Types, Size, and Purpose of Organizations | Desklib

This study material provides an in-depth analysis of different types, size, and purpose of organizations. It explores the relationship between various organizational functions and the positive and negative impacts of the macro environment on business operations. Gain valuable insights on Desklib.

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
P1: Different types, size and purpose of organization.................................................................3
P2: Size and scope of different organization...............................................................................5
P3: Relationship between different organizational functions .....................................................8
P4. Positive and negative impacts the macro environment has upon business operation..........10
P5: TOWS analysis of Morrisons to identify its strengths and weaknesses..............................12
P6: Relationship between external factors and strength, weakness...........................................14
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................16

INTRODUCTION
Business or organization is group of people gathered together for achieving a common
goal, it contains activities like exchanging of goods and services with money. Business
environment consist of factors which affect the operations in company, these factors may be
internal or external. Internal factors include shortage of workforce, communication within
departments and many other issues. External factors include changing market trend, customer
requirement and many more. Morrison is chosen for analysing relationship between various
organizational department. Morrison is the fourth largest supermarket chain of UK. This report
will evaluate different types of organizations and it will also check their scope. With that the
report will also analyse merits and demerits of interrelationship between various departments of
organization. Positive as well as negative impact of macro environment on organization will also
be examined by the report. Report will also analyse strength and weakness of organization.
MAIN BODY
SECTION-1
P1: Different types, size and purpose of organization
There are variety of types of organization with varied size structure having their own
purpose to operate in certain defined industry. Three different types of sectors are Public sector,
Private sector and Voluntary sector.
Public sector:-
It can be defined as the organization that are owned and operated by the government of
the country and that exist only to provide services to its citizens. It can also be said as
government and publicly controlled enterprises that deliver public goods and services(Lenaerts,
Kilhoffer, Akgüç ,2018).
Purpose
Purpose of public sector organization is to help the government of that country to
exercise social control on industry and trade for equitable distribution of goods and services. The
main purpose is to set up with the aim to provide services to public rather than making profits out
of them.
Legal Structure

As public sector refers to all the organizations and businesses which are accountable to
local and central government these enterprises are funded directly by the government of that
particular country. Just like private companies public companies are run by Board Of Directors
on behalf shareholders and also has and A.G.M where shareholders vote on certain key issues
relating to the company. Organization under public sector sells its share on stock exchange
prevailing in that country.
Example
For example National health service organization is public sector undertaking based out
of UK which is publicly funded healthcare organization with a vision to deliver better health,
better care and better value by providing quality care to every person every day which serves as
mission statement for NHS.
Private sector:-
This is the companies whose shares are not offered to the public and which are subject to
certain legal requirements. This is the companies held under private ownerships where the
business has a separate legal identity from the owners.
Purpose
Purpose of private sector undertaking is with the intention to maximize profits for its
shareholders and to become leading organization in their line of business. Private companies are
also focused in securing right kind of structure of organization which helps them in serving their
business interest( Raharjo, Eriksson,2017).
Legal Structure
Shares of the company can not be sold to public. Each share entitles its owner to 1 vote at
the time of companies Annual general meeting and also to share the profit of the company at the
time end of financial year known as dividend. Company is run by Board of directors who are
elected by shareholders which is being headed by the Chairman. Shareholder liability is limited
to the amount of investment they made.
Example
For example Morrison Supermarket is a private limited company which is fourth largest
chain of supermarkets in United kingdom where its vision is to enable its people to take
ownership of the products and work with the partners to ensure its sharing of vision with a

mission of making ease for its customers in making better choices and that drive overall well-
being and encourages doing things simply.
Voluntary sector
This organization are collection of individuals who work together to undertake activities
for the benefits of society.
Purpose
Purpose of this type of organizations is to identify the needs of an individual, groups and
initiate programmes accordingly by their own or with collaboration of government. It could also
be understood as giving concrete expression to the fundamental rights of individual or group of
members(Wo, Hipp, Boessen,2016).
Legal Structure
This groups generally exist as people of the community perceive a need and work
together to bring change in society. All the groups have managing or governing body of some
kind which could be named as managing committee, executive committee and board of directors
who execute power in the organization.
Example
For example British Red cross society based out of UK is a voluntary organization which
where its vision is to encourage all form of humanitarian activities with a view to prevent human
suffering with the mission to mobilize the power of humanity.
P2: Size and scope of different organization
There are three different types of organizations namely as Micro enterprise, small and
medium enterprise & large enterprise.
Basis of Micro Enterprise Small & Medium Large enterprise

difference enterprise
Definition Micro enterprise are the
enterprise which could
be around everywhere in
neighbourhood. These
are the enterprises which
usually operates with
small amount of capital
investment. In
developing countries,
micro entrepreneurs
represents large majority
of small business sector.
Micro enterprises add
value to the economy by
creating micro business
which helps in
enhancing the income
level of individual and
lowering the overall cost
of business.
Small medium enterprises are
the enterprises that employs
small number of workers and
does not account to high
volume of sales. In technical
terms it could be understood
as enterprises which are
owned and operated
independently that is limited
by size and revenue
depending upon a particular
industry. These enterprises
exist in all kind of industry.
This type of enterprises can
represents businesses of sole
proprietorship which are
controlled individually
Medium enterprises are the
enterprises which emerges
from the slow and steady
growth of small businesses
that are successful.
Large enterprise are the
enterprise which focuses
on providing wide range
products and services to
a wider variety of
customers. This are the
enterprises employing a
huge staff with high
amount of capital
investment by its
members which
constantly account to
work towards
achievement of higher
sales in order to achieve
higher profits.
Scope The scope of micro
enterprises is quite a
vast as it covers wide
range of activities which
requires less
sophisticated
technology. This kind of
Small & medium enterprises
play a centralized role in
economy as they are the
major source of generating
entrepreneurial skills,
innovation and employment
in economy. The scope for
Scope of large
enterprises are vast as
with the amount of
capital investment they
operate they have huge
opportunities of
generating higher

organization account to
produce both goods and
services for their local
area of operation. The
number of entrepreneurs
is quite a high because
of lack of proper
training and no formal
jobs available for them.
small & medium enterprises
can be seen possibly in every
sector such as financial
services, education, telecom,
media, real estate, food and
others. This make a country
hub for extracting the best
small business opportunity in
various segments of business
operations.
revenues by diversifying
and expanding their
business line into
different products and
services. Their scope lies
in building high end
relation with big business
contacts and able to
maintain great volume of
business communication
overseas(Granados,Parej
a-Eastaway, 2019 ).
Size Size of micro enterprise
is minimal in terms of its
employees and capital.
This enterprise usually
operates with less than
ten people and is started
with small amount of
capital. In context to
manufacturing and
service sector their
investment is around
115000€ with turnover
Up to 575000€.
Small enterprise are the
enterprise which employ
fewer than given number of
employees. These are the
firms generally fewer than
50 employees where their
investment sums up between
115000-1115000 € and
which accounts to turnover
between €575000-
5750000 €. Medium
enterprises are the enterprises
who employ around 250
people and their investment
range is between 1115000€-
5750000€ wherein its
turnover counts in between
5750000€-29000000€
(Hillary,2017).
Large enterprises are the
enterprises that employee
around more than 1000
employees and which
are fully equipped in all
sense. An enterprise can
be termed as large
enterprise when it has
annual turnover greater
than 1.5 billion euro and
whose balance sheet
accounts to account to
more than 2 billion
euros.

Examples Boss brewing company
is based out of UK
which is multi award
craft brewery and which
is one of the finalist in
2018 Micro business of
the year.
Verdant leisure is based out
of UK which is a holiday
park company and which is
award-winning holiday park
across Scotland and England
Morrison is the fourth
largest chain of
supermarket in UK
which provides its
customers with a wide
range of products and
services and make them
left out with better choice
to make
P3: Relationship between different organizational functions
It is very important for Morrison that its departments are working in coordination with
each other, this will result as increment of working efficiency for the organization. Proper
relationship among various departments of the organization will give each department an ability
to share their requirements (Garson, 2017). As the departments will be able to share requirements
and targets with each other, the organizational functional can change their working strategy as
per required criteria. Following is the relationship between various departments of Morrison.
Relation of Marketing function with Research and Development
The marketing team of any organization has to closely monitor developments made by
R&D department. It is necessary because the marketing department has to show case the product
developed by the R&D. So they have to check that the developed product is able to fulfil the
requirement of customers (Cusimano and Sterner, 2019). R&D department of any organization
has to work according to the instructions provided by the marketing functional because
marketing team is well aware of customer requirements. Marketing team has to make sure that
the product developed by R&D is according to the market trend, and the organization is staying
ahead of the market trend.
Finance department with Marketing
The marketing department of any organization is responsible for showcasing the new
product to buyers but the finance department is responsible for maintaining good economic
position for the company. This is the very reason why finance department and marketing
department of any organization has to work closely, so they can choose appropriate budget for

promotion of new product as well sufficient budget for company to survive. This effective
conversation between finance department and marketing functional, will increment company's
sales and company will also be having sufficient budget to survive in this competitive market.
Marketing with Production
The marketing department of any organization has to work closely with the production
department. The marketing department is responsible for having close contacts with the
customers so marketing department wants to get a fixed time from production department. At
which they can make product available to the customers (Tsekouropoulos and et.al, 2016). But
the production department has make sure that before sending the product to the customers the
product passes quality tests. Such that the quality of product can make a positive image of the
company to the customers.
Organizational Structure
Organizational Structure is the way in which departmental activity in an organization will
occur (Park and et.al, 2016). These activities involve reporting to higher authority, task
allocation and supervising activities. This structure is mainly of four different types which are as
following:
Functional
In this the organization is divided into different departments such as marketing, sales and
services and each department is having its own manager. Now these managers have to further
report to a common head who over sees all departmental working.

(Source; Functional Structure of an organization, 2010 )
Divisional
This provides flexibility in large organizations, in this when the company is having many
divisions geographically when each division has the ability to take decisions as per their
understanding and only few higher authority has to make contact with parent company.
Matrix
In case of matrix structure employee are having given a flexibility to report to two bosses,
and this structure gives advantage of effective knowledge between heads as each boss will be
having its own view point, so they can solve issues in a much faster way.
Flatarchy
This structure is mainly used when organizations want creative ideas from their
employees, so they allow them to create their own team and act on project individually.
Morrison uses functional structure which provided them an ability to manage different
departments effectively throughout the organization in this the employees are positioned based
on the skill which they are having.
P4. Positive and negative impacts the macro environment has upon business operation.
Political factors:
Illustration 1: Functional structure of organization

These factors include the extent to which government and their policies may impact the
organization such as tax policies, fiscal policies, trade tariffs etc. Morrisons categorized all the
influence government has on the business operations. The following impact it has on Morrison's
operation.
Positive : If government decided to give subsidies to the businesses, then it will lower their
costing and also helps in covering their costs.
Negative : If government puts restrictions on opening ventures in specific country then the stores
can not be expanded in those countries which ultimately affects their market.
Economic factors:
Morrison's suggest these factors are the determinants of the economy's performance
which directly impacts their business. These factors include interest rates, inflation rates, labour
costs etc (Perera, 2017).
Positive : If in some countries high rate of interest is given on FDI, the investment of store in that
country will be profitable.
Negative : If the countries labour costs increases then it will add on organization's overall cost.
Social factors:
Morrison's define these as demographic characteristics, norms, customs and values of the
population within which the organization operates. The factors include age, gender, income
distribution, lifestyle and culture.
Positive : If the income distribution of the area where the store is located is equal then there
might be good sales and no problem of stock storage.
Negative : If the people of the locality where the store is situated are not health conscious or does
not consume health related food then keeping those products will not run in that area.
Technological factors:
The innovation and technology advancement that impacts the business operation pertains
to these factors and include automation, R&D etc. Morrison's is making every effort to adopt the
digital technology to reach and retain customers (KADŁUBEK, 2016).
Positive : If the firm does proper R&D about the market trends they might get a competitve edge
over other s in the industry.
Negative : if the company does not adopt the latest technology like going digital as it provides
convenience to the customers, their customers might shift to other e-stores.

Legal factors:
Morrison's see these factors from the point of legality. These laws impact the business
operations and if not followed then activities of the organization might come into illegal
brackets. These include protections law, equal pay law, discrimination law, patent and copyright
law etc.
Positive : If the law of data protection is followed then there will be fewer chances of fraud in
the organization.
Negative : If any law is introduces relating to copyright and patent of a particular product then it
can not be sold by the organization.
Environmental factors:
These are factors relating to surrounding environment that impact business operation of
the organization. The factors include weather, climate, natural disasters, air and water pollution,
recycling standards etc (Policy, 2018).
Positive : If the company has certain recycling standards then it will reduce the wastage, lowers
the costa and also creates goodwill in the mind of society.
Negative : In case of flood where the store is located it may cause damage to stocks.
P5: TOWS analysis of Morrisons to identify its strengths and weaknesses
Tows analysis is an action tool which is used to analyse strength and weaknesses, threats
and opportunities within external and internal environment. It also explains relationship between
different factors for example relationship between strength and opportunity, weakness and
threat. It also describes interrelation of internal and external factors. Companies use this
technique to compare and create various strategy in business (Ariyani and Daryanto, 2018). The
main purpose of this matrix is to boost strength and reduce threats for a company. Tows analysis
can be used for Morrisons company which has many supermarket chains in the united kingdom.
It can be used to identify and study firm's situation in the market.
TOWS analysis of Morrisons :
It explains internal strategic element (S &W) and external strategic element (O & T). The matrix
also helps in developing strategies related to these four factors.
Strengths :

It is the fourth biggest supermarket company in United Kingdom. The company is
famous for providing quality products at cheap price. Enterprise has solid brand image in
consumer's mind. The firm has invested in making powerful brand portfolio It has also
developed expertise in retail market and thus helps in organizational success. Now company has
build strong network of distribution that can capture its target market. Company has maintained
good relationship with all customers which increases satisfaction level of customers.
Weakness :
It includes some problems that company can solve with appropriate efforts. The
company's profit ratio and market share is below the average in UK industry. High attrition rate
is common problem in retail industry, Morrison is also suffering with this difficulty. Company is
facing problem of technological changes.
Opportunities :
Company can use market development strategy to compete with other retail companies. It
will also sales of company. Company can take advantage of new policies and can increase its
business in UK market and in international market. The firm can make technological changes to
increase business efficiency. New technology can give an opportunity to furnish new pricing
strategies in the new marketplace. Now institution is investing money in online marketing
channels (Čepel and et.al, 2018). In modern era Customer behaviour is changing rapidly, so the
retail firm has chance to build new revenue generating streams and product categories.
Threat:
The enterprise has many competitors for example Tesco and Asda. UK retail industry
have intense competition which can negatively affect Morrison's business. New regulation of
Brixit can reduce the sales of many retailers in European region. Technological development by
the competitors can be a threat for the enterprise.
Strength & opportunities:
The firm is well established in retail industry so it has opportunity to shift into new
market segment with the help of its brand name and brand image. With the help of strong
distribution network company can expand its business.
Weakness & opportunity:
Nowadays customers are shifting towards organic food and vegetables so company
should focus on selling of organic food to capture consumers. With the help of training and

development strategy, enterprise can reduce the attrition rate and increase employee's
performance (Chaplin and et.al, 2018).
Strength & threat:
It is one of the biggest retail company in the UK so it has competitive benefit and
expertise in the industry so organization can use discount strategy to reduce competition.
Enterprise can increase its reputation by satisfying customers and employees.
Weakness and threat :
High attrition rate and and low market share can be a threat to the organization. It can
reduce profitability of the retail firm.
P6: Relationship between external factors and strength, weakness
Strength and weaknesses are related to internal environment of the company. But macro
factors can affect strength and weakness of the company. There are various external factors for
example political, economical, social, technological, legal and environmental factors that can
affect company's internal business process. All of these factors have positive and negative effect
on company (Gürel and Tat, 2017). All macro factors and their effect on company's effectiveness
are described as follows :
Political factors :
Various political factors can influence organizational performance and business directly
or indirectly. Political factors are the government actions in the nation, related to business. There
are different type of political factors for example government policies, rules and regulations,
quota and political instability. Recent example of political instability in the UK is Brexit. It is
affecting businesses of many organizations in that country (Kulshrestha and Puri, 2017). There is
a negative impact of Brexit on the companies.
Economic factors :
Economic environment also influences company's performance. Favourable economic
environment can boost the business and unfavourable environment can reduce the enterprise
productivity. There are several elements in this environment for example- inflation, GDP
Growth, unemployment rate etc. if economic situation is appropriate for any organization than it
can be known as strength for the company. Unemployment rate and recession can affect any
business and its operations. In UK, unemployment rate is high so companies can take advantage
of this situation to hire more workers with less salary.

Technological factors :
Technological environment or factors can directly influence the business of any
company. Some components of technological environment are information system, new
machinery, innovative ideas etc. for example with the help of internet technology people are
using online shopping apps and buying more products. In this case enterprises can take benefit of
this by selling more products on online platform. Marketers can use online shopping as strength
for their firms (Zafar and Kantola, 2019). Technological factors can also impact business
negatively because technological advancement can be too much costly for organizations and can
affect their profit margin.
Social factors :
These are different from another environmental factors. It includes different population,
customer's belief, religion, habits and various customs, age and education etc. All of these factors
affect business strategy and business environment. For example any company can be influenced
by changes in population. It can change the demand and supply of products and services. Social
factors are mainly used by marketers when they are targeting their specific customers. If a
company focuses on social factors than it can be strength for the company but if these are
ignored than it can be shown as weakness and threat for the enterprise (Ariyani and Daryanto,
2018).
Legal factors :
In every country there are some type of rules and regulations related to business
organizations. Those laws are very important to run business appropriately. Legal factors
includes strict laws for example (protection law, patent law, employment law, health and safety
rules) and some regulation or policies. Sometimes strict business laws of a country can create
weaknesses for business organizations. For example – there are strict laws related to
employment in United Kingdom that affect business of many retail companies negatively.
Overall, various macro environmental factors like political, economical and social factors can
affect the effectiveness and efficiency of the business. Economic and political factors can causes
weakness in business.

CONCLUSION
It can be concluded that there are various types of organization like public, private and
voluntary organization, and they all have different purposes of their existence. They have
different sizes like large, medium and small. As there are different functional department in the
organization, and they all have to coordinate with each other to achieve the objective so there is
relationship and link that exist between these different departments. Business operations of
Morrison's is affected by the macro environment and have both positive and negative impact.
Swot is also conducted to identify their strength and weakness of the organization.

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