Unit 8 Business and the Business Environment M/508/0494 HND Business Level 4

Different types, size and scope of organisations

For-profit, non-profit and non-governmental organizations

The for-profit organizations are the traditional business organizations that provide goods and services to select customers and make a profit from the customer, which is then shared among the people making up the organization (i.e. shareholders). These organizations' objectives are solely centred on the profit and the potential customers of their products or services that mark them as for-profit organizations.

The non-profit organizations are on the other hand are the type of entity set up by a group of individuals under the condition that the organization serves the society in general instead of the selected customer segment (Saunders& Lewis, 2012).Moreover,the profit or loss made by the company is not shared among the specific members of the organization like the for-profit model. The NGO is the similar type of organization that is based onthe same operatingprinciplesbut are not subject to any businessregulations set by the government and theyoperate autonomously as a trust and not a corporation. Therefore, thescope of the NGO is much broader as they concern with all aspect of the society like human rights, social rights and economic issue affecting the society as a whole while the NPO operates within a set boundary in a previously outlined purpose (Sekaran& Bougie, 2016).

Small micro and medium-sized organizations

The size of the organization is another aspect of the operations that can be used to divide the organizations into various categories, which are effective as an internationalstandard for the operations ofthe organizations. While the defining limits forte SME or SMDs are different under different national andinternational organizations this is usually measured by the number of employees in the organization and the overall profit and turnover in any economic year. However, these limits are not especially important as the SMEs outnumber the largecorporations by a huge margin and thus affect the market to a huge degree through competition and innovation in their respective sectors.

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Legal structures

The legal structure of the business can also be used to classify the different businesses as the sole trader, partnerships and the private limited enterprises as they each have different registrations structures under the different legal authorities. The sole trader can be defined as a company that is run by and owned by only one person. The partnerships are similar in structure but the responsibility for running the business is handled by two or more persons. In both cases, the business owners have unlimited liability (Zikmund et al., 2013).

A limited liability company, on the other hand, is recognised as a separate entity fromthe owners or shareholders and thus the shareholders are not personally liable for any actions of the business entity as a whole. Both the private limited and public limited companies fall under structure despite their varying sizes (Johnson, 2016).

The franchise business is the way a person and buys into an existing business and they operate as a part of the organizations in the business format which has been proven in the market and this less risky but also less unique in their operations. Therefore, this has little to do with the size of the business but the format and the business model applied.