What is a Business Organization?

Cite this article as:"What is a Business Organization?," in The Business Professor, updated April 1, 2020, last accessed December 4, 2020, https://thebusinessprofessor.com/lesson/what-is-a-business-organization/.

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What is an Organization?

An organization is a group of two or more individuals and the coordinated allocation of resources around a common goal or objective.

The elements that distinguish an organization from a loose association of individuals are as follows:

  • People – All organizations require human members. While the organization will likely have other forms of resources, such as capital and equipment, the involvement of human beings is essential.
  • Distinct Purpose – The members of the organization collaborate to achieve a distinct purpose, such as the purpose laid out in the mission statement. The organizational purpose generally includes the accomplishment of tasks or obtaining the desired result.
  • Deliberate Structure – The organization has a structure that is commonly recognized and adhered to by all members. An organization may assume a legal business entity status that controls its organizational structure.

In most organizations, the individuals within the organization will allocate duties or work functions among the members. It is the efficiency associated with the allocation of work functions that makes an organization more efficient and effective than the members could be individually.

Managers are a the forefront of the Planning, Organizing, Leading, and Controlling functions that give rise to an organization.

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