Scenario Choose different organizations of your choice(Private, Public, Government, Cooperative, Voluntary) and understand their type of business, nature of business and the section of the society that they cater to, different stakeholders of the organization.
Based on your understanding of their nature, answer the following question:
- Identify the purposes of different types of organization. (AC 1.1 : Identify the purposes of different types of organization)
Answer:
Business Organizations can be categorized into many ways i.e. on basis of sector, size, ownership & work domains. For sake of our study we will look into sector wise division; which is as below:- - Private Sector Organizations
- Public Sector Organizations
- Civic or Third Sector Organizations
To have a deeper and better understanding of the various sectors and the types of organizations in each; I would like to define each and give its purposes served.
Private Sector Organizations: In this sector; organizations are governed and owned by individuals or families as opposed to government. They are financed from various sources like Bank loans, Shares, Personal Savings of owners, Credit from creditors etc.
Examples: Partnership firms & Sole traders which have unlimited liability, Private or Public Companies which have limited liability, Franchises which in a brands business conducted by someone else in lieu of a licence fee to the brand parent etc.
Purposes:- - Earn maximum profits for the owners.
- Maximize sales turnover.
- Increase its growth rate over the time and make room for further expansions.
- Increase its market reach and market share.
- To create economic output for development of society, country and its users.
- Create employment.
- Innovate and lead to progress.
- Effectively utilize the resources.
- Follow Fair Trade practises and maintain its Corporate Social Responsibility.
Public Sector organizations: In this sector the organizations are governed and owned either totally or partially by the state, central, federal governments. The purpose of such organizations is to provide benefits and add value to lives of the people of nation. Most of these would be financed by the money coming from taxes paid by public to government and also from money invested by general public in shares of these companies where majority of shares will be held by government itself e.g. In case of Dubai Islamic bank in UAE where Government holds 30 % shares and no other individual is allowed to hold majority shares to himself. Government Organizations are owned and managed by government officials completely. The purpose of such an organization is to aid government with funds, have full control and smooth working of fundamental requirements in general, provide jobs, lead to economic development and serve the society. Examples:- Defence, Roads, Public transport services, Health services for poor, Postal Services, Police, Prisons, Social services, Government Schools & Universities, Parks, Libraries, etc.
Purposes:- - To cater for basic and essential services to all at minimal or zero pricing.
- To use the resources fruitfully for the advantage of economy.
- To provide employment to society.
- To enable economic development.
- To avoid any exploitation of customers.
- To protect and have control on key operations of economy.
- To avoid misuse of resources.
- To provide for services which are fundamental but not highly profitable and hence not taken care of by private companies?
Civic Sector or Third Sector organizations: Includes Non-Profit Organizations, Voluntary organizations, Cooperatives etc. These are not owned or governed by an individual; instead they are formed by group/s of individuals sharing common belief and will; to work towards a common motive with profit sense not being the primary motive. In this form of business profits and losses will be shared amongst the members as per their patronage or contribution. The members in such organizations elect and appoint the director/s or person responsible for overall operations. They get financed generally from the grants, Donations, Fund raising campaigns etc. They survive by spending only as much as the limit to which they received from their sources.
The International Co-operative Alliance (ICA) defines a cooperative as "An autonomous association of persons united voluntarily to meet their common economic, social, and cultural needs and aspirations through a jointly owned and democratically controlled enterprise."
Examples: Cooperatives formed for providing public services like Healthcare, Education, Transportation, Banking, etc. Cooperatives working for commercial activities like marketing, retailing, entertainment. Cooperatives working for basic utilities like waste management, credit to farmers, Insurance providers, electricity providers, Housing Cooperatives etc.
Voluntary Organizations: organizations working on self volunteering basis which may or may not be profit driven instead are cause driven mostly. They aid a cause and also enable other organizations to work smoothly and effectively. Example of Voluntary organizations: Trade Unions, Religious Groups, Environmental Groups, Oxfam group ensuring Corporate Social Responsibility of various companies
Purposes:- - To help particular section of society.
- To work towards a cause for betterment of society or living standards: like cancer research projects.
- To aid other organizations in their smooth operations.
- To work for and to support self interests of its members.
- To bring in a change or introduce relief programs in community.
- To provide services or perform functions that is required by the community; but is not being taken care of either private or public sector organizations.
- To bring awareness amongst community in respect of a cause.
- To provide a platform for people to join and act on a cause that they feel for but due to lack of proper medium and platform they ignored their feelings for the cause.
For the questions given below(1.2 & 1.3), work upon the organizations that you had chosen for the AC 1.1, identify their respective stakeholders, objectives of different stakeholders, responsibilities of the chosen organization and the strategies that they employ to meet their responsibilities and based on your chosen organizations answer the following :
- Describe the extent to which your organization meets the objectives of different stakeholders. (AC 1.2: Describe the extent to which an organization meets the objectives of different stakeholders).
Answer :
Stakeholders: - They are people or groups of people that can influence and are interested in organization’s working system, culture, practices, inputs and outputs.
Internal Stakeholders: - Includes people of business or are people working for the business betterment and growth. E.g.: Owners, Board Members, Managers, Executives, Employees, Investors and Trade Unions. As we can see from the examples listed that these category people are directly affected by or affect business operations and success of business is of importance and benefit to them. For e.g. Owners are interested in prosperity of business to be able to get more profits. Employees are interested in better business health for job stability and timely salary and so on.
External Stakeholders: - They have their interests in company and they are influenced by company’s actions and outcome and also they have the influence over the company. They are not the insiders or directly involved people in a company e.g. Customers who have interest in good quality products to satisfy their needs and at the same time price should be reasonable. Government is interested in company for giving return to economy in terms of employment and taxes. Suppliers are interested in long term relations with a company so as to be able to gain out of transaction between both parties.
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Objectives of stakeholders: Desirable outcomes from the view point of stakeholders. These objectives give guidelines and direction to the organizations. The extent to which the organization meets these objectives can also used as parameters to evaluate its success and sustainability rate and can also lay targets for organization which may have been missed or overlooked.
In order to answer the question it is essential to follow three steps given below:
- First identify the various stakeholders of the organizations picked for research work; which by far are common with few exceptions.
- Thereafter we need to work out the various interests or objectives that these stakeholders have.
- Then finally we will outline the extent and ways through which the organizations meet the objectives of its stakeholders.
Below I have outline the stakeholders in general, their objectives and the extent to which the organizations go to meet their objectives:
- Investors, Shareholders: they are the people investing their money as well as peace of mind in the organization and would in return want maximum profits, return of their investment with profit for further investments and timely dividends. In order to meet their objectives the organizations need to work with full capability and should also provide information like financial statements, to them as to progress of work and achievement expected.
- Owners: In case of private organizations they are generally individuals or families or shareholders; looking for maximum growth and returns if it is a profit oriented company and if it is a non-profit organizations then the sole objective could be achievement of mutual interest and cause. In case of Public sector government and shareholders would be expecting fair returns to income as well as prosperity of community and optimal use of resources. In voluntary organizations the owners are generally members working towards a common cause which may be profit oriented or non-profit oriented. That cause is their objective.
- Directors, Managers and other Employees: They are the internal stakeholders of an organization who impart their skills and expertise in order to accelerate the organization. They all expect growth and healthy profitable progress of company to be able to get constant employment, promotion opportunities, timely salaries, bonus, retirement benefits, status, power and also achievement of their financial, social and emotional security. The organizations need to be able to prove its stability and sustainability in order to provide for objectives of this group of stakeholders. Timely salaries and due promotions and motivational perks enable an organization to meet objectives of this group of stakeholders.
- Financers and Lenders: They are interested in organizations healthy and profitable progress in order to be able to get back their investments and interests. To satisfy the objectives of these stakeholders the organizations should work with integrity and to maximum potential. Besides this the organizations should present to its financers the real progress of the organization and should not cheat their trust.
- Suppliers and creditors: Their objective is to be able to make business with concerned organizations, to have frequent transactions for their own growth and also to be able to receive their dues as per decided terms. To be able to meet their objectives the organizations should keep up with fair and healthy trade so also keep the lenders, creditors informed of its progress to attain trust and confidence from their side.
- Clients and Consumers: They expect fair trade practices to be followed as well as reliable, cost-effective and safe goods or services that can satisfy their requirements. To be able to meet such objectives the organizations need to be able to forecast, produce and make available such goods and services and also follow fair trade practices and pricing in order to keep this group satisfied and attached with organization. Acts of fraud and deceit should be avoided like misleading advertisements, fake promises, etc.
- General Public: They need to be able to have a secured and healthy environment to live in. Companies need to follow their Corporate Social Responsibility to be able to satisfy the general public. Also some contribution to the local communities would enhance the organizations image and reach to general public and create trust and bond for a progressive future. This could include proper waste management techniques being implemented, fair labor treatment, donations for benefitting cause of society, creation of employment opportunities without discrimination, etc.
- Government: This group of stakeholders may be directly or indirectly governing the organization; as in case of public sector. In private and other sectors as well; this group of stakeholder is looking forward to ensure that all organizations follow the rules and regulations; laid out by government of land; as well as make optimal use of resources and not exploit any scarce resource in benefit of its own self alone. Beside this they also look for employment opportunities created and payment of taxes by organization’s which helps progress of nation in whole. For achieving the objectives of this group the organizations need to work within the rules and regulations framework of the land and also should keep in mind to work with integrity and full honesty in benefit of not just itself but for all in general.
- Trade Unions: This section of stakeholders aim to achieve reasonable salaries for workers, decent working conditions with threat coverage; if any involved in job and security of jobs. The organizations of all types need to look into this aspect by themselves and should also try to find ways and negotiate with trade unions for its progress and continuous & smooth flow of work.
Stakeholders come from various backgrounds and have varied objectives. For an organization to fulfill these objectives; is an ideal and essential task but at times maybe difficult due to various factors acting upon an organization for e.g. environmental factors, conflict of interests, social factors, economic factors, political factors, religious and communal beliefs etc.
The extent to which; an organization satisfies or achieve objectives of its various stakeholders is the indicator of its strength, performance, growth and sustainability. An organization that is able to satisfy its stakeholders to maximum level is able to survive and grow in long run.
- Explain the responsibilities of your chosen organization and strategies employed to meet them. (AC 1.3: Explain the responsibilities of an organization and strategies employed to meet them).
Answer:
Responsibilities of an organization: Every organization has to satisfy certain responsibilities towards its stakeholders in order to achieve its goals and follow it vision. In order to do so once responsibilities are laid out; then, the strategies should be laid out that need to be employed to realize a responsibility.
Strategies: An outline or approach followed by an organization in order to achieve its targets and realize its responsibility. It may require use of certain resources.
Following I have outlined the responsibilities of an organization and the strategies employed to meet them:
- To provide quality, cost-effective, reliable & safe products and services to consumers.
- To ensure the above, organizations employ good manufacturing practices for quality assurance and economies of scale; as well give guarantee and warranties along with products or free trials of services.
- To work with integrity and honesty.
- Organizations need to follow a code of conduct and also ensure that no overstated or false marketing stunts are undertaken to mislead its consumers.
- To provide its workers with safe, amicable work environment and also payment of wages as per the standards of economy and industry.
- Organizations should follow fair work-practices and also ensure for health and safety of its workers. It should have contingency plans for hazardous work situations involved in any process. Also insurances should be mandatory from company side; for such environments.
- To have a fair recruitment process to avoid partiality and denial to any applicant on basis of unfair recruitment practices. This process should ensure that there is no room for any discrimination due to religion, gender, age, nationality, minor disability, etc. The eligible candidate should have a fair chance to be recruited and all employees should get same fair work environment.
- To enact on Corporate Social Responsibility. Organizations should take inspiration from and implement its own corporate social responsibility charter and follow it. It lays out certain pointers as: no threat to environment nearing their manufacturing units or service areas, fair wages and treatment to labor, avoid usage of harmful chemical or substances in their product like harmful addicting agents or preservatives, organization should take due care of properly disposing its wastes in environment with no threat to lives and surroundings etc.
- To be Ethical in its trade practices. To honor this; the organizations should adhere to fair trade practices at all times and should avoid engaging in false marketing stunts or should not overstate its product or service in public or make any false commitment which it could fail to fulfill. At all times safety, quality and cost-efficiency should be taken care of.
- To make available it’s honest Financial Statement for knowledge of its shareholders, auditors, government and other interested parties. Organizations need to be honest enough to declare their true financial position to all its interested parties in order to show its true performance level and to be able to achieve trust and goodwill in return.
- To deliver proper and timely service and solutions to its customers. Organizations need to hire and train their staff to be able to satisfy customers especially those with complains and dissatisfaction level. There should be clear protocols for handling common complaints and at the shortest possible time to avoid discomfort or mistrust of any customer.
- To win its market share from its competition or to be able to offer better and timely services. To achieve same the organization needs to first identify the factors that differentiate it from its competition and vice versa. Thereafter it can employ resources and make strategies to overcome its weakness for e.g. inclusion of latest technology for efficiency and economies of scale, training of current staff to upgrade its current work performance, etc.
In conclusion it can be stated that Organizations that achieve its responsibility efficiently have dynamic leadership, strategies, vision and direction. Organizations that uphold and fulfill its responsibilities uphold their reputation which is HARD TO WIN BUT EASY TO LOOSE.
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