-
FIA FAB / ACCA F1 Accountant in BusinessChapter 1Business
Organisations & their stakeholders
-
What is an organisation?An organisation is a social arrangement
which pursues collective goals, which controls its own performance
and which has a boundary separating it from its environment*
-
Common characteristicsPerform certain standardsHave a formal
& documented systems & proceduresSpecilised in one
areaPursue a variety of objectives & goalsRequire inputs, then
process into outputs*
-
Why do orgns exist?To overcome individual limitationsTo enable
specialisationTo save timeTo share knowledgeTo create synergy Thus,
organisation will be more productive.*
-
Might be different in:Ownership sole trader, partnership,
company private/publicControlActivityProfit or non-profit (pg
6)Legal statusSizeSource of financeTechnology*
-
Private - Sole traders & PartnershipsAdvantagesEase of
formationSubject to few regulationsNo corporate income
taxesDisadvantagesDifficult to raise capitalUnlimited
liabilityLimited life
*
-
Private - Limited companiesAdvantagesUnlimited lifeEasy transfer
of ownershipLimited liabilityEase of raising
capitalDisadvantagesDouble taxationCost of set-up and report
filing
*
-
Public companiesOrganisations owned and run by the govt, such
as:Armed forcesSchool & universityGovt departments
*
-
Types of
organisationAgricultureManufacturingMiningEnergyRetailingTransportationIntellectual
productionService industries*
-
Profit vs Non-profitProfitPrimary goal to maximise
profitSecondary goals to support primary goalNon-ProfitPrimary goal
to maximise public interests or beneficiariesSecondary goals to
minimise cost in order to support primary goal*
-
Non-government orgns (NGO)An independent voluntary association
of people acting together for some common purpose.Not aimed to make
profitNot part of any govt agencyAimed to promote social, political
and environmental change*
-
OthersCo-operative societies businesses owned by tier worker or
customers, who share the profitsMutual associations similar to
above but owned by members only*
-
StakeholdersIndividuals or groups who have an interest in what
the organisation does. They are:Internal stakeholders
(primary)Connected stakeholders (primary)External stakeholders
(secondary)*
-
Stakeholders*
-
Stakeholders*
-
Stakeholder conflictOne of the most common one is between
manager and shareholders. Managers are naturally inclined to act in
their own best interests.Hence, the most important objective
required for manager is to maximise the shareholders wealth.*
-
Stakeholder mappingMendelow suggested to map stakeholders power
and interest in order to provide what is needed by each group by
identifying who are the:Key players may participate in decision
making (D)Be kept satisfied (C)Be kept informed (B)Minimal effort
required (A)*
-
Stakeholder mapping*
-
Stakeholder satisfactionExample:Employees staff turnover; pay
& benefitsGovernment pollution measures; filing of annual
return; accident rate; energy efficiencyDistributors share of joint
promotions; inventory shortage
*
*
