Business Organisations

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Business Organisations

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Business Organisations

  1. 1. Business Organisations
  2. 2. The Nature of Firms <ul><li>The importance of understanding the organisation of businesses </li></ul><ul><li>The nature of firms </li></ul><ul><ul><li>complex production </li></ul></ul><ul><ul><ul><li>organising production through markets </li></ul></ul></ul><ul><ul><ul><li>organising production through hierarchies </li></ul></ul></ul><ul><ul><li>benefits of organising production within firms </li></ul></ul><ul><ul><ul><li>reduction in transactions costs </li></ul></ul></ul><ul><ul><li>problems of market arrangements </li></ul></ul><ul><ul><ul><li>uncertainty </li></ul></ul></ul><ul><ul><ul><li>complexity of contracts </li></ul></ul></ul><ul><ul><ul><li>monitoring and enforcing contracts </li></ul></ul></ul>
  3. 3. The Nature of Firms <ul><li>Goals of the firm </li></ul><ul><li>The traditional theory of the firm </li></ul><ul><li>Alternative theories </li></ul><ul><ul><li>the divorce of ownership from control </li></ul></ul><ul><ul><li>the development of the joint-stock company </li></ul></ul><ul><ul><li>managerial objectives </li></ul></ul>
  4. 4. The Nature of Firms <ul><li>The principal / agent relationship </li></ul><ul><ul><li>the principal – agent problem </li></ul></ul><ul><ul><li>asymmetric information </li></ul></ul><ul><ul><li>dealing with imperfect information </li></ul></ul><ul><ul><ul><li>monitoring </li></ul></ul></ul><ul><ul><ul><li>incentives </li></ul></ul></ul><ul><li>The goal of staying in business </li></ul><ul><ul><li>the willingness of firms to take risks </li></ul></ul><ul><ul><li>problems of being over cautious </li></ul></ul>
  5. 5. The Firm as a Legal Entity <ul><li>The sole proprietor </li></ul><ul><ul><li>unlimited liability </li></ul></ul><ul><li>The partnership </li></ul><ul><li>Companies </li></ul><ul><ul><li>limited liability </li></ul></ul><ul><ul><li>public limited companies (plc) </li></ul></ul><ul><ul><ul><li>public issues of shares </li></ul></ul></ul><ul><ul><ul><li>shares traded on the Stock Exchange </li></ul></ul></ul><ul><ul><li>private limited companies </li></ul></ul><ul><ul><li>consortia </li></ul></ul><ul><ul><li>co-operatives: producer and consumer </li></ul></ul><ul><ul><li>public corporations </li></ul></ul>
  6. 6. The Internal Organisation of the Firm <ul><li>U-form </li></ul>
  7. 7. U-form business organisation
  8. 8. The Internal Organisation of the Firm <ul><li>U-form </li></ul><ul><ul><li>advantages </li></ul></ul><ul><ul><li>problems when firms expand beyond a certain size </li></ul></ul><ul><ul><ul><li>bounded rationality </li></ul></ul></ul><ul><ul><ul><li>communications costs </li></ul></ul></ul><ul><ul><ul><li>distorted information </li></ul></ul></ul><ul><ul><ul><li>decline in organisational efficiency </li></ul></ul></ul><ul><li>M-form </li></ul>
  9. 9. M-form business organisation
  10. 10. The Internal Organisation of the Firm <ul><li>U-form </li></ul><ul><ul><li>advantages </li></ul></ul><ul><ul><li>problems when firms expand beyond a certain size </li></ul></ul><ul><ul><ul><li>bounded rationality </li></ul></ul></ul><ul><ul><ul><li>communications costs </li></ul></ul></ul><ul><ul><ul><li>distorted information </li></ul></ul></ul><ul><ul><ul><li>decline in organisational efficiency </li></ul></ul></ul><ul><li>M-form </li></ul><ul><ul><li>advantages and disadvantages </li></ul></ul>
  11. 11. The Internal Organisation of the Firm <ul><li>The flat organisation </li></ul><ul><li>Multinationals and business organisation </li></ul><ul><ul><li>H-form </li></ul></ul><ul><ul><li>integrated international enterprises </li></ul></ul><ul><ul><li>transnational associations </li></ul></ul>
  12. 12. The Walt Disney Company (Holding Company)
  13. 13. The Walt Disney Company (Holding Company)
  14. 14. The Walt Disney Company (Holding Company)
  15. 15. The Walt Disney Company (Holding Company)

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