Meaning Of Business Organization (And Types)

Table Of Content

1. Definition Of Business Organisation
2. Types Of Business Organisations
3. Private Enterprises
4. Characteristics Or Features Of Private Enterprises
5. Public Enterprises
6. Characteristics Features Of Public Enterprises
7. Difference Between Private And Public Enterprises
8. Reasons For The Establishment Of Many Private Enterprises In West Africa
9. Problems Of Private Enterprises In West Africa

Definition Of Business Organisation: Business organisation can be defined as an Enterprise set up by an individual or group of individuals, government or its agency for the main purpose of making profits and providing goods and services for the satisfaction of human wants. All business organisations, being small or large, irrespective of the ownership and structure, have one thing in common which is the provision of goods and services to meet the numerous needs of the people.

Types Of Business Organisations

There are two major types or group of business organisations. These are private Enterprises and public Enterprises.

1. Private Enterprises: Private Enterprises at Enterprises owned and managed by private individuals. This type of business organisation is usually classified as a private sector Enterprises an examples of such private Enterprises include: sole proprietorship, partnership, private and public limited liability companies and cooperative societies. The major aim of objective of the private Enterprises is to maximize profits.

Characteristics Or Features Of Private Enterprises

1. Private Individuals Provide The Capital: Private individuals that own the Enterprises are there people to raise capital for the establishment of the Enterprise.

2. Ownership Belong To the Private Individuals: Private individuals, example sole proprietorship or partnership are the ones that own the business Enterprise.

3. Objective Of The Business Is To Make Profit: The purpose of setting up the business Enterprise is to make profit for the owners of the Enterprise.

4. Accountability Is Today Owners: The transactions of the business Enterprise and usually accounted for and submitted to the owners of the Enterprise.

5. When Is borne The Risk Of The Business: In the event of business failure or liquidation the owners we have to bear the entire risk associated with such failures.

6. Owners Manage The Business Themselves: The daily operations of a business Enterprise is controlled and managed by the owners of the Enterprise.

2. Public Enterprises: Public Enterprises are the types of business organisations which are owned, controlled and managed by the government. This business organisations are owned by either the local, state or Federal Government and their main objective is to provide social services to the people. They are associated with such names as authority, corporation, boards and commissions. Examples of public Enterprises includes public corporations and companies owned by government such as the national electric power authority (N.E.P.A), the Nigerian Ports Authority (N.P.A), the Nigerian television authority (N.T.A), Nigerian railway corporation (N.R.C), Nigerian telecommunications PLC. (N.I.T.E.L) etc.

Characteristics Or Features Of Public Enterprises

1. Government Provides The Capital: Government provide the necessary capital required to setup public Enterprises.

2. Ownership Belongs To The Government: Public Enterprises are usually set up by hearts of legislation and Enterprise belongs to the government.

3. Objective Is To Provide Social Services: The major reason of setting up public Enterprises is to provide social amenities and services to the people at reduced cost.

Difference Between Private And Public Enterprises

1. Private Enterprises are owned by individuals while public Enterprises are owned by the government.

2. In private Enterprises capital is provided by individuals why in public Enterprises capital is provided by the government.

3. In private Enterprises their major objective is to maximize profits while in public Enterprises there are major objective is to provide social services to provide social services to the people.

4. In private Enterprises they are controlled by the owners or directors appointed by owners while in public Enterprises they are controlled by the board of directors appointed by the government.

5. In private Enterprises they do not enjoy any Monopoly while in public Enterprises they enjoy some form of Monopoly.

Reasons For The Establishment Of Many Private Enterprises In West Africa:

1. Type Of Economic System: The type of economic system adopted by the government determines the nature of economic activities that will take place in that country. For example, Nigeria has a free economy which private individuals are allowed to participate in economic activities.

2. New Capital Requirement: The capital required to set up private Enterprises is usually small, hence many private Enterprises are in existence.

3. Favorable Market: The availability of favorable market for finished goods makes the proliferation of small-scale Enterprises to flourish in many west African countries.

4. High Level Of Efficiency: The private Enterprises are known to be more efficient and management than the public Enterprises and this account for their large number in the economy.

5. Favourable Legal Environment: The Enabling laws which Govern the setting up of private Enterprises are quite favorable. This makes it easy and interesting for many entrepreneurs to go into private business.

6. Availability Of Credit Facilities: The availability of credit facilities to private individuals enables them to set up private Enterprises.

7. Establishment Of Individual Estate: The establishment of individual Estate by government also encourages proliferation of private Enterprises in many west African countries.

8. Existence Of Official Corruption In Public Enterprises: The existence of official corruption in public Enterprises discourages government from further investment in public Enterprises, thereby giving way for the proliferation of private Enterprises in many west African countries.

Problems Of Private Enterprises In West Africa:

Many private Enterprises are faced with the following problems: They are:

1. Inadequate Capital: The private Enterprises do not have the adequate capital required to set up and run a large business outfit.

2. Insufficient Raw Materials: Many private Enterprises suffer from inadequate supply of raw materials necessary for Maximum production.

3. Inefficient Management: Private Enterprises generally do not suffer from poor management because their owners who run the business May and may not have a good knowledge of the kind of production they are engaged in.

4. Poor Power Supply: Many private Enterprises do not have regular power supply to their companies hence they have to generate their own power through generating sets, which increases the cost of production.

5. Lack Of Specialisation: Lack of specialisation by owners of private Enterprises leads to business failure as most of them are illiterates, who may not have any idea of what they are doing.

6. Poor Patronage: Private Enterprises so far from patronage partly because of low quality products and the high tastes which consumers have for imported foreign goods.