ACCA F1 Revision notes section 1
Definition of organization
“A formal group of people pursuing similar goals in the presence controlled systems”
Types of organizations
Commercial
Not-for-profit
Public sector
Non-governmental organizations
Cooperatives
Commercial
Profit is the main objective.
Other objectives
– Survival, growth, market share and development
Example: companies and partnerships
Not-for-profit
Profit is not the main objective
The main aim is to satisfy needs of the members
Example: schools, hospitals and charities
Mutual organization is a type of NFP
Mutual organization
Voluntary not-for-profit associations formed for the purpose of raising funds and providing services to all members of organization
Example: building societies and trade unions.
Public sector
The sector which operates for the welfare of the people
The main aim is not to make profit but to provide services like:
Defence
Education
Roads
Non-governmental organizations (NGO)
These are non-governmental organisations which operate for the social welfare of the people
They are not associated with the government
Cooperatives
It is a business organization owned and democratically operated by a group of individuals for their mutual benefit
Example of cooperatives
Retailers’ cooperative
Worker cooperative
Consumers’ cooperative
Ways organizations may be structured
Entrepreneurial
Functional
Matrix
Divisional
Departmental
Geographical
By product
Entrepreneurial
A structure for small businesses
Entrepreneur is providing a unique product or service
Decision making by 1 or 2 people
Quick decision making
Entrepreneurial
Advantages
Quick-decision making, goal congruence control workforce
Disadvantages
No career opportunities, lack of ideas and if organization grows difficult to maintain authority over employees
Functional
Oganization is structured according to functions.
A structure for small businesses with different products
Functions:
Marketing, Production, Personnel,Purchasing
Functional
Advantages
Economies of scale, career opportunities, standardisation
Disadvantages
Cannot cope with growth, conflict between functions and slow decision making, inability to change
Matrix
A structure where people from different departments work together to fulfill a specific purpose
The normal departmental boundaries have to be crossed
Matrix
Advantages
Quick decision making, coordination, economies of scale
Disadvantages
High costs, time consuming meeting, dual command or authority( 1 person might have to bosses)
Divisional/departmental
Organization is structured according to department or division. Divisions are considered profit centres.
Each division has functional structures
Divisional/departmental
Advantages
Able to cope with growth and diversification, better strategic planning, determine efficiency of divisions
Disadvantages
Lack of goal congruence/equivalence, loss of control, specialists not given accreditation or motivation, conflict between divisions
Geographical
An organization is structured according to the location
Areas: eastern area, western area northern area and southern area
Geographical
Advantages
Can cope with growth, better strategic decisions, determine efficiency profitability
Disadvantages
Specialists ignored, duplication and allocation of costs
Main departments in a business organization
Research and development
Purchasing
Production
Direct service provision
Marketing
Administration
Finance
Research and development
Invention of new products
Development of existing products
Create products which meet the consumer demand and are economical
Purchasing
Buy the raw materials
To buy it at the lowest price
Make sure that sales are not lost due to inadequate raw material
Production
Produce goods when they are needed
Maintaining and monitoring stock levels
Providing best quality with lowest cost
Direct service provision
This service is often referred to as DSP
Providing assistance to customers
Marketing
Determine and provide the good/service clients needs or wants
Develop marketing goals and strategies
Conduct market research
The 4 ps
Pricing, Promotion, Product and Place
Administration
Coordination
Support
Smooth management of business on every day basis
Finance
Preparing budget
To meet financial reporting requirement
Arrange funds/capital
To provide financial services
Levels of planning
Strategic planning
Tactical planning
Operational planning
Strategic planning
It is long term planning
Plans to attain objectives
Focuses on the entire organization
Usually done when a new product or business is started
Tactical planning
Medium term planning
Actions to implement the strategy
Focuses on a department
Done for a running business or product
Operational planning
Short term planning
Mainly concerned with the controls
Focuses on subtasks which are to be performed
Marketing in an organization
Definition of marketing
Satisfy needs of consumers and try to achieve organization’s goals
Marketing mix (4 Ps)
Product
Price
Place
Promotion
Relationship of marketing plan to strategic plan
A marketing plan cannot be constituted if strategic plan has not been made
Strategic plan is the first step to make marketing plan
Strategic plan points out the strengths and weaknesses
Separation of ownership and management
Ownership and management of large organizations is separated
Shareholders appoint directors who run the organization keeping in view the interests of shareholders
The directors and managers have to depend on shareholders for the capital required
Span of control
Span of control
Number of people who directly report to a superior in a hierarchy
The number of people for whom a manager is directly responsible
Scalar chain
Scalar chain
Chain of superiors ranging from the highest rank to the lowest rank
Line of power
Tall and flat organization
Tall organizations have a narrow span of control
Flat organizations have a wide span of control
Centralization
Higher level of management takes the important decisions
Little or no delegation of authority
Centralization
Advantages
Quick and authoritarian decision making
Decision taken by the experienced leaders
Disadvantages
Demotivated workforce
Unable to address operational issues
Decentalization
Lower level of management takes the important decisions
There is delegation of authority
Decentralization
Advantages
Motivated workforce
tackle operational issues
Disadvantages
Conflict over the decisions
Decisions taken by inexperienced workers
this notes is very easy to understand and i want model paper to the acca