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Managing Organisations - A framework for organisations

What is an organisation?

Organisations come in all shapes and sizes. The United Nations is an organisation, it is global, it is hugely powerful and what it does is pretty well unique. It does not make profits and it has no shareholders. General Motors is an organisation which, too, is global, what it does is not unique, it does make money and it does have shareholders.

Two people running a business from their kitchen table also constitute an organisation, and so does the Red Cross, so does your squash club and so does the US government.

Organisations do not need premises, assets or accounting systems, though most have them. They do not need to make money, although there are few organisations one can think of that are not involved in raising some form of funding or monetary income.

Size does not define organisations, nor is there necessarily any commonality of purpose among them. There must however be a purpose or purposes of the organisation to exist, but, by and large, any purpose will do.

An organisation is any group or people involved in related activities to achieve a purpose.

As businesses, organisations exist primarily to satisfy customers. It is wise not to lose sight of this fact. Organisations which satisfy their customers better than their competitors are said to have competitive advantage. Organisations which fail to satify their customers faily, soon cease to exist.

Businesses also need to make money in order to continue to satisfy their customers, to continue to fulfil their purpose. The argument is alive and well as to whether the primary purpose of a business is to make money or whether money is simply a means of measuring the business's success in serving its customers. Two points need to be thought about though:

businesses which focus primarily on making money rather than satisfying customers are likely to take decisions based on their principal focus. When this focus on making money conflicts with satisfying customers, the business puts itself in mortal danger

among the categories of customer a business is satisfying at any time is the owner, investor or shareholder category. Their satisfaction rests, unsurprisingly, on the business's ability to make money for them

Being clear about the purpose or purposes of the organisation is the first and the most important task for those responsible for guiding it.

NEXT WEEK: What shapes organisations?

Excerpts from The University of Leicester Diploma in Management Resource Development International (RDI) Jamaica.
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