Business Environment Analysis and Organizational Structure

This assignment is a detailed analysis of the business environment, covering various topics such as SWOT analysis, PESTLE analysis, and organizational structure. It also includes case studies on partnerships, government companies, and sole proprietorships, as well as a SWOT analysis of JPMorgan Chase. The assignment requires students to understand the different types of business structures and their advantages and disadvantages, as well as how to conduct a SWOT analysis and PESTLE analysis.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
Explain different type, size and scope of an organization..........................................................3
TASK 2............................................................................................................................................6
Interrelationship of the various functions within an organization and how they are linked to
organizational structure...............................................................................................................6
TASK 3..........................................................................................................................................10
Positive and negative impact of macro environment on business operations...........................10
TASK 4..........................................................................................................................................13
Determining the internal strength and weaknesses and explaining its interrelationship with
external macro factors...............................................................................................................13
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business is a process, which is performed individually or by group of people in order to
make money that can be done by selling their services and products in the market to customers.
The proprietor is personally taxed on all income from the business. To run any business
effectively, it is very important to have a good team and business environment. This can help in
achieving their goals and objectives on time.
Business environment includes the internal and external factors, which can affect their
functions including their employees, customers, management and their overall performance in
industry. Maintaining business environment is very important for owner to run it successfully.
Present report will focus on business of JP Morgan Finance and Investment. It will
discuss about various types of organizations and its size and scope. Interrelationship of various
functions within JP Morgan Finance and Investment and its positive and negative impacts on
macro environmental factors and will analyze its strengths and weaknesses.
TASK 1
Explain different type, size and scope of an organization
Organization is a whole entity, which consists of different people working together for
their goals, for example, an institution that has its own set of objectives to achieve and these are
also linked with their external environmental factors as well in order to work effectively.
Organization must have a great team with high enthusiasm. The main purpose of an organization
is to achieve their targets with effectiveness that can help to compete with their competitors
present in industry (Bull and et.al., 2016). Organizational business exists to make a profit from
that business which can be used for the enhancement of firm. Its main purpose is to increase
production rate and profitability rate in achieving their targets.
There are various sectors in which an organization can run their business successfully.
These can be public, private and tertiary sectors respectively.
Sole Trader
Sole trader is the simplest type of business structure, which can be used by any person. It
is basically run by one individual and owns the entire business. He is legally responsible for the
issues, which can arise. In this type of organization all the decisions and planning related to
business is taken individually. Although they can hire employees who can work for their
company.

Advantages: There are various advantages of this type of business organization, such as there is
only one owner and all the earned profit is his only. It is less expensive and requires less cost to
set up this business. It is easy to change the legal structure later if circumstances change.
Disadvantages: The main disadvantage of this business is to give limited capital investment. It
has unlimited liabilities. They are not seen as a separate entity by the law (Sole proprietorship –
advantages and disadvantages, 2017).
Example: Kurt Geiger is a sole trader, which is a shoe company that is running their business
successfully in United Kingdom. They run their business in private sector.
Partnership
It is a type of business organization in which there is two or more individuals work
together with the purpose of making a good revenue and profit and to run their business
successfully in industry. There are basically two different types such as general and limited
partnership business. All decisions made for business is done by mutual agreement (10 super
successful co-founders and why their partnerships worked, 2016).
Advantages: There are various advantages of this type, for example, it becomes to start any
business. Availability of capital is more in partnership. It also helps in tax relaxation as it is
operated between two or more people.
Disadvantages: This can include various factors such as liability of partners for debts of
business is unlimited in this type. There can be a dis-agreement between them regarding their
decisions and planning.
Example: The best example of partnership business is the Microsoft Company, which is run by
Bill Gates and Paul Ellen. They run their business in private sector (Bull and et.al., 2016).
Limited Company
Limited company is a company limited either by shares or by guarantee. The liability of
its members is limited to the amount invested or the guaranteed by them in the company. A
limited company is a separate legal entity, distinct from its owners. Members are not responsible
for their actions and company can enter into contracts in their own name and is responsible for
its debts and liability. If a limited company becomes insolvent, then directors and members are
not liable for the unpaid amount (Chang, 2016). It is mandatory to register a limited company.

They are of 2 types- public and private company. Public company can raise its capital from
public but in a private company only those which are defined by law can become members.
Advantages: Advantage of investing is it minimizes members liability, tax benefits, independent
identity.
Disadvantages: Disadvantage is distribution of power, can raise fund up to a certain limit,
lengthy and time consuming registration process.
Example: Quora, Facebook
Public Limited Company
Public limited company is one who can sell its share to public by listing its share on stock
exchange(listed or unlisted) or by initial public offering (IPO) which can be acquired either
directly or through trading. Shares are freely transferable among the people trading on stock
exchange. The company can sue and can be sued. A minimum of 7 members are required to form
PLC. Liability of members is limited and it is a separate legal entity. The company has perpetual
succession.
Advantages: Advantage of forming PLC is more capital can be raise capital from public,
disadvantage of forming PLC is they have to follow many regulations, they are required to
conduct AGM's and at least 2 directors must be present (Chang, 2016).
Disadvantages: they are required to bring prospectus to bring IPO, expensive, runs under the
supervision of SEBI and other regulatory bodies, have to publish its accounts to public, quite
lengthy process for formation.
Example: Rolls-Royce plc, Burberry plc
Government Company
Government company is one in which not less than 51% of its paid up share capital is
held by state government, central government or partly by state government or by central
government. Also, includes a company which is a subsidiary of government company. It is
formed by registering itself in the companies act or any other prescribed law. Also, known as
mixed ownership company. The company is free from budgetary and accounting controls. The
capital invested in the company is majorly of government only. The reports of meeting of such
companies are presented to the legislation. It is a separate legal entity and can make contract and

file suits. Main purpose of forming a government company is for the welfare of nation with
power of finance and military and for improvement of the nation (Government Company:
Characteristics, Advantages and Limitations, 2017).
Charitable trust are formed for the purpose of charity, education, promotion, health and
care, relief from poverty. There main purpose is to help the people to meet their basic needs.
There can a public or a private trust. They provide exemption to the donors and even the
charitable trust can exemption from payment of tax.
Advantages: The greatest advantage of government company is that they are easily formed as no
requirement of statute is there. It has a separate legal entity and so can manage its affairs on its
own (Curmi and Sammut-Bonnici, 2014).
Disadvantage: Interference of ministerial in the working of the company is found to be very
frequent which is a huge disadvantage of government companies.
Example: Oxfam
TASK 2
Interrelationship of the various functions within an organization and how they are linked to
organizational structure
For any business, it is very important to have an effective organizational structure that
can help them to manage their work properly. It is a type of structure, which is used to define
various functions that play an important role in effective functioning of company. These can
include different rules, regulations and responsibilities within firm. If any company does not
have a proper organizational structure then it can affect them in lot of processes. There are
various types of organizational structure within company such as functional, divisional, and
matrix structure (Hair Jr and et.al., 2015).
Functional Organizational Structure: In this process, company divides work of their
employees according to their capability to improve functions. For example, depending upon the
functions like there may be a marketing department, which controls the marketing of their
products and services, a sales department to maintain the sales of their products.

Divisional Organizational Structure: This is typically used in larger companies that operate in
a wide geographic area to sell their services and products. It divides various organizational
functions into products or regional divisions related to geography (Hamilton and Webster,
2015).
Illustration 1: Functional Organizational Structure
Source : (Organizational Structure: Functional Structure, 2017)

There are various functions, which exists in an organization, for example, Human
Resource Management, Research and Development, Production and Operations, Customer
Service, Sales and Marketing, Finance and Accounts etc. All these factors are inter-linked with
each other and help in achieving their goals and objectives in time. This plays an important role
in helping them to grow their business in market (Newton, 2014).
Following factors are linked to their organizational structure to manage their work effectively
that is explained below:
 Human Resource Management (HRM): This is the most important department in any
organization as it helps in improving an overall performance of firm by recruiting the
best candidates or employees for them. For JP Morgan, it is very crucial to have highly
qualified and skilled employees to increase their productivity. HRM also helps in giving
them training and development sessions to enhance their work performance in an
organization. It also helps in keeping orientation of firm which helps in maintaining good
working conditions. Another important task of Human Resource team is to manage
employee relationship (Prajogo, 2016).
Illustration
2: Divisional Organizational Structure
Source : (Organizational Structure, 2016)

 Research and Development (R&D) Management: This department helps in processes
like, innovation, introduction and improvement of their products and services which can
help them in delivering the best products to their customers. It also helps in improving
their existing products as well which plays an important role in growing their business in
market. An effective R&D team provides company a chance to enhance their overall
performance. It is very important to examine the positive and negative impact of their
strategies or planning before applying it into their system. This will help them to produce
a good revenue from the business.
 Marketing and Sales Department: A marketing and sales department plays a crucial
role in any business to increase their productivity in market. This department helps to
promote their techniques which is being used by therm to in the promotional activities of
the organization. It helps to provide the necessary research in identifying their target
customers and other audiences in order to increase their business (Racz and et.al., 2018).
To promoter their services or products company can use various factors which is
available in the market, for example, they can give their advertisements in newspaper,
magazines, etc. or they can even use e-marketing as well which includes used of their
own website, by promoting in social media platform, like, Facebook, Twitter, etc.
 Accounts and Finance Department: This department is also very important for the
organization in order to maintain their financial status. It helps in evaluating the overall
financial statement of JP Morgan to work properly. It also ensures in maintain their
budget to operate their activities within the given budget as it is very crucial to have
stability in their financial statement. This department typically include planning,
organizing, auditing, accounting for and controlling its company's finances. This
department ensures that all the details are kept as a record of the cash flow to estimate the
overall profit and loss of the organization (Prajogo, 2016).
 IT Department: It plays an important for effective working of the organization. IT helps
businesses to manage their daily operations, control costs and compete with large and
established companies. It contributes in so many areas of the company, such as, in
marketing processes, data management, etc. It also helps in ensuring the security of their
data in order to protect it from breaching or being misused by any person or company. It

also helps in information security management to ensure the security of the organization.
So, its very important to have an effective IT department.
 Operational Management: The main function of this department is to make strategic
planning for the organization to increase their business in industry. It also helps in
introducing new service or products into the market which can increase their production
rate as well as can help in generating a good revenue from their business. This
department generally works on planning and scheduling the process involved in the
production of their products. Operational management basically deals with various
factors which can affect their business, for example, capital, labor, material, energy of the
company to work effectively.
 Administrative Department: This department of the organization helps in dealing with
all the administrative work, such as, replying and resolving all the issues related to their
customer's feedback to improve their services and products. They are also responsible to
do all the documents related work like forms, newsletter etc. The main areas in which
this department contributes its services includes, planning, direction, control and
organizational functions (Racz and et.al., 2018).
 Customer Service Department: This depart helps to solve the inquiry of their
consumers which can be related to their services or products. This department helps in
making their customers feel satisfied from their products and services.
TASK 3
Positive and negative impact of macro environment on business operations
Macro environmental factors are those which are present externally and can affect the
business to large extent. These macro factors are also known as external factors which can be
analyzed by PESTLE analysis, which includes, political, economic, social culture, technological,
legal and environmental factor which is explained below:
1. Political factors: These are government intervenes that effect the functioning of business
externally as well as internally in the economy. Tax policy, labor policy, environmental
law, trade restrictions, tariffs, etc. are some political factors that can effect smooth
working of any organization. There can be many positive as well as negative impacts
within business environment from such factors. Positive impact is that Morgan can work
smoothly under such laws and regulations formed by the government unafraid of

fraudulent. As Morgan is bounded by many rules, regulations, taxes, tariffs, etc. it is
difficult for any fraud person or unauthorized organization to take financial or investment
assistance from Morgan. On a negative note, due to so many legal restrictions and
political factors effecting Morgan crucially can lead to decrease in the services provided
by Morgan to many financial industry (Singh, 2017). For example, if company X wants
to take financial services from Morgan, then firstly X has to make itself very strong in
terms or documentation and legal proceedings. As it is not possible for any company who
is weak in terms of documentation and is not fully authorized by government to enter into
such market to take financial services by Morgan.
2. Economic Factors: These are those factors that greatly effect business growth and
diversification. It includes interest, growth, inflation and exchange rates. As the
dimensions of Morgan are financial crises, population growth, urbanization rate, and rate
of unemployment. There can be some positive and negative impacts of economic factors
on the financial services provided by Morgan. On a positive note these factors will result
in realizing better profit terminologies for Morgan. And on negative side decisions made
by the Morgan and operation of business effects greatly. For example:- interest rates
affects any firm's cost of capital and indirectly effects the growth prospectus of that firm.
3. Social culture Factors: It is all about cultural aspects and health consciousness. It
includes population growth rate, age distribution, career attitudes and emphasis on safety
measures. Positive and negative effects of these factors can easily be determine as higher
the trends in factors higher the chances of change in demand of company's products and
services. Morgan need to give great emphasis on the social cultural values of the
customers to survive in the market with such big competitors like Bank of America,
Citigroup Incorporation. Morgan has to approach current and potential future customers
to compete against such institutions is very much important. For example, today's aging
population may not show their willingness to work, thus Morgan will have to increase the
cost of labor, as many companies may change their current and future strategies to adapt
according to the social trends caused from these factors like recruiting the older
employees (Smart and Creelman. 2017).
4. Technological Factors: Technological aspects like R&D activity, automation,
technology incentives and the rate of change in technology are included in such types of

factors. As communicating with customers in this new trendy and modern era with
effective techniques of marketing is very important. On positive note by the effects of
these factors there will be advancement of technology in Morgan, which in turn will
promote services rendered by Morgan to customers. On negative side there can be
barriers for entry and can determine minimum efficient production level influencing the
outsourcing decisions of Morgan (Singh, 2017). For example:- Morgan opted for
promotional campaigns to increase awareness of people about the services rendered by
company. Banking services were also advanced by applying for credit cards and modern
payment methods to survive in this modern era.
5. Legal Factors: These are the factors that can effect the operations of any company, its
cost of services, and the demand of its products and services rendered. So a company
needs to prevent all the legal disputes of the company for better, smooth, and long term
functioning of the company. Factors includes are discrimination law, consumer law,
antitrust law, employment law and health and safety law. Positive impact of this on
business is that, due to the policy of fixed rates of interests Morgan can form long term
policies and strategies for company and is very much beneficial to company as well as
customers. Negative impact is that there are huge chances of unwanted legal formalities
and proceedings, which can result in wastage of lot of time and money of the company.
For example, Morgan follows each and every rule stated by the government then only he
will be able to survive in the operated population of this era and in addition to these
services Morgan will never be noticed in other legal activity.
6. Environmental Factors: It means ecological and environmental aspects of the
environment like weather, climate change, climate, etc. Which may affect industries such
as tourism, farming, and insurance more if compared to others. There is no such crucial
effect on the business operations of Morgan from these factors. Positive impact from
these factors on Morgan is that there is growing awareness regarding the potential
impacts of climate change affecting company's operations and services they offer to
customers. On the other hand there are some negative impacts too from such factors of
the economy. Growing awareness from these factors can help in creating new markets as
well destroying the existing ones, which is not good for the company. For example:-
Morgan by analyzing environmental effects is paying attention to the ecological aspects

of the business which in turn helping the company to come out with new ideas of creating
new markets to attain good market share in financial services industry, which in turn
destroying the existing markets for customers as well as company to provide longer
services in financial services industry (Smart and Creelman. 2017).
TASK 4
Determining the internal strength and weaknesses and explaining its interrelationship with
external macro factors
To analyze internal strength and weaknesses of JP Morgan Finance and Investment, it can
be done by applying SWOT analysis on the organization. It is a process which is used to study
internal strength and weaknesses which can be very useful in understanding their business more
precisely. SWOT generally consists of factors like, strength, weaknesses, opportunities and
threats which is explained below:
 Strength: J P Morgan is one of the leading as well as a well known company which deals
in financial matters effectively and efficiently. The clients of the can trust over it blindly
as it is dealing in all the developed as well as developing countries too equally and
focuses on solving clients problems related to financial matters. It provides clients with
the services such as transferring of cash from one country to another by just following the
rules of that country. It has a strong network set up all over the world and customers need
not worry about the money transfer from one country to another. Headquarter of this
company is situated in America, the company works with a number of big investors and
large companies as well as maintain their relationship with clients too, this is the main
strength of the company. Strength of Morgan can be measured by the number of offices
and employees working all over the world (Smart and Creelman. 2017). It has in total
2,50,000 employees working simultaneously around the world and has offices situated
across the globe showing its global presence. Morgan has worked hard over the years to
built its strength and brand visibility in B2B segment. Morgan has the largest number of
banks in USA in terms of sales, assets, market value of shares in the market and profits
earned. For example:- if we compare Morgan with any other company providing
financial services across the world in America. Morgan will stand first in terms of
strength as company has more satisfied and trusted clients, global presence, big retail
banking network, diverse financial products and with solid balance sheet as compare to

another company. Morgan has become a trusted brand name who enjoys good financial
position in the field of business and finance (Wetherly, 2014).
 Weaknesses: The strongest weakness of JP Morgan Finance and Investment is that they
highly depended on USA market which is approx 65% of their revenue is generating
from their market. Their expense management is very weak which makes their work
affected. Fluctuations in market is also an important factor for them as it can result in
instability of their business (JPMorgan Chase (JPM) SWOT Analysis, 2017.).
 Opportunities: There are huge opportunities for the organization, such as, there is huge
scope in expanding their business in other countries as well which will help then in
growing in industry. The asset management industry is growing and is set to reach $102
trillion by 2020 with a CAGR of about 6 percent. JP Morgan Finance and Investment is
well equipped to get benefit from asset management process. JP Morgan has an
opportunity to further expand its geographic reach and cover all important in order to
increase their market share.
 Threats: The greatest threat which J P Morgan has is from its competitors. Changing
govt regulations and financial crisis like recessions can also be a huge issue for them to
manage their business effectively.
Strength and weakness of JP Morgan Finance and Investment are linked to their external
macro factors in many ways, such as, these external factors can affects the overall performance
of the company, they can effect their decision making planning and working of the organization
as well. Strengths helps the organization to get available opportunities that are present in market
which can help them in giving positive impact whereas weakness increases the chance of threat
which can affects their functionality. JP Morgan Finance and Investment weakness can affect
their financial stability whereas technological factors also affect the promotional activities of the
company (SWOT Analysis of J P Morgan, 2018).

CONCLUSION
From the above report it can be concluded that it is very important for any business to
maintain business environment in order to work effectively in the industry. It also helps in
organizing their work properly. This report discussed about different types, size and scope of
organization is present and they operate in which sector. It also focuses about organizational
structure and its types that are present within the company to manage their work effectively. It
has also explained about the various organizational functions, such as, HR department,
marketing, finance, etc. which has a direct link to organization's objectives. Apart from these,
this report has also discussed topics like, JP Morgan Finance and Investment positive and
negative effects of their external factors and also evaluating their internal strength and
weaknesses and explained its interrelationship with external macro factors as well.
Illustration 3: SWOT Analysis of JP Morgan Finance and Investment
Source : (SWOT analysis, 2017)

REFERENCES
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Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Newton, P., 2014. What is the PESTLE Analysis?.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
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Racz, L. and et.al., 2018. Extensive comparison of biodiesel production alternatives with life
cycle, PESTLE and multi-criteria decision analyses. Clean Technologies and
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Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
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