GETLARIMER

Archive for June, 2010

Organizations have highly specific purposes. A school is set up for the purpose of educating students; a government bureau is set up to provide specific services to its citizenry; a firm’s purpose is to produce and market goods and services.

Specificity of purpose varies between and among organizations; some conglomerates put no limitations of the kind of goods and services they may do business with.

Organizations not only have specific purpose but they are organized to achieve these- hence the programmed activities. In a firm for example, raw materials are purchased, processed, and marketed to earn the firm a profit. Machinery is acquired, repaired, overhauled periodically for the same purpose. This specificity of purpose and of the means by which these purposes are attained is a visible and important characteristic of organizations.

The success of a business depends greatly on managerial effectiveness. If a business is well managed, an adequate income will likely be earned. From an adequate income, it is possible to pay all expenses and to earn a profit as well. If a business does not earn a profit, it cannot continue for long. An entrepreneur assumes the risk of success or failure.
Risk—the possibility of failure—is one of the characteristics of business that all entrepreneurs must face. Risk—which involves competition from other businesses, changes in prices, changes in style, competition from new products, and changes that arise from economic conditions. Whenever risks are high, the risk of failure is also high.
Businesses dose for a number of reasons. Thousands fail yearly for financial reasons. According to popular statistics, one out of every four to five businesses fails within three years, and about half cease operations within six to seven years. However, those figures indude firms that unaril1 go out of business, such as by selling to someone else or by adding more owners.