Organization is a concept that includes groups of people of all types.   An organization is a subtype of system (that is, a human activity system).  From the point of view of the human system of interest there are internal organizations and external organizations.  Within some context there are replicated organizations (field offices, project teams) and singular organizations (the Board of Directors).  An organization can be formal (a department), informal (a committee), or legally constituted (a corporation).

Figure 2

Two recursive relationships among organizations are shown.  A containment relationship says that one organization is part of another organization, as in the standard organization chart. It is also possible for an organization to report to another, without actually being a part of it as a larger entity (such as a project team that reports to a steering committee, without being contained by the steering committee).

Organizations can be parties to agreements.  An organization requires certain roles to perform its functions, which in turn are dictated by the role played by the organization itself.  An organization may be defined by a functional area of the enterprise.  It is involved in a number of definable business situations.  It is composed of individuals that are its members.  Like many other business concepts, organizations have discernible states.  Organizations control various types of resources in order to fulfill their roles in the enterprise.