Trade on stock exchang
Diretors as shareholders
Hold a portion of shares
Source of capital
founder/promotor
Business associates
Venture capitalists
the public
Institutional investors

12. 2 Types of business organisation
Advantages of limited companies
More money
Reduces risk
Separate legal personality
Ownership is separate from control
No restrictions on size
Flexibility: capital and enterprise
brought together
Disadvantages of limited companies
Legal compliance costs
Shareholder have little power, only
sell share

13. 2 Types of business organisation
Characteristics
public sector
Ownership and management
government
objectives
variety
accountability
To parliament
funding
Raising taxes, making charges, borrowing
Demand for service
limitless
resource
Limited

14. 2 Types of business organisation
Advantages of the public sector
Fairness
providing Public goods
Public interest
Economies of scale
Cheaper finance
efficiency
Disadvantages of the public sector
Accountability
Interference
cost

15. 2 Types of business organisation
Non-governmental organisations
Independent voluntary association of people
For some common purpose

16. 2 Types of business organisation
Co-operative societies and mutual associations
Open membership
Democratic control (one member, one vote）
Distribution of the surplus in proportion to purchase
Promotion of education

17. 3 Stakeholder goals and objectives
Stakeholders are those individuals or groups that, potentially, have an interest in what the organisation does.
Internal stakeholders
Connected stakeholders
External stakeholders

18. 3 Stakeholder goals and objectives
Internal stakeholders: employees and management
Organisation’s continuation and growth
Individual interests can be harnessed to the goals of the organisation

19. 3 Stakeholder goals and objectives
Connected stakeholders
Shareholders (corporate strategy)
Bankers (cash flows)
Suppliers (purchase strategy)
Customers (product market strategy)

20. 3 Stakeholder goals and objectives
External stakeholders
Government
Interest/pressure groups
Professional bodies

21. 3 Stakeholder goals and objectives
Another approach
The primary stakeholder:
internal and connected stakeholders
The secondary stakeholders:
external stakeholder

22. 3 Stakeholder goals and objectives
Stakeholder conflict
May force resignations and divestments of business
Companies may make profit at the expense of the long term benefit of the companies.

23. 3 Stakeholder goals and objectives
Stakeholder mapping: power and interest
Menndelow suggests that stakeholders may be positioned on a matrix whose axes are power held and likelihood of showing an interest in the organisation’s activities.

24. 3 Stakeholder goals and objectives
Strategic value of stakeholders
Correlation between employee and customer loyalty
Continuity and stability in relationship with employees, customers and suppliers
Responsibilities towards customers
Responsibilities towards suppliers

25. Q1.3 Which of the following statements is true
Q1.8 ADB is a business which is owned by its workers. The workers share the profits and they each have a vote on how the business is run.
A public sector
B private sector
C Not-for-profit
Dco-operative