Business Organization is the combination business and organization. In order to understand the nature and importance of business organization, it is necessary that the meaning of these two words should be clear to everyone.
Business: – Business is a human activity, which is undertaken to provide goods and services to the people with a view to earn profit.
Organization: – The words organization is generally divided into two parts.
1. Material Organization 2. Human Organization.
Material Organization: – The material organization is the determining and provision of necessary raw materials, tools, capitals etc to enterprises for their smooth running and functioning.
Human Organization: – It is the appointment of qualified staff and assigning them different duties and responsibilities for the sake business organization interest. Organizations also give them enough authority to perform all their duties and responsibilities smoothly.
Now business organization can be defined as the process of establishing effective cooperation among different people to achieve certain goals to earn profit. Business organization can be formed to serve people and known as non-profit organization.
Scope of Business Organization
After the Industry Revolution, the scope of business organization has largely extended. The role of business organization in various forms of business is discussed in brief:-
- Sole proprietorship
In this form of business, due to simple structure of organization, entrepreneur brings his own capital. He is organizer, operator, controller, decision maker, financier, and above all, responsible for all the success and failures of business.
In this form of business, according to the agreement each partner introduces capital, Management and labor. In the management, partners decide among themselves to which partner can be suitable for take part in affairs of business. As the partnership business is running on small size, the business organization structure is very simple.
- Joint Stock Company
In this form of business, the work of organization started even before its amalgamation by the promoters. This work of organization continues after amalgamation. Responsibilities are prepared on organizational chart and duties of the personnel employed are defined, procedures are laid down. The scope of this form of business organization is quite wide and complicated.
Importance of Business Organization
- Products Growth.
All business activities directed towards the production of goods and services in betterment of business organization.
- Efficient Use of Resources.
Organizations play a vital role in the efficient use of factors of productions and other resources and thus reduced the cost of production of goods.
- Technological Improvements.
A good organization provides for the optimum use of technologies improvements.
- Creative thinking.
It stimulates independence creative thinking in various departments of production.
- Use of skilled salesman.
Another importance of business organization is that it is very useful in providing skilled salesmanship for satisfying the various needs of the customers.
- Quick decisions.
The business organization makes easy to take quick decisions.
- Recognition of the problem
The recognition of the problem, selection of the solution, issuing of the necessary orders can be taken in the right time.
- Fixing of responsibility
One of the most important things of business organization is that fixing of responsibility can easily be pin pointed.
- Feed back
An organization makes it possible to take decisions in the right time about production and thus may take feedback. Before making any decision organization always research the market and combine the facts.
- Minimum cost
The organizations always try to attain the goals and objectives of the business at the minimum cost.