Business and Business Environment - Farkas

Business and Business Environment
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Introduction:....................................................................................................................................3
Task 1:.............................................................................................................................................3
LO1:.................................................................................................................................................3
P1: Different types and purposes of organizations:.........................................................................3
P2: Size and scope of range of different types of organizations......................................................4
LO2:.................................................................................................................................................6
P3: The relationship between different organisational functions and the way they link to
corporate objectives and structure:..................................................................................................6
Task 2:.............................................................................................................................................8
LO3:.................................................................................................................................................8
P4: The positive and negative impacts the macro environment has on business operations,
supported by specific examples:......................................................................................................8
LO4:...............................................................................................................................................10
P5: Internal and external analysis of specific organisations to identify strengths and weaknesses:
.......................................................................................................................................................10
P6: Strengths and Weaknesses interrelate with external macro factors:.......................................11
Conclusion:....................................................................................................................................12
References:....................................................................................................................................13
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Introduction:
All internal and external factors that govern the method how a company works and handles
employees, customer management, business adjustments, and the demand and supply inter
relationship; can altogether be named as Business and its Environments. The success rate of a
business is judged by how it responds to changing environmental conditions and allocating its
resources wisely and timely manner and how well it adapts itself accordingly. The raw materials,
the demand and supply of goods, customer preferences all are variable and it is the job of the
business head board to act accordingly for success of the business. As opined by Farkas (2015),
an UK based company has been selected for investigating the types and sizes of business; this
firm has to face competition with. British Airways Limited has been chosen to find its position
and the features of the business environments and the competitions in the market.
Task 1:
LO1:
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P1: Different types and purposes of organizations:
Business environment can be broadly classified into two categories:
A. Micro Environment (Internal Environment): This includes the factors that strike
immediate effect in the performance of a firm. The supply, the demand, the customer
preferences, the trend, work power, associations, competitions are the factors that fall
in this category (Hellman, 2010). These provide immediate variations in the planning
and directing of a business firm.
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B. Macro Environment (External Environment): The factors under this sector do not
affect immediately. These factors are determined on the basis of a long time. These
factors include demographic changes, economic changes in the nation, political
turnovers and trends. These elements are outside a business form that is inevitable
and the regulations are done in the internal environment, according to the changes in
the external environment.
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Figure: Different types and purposes of organizations
(Source: Wong, 2014)
First World Problems include complaints like ones that whine about “business class product”.
British Airlines has taken innumerable progressive steps towards the satisfaction of business
class flight experiences, bringing competition speculations between them and American Airlines.
British Airways Limited has a large number of complaints about its bookings and transactions
that are quite tricky and cost consuming. British Airline Services Limited has excelled in almost
every other subcategory towards customer satisfaction.
Various political incidents such as the elections, terrorist assaults, Brexit, Military operations are
included in the external factors that govern the Macro Environment. Fuel Price hikes and higher
interest rates to fall on this category British Airways Limited, failing to change the outcome of
these factors.
As intended by Leong (2015), customer behavior and preferences are ever changing factors in
the business environment, which keeps the managerial board busy in taking quick decisions.
British Airways Limited has been using demographic and psychographic segmentation to learn
the business trends and the probable market characteristics to identify where they need to excel
and evaluate the mindset and attractions of customers. Customer class based positioning strategy
is used by British Airways Limited. British Airways Limited has spread across 82 nations with
over 300 airbuses. Various business subsidiaries like BA & AA Holding limited Bealine Plc.,
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Internal
Environment
Micro
Environment
External
Environment
Macro
Environment

British Airways Holdings Limited, British Midland Limited, and Overseas Airtravel Limited;
have come to use for managing business. It has decided its services into two broad parts-
passenger and cargo, the former using the BCG Matrix into Stars seamlessly. Both direct and
indirect competitors come in their way of grasping the Airlines market. The competitors having a
connection with the British Government often take an upper hand with the low cost tickets as the
British Airlines comparatively posing ticket prices on the upper side, being a totally private firm.
Vrigin Atlantics, American Airlines, Silk Air are its competitors (Britishairways.com, 2018).
P2: Size and scope of range of different types of organizations
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According to Strategy Theory, the British private organizations can be classified into four types:
Sole Proprietorship: These are small organizations run by a single head (the trader). All
business decisions are taken by the trader. No complex paper is done, direct and primitive
communication and feedback occurs between the sellers and buyers. The sole trader himself
makes the gross profit.
Partnership: Two to twenty partners coming together towards the fulfillment of a common
business goal with proper sharing of liabilities, work force, capital, profit and loss; is known as
partnership. An impartial solicitor is hired by joint discretion of all the partners to judge and
share everything between the partners.
Companies: When a group of shareholders appoint a director to give proper plans to a business,
managers hired to manage the floors, executive seniors to see that the job is done regularly and
with ease, together form a company.
Franchise: Franchise is simply a committee that follows a safe method of buying ideas from a
group and selling them to another with the correct flow of money. It can also be defined as a link
between the customers and a large company (Norton, 2015). The franchisor sells a part of its
supplies to the franchisee, keeping in mind the quality of a product. Due to the risk of
investing a capital, the franchisor takes an extra percentage for profit, in return, checks the
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quality of commodities and services provision. Trainings and developmental projects are held by
the franchisee itself.
Figure: Several types of organizations
(Source: Farkas, 2015)
British Airways is a global airway service that takes its place in the world airlines at 3rd spot in
terms of revenue generation. Its main base is at London Heathrow Airport. The greatest
competition of British Airways in United Kingdom is EasyJet, participating ina neck to neck
fight with British Airways flying 36.5 million passengers in 2008 and Easyjet carrying 44.5
million, but in recent years, the trend has changed and British Airways tightened its spot in the
Airlines market. With a sore in the trend in the lifestyle of United Kingdom, with increased
economy, customers using Airline Services have taken a hike that has been beneficial to the
company. Mostly frequent global premium fliers and the upper middle class and the upper class
group enjoy British Airways’ services. Their satisfaction level is always on a watch to remove
risks of losing them to the competitive market.
The business class fare between Heathrow Airport, London and John F Kennedy Airport, New
York is £1,452 and one gets an economic class ticket for £386. Like each and every other
multinational firm in the world, British Airways Limited shares the same set of competition and
environmental hazards both internal and external (Britishairways.com, 2018).
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Sole Proprietorship
Partnership
Franchise
Companies

The company has strengthened its position in the market by successfully developing the
infrastructure to first class services and racing with the other top organizations. The main
medium of distribution of its services is through call centers, agents, and shopping websites.
Electronic and print media has helped British Airways limited enhance its reach to the crowd.
Innovations like mobile application for the air transport service, dropping prices in the off
seasons; have come handy time to time, in fixing a top position for them in the Airlines Market.
LO2:
P3: The relationship between different organisational functions and the way they link to
corporate objectives and structure:
It is mandatory for any business to maintain a proper balance and effectiveness in the industrial
market. For keeping its efficiency and reputation, the company should create different stream
such as production manager, human resource management, sells and marketing team and many
another department also (Hellman, 2016). British Airways Ltd, being a public limited company
in the United Kingdom, the company has various departments for its marketing such as services
marketing department, IT department, promoting management team, different service providing
management and most crucial customer helpline management. This entire department divided the
whole process and maintained the pressure load to every employee. Thus the effect of the work
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incises and at the end of the business its help to improve company's balance sheet by earning
more from the market. Nowadays in the market collaboration two or more than two companies
have been shown. It is a market strategy to promote company's product to collaborate with other
company. It helps both the companies to improve their product by spending a less amount of
money. For example, British Airways Ltd promotes its air transport business by giving free
tickets to an NGO's children for their vacation tour. As mention by, Leong (2018), in this case,
British Airways Ltd collaborates with a particular NGO to promote its business along with a
social activity which gives the company an advantage in business fields and also helps to
improve its image in customer point of view. Every company follows some essential business
rules to maintain their sells and profit balance sheet. Some of these factors are discussed as given
below:
 Research and Development: To betterment the product and service quality every
company has a research and development group. In British Airways Ltd, this group
maintains the service quality provided by the company and also try to improve the
technology that offers the best experience to the customer in airline travels
 Human Resource: Human resource management is the lead departmental management
system in every company. This department maintained all others group and divided the
work pressure equally among all the groups. From employee recruitment to interview, all
this organised under the human resource management system.
 Seals and Marketing: This department handles only the seals and marketing portion in
every company such as all the investment, shares profit generated by the company. As
British Airways Ltd is an airline company, the seals and marketing department looks
after all online promotion and seals of airline tickets.
 Design and Production: Before sealing a particular product or providing a service it
should look good for the customer. Design a business strategy to attracts the customers,
the design and production management plays a significant role (Wong, 2018).
 Finance: Finance provided a tremendous amount of money for investment in the
business. The invested capital entirely depends on its business. In British Airways Ltd,
the spent money generally huge.
Every corporation should collaborate with each to promote their products at a low downside
promotional cost risk. In a company, all employees should work together to the improvement of
the company. Shearing the workload and creative ideas will compress the workload among all
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the employees. Hence it will reduce the competitiveness of the employees and creates a unique
bonding.
Task 2:
LO3:
P4: The positive and negative impacts the macro environment has on business operations,
supported by specific examples:
Everybody should gain some knowledge about the macro environment before discussing the
positive and negative effects on the business operation. Acronym pestle is the ideal word to
describe elements of the macro environment. Regarding the macro environment, some
significant factors are mentions below (Harrington, 2018):
Social Impact: Border market is the changing altitude in this environmental case, and also it
values the customer choice and effects people fashion which effects are purchasing companies
service and products. Customer preference is the primary factor which impacts the social,
environmental marketing business policy. If the company can build a better image in customers
point of view and it also incises the products seals of the company.
Economic Impact: Most of the peoples believe that the environment is the primary influence
business strategy, especially in developing countries mainly that are on top of customers and
vital economic shocks from outsiders sources. Some of the economic changes can affect the
business such as like, the interest of lone suddenly increase and a small company that has a
significant amount of solitary from a particular bank has to lower down its business. However if
the bank loan interest decrease, then the company will able to expand its business, hence less
unemployed people will there, and maximum taxes will be paid, change the economic condition
of the country (Ward, 2017).
Political Impact: As suggested by, Hilton (2015), in this discussion some technical, political
issue will be highlighted, which is faced most of the companies. Apart from the local political
parties, there are various political related NGO's and individual groups that put on a force to
change a particular policy with no valid reason. These desperate demands of these groups can
affect various companies to bringing down its products and service.
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Technological Impact: Nowadays, influence the human beings and grebe most of their times.
Technology has an essential role in every business policy or service, and it is also manipulating
the way in which business connect with its customers. As directed by, Klusmeier (2018),
technology is one of the most significant factors in the industrial market, and one cannot imagine
the business work process without the technology. Like most of the airlines business also in
British Airways Ltd, most of the significant business part is handling with the help of the
computer. In Airways business most of the pieces are controlled by computers software
technologies. Nowadays there is a massive change in the way the company deals with customers,
most of the deals are occurring in social media platform which saves human time, and the
process is hassle-free. In the level of competition without modern technology, it is nearly next to
impossible to compete with other companies in the market.
Ecological Impact: The entire environmental problem should be considered as it may impact on
airways and other various businesses. However in this topic, one should try to identify the
ecological impact on the business operation (Kaplan, 2018). Having any negative consciousness
can have an outstanding result on the business reputation and most importantly the seals and
marketing department. Hence it is the reason behind the decreasing of net revenue. The business
indulgence physical environment not the ecological stage but the current scenario, which may be
diminished the business rate. A suitable environment helps to grow a business as well as the
company, as the business grows profits is also making its growth path. Thus increasing profits
will attract investors and make them invest more in the market. Finally in this way business also
grows up exponentially and the whole business chain processed successfully.
Legal Impact: This topic is very similar to the political impact on the business environment.
However here the discussion is bound up to the legal matters only (Kaplan, 2015). The primary
factors recognise the fundamental upcoming legal problems towards all the industrial
association. This would probably convert existing legislation to the new law which is going to
help set up new airways business with little bit ease.
LO4:
P5: Internal and external analysis of specific organisations to identify strengths and
weaknesses:
SWOT Analysis:
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Strength: As stated by Hilton, (2016), the external macro elements factor that is unmanageable
and cannot be modified by the decision maker of the particular organisation sometimes helps to
encourage their own planned strategy. Only due to this reason most of the time the company
manages to get the proper limelight for the new customer, and according to that, a pseudo
promotional process can implement. For British Airways, the strengths that can be applied
partially to small sectors according to the will of the managing committee can be used as asset to
propel the external factors in the market and the surrounding economic environment.
Weakness: As the management of the organisation cannot manipulate the external factors thus
the customer can create a bad image of the company. Similarly, for British Airways Ltd, apart
from that, the natural disaster like a delayed cloudy day, rains also can take place to affect the
brand image of the company and to reduce the profit of the company.
Opportunities: As intended by Duray (2015), one of the most significant factors for every
organisation to develop its own business is customer retention and promotion. It can be
implemented only by the bits of the help of various macro elements existing in nature. The
British Airways, though conquering quite a top shelf in the aviation market in the United
Nations, must make full use of the drop in competitions in some short spans. Maximizing profit
and building stronger customer satisfaction through these steps should be the prime steps to
fulfill the spontaneous opportunities.
Threats: In today's business market one of the essential macro factors involving the business
management industry is the various types of political issue (Fornell, 2018). To avoid many of
these threats the administration of the British Airways Ltd company, should maintain a good
relationship with the management authority and the government of United Nations. The majority
of government officials traveling occur through the air route. Keeping the joint ventures in mind,
alterations in offers and promotions solely for the government sector employees and employees
can be implemented. Special airbuses can be built for the government officials for at the high
posts who possess the power of decision making such as the Cabinet.
P6: Strengths and Weaknesses interrelate with external macro factors:
If any organisation consider its employees to get better something into some activities, then it is
essential to make challenges with the company with success in the very similar business.
However many similar examples can be described as the company British Airways Ltd should
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increase the price of flight tickets in most of the metropolitans cities, like London, Liverpool etc.
It will help to improve the business and also increase the shareholder's profit.
With the analysis of the key strengths and weaknesses and their dependencies upon their external
macro factors, the proper handling and alterations in the direction department must be very
active and influential. The according steps must be followed according to the positive and
negative sides. The strong departments in the British Airways Ltd must be promoted. Less
supervision is necessary in the flourished departments. The lacking sides of British Airways
must be analyzed properly by higher authority. Proper examination of the supervisors in the
department will lead to the recognition of the faulty subordinate managers. The departments
where it is seen that the workers are ill-skilled, proper training workshops and facilities must be
developed.
Political factor: As per the strength and weakness of British Airways it can be interpreted that,
the organisation has well settled market in UK also in the global market. The largest aviation
organisation is serving millions of travellers in a year that motivates the nations towards growth.
The major strength of British Airways Ltd, it is controlled by government of British and hence
can enjoy the privileges like taxation policy, subsidies, government remedies etc. Apart from this
the organisation has poor image in front of customer by delaying of flight but support of
government can help the organisation to rebuild the trust factor.
Economic factor: The economic factor is denoting the national income of a nation. For any of
organisation national income of the nation played a massive role that helps the organisation to
measure the success. The national income of UK or GDP rate of UK is 5th largest GDP in the
world economy that 5.1 are in number. As per the strength of the organisation British Airway Ltd
is financially strong in the market and the positive growth of economy of UK has denoted that
the organisation British Airways Ltd would not have to face scarcity of resources in the market
(Britishairways.com, 2018).
Social factor: The social factor has influenced the market growth of British Airways Ltd. The
major weakness of the organisation is it has poor image in front of its targeted customers in the
market. This has revealed that the organisation is needed to improve its service quality so that it
can be able to gain the satisfaction as well as trust of their customers (Britishairways.com, 2018).
As the social factors is denoted as the perception of the customers or the views of the customers
towards the services what they are actually consuming in the market.
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Technological factor: The technological factor denotes the technologies using by an
organisation in the market for producing the better products and services. British Airways is a
technology based organisation but here the technological factor denoted that what technologies
the organisation is using to serve quality services to the travellers (Britishairways.com, 2018). As
per the innovative technologies the organisation has loaded with such tools like CRM and digital
marketing tools and online ticket booking that is helping the customers to enjoy the services but
the fact is British Airways has poor image in the current market.
Legal factor: Legal factors refers to the legal frameworks what an organisation is following as
well as maintaining within the organisation that helps the organisation to avoid government
intervention in the business transactions. As per the scenario of the organisation, British Airways
Ltd is following the rules and regulations in the current market such as Company registration act,
employees’ health and safety act, remuneration act and equality act (Britishairways.com, 2018).
Environmental factor: The environmental factor refers to the CSR activities done by an
organisation to develop the society in the meantime. It has been noticed that the organisation
British Airways is performing CSR activities and as per the terms of ecological development the
organisation has cleared the certification from ISO under the composition of ISO 14000 and
2000 (Britishairways.com, 2018).
Conclusion:
The above argument as a final point that every organization can maintain the dynamic stability
and sustainability if they hold and go after an organizational business plan (Aguilar, 2017).
However, the competitive environment is failed to provide the effective corporate policy and
strategy with an advantage. Apart from building a strong foundation and strategic plan for the
company, the managers should also be notified the weakness of the company, market threats,
service quality, and business dealing with the customer. All of these chances is develop to retain
different external opportunities which may be increased in future.
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References:
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Klusmeier, A. (2017) Business environment and customer satisfaction survey [Madison, Wis.]:
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