The Purpose and Types of Business Organisation

Learn how organisations are formed, how they differ and how to classify them accurately.

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Learning outcomes

Define a business organisation.
Explain why organisations are formed.
Describe the common features of organisations.
Explain how organisations differ.
Identify the sectors in which organisations operate.
Distinguish commercial, not-for-profit, public-sector, non-governmental and cooperative organisations.
Classify organisations using control, purpose and activity.
Apply these classifications to fund-administration scenarios.

Score at least 80% and explain every major classification without looking at your notes.

Mark each section as you work through it. 0% complete.

1. Business organisations: meaning and purpose
What an organisation is, the input–process–output model and why organisations are formed.
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2. Common features of organisations
The seven features shared by all organisations and how success is defined differently.
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3. How organisations differ
Eight points of difference and the three-axis classification method.
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4. Sectors of business activity
Primary, secondary and tertiary activity, plus the private, public and third ownership sectors.
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5. Commercial organisations
Purpose, income sources, performance measures and beneficiaries of commercial organisations.
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6. Not-for-profit organisations
Mission-led organisations that may earn a surplus but reinvest it.
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7. Public-sector organisations
Government ownership or control, funding and the three Es of performance.
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8. NGOs and cooperatives
Independence from government versus member ownership and mutual benefit.
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9. Legal forms
Sole trader, partnership, limited company and cooperative — plus who owns and who directs.
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10. Fund administration application
Applying control, purpose and activity to a Luxembourg fund-services scenario.
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Distinction	What actually separates them
Public sector vs public company	Government control versus a company ownership or share concept.
Not-for-profit vs no surplus	A not-for-profit may generate a surplus but normally reinvests it.
NGO vs public-sector body	An NGO is operationally independent of government.
Private sector vs tertiary sector	Ownership or control versus economic activity.
Commercial purpose vs profit every year	A commercial organisation may temporarily make a loss.
Shareholders vs directors	Owners versus those responsible for direction and management.
Fund administrator vs investment fund	Service provider versus administered vehicle.