What is an Organization?

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What is an Organization?
Someone asked me the other day: what exactly is an organization?

DEFINITION OF AN ORGANIZATION
Well, in in simple terms, an organization is defined as: "an entity comprising one or more people that has at least one particular purpose". An organization is usually made up of various sub-organizations like business units and departments with specialized tasks.

EXAMPLES OF ORGANIZATIONS
Typical examples of organizations are:

• A business firm / company / corporation (for profit organizations)
• A government agency
• An NGO
• An association of volunteers
• A charity
• Various strategic alliances and partnerships
• A joint-venture
• An educational institution
• A special purpose vehicle
• A spin-off
• Etc.

CRITERIA FOR AN ORGANIZATION
As you can see in the above examples, organizations can differ a lot among each other. But organizations do have six things in common:

1. PURPOSE: They have at least one purpose / goal (that could be a pure economic and/or a moral purpose);
2. PEOPLE: They are comprised of at least one person, but normally of multiple people;
3. STRUCTURE: They have some form of organizational structure (how they are built up internally);
4. ASSETS: They normally have assets to accomplish their goals (machines, tools, but also knowledge and skills);
5. CONTINUITY: They aim for continuity and are permanent (as long as their purpose is not achieved);
6. COORDINATION AND DIVISION OF TASKS: In order to achieve their predetermined goal with a certain group of people, tasks will have to be distributed.

These 6 criteria (taken together) set organizations apart from other social groups and coalitions.

FORMAL AND INFORMAL ORGANIZATION
A distinction can be made between the formal organization and the informal organization. The formal organization is the whole of the officially established procedures and decision-making rights, as established in the organization chart. The informal organization is the social structure of the employees, who discuss and align their work and conduct with each other.

THE STAKEHOLDERS OF A COMPANY
Stakeholders are interested parties, persons or organizations who can be influenced (in both positive and negative ways) by the organization, or who can exert influence on (part of) an organization (also in both positive and negative ways).
For example, stakeholders of companies include employees, local and national government, various pressure groups, etc.

LEGAL FORMS OF ORGANIZATIONS
Depending on the jurisdiction (country), organizations can take different legal forms. Roughly, a distinction can be made between organizations with legal personality and organizations without legal personality. The first group can independently participate in economic transactions and as such has its own rights and obligations.

		Comments by date▼ Comments by rating Rating
		MICHAEL RAVAIN HR Consultant, United States
	5 What is an Organization? Thank you for your explanation for what is an organization. I generally agree with your explanation. However, my conceptualization of "organization" is quite different today than it was 25-years ago, (...)

		Sayran Ghafuri,Kittani Coach, Iraq
	0 How is an Organization Built? Can you explain how the organization is being built? I think that in your definition of the organization you were influenced by the philosophy of Henri Fayol in explaining the organization, as he c (...)

		Jaap de Jonge Editor, Netherlands
	3 Formation of an Organization @Mrs.Sayran Ghafuri: Well, an organization can arise or be built in many different ways. It can arise naturally or as a result of conscious choices by owners, managers or as a result of stakeholder pr (...)

		Nader Chavoshi Boroujeni Manager, Iran
	1 New Definition of Organization @Mrs. Sayran Ghafuri: As an DBA student I think that, by the increasing development in business environments, people can build an organization without any materials. So, we should change the definitio (...)

		Sayran Ghafuri,Kittani Coach, Iraq
	1 Organizations are Social Units that Aim to Provide Services to the Community @Nader Chavoshi Boroujeni: This depends on understanding the meaning of the organization and the type of organization. Presidency of State, Cabinet, Ministries, General Directorates, Hospitals, School (...)

		MUNI DAVE Business Consultant, India
	1 How an Organization is Built of Materials An organization is built by one or more persons with one or more (inter-related) specific purposes or objectives. Materials may be in the form of knowledge. It may have an infrastructure consisting of (...)