Profit and Non-Profit Organisations

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A profit-seeking organisation is established and operated mainly to earn profits. It is basically a business organisation that produces or buys and sells goods and services on a regular basis to satis…

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Profit is needed for survival, modernisation, expansion, and growth. Without some profit, a business organisation cannot survive for long.

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The main problem is maximising operating efficiency. Owners and managers try to reduce costs and increase productivity.

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Alfred Marshall gave this definition. He described it as an entity that combines labour, capital, and land to produce goods and services with the goal of earning profit.

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Examples include a grocery shop, a sugar mill, an automobile repair workshop, and a truck company. These are business organisations run mainly to earn profit.

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A non-profit organisation is set up and run not to earn profits but to serve society. If there is any surplus, it is ploughed back into the organisation to support its mission.

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Peter F. Drucker gave this definition. He explained that any surplus is ploughed back into the organisation to further its mission.

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David O. Renz gave this definition. He described them as organisations formed to serve a public or community purpose, without profit distribution to controlling individuals.