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Definition of organization.
An organization as a social arrangement which pursues
collective goals, which control its own performance and
which has a boundary separating it from its environment.
Pooling of expertise
Individuals complementing their skills, expertise,
experience, etc in their attempt to attain some results.
Power Centre
Individual rarely has the power to influence events on a
large scale whereas a group of people can certainly
influence decisions.
No individual is all-rounder
No individual is capable of satisfying his/her needs.
Therefore organizations are formed to offer a variety of
products and services.
Synergy advantage
A team’s output is better than an individual.
Control
Individuals as owners themselves, by people working on their behalf
or indirectly by government.
Activity
What does the organization do or what is their core business?
Manufacturing? Service?
Source of finance
Where does the company find money to finance their organization?
Borrowing, government funding, share issues.
Technology
High use of technology such as I.T. industry or low use of
technology such as sundry/ sundry shop.
System
A system is a collection of interrelated parts which had
taken together forms a whole such that:
• The collection has some purpose
• A change in only of the parts leads to a change
in some other parts.
An organization is a system made up of
Departments Sub-systems
Distinctio Description
n
A closed • Isolated from its environment and independent of it
system
• thus no environmental influences affect the behavior
Economic environment
Government policy affects the whole economy.
Government is responsible for creating a stable framework in which
business can be done.
It is an important influence at local and national economic activities and
here are some of the factors and impacts:
Factor Description
Overall growth or
fall in Gross • Or demands for goods & services
Domestic Product
Socio-cultural environment
All the stakeholders of a company form the society where the business operates.
Thus, need to carry out a demography study – study of human population and
human population trends.
Development Description
Growth Size of population.
Nature of employment Employees are looking for quality working life and
employers are looking for the ways to reduce cost.
Technological environment
Technology can contribute to overall economic growth.
Our study focus on information technology and telecommunications.
Technological Description
impact
Type of product / Music DVD / MP3
services that are made Movie(cartridge) DVD
and sold
Magazine E-mag
Micro Environment
The five competitive forces model
Prof. Porter
Industries & marketplace
The 5CFs Description
Barriers to new How easy or difficult for a potential company to
entrants enter the market / industry.
The easier it is, the more threat it is.
Threats of substitutes Alternatives that serve the same purpose.
More substitutes more competition for an
organization.
Rivalry amongst the The more players/ competitors, the greater the
existing competitors level of competition.
Stakeholders
Stakeholders are groups, corporations or individual who
have an interest or a stake as well as ability to influence
the well being and future course of action of the
organization.
Stakeholders Description
Internal stakeholders • They are stakeholders who are employed by /
involved in the running of the organization.
• Eg: management, employee, CEO
Connected • They are stakeholders who have a financial link
stakeholders with the organization.
• Eg: shareholders, customers, suppliers,
bankers
• Companies Act also set formats for company account and states what
information must be disclosed.
• Appoint external independent auditors to audit the accounts.
Non-statutory regulation
N-S R Description
The Financial • Its chairman appointed by the government.
Reporting Council
• Guides the standard setting process.
(FRC)
The Accounting • Responsible for the issue of Financial Reporting
Standard Boards (ASB) Standards (FRSs)
• Lay down prescribed accounting treatments
where a variety approaches might be taken.
• Aim: ensure that users can compare the
accounts of different companies.
The Urgent Issues • Offshoot of ASB. (assistant)
Task Force (UITF)
• Role: assist ASB but unsatisfactory / conflicting
interpretations have developed.
Auditing regulations
An audit defined as an independent examination of &
expression of opinion on the financial statement of an
enterprise.
Taxation
1. It will affect the work of the accounts of organizations that runs a
PAYE system or is registered for VAT.
2. Keeping records and submitting returns of payroll work to the
Inland Revenue and the Department of Social Securities (DSS).
3. Timing of accounting work in important, since returns are
required every month for payroll and every three months for
VAT. Info must be ready in time with these requirements.
Corporate governance
Defined as the way the management of a firm is
influenced by many stakeholders (including owners,
shareholders and creditors).
Different economies have systems or corporate
governance that differs in the relative strength of
influence exercised by the stakeholders & how they
influence the management.