Company and organization are the two most commonly used terms in the business world and are thought to be synonyms. However, this is not true: both terms are different, and this article will clarify the difference between organization and company.
Company
When a group of individuals works together for a commercial purpose, the association is called a company. The company’s focus is on products or services, and the objective is to make money.
Types of Companies
In the USA, a company can be of the following types:
- Partnerships: In a partnership, two or more individuals or entities sign an agreement to run a business together.
- Corporations: These are legal entities and have the same rights and responsibilities as a person but are separate from the owner.
- Associations: This is the joining of two or more entities or groups to achieve a common goal.
- Trusts: A trust is a legal arrangement that allows a third party to hold assets on behalf of a beneficiary.
- Funds: A fund is a pool of money businesses collect to spend on a specific purpose.
A company can be private or public.
A private company has private ownership and has less legal accountability. Public companies have more legal responsibility and are listed in the stock market.
Examples of Companies
A few examples of popular companies in the USA are:
- Amazon
- Tesla
- Starbucks
- KFC
Organization
When a group of people comes together for a common purpose, the group is called an organization.
When a group of people comes together for a commercial purpose and to earn a profit, the association is called a company.
A company can be a part of an organization. It can join with other companies to form an organization. An organization can have different companies.
An organization is much more than a company. A business with operations in various dimensions opts for an organizational structure for easy future growth. Organizations can be hybrid and operate commercially and can also be involved in not-for-profit activities simultaneously.
Examples of Organizations
- Corporations
- Cooperatives
- Charities
- Political parties
- Partnership
- Educational institutions
Company Vs Organization
The following are the key differences between an organization and a company.
- The purpose of a company is to earn a profit, while an organization can have a commercial intent or a non-commercial purpose.
- A company has a clear hierarchy, such as CEO, section head, etc. Organizations have groups of companies with boards of directors.
- Companies can be public or private. Public companies are listed in the stock market and owned by the public. While organizations are not listed on the stock market, companies under an organization can be listed on the stock market.
- A CEO leads a company with management staff while the organization has a board of directors.
- The objective of a company is to earn a profit, while the objective of an organization is the collective objectives of a group of companies under its umbrella.
Conclusion
Companies have commercial intent and can be a part of an organization. While organizations have a larger goal, they can have commercial and non-commercial intent.
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