Types and Purposes of Organizations in Business Environment

This article explains the different types and purposes of organizations in a business environment, including private, public, and voluntary sectors, and their legal structures. It also discusses the relationship between different organizational functions and how they link to organizational objectives and structure.

Aula, P. and Mantere, S., 2020
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P1 Explain different types and purposes of organisations; public, private and voluntary sectors and legal
structures.
Within a business environment, there are three types of organisations - private, public and voluntary
sectors. The explanation about company’s scope, size, mission and vision are mentioned below -
Private sector organisations
Private sector is known as organisation that is owned by individuals and not governmental bodies.
These organisations operate within market for increasing profit and sales. one of the examples of private sector
organisation is JD Sports (Aula, P. and Mantere, S., 2020).
 Background details of organisation- JD Sports was founded by Jack Cohen in the year 1919. This
is a private sector organisation which conducts operations in retail sector internationally. JD Sports
provides services to people through supermarkets, super stores, hypermarket and convenience shop.
 Products and Service- This company is offering products and services like daily utility products,
groceries, bank, magazine, clothing, etc.
 Vision- The vision of this company is to increase value of products and services and provide high
quality products to consumers. They also want to increase customer loyalty and enhance number of
potential customers.
 Mission- To mission is to develop value for customers in order to earn lifetime loyalty from potential
customers.
 Types-
Sole Proprietorship: It refers to the organisations that are run by individuals for earning profits. It is
known as oldest form of private sector organisation and there are very less restrictions while running these
organisations. The example of sole proprietorship includes Carpenter, Local Grocery store, Tailor, etc.
 Partnership- This is known as agreement that exists between two or more individuals for running a
private business. In context of partnership business, profit and loss has to be beard by both the
partners. Generally, the agreement depends upon shares, authorised capital, ownership and profits.
 Joint Stock Companies There are limited financial resources in joint stock companies. This consist
of heavy load of risk for owners. There are different values for companies which are operating in
joint stock. Board of Director, CEO, Shareholders are main operating partners of joint stock
companies.
 Purpose- The main purpose of JD Sports is to become one of the biggest retailing organisations
across the world. This provides high quality products and services to customers (Bouranta, N. and
Psomas, E., 2017).
 Legal Structure- Corporate governance is the legal structure used in JD Sports. This company uses
the strategy which helps to satisfy demands of all stakeholders.
Public sector organisations
Public sector organisations are those which are ruled by governmental authorities. These are an essential
part of economy. These include industry of public sector consisting of school, electricity, emergency service,
fire services, gas, healthcare and many more. An example of public sector organisation is NHS.
 Background details of organisation- NHS is a public sector organisation of UK that provides health
care facilities to people at low charge. There are four operating systems of NHS including NHS
Business and Business Environment
England, NHS Wales, Health and Social Care in Northern Ireland and NHS Scotland. This organisation was
founded in the year 1948 by Aneurin Bevan
 Products and Service- It provides medical facility to people and ensure that individuals are given
effective treatment.
 Vision- To enhance medical help and promote health, care and value for individuals.
 Mission- To provide good health services to people in need and make them happy.
 Types-
Departmental Undertakings- This is an old public organisation type which is governed by
government. It provides essential services like railways, telephone service, broadcasting, etc.
Public Corporation/ Statutory Corporation- These types of organisations are the ones which are
operated by parliaments, state or central government. The best example of these are Airlines, State back, etc.
Government Company- In this type of organisation, 50% capital is associated with state or central
governance. Moreover, in context of these companies it is seen that government provide effective rules and
regulations to run these (Ferreira, J.J.M and et.al., 2017).
 Purpose- The purpose of NHS is to create enthusiasm among people for promoting health and
care. This includes creating good facility for people in context of medical need.
 Legal Structure- The legal structure of NHS is public corporate. NHS is operating for
improvising medical health and care.
Voluntary sector organisations
This is type of organisation which runs for only social work. the main objective of such type of
organisation is to enhance society’s condition. These are generally non-governmental or non-profitable
companies. Such organisations take funds from national lottery, government, rich individuals, etc. Oxfam
organisation is an example of voluntary organisation.
 Background details of organisation- Oxfam is an organisation which was founded by Cecil
Jackson Cole in year 1942. This company is situated in Nairobi, Kenya. The services offered by
this organisation are mainly for poor people. This organisation wants to remove poverty from
surroundings.
 Products and Service-. This company initiates campaigns for removing poverty among people. It
provides nutritional food, shelter, clothes to those who needs it.
 Vision- To abolish poverty from the world by helping poor and providing them means of income.
 Mission- Mission of respective company is to develop effective solution for injuries, disease and
poverty so that they can change the world and make it effective (Iqbal, Z. and Malik, M., 2019).
 Types-
Unincorporated Association- It is considered as business unit which is developed by considering
group of people who come together for some specific reason other than profit. They didn't need any
types of cost in order to get set up at the marketplace.
Trust- These types of organisations considered as three-party fiducial relationship at which first
party is trustor, second party is for benefits for the third part i.e., beneficiary.

It is generally developed when an individual (Settlor) gives property to some other individual (Trustee).
 Purpose- The purpose of respective company is to help other or society in order to offer them long
lasting solution of injustice in respect of poverty. Along with this, they also want to change the world
and make it better for every person.
 Legal Structure- The Oxfam's legal structure is unincorporated which is setup along by considering
agreement with peoples. They generally conduct their business operations and functions for society
instead of making profits.
P2 Size and scope of different types of organizations
The organisation can be classified in accordance to their size which describes to Small, Micro,
Medium and Large enterprise.
Micro enterprises- It is a small corporate sector with fewer than ten employees and investment
capital and employment levels are low, at less than 2 million in sales. The size of these companies adds value
to the economy that is formed in large numbers in the developing world, where all the needs are met by the
micro-entrepreneurs. The scope of the micro business is wide and covers the activities that need less
technology. This type of establishment is created by developing countries where they have made all the
essential commitments. It adds value in the economy by creating improved income opportunities and growth
by decrease business expenditure. It creates the income opportunities and growth by lowering business costs. A
suitable example is Oxfam organisation. The size of this organization is 7550 employees and 28 locations in
1st place among the competitors. It has a low investment cost, but seeks to work with big corporations to
eradicate cancer around the world by working in all areas for social causes.
Small enterprises- This organization includes up to 50 employees with a turnover of 10 million. It is
owned by an independent corporation with a small number of employees looking to improve the business over
the long term. employees looking to improve the business over the long term. Scope These are private
corporations working in partnership owned by sole proprietorships who have the ability to vary the size and
structure of income. It encompasses the sources of entrepreneurial competence, innovation and the areas of
economic activity. NHS is a suitable example. The national health services have a workforce of 1.3 million and
employ about 112 thousand different doctors. The organization's vision and mission are to enable people to
live healthy lives and to provide high quality care to all members. The NHS assists in providing services and
caring for families, or aids in improving health as well It seeks business improvement by increasing sales
volume that keeps partnering with other companies to achieve the goals (Linder, M. and Williander, M., 2017).
Medium and Large enterprises- In this organization, growth is increased by working as volunteer
members and multinational bodies. The number of employees is 250 or more with annual sales of 250 million
or more. The scope of the organization includes the multinationals that aim to generate huge income as part of
the government. For future development, a certain reserve in the form of capital is created, which is reserved
for the internal aspects of the company. The appropriate example of can be taken of JD Sports which is an
sports fashion company dealing in sportswear and clothing. It has 34885 employees working worldwide and
listed in London stock Exchange. The working company is not for profit and works its channels to help
customers through loans and advances. It has the advantage of flexibility and close relationship with
customers, but is also faced with the difficulty of funding and retaining customer loyalty. Employee training is
supported by the government.
P3 Relationship between different organisational functions and the way they link themselves to
organisational objectives and structure
The organisational structure is defined as the procedure followed within organisations for assigning
and supervising different roles and responsibilities of the company.
This helps in smooth functioning of business operations and activities. There are different
departments present in an organisation (Munemo, J., 2017). They all are linked together and help in attaining
organisational goals effectively. Following is detailed information about functioning of different
departments present in JD Sports and how they work together for attaining goals-
 Finance Department – This department in a company helps in managing and controlling all cash
related issues. The main objective of this department is to manage budgets for different campaigns
and operations that are run by the company. Within JD Sports finance department handles
budgeting, costing and financial forecasting. This department manages funds and budgets that is
needed by other departments of JD Sports like marketing, operational, human resource, etc.
 Operations Department – The operations department of JD Sports is involved in ensuring
packaging and manufacturing related process. This department takes care of delivery that all
products are provided to customers on time. This department has to ensure that products and
services offered by the company are of high quality. Quality assurance is the major factor of
operational department. It is taken care that auditing and product development is done properly.
 Marketing Department - The marketing department of an organisation takes care of promotion
and advertising of products and services offered by the company. This is a special team that has to
ensure consumer behaviour and provide products and services accordingly. This department also
evaluates strategies used by competitors and develops more effective strategy for JD Sports.
 HR Department – The HR department of JD Sports is involved in managing all issues related to
workforce of company. Recruitment and selection are two essential functions that are focused
upon more in JD Sports. There is basic responsibility to hire only talented and skilled employees
so that goals can be attained in less time. The HR department of JD Sports also emphasises upon
managing employee relation within workplace. This is helpful for avoiding conflicts and attaining
assigned goals easily (Yan, J. and Yan, L., 2017).
Finance and Operations Departments – The finance and operations department is involved in
managing coordination for attaining organisational goals. Finance department of the company provides
budgets and funds to operational department in order to complete the activities and tasks. In JD Sports,
operational department requires money for developing payment machines, delivery process, supply chain,
etc. For all this, there is need to have proper funds and budgets.
Marketing and HR Departments – The marketing and HR department are interrelated and they
work together for attaining goals. The human resource department of JD Sports hires skilled employees who
can manage the operations effectively. On the other hand, marketing department deals in developing good
marketing plan. HR managers are given information about the skills needed in new marketing professionals.
They use this information in producing advertisements.