Interrelationship Between Different Functional Departments of Organization

This article discusses the interrelationship between different functional departments of an organization, such as Human Resources, Finance, Marketing and Sales, and Operations and Production. It explores how these departments work together to achieve the company's goals and objectives. The article also highlights the advantages and disadvantages of these interrelationships.

Khalid Ramzan
S0272665
Unit 1: Business
and Business
Management
[4897]

Contents
INTRODUCTION...........................................................................................................................3
Explanation of different type and purpose of organization with their legal structure.....................3
Size and Scope of two different organization..................................................................................5
Interrelationship Between Different Functional Department of organization.................................6
Human Resources Department....................................................................................................6
Finance Department.....................................................................................................................8
Marketing and Sales Department.................................................................................................8
Operations and production...........................................................................................................9
Macro Analysis (PESTEL) of Aviva Private Limited...................................................................10
Political Factor...........................................................................................................................10
Economic Factor........................................................................................................................10
Social Factors.............................................................................................................................11
Technological Factor.................................................................................................................11
Environmental factor.................................................................................................................12
Legal Factor...............................................................................................................................12
SWOT Analysis.............................................................................................................................13
SWOT of Aviva.........................................................................................................................13
SWOT of The British Heart Foundation....................................................................................14
Impact of Micro and Macro Factor on Decision Making and Business Objectives of organization
........................................................................................................................................................15
Impact of Macro Factor on Business Objective and Decision Making.....................................15
Impact of Micro Factor on decision Making and Business Objective.......................................15
Interrelation between SWOT an PESTEL Factors........................................................................15
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Business environment can be defined as those internal and external factors that can affect
business. These factors can affect performance of business. So company must lay special
emphasis on all external factors that is going to affect business. Present report will lay emphasis
on Aviva. Aviva plc is a British multinational insurance company headquartered in London,
United Kingdom. It has about 33 million customers across 16 countries (Turnbull and Haddud,
2018). Company also have been listed in London Stock exchange. The purpose of these
assessment is to develop critical knowledge of the organization and its functions that are
interrelated to each o.ther Present report will lay emphasis on various type of enterprises and on
their purpose. Assignment will also lay focus on the size and scope of different type of
organization. It will also provide organizational structure of Aviva and will also explain their
inter-relationship with other functional units. Report will also lay emphasis on the macro
environmental factors which can affect business. It will also explain SWOT analysis of two
different business.
Explanation of different type and purpose of organization with their legal
structure.
There are various types of organization and also these firms have different purposes. This
includes following:
Private organization- Organization contains a number of units created by company to
handle company operations that help achieve goals. There are including several kind of business
that is run by an individual to generate profit. This structure mainly concentrate on the desire of
customers and wants. After that measure satisfaction of customers for their different types of
products. An organisation can be categorised into different types of sectors like sole Private,
public and voluntary sectors (Eller, Fischer and Diedrich, 2016). There are defined different
sectors and their purposes -
A profit organisation are businesses that use a variety of plan of action to generate a
profit. The main goal of the company to make money as conflicting to a non profit organization
which focuses on a goal like support to community and is afraid with money only much as
necessary to keep the organization operating. For instance, Aviva is a British multinational
insurance company which is being engaged in making profit, attaining and retaining large
number of consumers. (Armeanu, Istudor and Lache, 2015).

Purpose – The main purpose of the Aviva is to provide international savings, retirement
and insurance benefits to the consumers of company and also to their shareholders, communities
and employees working with them.
Legal structure- It has been analysed that Aviva is being engaged in following various laws,
rules and regulations. Like for example they make sure that every employee in company is being
provided with safe and secure environment so that they can create employee loyalty.
Not for profit organisation (Public) – These types of organization that do not earn
profits for its owners. All of the money earned by or donated to a not for profit organization is
utilised in pursuing the organization's objective and keeping it running. Not for profit
organization consider as tax exempt charities and other types of public services and they are not
required to pay most taxes. For instance, Crown Prosecution service is the public agency that is
being engaged in doing criminal prosecutions that to in England and wales (Michalski,
Illustration 1: Organizational Structure of Aviva PLC

Rutkowska-Podołowska and Sulich, 2018). This organization is run and directed by public
prosecutor.
Purpose - The purpose of crown prosecution service is to give advices that are legal to
police forces working in England and Wales. This can be done by them during course of criminal
investigation. (Buxel, Esenduran and Griffin, 2015).
Legal structure: It has been analysed that firm is being listed in London Stock exchange. It
has also been analysed that various laws rules and regulations has been followed by crown
prosecution service. Like for example the extradition Act 2003 is being followed by the public
organization. In this they provide extradition services within England and Wales.
Non-governmental organisation (Voluntary) – It is a non profit, citizen based group that
operations independently of government. These types of organisation also known as civil
societies that are organised on national and international level to serve particular social or
political purpose and are coordinating rather than commercial in nature (Erasmus, Strydom and
Rudansky-Kloppers, 2016). For instance British Heart foundation is a voluntary organization
which supports those people who are suffering from heart attack. It also funds those circulatory
diseases and also the individuals who are at risk of it. Purpose - The aim of British Heart
Foundation is to improve the health condition of people who are suffering from chronic heart
disease. They support these people to enhance their quality of life. This voluntary organisation
supply goods and services into different areas like inclusive education, health and livelihoods.
Through three approaches focus on these areas like social inclusion and gender, social
accountability and Resilience.
Legal structure: The British Heart foundation is being engaged in providing equal
employment opportunities in their voluntary sector to both men and women. This has supported
them in retaining employees and also this feature of company has created employee loyalty and
belongingness.
Size and Scope of two different organization
Basis Aviva The British Heart Foundation
Size It has been analysed that Aviva
has total number of employees
which are 29,600. They also
The British Heart Foundation has
total number of employees which are
3000. Also they have top 10

have £289.9 billion assets under
management
competitors
Scope The Scope of Aviva is to provide
best retirement and insurance
benefits.
The scope of the British Heart
foundation is that they are currently
funding over 1000 research projects.
There main focus is on
cardiovascular research. They are
aiming to also invest in Research
Excellence
Market share Aviva has been expanded their
market in Hong Kong, India,
France, Canada, Cofco and many
more areas.
The British Heart foundation has
been ranked 32 for promoting health
and quality service. They have also
been serving their services globally.
Profit share From the annual report of
company it was identified that
firm has made profit of £ 3.12
billion
From the annual report of company it
has been analysed that they have
generated profit of £22.9.
Sustainability It has been analysed that
company is making use of CSR
so that they can create their
goodwill
The British Heart Foundation has
been involved in making effective
use of resources so that future
generation do not face problem
Growth Company has been involved in
expanding their market share and
also enhancing their profitability
aspects.
It has been analysed that the
voluntary firm is growing internally.
They have been engaged in
providing training and learning to
their employees.
Interrelationship Between Different Functional Department of organization
A business organization is consisted of various functional departments that are important
for high performance of company in the global market. Each functional department is allotted
with different operation on basis of their expertise (Eling and Schaper, 2017). Main functional
department of business organization are- Human Resources Department, Finance Department,

Marking and Sales Department, Operation and Production Department. These all departments of
organization are interrelated to each in order to improve their improve the market performance of
company.
Complexities of different type of business structure: Rules and regulations which are imposed
in organizational structure can hamper the working of employees. There might occur chances
that there are employees who have miss- communication in between them. This will lead to
lowering down efficiency of workers.
Inter-relationship of marketing with HR: in this HR department of company is engaged in
hiring efficient employees which are being attracted to effective marketing.
Human Resources Department
Human resource management is one of the most important department of organization
like Aviva PLC. The main work of HRM department is to deal with various people that are
connected and associated with the business of company. Main function or HRM are divided in
two categories that are known as managerial functions and other one are operative functions.

The managerial functions of HRM are for performance of organization in international
market. HRM need to communicate with other departments of company for better
communication of data and information to improve the operational capability of company. For
example in business planning, market research HRM have to deal with sales ans marketing
department. For the purpose of people management in organization Human Resource
Management have to deal with all other departments of organization (Khan and Quaddus, 2015).
By achieving effective interrelationship with other department they will be able to meet
organizational goals and objective. This interrelationship is also important for this interrelation
gets complex with bigger and complex organizational structure.
Advantages
1. Improve people management on the work place.
2. Improve communication between various departments.
3. Help in workforce related issues in company.
Disadvantages
Illustration 2: Functions of HRM
(Source: Human Resource Management, 2019)

1. It is a time Taking process
2. Needs Extra resources to maintain this inter-relationship.
Finance Department
The role of finance department in Aviva PLC is to manage all the matter related to fund
management in organization. The main work and objective of this department is to manage
monetary issues and management with in the organization that includes budgeting process, cash
flow handling and fund allotment (Mawejje and Okumu, 2016). To meet the objectives of
organization related to finance this department have to communicate with other department.
With the complex structure of Organization this interrelation becomes more complex. This
interrelation is basically consists of communication related to monetary issues and transactions.
Advantages
1. Improve the preciseness of company budget.
2. Reduce the risk of financial crisis and failure in organization.
3. Help in fund allotment process.
Disadvantages
1. Time consuming process.
2. Make budgeting more complex.
3. Increase work load of employees of Finance department.
Marketing and Sales Department
It is one of the main department of business organisation that handle the promotion
activities of organization that are related to the product and services of Aviva PLC. The functions
of this are also associated to the collection of market data and deliver information to the
consumer about the services and products of company (Huang-Horowitz, 2015). For example
marketing and sales department of company communicate the market report with other
department of organization. On the basis of this information sharing operations of marketing
department other departments take respective action to complete the market objective of Aviva
PLC . This interrelation is all about the sharing of market and departmental information with
other organization. On the small scale this interrelation is simple and on higher level this process
is more complex and lengthy process.
Advantages
1. Provide better market handling to organization.

2. Help the organization to improve their business practices per the market demand.
3. Reduce the chances of market failure.
Disadvantages
1. It causes irregularity in production of goods and services that affects the performance of
organization.
2. It is a time consuming process that can affect the performance of organization.
Operations and production
The operation and production department of Aviva is responsible for better and effective
profitable production of product and services. This department of organization is responsible for
the effective production of the company product and services in order to meet the market
demand of company product. In order to manage the speed of production and manufacturing of
product is depended on the information that is provided by other departments. For example the
production of goods depends on the market demand data that is provided by the marketing and
sales department. For continuous production of product and services, production department
have to maintain connection with finance and management of organization (Petrescu and
Petrescu-Mag, 2016). This is how the production department of Aviva PLC maintain relation
with other department in order to maintain supply chain objectives of organization to the market
place. For the hierarchy and matrix structure this interrelation have higher degree of controlling
and monitoring.
That is how various functional department of Aviva PLC are interconnected to each other
in order to meet the business of organization and it also help to reduce the complexity of
organizational structure.
Advantages
1. Data related to market demand help them to adjust their operations to improve the
sustainability of organization.
2. Reduce the cost of production by making demand based production system.
Disadvantages
1. Affect production capability of production department.
2. It needs continuous communication with other departments which is complex process.

3. The organizational structure used by Aviva PLC is Vertical Hierarchy. There are
different advantages and disadvantages of this type of organizational structure.
4. Advantages-
5. Have clear line of authority.
6. People have well defined role in organization.
7. Good for better control.
Disadvantage
1. Large communication gap between employees.
2. It is rigid structure for creative working.
3. Less flexibility in organization.
Illustration 3: Organizational Structure of Aviva PLC

Macro Analysis (PESTEL) of Aviva Private Limited
PETEL analysis is used by the organization to know the external factors of business
environment in order to evaluate their impact and influence of their conditions. It is generally
considered as a process or a tool that is used by business organization before creating or planning
their business strategy (Prajogo and Oke, 2016). The main factors that are consider in PESTEL
analysis are- Political Factor, Economic factor, social and cultural factor, technological factor
environmental factor and legal factor. ,the main objective of the Pestal analysis to study the
external environment to know it impact of this factor on decision making and operations of
company.
Political Factor
There are some political factors are need to be considers in order to make effective
policies and strategies to successfully operate in market place. The factors like stability in
political scenario, risk of military invasion, corruption in financial area, changes in government
policies like taxation policy and pricing policy can affect the business of Aviva PLC in United
Kingdom market. For example the Brexit is a considerable factor that can affect the business
operations of Aviva PLC in UK market (Makarova and Polyanin, 2015). UK is 6th largest
economy around the world so it could be larger advantage for company. The impact of political
factor are both positive and negative for Aviva.
Positive Impact- The pricing policy and taxation policy of UK is too easy and it is effective for
Aviva to gain higher profit with simple taxation and pricing policy.
Negative Impact- Brexit is major issue for Aviva PLC in UK market because there is bit
uncertainty in UK market that can cause negative impact of business of Aviva.
Economic Factor
There are many advantage of stable national economy for a particular company. Aviva
PLC is an insurance company so the impact and influence of Economical factor is huge on their
business practices. The impact of Brexit and change in national and international economy,
changes in taxation policy can influence the business of Aviva PLC (Ricciardi, Zardini and
Rossignoli, 2016). It has both positive and negative of economical factor on the financial
steadiness of their business.
Positive Impact- The Pricing policy and taxation policy of UK s very effective for different
business organizations. The taxation policy made by government is comfortable for business

organization like Aviva PLC and it can help them to take creative and innovative changes in their
business practices to gain higher profit in market place.
Negative Impact- Due to Brexit there is bit instability in UK market which is not good for the
Aviva. It can affect their profit because people are in state of confusion about making
investment. So, there will be only few opportunity for organization to successfully conduct their
business.
Social Factors
Social factor are related to the cultural, personal and social values of organization. The
main issues that are included in social factor are- population, cultural diversity, average income
of people and education level of people. This factors can affect the business of organization in
particular market.
Positive Impact- The literacy rate in UK is 99 % which is too good from the perspective of
organization (Burns and Dewhurst, 2016). This will help them to recruit more people in
organization who can improve their productivity. The Average income of people if high and it is
advantage for them to perform business successfully in UK.
Negative Impact- For Aviva there are some social factor that need consideration of company.
Factors like cultural diversity of UK is to high which is one of big challenge for company. This
will be difficult for Aviva to make effective business policy for UK market.
Technological Factor
United Kingdom is a developed country and in field of technology they are too good.
There are different issues Aviva PLC can consider in the technological factors are related to
change and innovation in current technology. The technology used by other competitors is also
major concern for them. There are some positive and negative impact of technological factor on
Aviva PLC which are-
Positive Impact- The current technological improvement implemented in organization are
effective for their productiveness (Foster, O'Reilly and Dávila, 2016). The techniques used by
Aviva PLC for marketing and operation is digital technology which is highly effective for them.
Negative Impact- The technology used by the competitors of Aviva is also of advance level that
is effective to face tough competition in the market place. This is big challenge for them to
overcome in UK market. This can affect their positioning in the target market.

Environmental factor
The environmental factor are more related to the environmental conditions. The impact of
environmental factor is low on Aviva PLC because it is a insurance company and its operation
are mostly sustainable for environment. But there are some legislation need to be considered by
Aviva PLC to meet corporate social responsibility. By this they can improve their image in
market place.
Positive Impact- By considering the concept of recycling and reusing can help the organization
to meet environmental needs. The high geographical diversity can help them to improve their
business in UK market to generate high marginal profit.
Negative Impact-there are no major impact of environmental factor for Aviva because they are
effective with their sustainability policy. This geographical diversity can affect their business by
environmental limitation of Local Habitat.
Legal Factor
There are many legal laws need to be followed by an business organization. This
legislation are made by the legal authority to pur some restriction on the action of organization
that are not good legally. For example business laws care effective for actions of the organization
(Bryson and Daniels, 2015). They need to follow all employment laws in order to conduct
business without any legal issue. For example business contracts, copyrights and, employment
law and health and safety law can affect the business of Aviva.
Positive Impact- There are many rules and regulation are followed by the organization. This is
important for them to follow all these is in order to legalize their certain actions in UK, by full
filling Legal requirements they can conduct business in any region of Unites Kingdom.
Negative Impact- The main problem with organization is related to the decision making of
organization. Some of legislation like employment law, labour law and health and safety law
force the organization to perform regular reforming of organization which is lengthy process for
business organization.
This is how different external factors can affect the business of Aviva in United Kingdom
market. This is important for them to study all these factor in order to avoid the negative impact
of these external factors (Hamilton and Webster, 2018). To avoid these factor organization can
implement different changes in their business policy in order to achieve higher productiveness in
the market place.

SWOT Analysis
SWOT of Aviva
Strength
1. The experience that is hold by Aviva PLC is too high in entering in a new market. It can
help them to enter anew market effectively.
2. The community that is developed by the organization is too good for their business
performance.
3. The suppliers of Aviva PLC are good for their business performance.
4. The work force of Aviva PLC is highly skilled and reliable.
5. Distribution network used by Aviva PLC is robust and effective for their business.
6. Track record of organization is too good and it can help them to retain their investors
Weakness
1. The Organizational structure used by Aviva is not compatible for future plans. It is only
effective in current scenario.
2. To implement new technology they need higher capital.
3. The financial plan of company is not that much effective for their further business plans.
4. There are many new competitors of organization which are affecting their business in
current market.
5. The net profitability ratio of Aviva is below than average in this inductry.
Opportunities
1. New environmental policies can help the organization in the current market scenario.
2. Better marketing policies can help them to dilute the competitors in the market place.
3. Decreasing transportation can help the organization to gain higher profit.
4. Online channel can be implemented in organization to gain new consumers.
5. New taxation policy is effective for organization and Aviva PLC can take advantage of
it.
6. Utilization of current and future trends can help them to generate higher profit.
Threats
1. There is high competition faced by company the local market.

2. Less innovation in business policy is reducing their business in the market place.
3. Demand of their services are seasonal based so, continuous profit is not possible.
SWOT of The British Heart Foundation
Strength
1. Huge experience in the United Kingdom market .
2. Better image in the market place.
3. Effective research strategy used by organization which is good for their efficiency.
4. It is public powered organization.
Weakness
1. Still a lot research need to be made in the particular field.
2. Less number of employees.
3. Resources are limited.
4. People handing capacity is not good according to current demand.
5. Need technological improvement.
Opportunities
1. Innovative technology can improve their work practices.
2. Organization can hire new staff to meet their workforce requirement.
3. Development of new work place can improve the performance of organization.
4. There is huge technological scope of health care organization.
Threats
1. The increasing rate of cardiac cases can decrease the performance of organization.
2. Higher work load is challenge for them.
3. Limited resources is also a trouble for them.

Impact of Micro and Macro Factor on Decision Making and Business
Objectives of organization
Impact of Macro Factor on Business Objective and Decision Making
Business Objective- Macro factors of organization are more important for them because this
factors are not in control of Aviva PLC and these factors can improve or reduce their
productivity by affecting their performance in target market (Vij and Bedi, 2016). The factors
that have positive impact on business organization can help them to complete their objectives
with high effectiveness and negative factor like high cultural diversity can reduce business
effectiveness of organization in the target market.
Decision Making- This is important for the Aviva to consider all external factor while taking
crucial decision for organization. For example while making changes in the business. The
analysis of these factor can improve their decision making process that is efficient for their
business performance. For example, Legal acts like employment act and labour laws can force
the organization to change their decisions related to organization policy.
Impact of Micro Factor on decision Making and Business Objective
Business Objective- All the decision that are made by organization are depended on the internal
factor and capability of the organization (Ifinedo, Pyke and Anwar, 2018). The board of director
and senior managers consider the Micro factor while drafting organizational objective to keep
the targets of company achievable.
Decision Making- The decision taken by organization are highly depended on the internal factors
and capabilities of organization (Janković, Mihajlović and Cvetković, 2016). The decisions like
business expansion and new product launchis depended on the strength, weakness, opportunities
and threats of market. For example the new market entering policy of Aviva is too good then the
can consider this at time of decision making while entering in a new market. The impact of micro
and macro factor is huge on the business operations of organization.
This is important for organization to consider all different factors to make effective
decisions for organization which can provide extra benefit to company in selected market place.
Interrelation between SWOT an PESTEL Factors
The strength and weakness of organization are depended on the external factors. It can be
understand by different examples. The internal strength of organization can help Aviva to deal
with different external factor. For example the higher experience is strength so Aviva in entering

new market this thing can help them to avoid of minimise the cultural issues of organization
(Kozubíková, Homolka and Kristalas, 2017). For example the weaknesses of organization can be
avoided by taking advantages of external factors. This is how the internal factor are directly
interrelated to external Factors.
CONCLUSION
This report is concluding the importance of business environment analysis for Aviva
Public Limited Company. In report SWOT analysis has been performed to evaluate the internal
strengths of company. PESTEL analysis of Aviva PLC has been performed in order to know the
impact of external factor on the performance of the business organization. Various type of
organization has been considered in this report to better understand the concept of organizational
size, scope and purpose. The organization structure of public, private and voluntary has been
studied in the report. As per the evaluation of the market place private firm like Avava PLCis
better suitable for making investments.

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