ACCA F1 Revision notes section 1



Definition of organization

“A formal group of people pursuing similar goals in the presence controlled systems”

Types of organizations

Commercial

Not-for-profit

Public sector

Non-governmental organizations

Cooperatives

Commercial

Profit is the main objective.

Other objectives

–        Survival, growth, market share and development

Example: companies and partnerships

Not-for-profit

Profit is not the main objective

The main aim is to satisfy needs of the members

Example: schools, hospitals and charities

Mutual organization is a type of NFP

Mutual organization

Voluntary not-for-profit associations formed for the purpose of raising funds and providing services to all members of organization

Example: building societies and trade unions.

Public sector

The sector which operates for the welfare of the people

The main aim is not to make profit but to provide services like:

Defence

Education

Roads

Non-governmental organizations (NGO)

These are non-governmental organisations which operate for the social welfare of the people

They are not associated with the government

Cooperatives

It is a business organization owned and  democratically operated by a group of individuals for their mutual benefit

Example of cooperatives

Retailers’ cooperative

Worker cooperative

Consumers’ cooperative

Ways organizations may be structured

Entrepreneurial

Functional

Matrix

Divisional

Departmental

Geographical

By product

Entrepreneurial

A structure for small businesses

Entrepreneur is providing a unique product or service

Decision making by 1 or 2 people

Quick decision making

Entrepreneurial

Advantages

Quick-decision making, goal congruence control workforce

Disadvantages

No career opportunities, lack of ideas and if organization grows difficult to maintain authority over employees

Functional

Oganization is structured according to functions.

A structure for small businesses with different products

Functions:

Marketing, Production, Personnel,Purchasing

Functional

Advantages

Economies of scale, career opportunities, standardisation

Disadvantages

Cannot cope with growth, conflict between functions and slow decision making, inability to change

Matrix

A structure where people from different departments work together to fulfill a specific purpose

The normal departmental boundaries have to be crossed

Matrix

Advantages

Quick decision making, coordination, economies of scale

Disadvantages

High costs, time consuming meeting, dual command or authority( 1 person might have to bosses)

Divisional/departmental

Organization is structured according to department or division. Divisions are considered profit centres.

Each division has functional structures

Divisional/departmental

Advantages

Able to cope with growth and diversification, better strategic planning, determine efficiency of divisions

Disadvantages

Lack of goal congruence/equivalence, loss of control, specialists not given accreditation or motivation, conflict between divisions

Geographical

An organization is structured according to the location

Areas: eastern area, western area northern area and southern area

Geographical

Advantages

Can cope with growth, better strategic decisions, determine efficiency profitability

Disadvantages

Specialists ignored, duplication and allocation of costs

Main departments in a business organization

Research and development

Purchasing

Production

Direct service provision

Marketing

Administration

Finance

Research and development

Invention of new products

Development of existing products

Create products which meet the consumer demand and are economical

Purchasing

Buy the raw materials

To buy it at the lowest price

Make sure that sales are not lost due to inadequate raw material

Production

Produce goods when they are needed

Maintaining and monitoring stock levels

Providing best quality with lowest cost

Direct service provision

This service is often referred to as DSP

Providing assistance to customers

Marketing

Determine and provide the good/service clients needs or wants

Develop marketing goals and strategies

Conduct market research

The 4 ps

Pricing, Promotion, Product and Place

Administration

Coordination

Support

Smooth management of business on every day basis

Finance

Preparing budget

To meet financial reporting requirement

Arrange funds/capital

To provide financial services

Levels of planning

Strategic planning

Tactical planning

Operational planning

Strategic planning

It is long term planning

Plans to attain objectives

Focuses on the entire organization

Usually done when a new product or business is started

Tactical planning

Medium term planning

Actions to implement the strategy

Focuses on a department

Done for a running business or product

Operational planning

Short term planning

Mainly concerned with the controls

Focuses on subtasks which are to be performed

Marketing in an organization

Definition of marketing

Satisfy needs of consumers and try to achieve organization’s goals

Marketing mix (4 Ps)

Product

Price

Place

Promotion

Relationship of marketing plan to strategic plan

A marketing plan cannot be constituted if  strategic plan has not been made

Strategic plan is the first step to make marketing plan

Strategic plan points out the strengths and weaknesses

Separation of ownership and management

Ownership and management of large organizations is separated

Shareholders appoint directors who run the organization keeping in view the interests of shareholders

The directors and managers have to depend on shareholders for the capital required

Span of control

Span of control

Number of people who directly report to a superior in a hierarchy

The number of people for whom a manager is directly responsible

Scalar chain

Scalar chain

Chain of superiors ranging from the highest rank to the lowest rank

Line of power

Tall and flat organization

Tall organizations have a narrow span of control

Flat organizations have a wide span of control

Centralization

Higher level of management takes the important decisions

Little or no delegation of authority

 Centralization

Advantages

Quick and authoritarian decision making

Decision taken by the experienced leaders

Disadvantages

Demotivated workforce

Unable to address operational issues

Decentalization

Lower level of management takes the important decisions

There is delegation of authority

Decentralization

Advantages

Motivated workforce

tackle operational issues

Disadvantages

Conflict over the decisions

Decisions taken by inexperienced workers






Rating 2.00 out of 5


One Responseto “ACCA F1 Revision notes section 1”

  1. very very good says:

    this notes is very easy to understand and i want model paper to the acca

Leave a Reply