Chapter One

Question 1

what are organisations?

Answer 1

organisations are social arrangements for the controlled performance of collective goals

Question 2

what are the 3 key aspects of organisations?

Answer 2

collective goals, controlled performance, social arrangements

Question 3

what are collective goals?

Answer 3

Organisations are defined by their goals so we need goal congruence 

Question 4

what are social arrangements?

Answer 4

Someone working alone cannot be classed as an organisation. Organisations are structured to allow interrelated individuals to work together towards a common goal. 

Question 5

why do we need organisations?

Answer 5

share knowledge and skills, specialise, and pool resources

Question 6

What is synergy?

Answer 6

where organisations can achieve more than the individuals could on their own

Question 7

what is the main objective for businesses whose primary making money?

Answer 7

maximising the wealth of their owners

Question 8

who is liable for debts as a sole trader and partnerships?

Answer 8

the individual

Question 9

define sole trader?

Answer 9

owned and run by one person. the owner is now legally separate from the business itself and is responsible for any business debt

Question 10

define partnerships?

Answer 10

owned and run by two or more individuals. traditionally they do not have separate legal identity from their owners.

Question 11

what type of partnerships do have separate legal identity to their owners?

Answer 11

limited liability partnership

Question 12

what is a LLP?

Answer 12

limited liability partnerships, where some or all of the partners have limited liability similar to shareholders in a company

Question 13

what is a limited liability companies?

Answer 13

a company has separate legal identity to its owners who are knwon as shareholders.

Question 14

what is the owners liabilty limited to regarding a limited liability company>

Answer 14

to the amount they have invested into the company

Question 15

what are the two type of limited companies?

Answer 15

private limited and public limited

Question 16

what is a liability limited company?

Answer 16

‘ltd’ after their name. shares cannot be offered to the general public. they can be owned by individual people, trusts, associations and other companies

Question 17

what are public limited companies

Answer 17

with plc after there name. shares can be offered to the general public

Question 18

eg of not for profit businessq

Answer 18

schools, charity, hospitals, clubs

Question 19

what is your public sector?

Answer 19

provides basic government services, controlled by government. eg police, miliary, public transport

Question 20

what is your private sector?

Answer 20

run by private individuals from groups and individuals.. within these will be both profit seeking and not for profit organisations, eg club, charity

Question 21

what is a non governmental organisations (NGO)

Answer 21

one which does not have profit as its primary goal and is not directly linked to the national government

Question 22

what do NGO’s often promote?

Answer 22

political, social or environmental change within the countries they operate

Question 23

what might NGO’s include?

Answer 23

the red cross, greenpeace, amnesty international

Question 24

what are co operatives?

Answer 24

organisations that are owned and democratically controlled by their members - the people who buy their goods and services

Question 25

What’s the difference between service and manufacturing organisations in regards to simultaneity?

Answer 25

Although the manufacturer of a tangible good may never see that your customer the custom offer must be present during the production of service and cannot take the service home. No service exist until it is actually being experienced/consumed by the person who has bought it.

Question 26

Why are cooperatives organised?

Answer 26

Solely to meet the needs of the member owners who usually share any profit

Question 27

What is the difference in smaller companies and larger companies regarding who manages the business?

Answer 27

In smaller companies, the owners usually manage the business, however in large companies shareholders usually delegate control to professional managers to run the company on their behalf

Question 28

What can the separation of ownership and control lead to?

Answer 28

A potential conflict of interest between directors and shareholders

Question 29

What is a conflict of interest between directors and shareholders an example of?

Answer 29

The agency problem 

Question 30

What does agency problem mean?

Answer 30

The principles, shareholders, have to find ways of ensuring that agents (the managers) act in their interest

Question 31

What are the possible areas of conflict?

Answer 31

Fat cat salaries and benefits, mergers and acquisitions, short termism

Question 32

What attempts can you take to resolve the conflict?

Answer 32

Corporate governance, a review of the remuneration and bonus schemes to give the directors

Question 33

What is a similarity between most organisations?

Answer 33

But they are mainly concerned with taking inputs and transferring them into outputs

Question 34

What is share skills and knowledge?

Answer 34

This allows people to perform tasks that they would not be unable to achieve on their own 

Question 35

What is specialise?

Answer 35

Individual workers can concentrate on a limited set of tasks. This allows them to build up a great level of skill and knowledge than if they attempted to master everything.

Question 36

What is pool resources?

Answer 36

With money or time

Question 37

What are different business organisations defined around?

Answer 37

Their structure, their processes, as well as the relationships, authority and responsibility of the individuals that make them up

Question 38

What do businesses have the following in common?

Answer 38

They have input which are processed and provided an output, they have customers as well as stakeholders, they have a vision and mission, they have structures

Question 39

What is simultaneity?

Answer 39

The production and consumption occurred at the same time

Question 40

What is heterogeneity?

Answer 40

Quality and consistency is likely to vary as a service is likely to involve less automation and be more tailored to the needs of the customer

Question 41

What is intangibility?

Answer 41

There is no physical tangible project, which can sometimes make it harder to separate out the different elements of service

Question 42

What is perishability?

Answer 42

A service cannot be stored for future use service companies often have low levels of inventory in their account accounts

Question 43

Where will public sector organisations tend to raise money from?

Answer 43

The central government

Question 44

Where are private sector organisations tend to raise money from?

Answer 44

Their owners

Question 45

Charities are usually funded by what?

Answer 45

Donations

Question 46

What is debt finance?

Answer 46

Mini length from banks requiring interest returns to be paid to the debt investor the level of which is dependent on the amount of risk they face

Question 47

What is equity?

Answer 47

Finance raise from selling ordinary shares will expect higher returns to the risk of business failure

Question 48

Why is long-term finance more expensive?

Answer 48

Due to the higher levels of risk and uncertainty that the investors based over longer periods. However, it is more predictable and assured for the company.

Question 49

What is equity finance?

Answer 49

The investment in a company by the ordinary shareholders, represented by the issued ordinary share capital plus reserves. This can be internally generated funds or new external share issues.

Question 50

What is internally generated funds regarding equity?

Answer 50

Retained earnings arise as a result of a company retaining their profits rather than paying them out to the owner, e.g. informs of dividends

Question 51

What is a good thing about internally generated funds?

Answer 51

Search finance is cheap and quick to raise requiring no transaction costs professional assistance or time delay