Business and Business Environment: A Comparative Analysis Report

This report provides a comprehensive analysis of business environments, focusing on organizational structures, scopes, and sizes. It evaluates different types of organizations, including public, private, and voluntary sectors, and explores their legal structures. The report examines the interrelationships between various organizational functions, such as structure, scope, and size, and how they impact business operations. Case studies of H&M, Nike, and Zara are used to illustrate these concepts, with detailed comparisons of their structures, scopes, and strategies. The report also applies PESTEL and SWOT analyses to assess the impact of macro and micro environments on business activities, providing a thorough understanding of the complexities and challenges faced by businesses in today's market. The report aims to provide a detailed overview of the business environment to help students understand the key concepts and practical application of the business environment.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Evaluating different types and purposes of organisation.................................................1
P2. Structure, Scope and Size of different organisations.......................................................3
M1. Evaluating different structure, scope and size of different companies...........................4
D1 Complexities of different business structures interrelated with other organisational
functions.................................................................................................................................5
TASK 2............................................................................................................................................5
P3 Relationship and impacts between different organisational structures.............................5
M2 Advantages and disadvantages of interrelation between different organisation..............6
P5 Analysis to identify the strength and weakness internally and externally........................9
P6 Evaluating the relation of strength and weakness with macro environment...................11
M3 Evaluating the impact of PESTEL ................................................................................12
M4 Analysis the impact of SWOT on decision making.......................................................12
D2 Evaluating the impact of micro and macro environment on business activities...........12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................13

INTRODUCTION
A business can be defined as an economic activity, which is related to production and exchange
of goods and services for acquiring wealth or earning economic returns (Cavusgil and et. al.,
2014). Environment refers to the aggregative conditions, events and influences that affects or
surround a business. So it has a great impact on function, performance and decision making of
any business either positively or negatively that consists of all external and internal factor.
Hennes & Mauritz AB (H&M) group is a Swedish company, it is one of the world's leading
fashion company which has expanded over in 60 countries. It has a multi-brand matrix
organisation with 8-well defined brands. This report is presenting a brief discussion on different
types, sizes and scopes of organisation, explaining the interrelationship of various functions
within a company as well as how they link to its structure and also demonstrate the impact of
macro environment on business operation using PESTEL model and SWOT analysis.
TASK 1
P1. Evaluating different types and purposes of organisation
In the present scenario, there are different types of business firms which are dealing with
several products but their business environment is totally different from each other. Advantage of
this purpose is to achieve high profit and give benefits to society (Chandrasekar, 2011). This
helps their customers to identify the internal surrounding, management system and working style
of any company. Thus, analysing business environment is important to determine the current
position and status of any organisation. There are three main types of organisations which
include public, private and voluntary with different business operations.
Types Purpose Aim
Private Sector Main focus of company is to
earn high profit whether from
internal or external market in
private sector. Their business
is operated on individual basis
and don't take any help from
government bodies. They
provide several opportunities
They are totally different from
public sector firms. They
mainly focus on achieving high
revenues in order to make their
company more established for
a long term in the market. The
firms under this include traders
and partnership business. They
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which are beneficial for the
society so as to enhance their
skills and capabilities. As they
are not under any government
bodies, they take better
decisions which are effectively
applied by them in their
company.
are the sole enterprises.
Partnership business may
include two individuals or
more.
Example: H&M is a private
company and they are gaining
higher revenues and profit
through their industry.
Public Sector These types of businesses
come under governance body.
Thus, they are being run by the
government. Services provided
by them to their clients are
very effective and helpful for
society. Many companies enter
in this sector to achieve higher
market share and profit ratio.
They work for the benefit of
society and are controlled by
legal authorities. They provide
customers with the best quality
products and services at a very
cheap rates which are
affordable and any small
company can opt that.
Customers can get proper
satisfaction towards their
needs and demands. For
example: Nike is a public
sector and deals in apparel and
shoes.
Their aim is not to focus on
higher profit shares rather they
give good quality of services
and products. For example:
Army, government schools,
hospitals, etc. They are
providing services not to gain
profit but to help the citizens.
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Voluntary Sector These sectors do not work to
have profit but work as a third
party mainly focusing on
quality of services. This
includes charity, NGOs and
more. They are linked with
both public and private sector.
Thus, these are regulated by
government as per the norms
and regulations.
Their main aim is to provide
charity or some kind of help to
the needy person. These
services are available to every
person.
For example: World Vision is
the major charity organisation
which aims to provide the basic
facilities to every child for
saving their life.
Legal Structures Legal structure of public sector
includes mainly three
components they are Sole
Trader: they are independent,
can start their business straight
away but they require licence
to trade. There is a criteria that
owner should display the name
at their premises
Partnership: they cannot start
their business straight away
and some business may need a
licence trade.
Their main aim is to provide
same judicial composition to
every organisation so that no
company can be given
privilege.
H&M is a leading multinational company of Swedish which deals in clothing and also
known for fast-fashion clothing for both men and women, teenagers and children. Number
Employees working there are around 132,000 people and organisations malfunctioning is almost
62 companies which is having approximately 4,500 stores across the globe (Charter, 2017).
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P2. Structure, Scope and Size of different organisations
Company Legal Structure Size Scope
H&M Company It is a giant retail
clothing company,
headquarter in
Stockholm. With
around 50% of market
shares, they have
achieved competitive
advantages. They are
giving equal rights and
are against
discrimination.
This is the largest
retailer company with
having stores all over
the world at national
or international level.
Organisation has
around 22 production
agencies which are
linked with approx.
900 independent
suppliers. Company is
very vast and spread
over Europe with 9
agencies, 11 are in
Asia and 1 is in
Africa.
Main scope of this
company is to spread
their business all over
the world where they
have not expanded yet.
They are focussing on
advancing the services
which are offered to
their customers. This
will help them in
gaining higher profit in
their shares. On the
basis of goods
purchased by buyers,
they can monitor the
growth of company.
Nike Structure of any
company reflects the
abilities and limits of
their business.
Structure may be
categorized as
connections between
its employees, group
or team mates. Nike is
a big brand company
that deals in clothing
and sports equipment
Company is dealing
with a large amount of
sports goods which
include clothing,
sports equipment,
footwear, etc. Retail
shops are around 200
across country which
include independent
distributors and
subsidiaries.
Scope of any business
is connected with the
performance so that
they can make
strategies for the future
business. By having
new policies regarding
their product, they can
invade in market so as
to gain high revenues
and profits. It also
works as a public
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with its headquartering
in USA. Its stores are
spread all over the
globe with around
44,000 employees
working in company.
sector firm. They can
give charity to people
those who require
some sort of help.
Zara All the partner under
this organisation
follow rules and
regulations given by
the governance body.
This company is a
textile group and their
production is all
independent.
Organisation has
around 200 retail
buyers who are trained
by professional
designers. Their
structure is based on
work of
communication and
coordination. Under
this it includes lot
many criteria like
Division of work, task
and functions, span of
control etc.
Their main scope is to
contribute to
sustainable
development and for
that they are taking
initiative like
producing clothes
which are environment
friendly.
The firms which are stated here, are public and other one is private sector firm which
work according to their norms and rules. But there are other firms which work on the behalf of
well-being of person. They are known as charitable associations. World Vision is a non-profit
organisation which works for the well-being of public (David, 2011).
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M1. Evaluating different structure, scope and size of different companies
Hennes & Mauritz and Nike are different from each other in various aspects. Former
company deals in retail industry which includes grocery items, clothing, etc. Whereas, Nike
deals in clothing and sports equipment. Structure and size of company are similar as they both
have expanded their business worldwide. H&M is a private firm while Nike is a public company.
They both work according to their rules and regulations. There is a specific structure of their
business based on which their strategies are made. Scope of Nike is to gain profit but on the
same time, they work for charity and funds which are raised by them are given to those who
need them whereas Hennes & Mauritz is totally a profit based company. It works to increase
their revenues and expenditures (Harrison, 2011).
D1 Complexities of different business structures interrelated with other organisational functions
Complexities are very common in business environment. Company has to cope up with
all business complication so as to establish their business. Many organisation pay serious
concerned about their capability so that they can manage their work load. Difficulty may arise
through system, structures of any business, group decision making etc. origin of complexity by
produced by managers - their decisions may may arise conflict. H&M organisation have some
the complexities which can be resolve by group discussion. Simplification of their business will
help them to generate more profits (Merschmann and Thonemann, 2011). Nike is a leading brand
but it has also some complications regarding their suppliers and rates of their commodity are
preferably higher than other companies. Managing their stores in different parts of the countries
may create some difficulties in their business.
TASK 2
P3 Relationship and impacts between different organisational structures
Every business have different objectives and purpose for their company. Their scope and
structure varies from one another. H&M company is a private sector firm which is having around
132,000 employees working in their organisation (Paul, J. and Rana, J., 2012). They are
providing retail products to everybody. Relationship between companies is very beneficial for
any organisation to expand their business. Effective work structure or workplace is required for
proper functioning of enterprise. Mangers are very important in this aspect because they act as a
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bridge between any company. Thus, they should ensure that their workers are not facing any
obligations regarding any work (Smith and Zook, 2011).
Business mainly include operations like marketing sales, distribution, research and
development activities etc. workers perform according to what their organisation told them to do.
It determines the role and responsibility of employees. Related structure and functions are given
below:
Matrix Structure: how to execute the plan in order to achieve great results comes under
this. They are given task according to their work field and also provide training if there is any
modification. This helps in reducing work load from one department.
(Source: Organisational Structure of H&M, 2017)
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Illustration 1: Organisational Structure of H&M

H&M is following this organisational structure it assist them to carry out all their plans in an
effective manner.
Marketing and Sales: this help to create innovative ideas so that they can sell their
products and it is crucial part of every business. Growth and productivity depends on this
department.
Human Resource Management: main responsibility is to recruit new employees as per
their capabilities so as to increase their productivity. Their main focus is to achieve new targets
which is beneficial for company.
Finance: money is the most essential thing which you required to start any business. This
department make sure that organisation have ample amount of stock left for the smooth conduct
of business. They make strategies of how to clear their bills and timely payment is given to their
workers.
Divisional Structure: Company is following divisional matrix structure which are opened
over the globe. They are proving with good products and services. Various departments are
performing their task accordingly.
Hennes & Mauritz have to analyse all their objectives in different ways which can be
linked with smart work so that the outcomes is very fruitful. Various types of operations and
decisions can be made in order to provide best quality products. Relationship with Banks is also
important because to expand their business company require a huge amount of money and Banks
are the only one who furnish them funds (Sorescu and et. al., 2011).
M2 Advantages and disadvantages of interrelation between different organisation
Advantages:
1. Specialization in work: There is a benefits of working in big company, it
provides their employees with a high level of specialisation in training. It helps
them to enhance their career from entry level and as they move on. As the time
passes they become expert in their functional area and their experience increases
over time goes on.
2. Productivity and Efficiency: An employee who is skillful in any area will
perform his task at a very high speed which will enhance their productivity.
Knowledgeable person will proceed with confidence and there will be no risk of
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any mistakes. This will highly motivate to advance their career and may also
make them more productive in nature.
3. Division of Labour: This help company to divide their work as per specialization
which will decrease mental stress of employee and more productive work can be
done accordingly.
Disadvantages:
1. Lack of Teamwork: Lack of teamwork is one of the disadvantage in any
workplace. Many employee often perform with high level of efficiency which
may have difficulty working with other units. Workers can disagree to cooperate
with each other if several units are forced to do work together. Thus, every sector
has its own interest of doing any task.
2. Difficult in controlling Management: Its a challenge for top management to
control their organisation as it expands. As company gets bigger it is challenging
for management to make decision which may lead to difficulty in coordinating
with various division of workers. Management has to be very peculiar about what
decision they are making and how it will have an impact on their business.
3. Conflict: Conflict is very common in big organisation, unmatched views may
arise differences between co-workers. Therefore, issues can originate and
outcome of this lead to less productivity.
P4 Evaluating the Impact of Macro environment on Business Operation
Factors which have an indirect impact on performance of any business and that operates
in the external environment are known as macro environment (Tang and Musa, 2011). These
factors include demographic, political and legal, economic, socio-cultural, environmental and
technological factors. So these factors are called uncontrollable factors also and have been
evaluated positive and negative impacts on business and its activities. The policies which are
linked with H&M company are also influenced by these factors which are operating in business
organisation. Thus to evaluate these factors which affect growth of business operations, H&M
uses the PESTEL analysis. This analysis is used to identify the threats and weaknesses of a
company, before implementing any kind of strategy (Teece, 2012).
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Political Aspects- These factors include some government policies such as trade, fiscal,
political and taxation policy which is used to determine their impact on an organisation. Any
change in rules and regulations of government laws affects the business of a company, if there is
increase in rates of taxation policy then company will not in good condition to borrow loans from
their investors such as banks which gives a negative impact on the.
Similarly, if taxation rates gets decline then this will be beneficial for the company to
take loans which is helpful in attaining the business growth (Valentine and et. al., 2011). Hence
after screening the effects of political factors, H&M has to collaborate with their franchising
partners to operate their brands globally.
Economical Aspects- These factors has a direct impact on economy and performance of
an organisation, as it includes rate of interest, cost of raw materials and foreign exchange rates. It
gives the negative impact on the company during inflation period of a bank,due to which bank
have to stop its supply of money when prices of any products become high.
Whereas it gives positive effect in the period of deflation which is valuable in increasing
the aspects of business. So in order to run all the business activities in an effective way bank
have to adopt some action plans to control all these factors which are linked with inflation and
deflation factors of economy. Due to expansion of company globally, H&M has to maintain its
competitive pricing strategies. While maintaining these pricing strategies, it is difficult for H&M
or any MNC to operate due to fluctuation of currency and interest rates (Wild, Wild and Han,
2014).
Social Aspects- It is most valuable factors for any organisation or MNC company to
understand their customers' needs and interest as it mostly focus on identifying the emerging
trends and social environment that includes cultural trends, change in styles and demographics.
H&M has ensured a proper hygienic working conditions by started working with
ILO( International Labour Organisation). It has shows all his efforts to provide a safe working
environment and safer and better world by recycling of unwanted and wasted clothes.
Technological- It affects the clothing industry include availability of resources, demand
and production. It includes the innovation and new discoveries by R&D (Research and
Development) which is so beneficial for any company in making their product technologically
obsolete.
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