1.3 Classifying organisations by profit orientation

Organisations can be classified in many different ways, including the following:

Profit seeking organisations

Some organisations, such as companies and partnerships, see their main objective as maximising the wealth of their owners. Such organisations are often referred to as ‘profit-seeking’.

The objective of wealth maximisation is usually expanded into three primary objectives:

§ to continue in existence (survival)

§ to maintain growth and development

§ to make a profit

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Peter Drucker has suggested that profit-seeking organisations typically have objectives relating to the following:

§ market standing

§ innovation

§ productivity

§ physical and financial resources

§ profitability

§ manager performance and development

§ worker performance and attitude

§ public responsibility

Not-for-profit organisations

Other organisations do not see profitability as their main objective. Such not-for-profit organisations (‘NFPs or NPOs’) are unlikely to have financial objectives as primary.

Instead they are seeking to satisfy particular needs of their members or the sectors of society that they have been set up to benefit.