A corporation, or company, is owned by shareholders and managed by directors. A shareholder is any person who owns one or more shares in a company. Think of a share as a unit of ownership in a company. Selling shares to the general public raises funds for establishing or expanding the company. The main purpose of a corporation is to make a profit. Shares in public companies are usually traded on the Australian Securities Exchange (ASX). Members of the public can buy or sell shares in public companies, and public companies can have millions of shareholders. Examples of public companies
include BHP Billiton, Telstra and Virgin Blue. Private corporations are not listed on the ASX and have restrictions on who can buy their shares. They can have one shareholder (who would also be the director), but no more than 50 shareholders. Private corporations are often family companies. Companies such as Rip Curl, 7 Eleven and Retravision are examples of privately owned companies
Government Business Enterprise
Another type of corporation is a government business enterprise (GBE), which is owned and operated by the government. GBEs carry out government policies while they deliver community services. We may not always think of them as being corporations, but they actually run just like companies. Typically, GBEs
are large organisations that employ a large number of people. Some of the largest employers in Australia
are GBEs. Australia Post, Medibank Private and VicRoads are examples of large-scale GBE organisations in Australia. VicRoads is also a statutory corporation — an Act of Parliament (a law) had to be passed to establish it.
Government departments exist at all three levels of government (federal, state and local). They provide essential community services, such as health, education and welfare. The Department of Education, the Department of Employment and the Department of Social Services are three examples of Australian Government departments.
Not-for-profi t organisations include charities and foundations. Their main purpose is to provide goods, services or funds to prevent particular social problems or to continue their work for the benefit of the community. Examples of not-for-profit organisations include the Salvation Army, World Vision, Anglicare, the Australian Conservation Foundation and The Smith Family. These organisations do not generate business by selling products or services with the specific purpose of making a profi t. Rather, they produce services for free or at a subsidised rate, and rely on volunteers, membership subscriptions and donations to continue operating. The term ‘not-for-profi t’ can be misleading, because many charities and foundations do make a ‘profi t’. However, all profi ts made are used to expand the organisation and to continue the work of preventing problems or helping those in need.
As organisations seek to achieve different things, each organisation has different objectives. It is
obvious that many organisations exist to make a profit and will consequently measure their performance
against objectives established around profitability (sales, market share, returns on investment).
However, profits are not the only objective, as you will see by the vision and mission statements in the
figure on the right. Many corporations today, such as Bendigo and Adelaide Bank, include customer service, community involvement, the environment and concern for employees within their objectives. Bendigo and Adelaide Bank focuses on customers, communities and partners, and sustainable earnings and growth. Government business enterprises and government departments will, of course, have objectives reflecting the provision of services to the community. VicRoads’ objective is to deliver
social, economic and environmental benefits to communities. It does this by managing Victoria’s
roads and transport
Once an organisation has established a set of specific objectives, the next step is to determine what needs to be done to achieve the objectives. Strategies outline how the organisation will attempt to achieve its objectives — they are a series of actions undertaken to achieve an end result. For example, a strategy
to achieve the objective of increased profi t may be the introduction of a new product range.
Successful LSOs are those that develop a range of different strategies to achieve objectives in different operational areas. A marketing objective, for example, might be to increase market share by 10 per cent. Strategies to achieve this might include:
• targeting a new group of customers
• increasing sales by using a new promotional campaign
• increasing the number of distribution outlets
• improving the performance or quality of the existing product.
An LSO needs to make sure all the objectives and strategies are linked. Money will be required, for example, to implement the marketing strategies.