Types, Purpose, and Structure of Organizations: A Comparative Analysis

This report provides an overview of different types, sizes, scopes, purposes, and legal structures of organizations, with a focus on three real organizations in the UK. It explores the relationship between organizational functions, objectives, and structures, and offers a critical analysis of the complexities involved. The organizations discussed include the National Health Services, JLP Group, and the National Trust.

Running head: BUSINESS AND BUSINESS ENVIRONMENT
Business and Business Environment
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Executive summary
Organisations are of various types and have different purposes. There are public, private and
voluntary organisations, and at the same time, there are for profit and for non-profit
organisations. This report gives an overview of the different type, size, scope, purpose and legal
structure of organisations, with the explanations of three real organisations in UK, namely, the
National Health Services, JLP Group and the National Trust. This report also illustrates and
compares various aspects of the relationship between their organisational function, objectives
and their structures.

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Introduction
Organisation refers to a group of people working together for achieving a particular
common goal or purpose, such as, governmental activities or business or community work (Pittz
et al. 2017). Organisations are of various types and they all have different purposes. The
structures of the organisations are also different with distinct functionalities. This report will
highlight different aspects of three types of organisations with real examples and will explain the
relationship of the organisational functions with its objectives and structure. It will also present a
critical analysis of the complexities of the relationship.
Discussion
There are three major classifications of organisations, namely, public, private and
voluntary. These organisations also operate with different types of motives such as for profit and
for non-profit. As the names suggest, public organisations are dedicated for public services and
those are mostly government organisations. The private organisations are under private
ownership and they follow mostly profit motive and the voluntary organisations are mostly
charities, which can be non-governmental organisations working for non-profit (Manuel 2015).
Thus, these organisations also have different type of legal structure as per their operation type
and objectives.
Types and purpose of organisations: Public, private and voluntary
The purpose of public organisations is to serve the public of the nation than to increase
sales and profits. Thus, the public sector organisations mostly focus on providing good service
for the betterment of the entire community than to target some sections of the society and make

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profits (Nikolova 2015). For example, National Health Service (NHS) in the UK is a public
sector organisation. It is a publicly funded healthcare organisation that was established in 1948 to
provide the highest quality healthcare services to the citizens of the UK and also to the visitors. It
is also the largest healthcare institution in the UK (Nhs.uk 2018). As the organisation is funded
by the government, it operates under the Department of Health and Social care. Hence, the
purpose of this organisation is not to make profit but to the serve the people of the country with
the best and affordable healthcare so that the nation gets healthier citizens.
On the other hand, the private sector organisations operate with the motive of earning
profit to survive. The private organisations provide goods and services to the clients with the aim
of earning revenue and substantial profit and hence, they compete against their competitors by
employing various means (Bolman and Deal 2017). Thus, the private organisations mostly
operate for profit. John Lewis Partnership is a Private Limited Company in the UK, operating in
the retail sector. It is owned by a trust, on behalf of the employees, who are known as Partners.
They are shareholders of the organisation and thus, receive a portion of the annual profit. The
JLP Group is one of the largest private companies in the UK by sales as of 2016 and thus, its
purpose of business is to make profit. It competes in the market quite aggressively to capture the
target market. As a private limited company, the profits of JLP Group are subject to corporation
tax of 19% to the government. This tax rate is lower than that for sole trader or proprietorship for
individuals (Johnlewispartnership.co.uk 2018). Thus, the private limited companies are legal
entities in their own rights and the assets of the company and the owner are separate. These have
protection from the personal liabilities and hence the risk of losses is reduced, and these also
have added credibility in the market. These organisations also have a constitution to guide the
shareholders and directors.

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Lastly, the voluntary organisations, as the name suggests, are the organisations which are
independent, autonomous, democratic and non-profit. These organisations work for the welfare
of the society and governed by themselves only (Shafritz, Ott and Jang 2015). The membership
is also voluntary and there is no external control. Majority non-governmental organisations
(NGOs) fall under the category of voluntary organisations. These work with a non-profit motive,
and operate mostly with donations and charity funds. Voluntary organisations are mostly focused
towards performing welfare activities for the communities. These organisations are not taxed as
they do not have any fixed earnings and profits. For example, there are many large voluntary
organisations in the UK and one of such organisation is the National Trust, whose annual
expenditure for the welfare activities were £450 million in 2011-12 (Data.ncvo.org.uk 2014).
The organisation was established in 1895 with the purpose of preserving the places of historic
interest or the natural beauty of the regions of England, Northern Ireland and Wales. The
National Trust is headed by H.R.H. The Prince of Wales and is privately funded. As of 2014-15,
it had 5899 staff members and 62,000 volunteers and earned revenue of around £494 million
(Nationaltrust.org.uk 2018). Being supported by the royal member, the trust was able to gain
many large donations, membership subscriptions, and bequests and over the years, the members
voluntarily came forward to protect the heritage places. Unlike the other two types of
organisation, the voluntary organisations, like, the National Trust, are completely governed by
the trustees and also operates independently.
Size and scope of organisations
There are various types of sizes and scopes for the organisations, such as, micro
enterprise, SMEs (small and medium enterprise), large scale, global or multinational etc. Size of

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the organisations is decided by its number of employees, number of owners and/or shareholders,
its market share and the legal status (Goffee and Scase 2015). For a micro organisation, the usual
staff headcount is less than 10 employees with a turnover of less than EUR 2 million, for a small
organisation, the headcount is usually less than 50 with an annual turnover of less than EUR 10
million and for the medium-sized enterprises, the employee count is generally less than 250 with
a turnover of less than EUR 50 million (Roche 2016).
In the case of above mentioned organisations, that is, National Health Services (NHS),
JLP Group and National Trust, all of these are large scale organisations, as the number of
employees are more than 250 in each and the annual turnover is also far more than EUR 10
million. Although these organisations belong to different types of operations, yet, none of these
are micro or small or SME.
Scope of organisations refers to the role, range and nature of the business. Sole
proprietorship, partnership, joint stock company, limited companies are some of the
organisational scopes that is widely used. A sole proprietorship is owned and controlled by a
single person and hence is personally liable for debts, profits as well as loss of the business.
These are mostly small and medium scale organisations. Partnerships are collaborations between
two or more parties with joint responsibility and there are formal guidelines about how the
profits are to be distributed. There is unlimited as well as limited liabilities where there are
limitations about the responsibilities of the partners. Under joint stock companies, the scope of
the organisation is quite wide and also complicated. There are defined rules about the duties,
responsibilities and operational procedures in this type of organisations. Lastly, for the public
and private limited companies, the shareholders have some control on the business. The scope is
much wider for these limited companies (Scott 2015).

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In the above example, as all these organisations are large in size, its scope is also wider.
NHS operates in the public health care sector and the scope is much larger. JLP Group operates
in the private retail sector and one of the largest companies in the UK in terms of scale of
operations, employee strength and profits. Lastly, the National Trust is operating in England,
Northern Ireland and Wales, with a large number of employees and volunteers and hence, it also
quite a large scope.
Relationship between different organisational functions and their link to the objectives and
structure
As stated by Haigh et al. (2015), organisational structure is of various types, such as,
functional, divisional, and matrix. These structures help the organisations to define their job
profiles and responsibilities. Using the organisational charts, these structures represent the
organisational functions, which are mostly designed to accomplish the organisational objectives.
In a functional structure, separate departments have one higher authority and the departmental
divisions are based on functions. Under divisional structure, each of the company divisions
works as a separate independent company. Matrix structure creates various interrelated divisions
within the organisation. The functions of the organisations are reflected in the organisational
structure.
For example, in the public and voluntary organisations, the organisational functions
include services, while the private organisation is involved in goods manufacturing and retailing.
However, in all these organisations, the functions are undertaken to fulfil the organisational
objectives. Organisational functions include production, financial, administrative, sales and
marketing, and research and development. NHS is engaged in service production and related

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financial, administrative and marketing functions. JLP Group is engaged in all the above
mentioned organisational functions, while the National Trust is engaged in service and research
and development of the conservation techniques in three different regions. Thus, it can be said
that NHS and JLP Group follow the functional organisational structure while National
Trust follows the divisional structure as per their organisational operations and objectives.
Critical analysis of the complexities of different types of business structures and
interrelationships of different organisational functions
For a critical analysis of the organisational structure and interrelationships between the
functions, the National Trust of the UK is chosen below. As stated earlier, it is a voluntary non-
profit non-governmental organisation. Although over the years, the scale and scope of this trust
has expanded considerably, yet the organisational functions remained same, that is, conservation
services to the historic places across three regions, England, Wales and Northern England, and
conducting fund raising activities. The organisation thus follows the divisional organisational
structure which has geographic divisions. It has three distinct divisions to handle the functions in
three different regions. Under this structure, there are horizontal divisions. The organisational
structure for the National Trust is shown in the image below.

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CEO/Director
Divisional: Geographical structure
England Division Northern Ireland
Division Wales Division
Services Promotion/Fund
Raising
Services Services
Promotion/Fund
Raising
Promotion/Fund
Raising
Figure 1: Divisional organisational structure
(Source: Author)
It can be said that this structure is different from the other structure followed by the other
two organisations, that is, NHS and JLP Group. These organisations have multiple departments
and each has their own independent responsibilities. Thus, there is a higher authority, such as,
CEO, to whom the supervisors of other departments report. Each of the department, such as,
production, finance, administrative and marketing, have their own independent operations, which
is monitored and controlled by the supervisors of those particular departments and they report to
the highest authority. This is the functional organisational structure (Shafritz, Ott and Jang 2015).
Under geographic division, each of the functions exist under each of the regional
division, such as, services and fund raising programs are undertaken under each of the regional
division of the National Trust, while under functional structure, the division of the departments is

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done on the basis of their functions, like, productions, sales and marketing, administrative etc.
and under these main classification, each of these departments have same functional operations.
Conclusion
From the above analysis, it can be concluded that there is a direct relationship between
the organisational functions and its objectives and structures. The functions are based on the
organisational objectives and on the basis of the functions, the structures are designed. In the
example of the NHS, JLP Group and the National Trust, it is seen that each of these belongs to
three different categories of organisation and perform different functions with different
objectives. Thus, they follow different type of structures that help them to fulfil the objectives in
the optimum manner. While the private and public sector organisations follow the functional
structure as they need to focus on different types of activities and objectives, the voluntary
organisation needs to monitor same functions and objectives across three different regions, and
hence, follows the divisional organisational structure. Thus, these concepts are interrelated and
have significant impact on each other.

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