Why Do Organizations Exist?

Organizations exist for different purposes, including meeting the objectives of external stakeholders, a community or a market segment. Others are formed to engage or utilize collective abilities. Business-oriented organizations are formed to make and maximize profits. Community-based organizations are formed to empower members and the community.

An organization is a social unit such as an entity or institution that is designed and managed to meet a specific need or pursue collective objectives. A business organization consists of an individual or group of persons that collaborate to achieve specific commercial goals. Some business organizations, such as banks and insurance agencies, are formed to earn income for the shareholders. Not-for-profit organizations are formed to meet the needs of the public. These organizations, which include NGOs, mobilize funds from donors and use their resources to support public projects. The objective of faith-based organizations is to spiritually nourish the public. Other organizations, such as human rights activist groups, exist to champion for the rights of citizens.

All organizations have a management structure that defines activities and relationships among members, and splits and assigns roles, functions and authority to execute various tasks. An organization can either be formal or informal. Formal organizations have defined structures, such as articles of association, and have specific knowledge to discharge work-related mandates. Informal organizations may be formed merely to accomplish a particular short-term objective.