Business and Business Environment: Understanding Organizational Structures and Macroeconomic Influences

This comprehensive study delves into the diverse types, sizes, and scopes of organizations, exploring the interrelationships between organizational functions and their impact on structure. It examines the influence of the macro environment on business operations, utilizing the PESTLE model for a detailed analysis. The study also conducts internal and external analyses of specific organizations, identifying strengths and weaknesses and their interrelationship with external macro factors. Finally, it applies SWOT/TOWS analysis to demonstrate how these factors influence decision-making.

BUSINESS AND BUSINESS ENVIRONMENT
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Table of Contents
Introduction......................................................................................................................................3
LO1 Explain the different types, size and scope of organisations...................................................4
LO2 Demonstrate the interrelationship of the various functions within an organization and how
they link to organizational structure................................................................................................4
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures..........................................................................................................................4
P2 Explain the size and scope of a range of different types of organisations.................................5
M1 Analyze how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organization....................................................7
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure...........................................................................................8
M2 Analyze the advantages and disadvantages of interrelationships between organizational
functions and the impact that can have upon organizational structure............................................9
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples..................................................................................10
M3 Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organization..............................................................................................11
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses..............................................................................................................................12
P6 Explain how strengths and weaknesses interrelate with external macro factors......................14
M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision-making.
.......................................................................................................................................................14
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
Appendix........................................................................................................................................19
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Introduction
The business environment identifies the different internal and external factors that affect the
business of the organisations. The business environment mainly emphasizes on the different
ways in which the combinations of the external as well as in the internal business affects the
business of the organization. Thus business environment plays a vital role in shaping up the
overall operations of the organization. The different organisations that exist in the contemporary
market are the private, public, profit and non- profit organisations. However, other types of
organisations like micro, small and large have also been emphasized in the section. The scope as
well as the size of the profit share, market growth as well as growth of the organisations along
with the legal structures has also been chosen.
For this particular project, organisations like Child maintenance organisations, Google and
Welcome trust have been selected and the legal structures of each of them have also been
identified in this section. The sector and the type of each of them have also been identified. The
mission and objectives of each of them have also been identified and the organizational structure
of each of them has also been identified in the section.
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LO1 Explain the different types, size and scope of organisations
LO2 Demonstrate the interrelationship of the various functions within an organization and
how they link to organizational structure
P1 Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures
As discussed by Brewster and Hegewisch (2017), the legal structures and the basic variants of
the private, public as well as the voluntary organizations vary from each other. The modes of
operation of each of them vary from each other. While the public sector organization identifies
the organization that are publicly designed and formulated agencies that provide public services
to the citizens (customers). However, often refeed as the state sector the public sector
organization identifies the combinations of the public enterprises as well as the public services.
The organisations are intended for providing the government services to the citizens of the place.
The Child maintenance organization can be considered as an example of the public sector
organization operating in UK. The organization was built with the sole purpose of ensuring that
the children of UK r are maintained and educated effectively. The organization is headquartered
in London and is controlled by the secretary of the state for pensions and work. The organization
is mainly monitored by Department of pensions and work. This is basically a child enforcement
organization that looks after the welfare of the children. Legal structure of this particular
organization is of the sole proprietorship type.
The private sector organisations on the contrary are the organisations that run only on the basis
of profits. These types of organisations are not run by the government but are run and operate by
individual entities. Earning profit is the sole aim of these types of organisations. However, these
type of organisations also play a vital role in elevating the overall unemployment level of that
particular country. These organisations earn profit and hence also contribute towards the overall
revenue generation of the state of operation. Google is an example of one of the leading private
sector organisations of the contemporary times. The organization is a 19 years old organization
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headquartered in California. The organization operates on a worldwide basis. The organization
has a total employee count of more than 73,000 employees who work effectively towards the
success of the organization. Legal structure of google is partnership firm. There are a number of
shareholders of the organization. The most significant among the shareholders are Larry Page,
with a total of 27.4% of the share (Google.co.in, 2018).
The voluntary sectors (organisations) are the perfect examples of the non- profit organisations. In
complete contrast to the public and the private sector organisations these organisations are also
termed as third sector organisations. Bringing about revolutionary changes in the society and
allowing each and every individual are some of the significant objectives of this type of
organization. These organisations exist only for bringing about revolutionary changes in the
society and hence do not earn profit, nor does it contribute towards highlighting any type of
unemployment ratio. As stated by Fehon and Garrard (2017), the contributions of the voluntary
organizations are more of the indirect type than the direct type. The Welcome trust is one of the
leading charitable s organisations headquartered in London, UK. This is a bio medical research
institute in London. With a total of more than 2000 employees, the organization aims at aiding
individuals towards carrying out the different bio medical research by the scholars. The
organization does not have any profit margins and work towards the welfare of the society. The
organization is privately owned by Miss Baronnes Ellisa (legal structure).
P2 Explain the size and scope of a range of different types of organisations
The different types of organisations based on their size that find existence in the business world
may include the large, medium and small sized organisations. The objectives as well as the other
attributes of each of the organisations vary from each other
Large organisations- the organisations that cater more than 5000 employees are examples of
large organisations. Most of the business giants of the contemporary times (Google, Nokia,
British Airways) are examples of large organisations. The main objective of these organisations
are maximizing the shareholders profit as well as well as motivate them to enhance their
investment in the organization. The main goal of the organization is to earn profit and maximize
the capital investments of the organization. The market share of the organisations is extremely
significant. The organisations usually occupy more than 30% of the overall market. The market
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share of google is 32.5%, while that of Nokia is 48.7% occupying the third position in the
industry. This clearly points out that the market share of google is extremely high as compared to
its competitors such as yahoo, Bing. Similar situations are noticed in case of the competitors of
Nokia (Samsung, Motorola). The organisations maintain a steady growth approx. 10% each year
(Grobler et al.,2017). The reports prove that the steps that have been taken for the purpose of
maintaining the sustainability (living map of the forest, usage of renewable energy) have proved
to be effective enough in providing the required purpose.
However if the international scenario is considered then the other types of organisations that find
their existence may include
International- The organisations that have a proper international scope and presence may be
considered as an example of an international organization. These organisations have proper legal
permission to perform in the international scenario. Examples – World Trade Organization
European Union and NATO
International organisations- These organisations have witnessed an overall growth since the
past years approximately 10%. The presence of these organisations and their developments are
strictly witnessed in case of the different developing and under development countries (Nigeria,
Ethiopia).
Transnational- these are a variation of the international organisations. The transnational
organisations refer to the NGOs that operate in the international scenario. The WHO (World
Health Organization) is an example of transnational organization that enjoys a vital existence in
each and every country of the world. If reports are to be believed the growth rate (expansion rate)
of these organisations are indeed huge ( more than 15%) and the existence of these organisations
are witnessed in almost each and every countries in the world.
Global – the global organisations refer to the organisations that have their existence in each and
every countries of the world. Both Google and Nokia are examples of these type of
organisations.
The franchising, joint ventures and licensing are the type of legal structures that are followed by
the different organisations. The meaning and the representations of each of them vary from each
other.
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Franchising refers to the process of granting permission to the other organisations for selling the
products and the services. For example Nokia has a number of franchises in the different parts of
the world that produce and provide original products of the organization. The authencity as well
as the originality of the products are greatly witnessed in these types of stores.
Licensing on the other hand refers to giving permission to other business firms (or individuals0
to sell the products and the goods of the particular organization. For example Huawei and
Xiaomi are the licensed partners of Nokia. The advantage of these types of licenses (business
collaborations) is that it provides advantages to both the organisations. The customer base as
well as the brand image of the organisations actually gets shared among each other. If reports are
to be believed then the customer base and hence the profit margin of Xiaomi have increased by a
booming 35%, after its collaboration with Nokia (Jegers and Verschueren, 2016)
Joint ventures are examples of business activities when two or more organisations come
together to form a common organization for achieving some common goals and objectives of the
organization. The joint venture of Nokia and Microsoft in the year 2014 can be considered in
these regard.
Adoption of these types of legal structures actually helps the organisations to maintain a proper
relation among the demand and the supply among the organisations. For example the demands of
the customers for using the Microsoft as well as the Nokia services have been fulfilled easily by
the joint collaboration among these organisations and supplying Microsoft phones (supply).
M1 Analyze how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organization
Maintaining a proper inter relationship among the different factors as discussed above have
manifold uses and applications. The main objectives of the business organisations (google,
Nokia) actually helps in fulfilling the main and significant business objectives- enhancing the
sales margin, connecting to more number of customers, satisfying the stakeholders to the
maximum extent. For example the successful licensing among Nokia and Xiaomi actually helped
in reaching out to a large number of customers- fulfillment of the motto “Connecting People”.
The scope of these types of organizational structures actually helps the organisations to utilize
the customer base of the other organization. The licensing of Google and Android has also
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proved to be effective in enhancing the overall customer base of Android. It actually helped
Android to reach out to more number of customers thus enhancing the overall customer base and
hence the profit margin of the organization. It actually helped Google to fulfill their goals of
providing accessible information to the customers of the organization.
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure
The different objectives of Nokia may include
- To capture more of the national as well as the international market
- To provide a wide series of mobile phones
- To provide quality products at much economic rates to the customers
- To incorporate the latest technologies in their products
- To produce ecofriendly products
As discussed by Jenkins (2017), the organization usually witnesses the presence of a number of
functional departments and these are the finance, human resources, marketing and sales,
operations, research and development wing. The duties of each of them vary from the other. The
main role and the purpose of the human resource department are selection and recruitment.
However whenever any new products are being launched by the organization the human resource
department in accordance with the research and the development wing for sharing the
technicalities of the new products and services with the engineers and the other employees of the
organization. Thus a proper inter relation among the departments is useful for the human
resource department to organize their training programs.
The finance department on the other hand produces the budget and allocates the resources
(financial) for the activities that are to be performed by Nokia throughout the particular financial
year. The research and the development wing needs to maintain a proper relation with the
finance department since the activities that the department is planning to perform can be strictly
restricted by the budget thus produced by the finance department of the organization. To be
more precise, the finance department needs to provide their budget after contacting the research
and the development wing as to what the technological changes they are planning to implement.
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The marketing and the sales department of Nokia performs a two folded role. On one hand the
marketing department provides a detailed overview of the products to the customers and also
estimates the sales volume and the profit margin of the organization. On the other hand, the
marketing team also collects the feedbacks of the customers about the changes and updates it to
the research and the development wing. The research and the development wing then incorporate
new changes and modifications in the existing models for assuring the customer satisfaction in
the best way possible. Thus the marketing team forms the bridge among the research and the
development wing and the customers (Kadelbach, 2017). The interrelationship among the
departments helps the research and development wing to have good idea about the demands of
the customers. The operations department brings about overall smoothness in the entire process.
The operations department needs to maintain an effective relationship among the human resource
department as well as the other departments’ helps in identifying the issues that are faced by the
other departments and helps in providing seamless services in the organization (Nokia).
M2 Analyze the advantages and disadvantages of interrelationships between organizational
functions and the impact that can have upon organizational structure
There are actually a number of benefits that are obtained from maintaining inter relationships
among the different departments. The greatest advantage among them being that maintaining a
proper inter relationship helps in ensuring the workability of the organisation. It actually helps in
understanding the exact trends and the demands of the market (customers) to be precise. Along
with all the other factors, proper inter relationships among the departments help Nokia to fulfil
the motto of the organisation – Connecting People.
However, the disadvantages that are obtained should also never be ignored. In many cases
interrelationships among the departments creates immense confusion and commotion among the
employees as to what they are supposed to do and what not. For example, when Nokia and
Microsoft entered into a joint venture, there was ample confusion that was created among the
employees (rather departments).
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LO-3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations
LO-4: Determine the internal strengths and weaknesses of specific businesses and explain
their interrelationship with external macro factors (power-point)
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
The term macro environment identifies the different factors of external environment that may
affect the overall business of Nokia while operating in UK. The effects of the macroeconomics
that are widely witnessed are
- Inability to adopt with the macro economic factors the organization may actually collapse
and close down in all aspects
- Political stability is one of the leading macro-economic factors that affect the business. A
stable political condition brings with it effective and impactful changes in the internal
environment of the organization.
- Finland is quite strict about maintaining an effective environment in the country. In
accordance with these have proved to be extensively useful for the country to develop
effective products that are recyclable and reusable from all aspects
- The society of Finland mostly uses the Android and other smart phones. The inabilities
of the organization to adopt with these changes have turned out to be fatal for the
organization.
- The technological factors that are available in Finland are not of the much advanced
types. Moreover the economic conditions of Nokia are never too healthy to support the
different research and development ventures (Thornhill, 2017).
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M3 Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organization
Factors Impacts
Political the exact impacts of the political turmoil in Nokia is never easy to
estimate .Moreover, since Nokia belongs to a small country (Finland) that
does not have an effective political stature so at times the government is
not able to provide required political supports to the organization.
Economical The effects of the European Downturn on Nokia have indeed proved to be
detrimental for the organization. Moreover the organization also lacks easy
access to the different economic resources that are used by its competitors
like Apple, Samsung. The economic condition of the country also effects
the objectives of Nokia for introducing new and advanced technologies in
its products (Kramer, 2017).
Social One of the greatest social factors that affect Nokia is the adoption of Smart
phones and a whole lot of new applications and software by the
individuals. Most of the individuals prefer new and advanced technologies
and the incapability of Nokia of adopting with the latest trends are greatly
affected. The objectives of the organization in enhancing the customer base
of the organization are affected by these.
Technological The most significant technological factors affecting the business of the
organization is the incapability to cope up with the recent technologies that
are being implemented. Finland is never considered as a technologically
advanced country and hence the usage of the technologies in Finland is
actually limited (Sharma et al.,2017).
Legal The legal environment in which the organization is operating is a
challenging one. The organization operates in the EU nations – the nations
that cater most number of android users. The organisations legal contract
with Microsoft have not proved to be an effective one for the organization
and has landed it into legal complications
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Environmental The environmental laws of the European nations are extremely strict.
Most of the mobile phones and the other products that are produced by
Nokia are recyclable and do not have any adverse effects on the
environment. Thus the objectives of the organization to produce
environment friendly products are greatly fulfilled (Spear et al.,2017)
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses
Nokia is one of the leading mobile phone vendors of the contemporary times. The mobile phone
organization has a good and effective brand image in the market. Every organization, no matter
how successful it is always faces a few weaknesses along with the strengths it faces. While the
strengths help in strengthening the foundation of the organization, the weakness at times imposes
fatal effects to the organization.
The different strengths and weaknesses that are faced by Nokia are
Strengths
- Brand name is by far the most significant of the strengths that are possessed by Nokia.
The organization has been in operation for more than a century and as mentioned by (),
there are practically no individuals in the world who have never used the phones that are
being manufactured by the organization. In fact using Nokia phones at times adds top the
social status of the users.
- The user-friendly software used by Nokia is among the factors that have contributed to
the strength of the organization. If reports are to be believed then more than 90% of the
global residents have used Nokia as their first phone in their lifetime. The user
friendliness of the software have actually brought mobile phones (hence Nokia) a step
closer to the customers (Nokia, 2018).
- Nokia, by far enjoys the largest network of communications in terms of selling and
distribution. The Nokia cares and franchises are seen in almost every corners of the
world.
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- The customer relation of the organization is quite strong enough and moreover the
organization has an effective customer care that provides 24*7 services throughout the
year.
- The phones that are produced by the organization are mostly durable and have high
longevity adding much to the strengths of the organization
Weaknesses
The weakness may include
- The merger of Nokia and Microsoft has not proved to be profitable for the organization.
Instead, the market share of Nokia reduced due to the Microsoft phones that are produced
by them.
- The sets that are available are less stylish and in most cases not up to the mark in
accordance with the current trends.
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P6 Explain how strengths and weaknesses interrelate with external macro factors.
The strength of the organization to produce and manufacture the different products that are
recyclable and bio degradable in all aspects have proved to be effective for the organization in
co operating with the different environment laws that are existing in the country. The
organization has proved to be effective enough in providing mobile phones that are effective
and durable enough in enhancing the customer base of the organization. Nokia has been enjoying
an effective customer base since the past years and the quality of the products that have been
provided by the organization have always proved to be effective in satisfying the customers in
terms of quality and quantity.
However, the weaknesses that are possessed by the organization have also created havoc barriers
in paving the success path of the organization. The weakness of the organization in adopting with
the current trends and software has indeed proved to be detrimental for the organization. As
discussed by Turk (2017), the inability of the organization to cope up with the current changes
are some of the primary reasons that have affected the growth of the organization largely.
Moreover, the resources that are accessible to the organization are also limited and all this have
imposed serious problems for the organization to survive in the current market. Moreover, the
decisions of the organization to merge with Microsoft have also proved detrimental for the
organization. Instead of providing benefits, it reduced the customer base of the organization.
The market share of the organization also greatly reduced due to these activities and hence the
customer base of the organization as well as the market share has been greatly affected by these.
M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision-
making.
The SWOT analysis plays a vital role for the organization in shaping up the decision-making
skills of the organization.
Opportunities
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The ever growing market of Nokia is one of the leading opportunities for the organization. Using
this particular opportunity, the organization can adopt proper skills for expanding the
organization in places where they have a limited presence
The demands of smart phones have increased greatly in the contemporary times. Using this
opportunity, Nokia can actually launch and more effective smart phones that are able to satisfy
the customers in the most suitable way possible.
However the threats that may impose problems in securing the future of the organization also
exists in the market
- The increasing popularity of I-phone and the crave among the customers can never be
considered as a good decision for the organization.
- Moreover the absence of an effective research and development wing also effects the
overall growth of the organization (Wamsler, 2016).
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Conclusion
The above project has proved to be effective enough in throwing an emphasis on the different
types of organisations that find their existence in the business world. It has been estimated that
the private, public and the voluntary organisations are some of the common types of
organisations that witness their existence in the modern world. While the public and the private
sector organisations run for their own benefit, the voluntary sector organisations run for the
benefit of the society. The legal structures of some of the leading organisations such as Google,
Nokia, and World Health Organisations have also been identified and discussed in the section.
The size and the scope of the large, small and the medium organisations have also been
discussed in the section. The advantages (as well as the disadvantages) of maintaining inter
relationships have also been discussed in the section. An environmental audit has been carried
out and the way it affects the business and the operations of Nokia have also been carried out in
the above sections.
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Appendix
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