Why does organisations exist

The objective of faith-based organizations is to spiritually nourish the public. Other organizations, such as human rights activist groups, exist to champion for the rights of citizens.

All organizations have a management structure that defines activities and relationships among members, and splits and assigns roles, functions and authority to execute various tasks. An organization can either be formal or informal. Formal organizations have defined structures, such as articles of association, and have specific knowledge to discharge work-related mandates. Informal organizations may be formed merely to accomplish a particular short-term objective.

Studies of the role and impact of values or ethics on corporate performance show that profits follow from worthy and useful purposes. Fulfilling the purpose comes first, and then the profits follow. Profits are a reward. Developing a purpose aimed at serving others adds a deeper sense of meaning to our lives.

It taps into the deep craving we all have to make a difference. We need to feel that the world was in some way a little bit better off for the brief time we passed through it.

Those who are able to inspire will create a following of people — supporters, voters, customers, workers — who act for the good of the whole not because they have to, but because they want to. This issue starts with a focus on purposeful persuasion power.

Anyone can learn for free on OpenLearn, but signing-up will give you access to your personal learning profile and record of achievements that you earn while you study. Start this free course now. Just create an account and sign in. Enrol and complete the course for a free statement of participation or digital badge if available. Organisations exist because groups of people working together can achieve more than the sum of the achievements which the individuals in the organisation could produce when working separately.

For example, one person might struggle all day to carry a piano upstairs, whereas a team of four people, each taking one corner, may need to put in much less than a quarter of the effort of one person to complete the task Coates et al. Although such cooperation is beneficial, if individuals pull in different directions, the result is counter-productive. Thus coordination is necessary and this is a fundamental role of management, as will be discussed in a later section of this session.

It can also be argued that organisations exist as a result of the impact of transaction costs , because they can arrange transactions between their different parts at a lower total cost than that available in the open market.

All transactions were conducted through market exchange without the need for formal organisations. As economic development gained pace, however, it became clear that it was more efficient to organise production internally within a firm rather than undertake each transaction externally through the market.

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