Size and scope of organisations | My Assignment Tutor

1Session 4: Size and scope of organisations (P2- part 1)Prepared by: Dr Gilbert Zvobgo 1P2: Explain the size and scope of a range of different typesof organisations.Dr Reza AboutalebiAlthough there are millions of organisations in theworld, they can be categorised into four groupsbased on their sizes.In the European Union and many other countriesorganisations may have one of the following sizes: Micro Small Medium Large21 22There are three possible ways to measure sizeof an organisation. We can use one or moreof three measurements: Number of employees; Turnover (annual sales volume); Size of the balance sheet (a financial statementthat summarizes a company’s assets, liabilities andshareholders’ equity at a specific point in time).3Types of organisations based on their sizeDefinition of Micro, Small, Medium, and Largeorganisations: Micro firm: 1-9 employees; Small firm: 10-49 employees; Medium firm: 50-249 employees; Large firm: over 250 employees.43 43 Small company is an independent business withlimited size that managed by its owner or part ownersand having a small market share. Small to medium-sized enterprise (SME) is anorganisation that can be either micro, small, ormedium-sized.5 Framing rules, policies and procedures. Helps in determining the resource requirement. Provides direction to the activities. A set of well defined objectives enable a firm to assignduties to the employees Provides the basic for measuring and evaluatingemployee performance Justifies the existence of a company6Business Objective is “a specific result that an organisation aims toachieve within a time frame and with available resources”.5 64Common business objectivesMaximiseProfitTo SurviveTo grow insizeTo increasemarketshareTo increaseSaleTo gain agoodreputationto maximisecustomersatisfaction7Common Business Objectives ObjectiveWhat does it mean?To surviveAt first it is important that the business is kept alive. It might not bemaking any profit, but the costs aren’t too high either.To increase sales(turnover)Businesses often want to increase the amount of money that they receivefrom selling their product to the customers.To maximiseprofitsTo make as much profit as possible, which is the reward for taking risks.To increasemarket shareAll of the businesses in a particular market can claim a percentage of thesales in that market. Many businesses aim to increase the percentage ofsales that they are responsible for.To growOver time, a business will look to expand. It might do this by opening newbranches, or by broadening it’s product range.To gain a goodreputationWord of mouth is one of the most powerful forms of advertising for smallbusinesses, and it is important that customers think highly of theirbusiness so they will return, and tell others to visit too.To maximisecustomerssatisfactionBusinesses want to increase the number of customers who use theirbusiness. This may mean attracting brand new customers, and trying tosteal customers from their competitors. 87 859Objectives of organisations with different sizes Objectives of Micro organisation: gathering family members/friends, being own boss Objectives of Small organisation: implementing new idea, jobcreation for relatives Objectives of Medium organisation: serving niche market,increasing sales Objectives of Large organisation: profitability, growth, marketdominationAlthough some of the objectives are similar among all organisations,some other objectives may be depend on size of the organisations.In other word, some objectives can be more common between smallorganisations while other objectives may be common betweenmedium or large organisations.Scope of an organisation is about the territories(cities, counties, or continents) that are covered bythe organisation. Where does a company do itsbusiness?One way to determine the Scope of one company isdividing the company’s territories into four parts: Local (doing business in one town or city in one country) National (doing business in all/many parts of one country) Transnational/International (doing business in two ormore countries) Global (doing business in many countries in all continents)109106• Transnational Corporations (TNCs) are private firmsthat have established branch operations in nationsforeign to their headquarters’ country. Also known asmultinational enterprises (MNEs).• TNC is a company that has operations in more than onecountry to produce or sell products and services.E.g. Tesco, IKEA, Costa CoffeeScope of organisation: Transnational Corporation11 Advantages of TNCs locating in a countryinclude:◦ creation of jobs◦ stable income and more reliable than farming◦ improved education and skills◦ investment in infrastructure, eg new roads – helpslocals as well as the TNC◦ help to exploit natural resources◦ a better developed economic base for the country121112

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