Association of Chartered Certified Accountants (ACCA) Certification Practice Test

According to organizational theory, what is an organization?

1. A temporary group with no boundaries

2. A set of individuals with diverse goals

3. A social arrangement pursuing collective goals

4. A network of unrelated activities

The correct answer is: A social arrangement pursuing collective goals

An organization is best defined as a social arrangement pursuing collective goals. This perspective emphasizes that organizations consist of individuals who come together with a shared purpose, working collaboratively to achieve objectives that they cannot accomplish alone. The notion of a "social arrangement" highlights the interactions and relationships among members, which are essential for coordinated effort and successful outcomes. The emphasis on collective goals illustrates that the strength of an organization lies in its members' alignment towards a common mission, which can lead to greater efficiency and effectiveness than individual efforts. This is particularly relevant in the context of formal structures, roles, and processes that are typically established within organizations to facilitate collaboration and the achievement of shared objectives. Additionally, considering the other options, while a temporary group with no boundaries might suggest a type of informal gathering, it does not capture the structured, goal-oriented essence of an organization. Similarly, while a set of individuals with diverse goals might exist in certain contexts, this diversity could hinder collective progress unless aligned toward common objectives. Lastly, describing an organization as a network of unrelated activities neglects the fundamental purpose of organizations, which is to coordinate and integrate efforts for a specific mission. Thus, understanding an organization as a social arrangement focused on collective goals is foundational in organizational theory.