Business Environment Essay
Added on 2020-12-29
15 Pages3330 Words209 Views
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[Business Environment]
IntroductionDifferent types of organizations and their purposesThere are three types of organizations – public, private and voluntary organizations.Public organizations include government organizations and also public sector companies. Publicsector companies are those that have government as their majority owner. The objective of theseorganizations is to serve the citizens. However public sector companies now have value creationfor their shareholders also as an objective. A number of such public organizations are regulatorsthat regulate private sector companies in various industries[ CITATION Sam16 \l 1033 ]. Publicorganizations are usually financed by government money that is raised from taxpayers.Taxpaying citizens are the financers of the public organizations. Public sector organizations arealso concerned with policy making in a number of areas. Legal structure of these organizations isusually supported by some act or law of the legislature or by an executive order of thegovernment.Private sector organizations are private companies and businesses. These privatecompanies and businesses serve their customers, shareholders and stakeholders. Profit is one ofthe most important goals for these organizations[ CITATION Jon13 \l 1033 ]. Shareholder wealthcreation is one of their main responsibilities. They raise financing from their shareholders andcreditors. They are obliged to return back this financing through payments on loans fromcreditors and dividends or capital appreciation to shareholders. These organizations provideemployment to majority of citizens. They are also big tax payers. The legal structure of theseorganizations is usually in the form of a partnership, limited liability partnership or a company. Ifthey are registered as a company then they can be a private limited company or a public limited
company. A public limited company should not be confused with a public organization. A publiclimited company is one that has raised money from the general public and is listed at a stockexchange, such as the London Stock Exchange. The liability of owners and partners incompanies and limited liability partnerships is limited only to the extent of the capital providedby them[ CITATION Cha17 \l 1033 ]. So if a company fails to pay back on its debt obligations, theassets of its shareholders or owners cannot be seized and sold for recovering the money owed. Voluntary organizations are non-government organizations that are engaged in achievingsome non-profit cause. These organizations usually have the structure of a private organizationbut profit is not their sole motive. Many of these organizations are involved in charitable acts.There are various acts in various countries under which these voluntary organizations can beregistered. The structure, scope and size of different organizations are linked to their objectives.That structure is chosen which is most conducive for them in order to achieve their objectives.Organizations that do not choose an appropriate structure often fail in achieving theirobjectives[ CITATION Kot18 \l 1033 ]. The key stakeholders of a public organization are citizens and employees of theorganization. In a private organization the key stakeholders are shareholders, creditors,customers, suppliers, employees, state and the community. In a voluntary organization the keystakeholders are the sponsors, employees and those who are going to be affected by the activitiesof the organization. Size and scope of various business organizations
The focus here will be a private business organization, Tesco. Tesco is a Britishmultinational retailer. It has operations in more than 7 countries[ CITATION Tes18 \l 1033 ]. Thesize of a multinational private organization is very significant. It scope extends to servingcustomers and stakeholders in many different country. For public organizations, voluntaryorganizations or private organizations that are not multinational, the scope is limited only toserving stakeholders in one country. However there are a number of multinational voluntaryorganizations too, such as Oxfam.Domestic private organizations are those that operate in only the domestic market. Theyare therefore vulnerable only to the macro-environment in the home country. For instance acompany that operates only in United Kingdom will be vulnerable only to the macroeconomicenvironment in UK[ CITATION Bla17 \l 1033 ]. Such an organization will be impacted heavily by amacroeconomic event like Brexit. A multinational organization is vulnerable to macroeconomic environment of all thedifferent countries in which it operates. The advantage of having this structure is that it reducesthe risk of being exposed to macroeconomic conditions of just one market because of marketdiversification. A multinational company such as Tesco will be less vulnerable to the risks ofBrexit because good performance in some of the other markets may offset the negative impact ofBrexit on the British market. However in the case of Tesco, it has overdependence on the Britishmarket for its revenues. So it may not get the diversification benefit as much as a company likeMcDonald’s that is even a bigger multinational with operations in more than 120 countries. Interrelationship of the various functions within an organization and how they linkto organizational structure
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