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Session 4: Size and scope of organisations (P2- part 1)
Prepared by: Dr Gilbert Zvobgo 1
P2: Explain the size and scope of a range of different types
of organisations.
Dr Reza Aboutalebi
Although there are millions of organisations in the
world, they can be categorised into four groups
based on their sizes.
In the European Union and many other countries
organisations may have one of the following sizes:
Micro
Small
Medium
Large
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There are three possible ways to measure size
of an organisation. We can use one or more
of three measurements:
Number of employees;
Turnover (annual sales volume);
Size of the balance sheet (a financial statement
that summarizes a company’s assets, liabilities and
shareholders’ equity at a specific point in time).
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Types of organisations based on their size
Definition of Micro, Small, Medium, and Large
organisations:
Micro firm: 1-9 employees;
Small firm: 10-49 employees;
Medium firm: 50-249 employees;
Large firm: over 250 employees.
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Small company is an independent business with
limited size that managed by its owner or part owners
and having a small market share.
Small to medium-sized enterprise (SME) is an
organisation that can be either micro, small, or
medium-sized.
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Framing rules, policies and procedures.
Helps in determining the resource requirement.
Provides direction to the activities.
A set of well defined objectives enable a firm to assign
duties to the employees
Provides the basic for measuring and evaluating
employee performance
Justifies the existence of a company
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Business Objective is “a specific result that an organisation aims to
achieve within a time frame and with available resources”.
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Common business objectives
Maximise
Profit
To Survive
To grow in
size
To increase
market
share
To increase
Sale
To gain a
good
reputation
to maximise
customer
satisfaction
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Common Business Objectives
| Objective | What does it mean? |
| To survive | At first it is important that the business is kept alive. It might not be making any profit, but the costs aren’t too high either. |
| To increase sales (turnover) |
Businesses often want to increase the amount of money that they receive from selling their product to the customers. |
| To maximise profits |
To make as much profit as possible, which is the reward for taking risks. |
| To increase market share |
All of the businesses in a particular market can claim a percentage of the sales in that market. Many businesses aim to increase the percentage of sales that they are responsible for. |
| To grow | Over time, a business will look to expand. It might do this by opening new branches, or by broadening it’s product range. |
| To gain a good reputation |
Word of mouth is one of the most powerful forms of advertising for small businesses, and it is important that customers think highly of their business so they will return, and tell others to visit too. |
| To maximise customers satisfaction |
Businesses want to increase the number of customers who use their business. This may mean attracting brand new customers, and trying to steal customers from their competitors. |
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Objectives of organisations with different sizes
Objectives of Micro organisation: gathering family members/
friends, being own boss
Objectives of Small organisation: implementing new idea, job
creation for relatives
Objectives of Medium organisation: serving niche market,
increasing sales
Objectives of Large organisation: profitability, growth, market
domination
Although some of the objectives are similar among all organisations,
some other objectives may be depend on size of the organisations.
In other word, some objectives can be more common between small
organisations while other objectives may be common between
medium or large organisations.
Scope of an organisation is about the territories
(cities, counties, or continents) that are covered by
the organisation. Where does a company do its
business?
One way to determine the Scope of one company is
dividing the company’s territories into four parts:
Local (doing business in one town or city in one country)
National (doing business in all/many parts of one country)
Transnational/International (doing business in two or
more countries)
Global (doing business in many countries in all continents)
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• Transnational Corporations (TNCs) are private firms
that have established branch operations in nations
foreign to their headquarters’ country. Also known as
multinational enterprises (MNEs).
• TNC is a company that has operations in more than one
country to produce or sell products and services.
E.g. Tesco, IKEA, Costa Coffee
Scope of organisation: Transnational Corporation
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Advantages of TNCs locating in a country
include:
◦ creation of jobs
◦ stable income and more reliable than farming
◦ improved education and skills
◦ investment in infrastructure, eg new roads – helps
locals as well as the TNC
◦ help to exploit natural resources
◦ a better developed economic base for the country
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