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Enterprise/ Organization
Like land, capital, and labor, organization is also an important factor of production. Organization is the act of gathering the factors of production—land, capital, and labor—in a balanced way and putting them to work in the production process. The person who organizes these three factors is the organizer or entrepreneur.
Humans' unlimited needs cannot be met by individuals alone. Countless workers are involved in producing the goods and services we consume.
Various types of raw materials are used. Land is used. Thus, land, capital, and labor required for production work must be gathered. One person may have land, another may have capital, and a third may have labor. Production work cannot happen without bringing these three factors together in one place.
Therefore, bringing them together and starting the production work is called organization, for example, land is needed to produce rice. To plow the land and plant rice, capital such as seeds and oxen, plows, or tractors is necessary.
Labor is needed for plowing and planting. Arranging all these factors to produce rice is called organization.
Functions of the Organizer or Entrepreneur
(a) To gather the various factors of production—land, capital, and labor—and establish cooperation among them.
(b) To purchase necessary machinery, equipment, and raw materials.
(c) To organize labor and assign work according to their qualifications.
(d) To maintain the relationship between labor and capital.
(e) To arrange for the exchange of goods.
Characteristics of an Entrepreneur
(a) Planning: The entrepreneur or organizer must first plan what goods to produce, how to produce them, when to produce them, at what price to sell them, and where to sell them. To be a successful entrepreneur, one must have the ability to formulate plans.
(b) Decision-making: To get good returns from the industry, the entrepreneur must be able to make appropriate decisions at the right time. In today's competitive environment, decisions must be made about what goods to produce, in what quantity, and what quality of goods to produce.
(c) Coordination: Coordination is necessary regarding the ratio in which the units of land, capital, and labor should be used when producing goods. A skilled organizer coordinates the factors in such a way that production is high and the cost is low.
(d) Supervision of work: The organizer supervises all the work, including whether the work is being done according to the plan, evaluating the work of the laborers, and the condition of the machinery. Regular supervision makes it easier to remove potential problems in the business.
(e) Distribution of work: The entrepreneur also does the work of distributing the income received from production among labor, capital, land, and themselves. They arrange to provide rent for land, wages for labor, and interest for capital, and to secure profit for themselves.
(f) Risk-taking: The future is uncertain. The estimation of whether the goods produced by their industry will be in demand in the market tomorrow is not always consistent. Despite such uncertainty, they continue the production work.
Types of Organization
Organizations are of various types, some of the main ones are as follows:
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