Difference Between Organization and Company

What is the difference between organization and company? On many occasions, the terms organization and company are used synonymously, giving them a similar definition. However, both have marked differences. To gain a better understanding of the differences, it is important to know the definition of each of them.

Business

When talking about a company, it refers to an organism made up of different elements, both material and human personnel, for profit, generally in charge of providing a service to the community. A company combines capital and nature to achieve these goals. For example: LG, Samsung, Nestlé, etc …

Organization

On the other hand, organizations are considered more as a social system established to meet various proposed objectives, generally through human resources, or some other type of management that involves people’s talent. In other words, it can be seen as an agreement between people in order to achieve a stated purpose.

Many organizations have purposes for the purpose of help and contribution. As we have the United Nations Organization, the World Trade Organization, the World Tourism Organization, etc …

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What is the main difference?

The differences between an organization and a company are not really much. However, the one that stands out the most is that the company is an economicfor-profit organization. On the other hand, an organization does not necessarily have an economic purpose, so a group of people can be considered an organization.

An organization can become a company when it becomes a pursuit of economic ends.

Types of Organization 

When it comes to an organization, it can be differently seen as formal, informal, or social organizations.

  • The formal organization is a cooperative action, where everyone collaborates and works together to achieve more efficient work.
  • The informal organization is about the individual reaction by individuals to the formal organization.
  • The social organization refers to a group of people with common objectives, who work formally to achieve the objectives with greater efficiency.

It is also possible to refer to an open or closed organization. Where the open mentions the continuous interaction of elements to achieve the purpose, in conjunction with the environment that allows strengthening the system. The closed organization, on the other hand, has little relationship with the external environment, where reasons known as cause and effect are distinguished, which mark the entrances and exits.

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Types of companies

For their part, companies can be classified according to different criteria, such as:

  • Activity sector: For example, companies in the primary sector (extraction of material), secondary (transformation of raw material), tertiary (services), quaternary (technology and innovation).
  • Capital ownership: It refers to private, public, or mixed companies.
  • Legal form: Refers to cooperative companies, joint-stock companies, sole proprietorships, or collective companies, etc …
  • Scope of activity: This group includes national and regional companies, among others.
  • Size: With regard to size, they can be considered as small companies, micro-companies, medium companies, and large companies.

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