Business and Business Environment: Understanding Organizations and Their Macro Environment

This document explores the fundamental concepts of business organizations, encompassing their types, sizes, and scopes. It delves into the interrelationship of various functions within an organization and their connection to organizational structure. Furthermore, it examines the influence of the macro environment on business operations, highlighting both positive and negative impacts. The document concludes by analyzing the internal strengths and weaknesses of specific businesses and their interrelationship with external macro factors.

Business and Business Environment
1

Contents
Introduction........................................................................................................................3
LO1 Explain the different types, size, and scope of organizations...................................3
LO2 Demonstrate the interrelationship of the various functions within an organization
and how they link to organizational structure....................................................................7
LO3 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations...........................11
LO4 Determine the internal strengths and weaknesses of specific businesses and
explain their interrelationship with external macro factors..............................................15
References.......................................................................................................................18
2

Introduction
The business organization is the combination of the business and organization. In order
to understand the nature and the importance of the business organization, it is
mandatory to know the meaning of these two words i.e. business and organization,
business is a human activity which provides the services and product to the people in
order to earn the profit. Organizations organize themselves in such way to get the
desired goals. Good leaders and managers are necessary to the success of the
organization. There are many successful organizations whose success depends on the
best leadership and the management.
LO1 Explain the different types, size, and scope of organizations.
The organization is basically generally divided into the two parts i.e. material
organization and Human organization.
The material organization consists of basically the raw parts such as tools, capitals etc
for the smooth running and functioning while human organization consists of the
employee and staff to handle the different responses and roles for the synchronized
function of the government.
Value of business organization
There is very much importance of the business organization such as product growth,
efficient use of the resource, improvement in technology, creative thinking,
implementing the quick decision recognition and fixing the problem (Slideshare.net,
2018).
Differentiate between the NGO and NPO
NGO (Non-Government Organization) organization is mainly to work for the public and
the social welfare these types of organization are not mainly affiliated with any
government. NGO formed by the common citizens and operates autonomously for the
government while NPO (Non-Profit Organization) is working for all the purpose except
rather than making the profits (S, 2018).
NGO (Non-Government Organization)
Ngo is formed by the citizens that work as completely autonomous to perform the
variety of function such as humanism services. It is non-profit making operations it
operates in all the level such as a regional, national and international level. It basically
raises its fund from government foundations, businessman and private people .there are
many NGO which work for various concerns like women and children basic rights, the
red cross, health and many such similar concerns. NGO area of operation is large.NGO
works mainly for the betterment, upliftment of human rights, women empowerment etc..
There are basic types of the NGO are the most common types are INGO (International
3

NGOs), BINGOs( business-friendly NGOs) ENGOs( Environmental NGOs)
QUANGOs( quasi-autonomous NGOs)
NPO
NPO is legally performed by a group of persons to promote culture, religious and the
social activities the funds are basically covered by the member or individual of the NPO.
As the organization is basically NPO it applies its surplus fund for the motivation and the
promotion of the objectives of the organizations. An NPO includes a charitable concern
like a sports club, women’s club, social recreational organization, public educational and
public hospital etc. NPO functional area is small compared to NGO. NPO primary
objective is to generate and cultivate public profit instead of working for the private
profits .these include the charity and social concerns they basically operate in the
scientific and educational sectors.
NGO is associated with the promotion of humanism and cooperative objective.NPO is
the organization which promotes the science, education and other social and cultural
purpose.
Creating Customer
The customers and clients are very important for the business organizations .the
business can profit only when it has the customers the customer and clients keep the
business running so the product affinity must be made between the customer and
products. The good leaders and best managers must ensure that there should better
supply of product and services to maintain the name and fame of the organization.
Economic Objective
Used for income resources that control the country economy it aims for earning the
profit and motivate people to cultivate business, the good leaders and managers earn
the profit for business .profits helps businessman to maintain profit and increase the
producing capacity of its resources. With the profit, the business scope can be
expanded
Innovative trend
The innovative trend must be done as per the changing trend and the blending
technology. The good leaders and the managers have the best vision of future trend
and technology thus they maintain and innovate the changes according to that.
Social Concern
Business success many social factors are also responsible and the managers and
leaders of the organization have to concentrate on it. These social things are as follows
supplying of the goods at the reasonable prize the product and prize of the organization
must be at the reasonable prize black market and misleading advertisement must be
avoided ,employees must be given the fair compensation for their work this could be
4

very beneficial for the organization various rewards must be there for there well
contribution so that they can focus more on their work . The employment generation
tendency must be there within the organization and better working environment must be
maintained so that talented resource can be hired. Many social and cultural program
must be organized within the organized to maintain the positive working atmosphere
similarly the good taxation system should be developed and maintained because these
revenue and taxes help the government to focus on public welfare.
Human resource management
For good business human objectives should be maintained these human objectives are
labor welfare each and every business must analyze the value of the human being so
the proper and best opportunity should be provided to every employee for the
substantial development of the organization the employee and staff technical as well s
the management skills must be developed by scheduling the various induction training
program and also various skills test and mock drills must be organized to develop the
overall efficiency of the organization. Also, the working hours must be fixed and there
must be the proper roster for working durations
Scope in business organizations
Scope of the business organizations are partnership in the partnership each partner
introduces capital management .in the management each partner decide how to take an
manage the business and the other is sole partnership in this the entrepreneur is the
organizer, operator, controller, financier and decision maker and having all the
responsibilities (Business Study Notes, 2018).
Organization types are small scale and large scale based organizations small scale
have small infra and less revenue growth less economy as compared with the large-
scale organizations but they have a very crucial role in the large-scale organization as
they provide many resources to the large-scale organizations.
When a business organization is doing the business in any other country the things it
has to focus are.
International organizations are the importers and exporters and have no investment
outside their home country
Multinational has facilities in the multiple countries and each domain function in their
own way according to their trend
Global concern has a location in the multiple countries and is responsible for expanding
the global market by maintaining the friendly relations.
Transnational organizations is a commercial organization and operate its business in
more than one country they are those who maintain a more value of responsiveness in
the local market to maintain the facility
5

Licensing Vs Franchise
Licensing is agreement by which a company signs the contract with the other
organization to sell the products or services of a company for a license based and
royalty While a joint venture is an MOA between the two different party for the mutual
profit basically for the new product and service for market
Porter Five forces analysis
The industrial analysis is done basically by Porter’s Five forces this tool is very useful
for business development strategies there are basically five main primary forces to
determine the attractiveness of the industry these are s follows
Industry trend -this includes competition trend with the key rivals
Substitutes threat- To me superior to those products that cause the deterioration in the
product sale so, the managers and leaders must do market audit time to time.
Customer & Clients bargaining – sound clients and buyers have good control on prices.
Barriers to entry – the threat of new rivals who are entering the market with the
modified products with the reasonable price
6

LO2 Demonstrate the interrelationship of the various functions within
an organization and how they link to organizational structure.
HRM department is considered to be the heart of every system for any organization.
The main duty of HRM is to maintain the smoothness and synchronized function
between all departments within the organization there are also various tasks that human
resource department performed they are. Organizing the meeting ,recruiting and
retaining of the candidate ,maintaining the rules and policies fixing the remuneration
such as fixing the work hours duration ,appraisal system & reward system maintaining
the friendly relations with the other organization ,developing the positive work culture in
the organization premises as well as maintaining the harmony and peace in the
organization ,result and solution-oriented approach (Hierarchy Structure, 2018)
Also the HR maintains the friendly relations with all domain staff for the better efficiency
and outputs ,HR also try to recruits and retain the talented resource by doing various
skills test also they are providing many health care facility to employee so that he can
put his hundred percent efforts also they are developing the positive work culture by
giving the induction training and program, they schedule the meeting to solve each and
every conflict which proves hinderance in the organization efficiency.
The best leaders of the organization are having the best vision or future analysis of the
market after the vision has been done. The human resource management department
managers are set the goals as well as a target for the organization to achieve.
There are many key factors of the HR committee such as:
Employment and staff growth,
Attraction strategies of the worker
Motivate the learning in the organization
The HR management responsibility is to maintain the performance of the employee
through many dashboards and many HR monitoring tools these tools give the complete
analysis of the work report once the report is generated the report will go the all domain
leads for complete analysis and monitoring the feedback is given and the induction
training is scheduled for the development of the employee.
7

Key HRM activities are employee relationship and resourcing utilization. The Human
resource management department utilizes the whole potential of the employee for the
better efficiency and the output of the organization
Performance appraisal of the employee must be done time to time the performance can
be connected with reflective index of Excellent, Vey Good ,Good ,Average and poor .the
candidate with the very good performance and excellent performance should be given
the good hike in appraisal so that they can maintain their best work
(Referenceforbusiness.com, 2018).
Health Facility
The Hr. department member must provide the better health facility for an employee for
this health checkup camp must be scheduled and as well as gym facility must be there
in the organization campus so that good health and fitness can be maintained for the
employee.
Organization structure
8

Organization structure gives the way that organization arranges itself in a hierarchical way to
achieve the organization goal and the objectives this hierarchy gives the complete reporting
analysis. To fulfil this there is the frequent meeting between all the departments such as IT
manager, business, and marketing manager service desk lead, front desk, housekeeping staff
and many other such departments to isolate their issue and personal and emotional conflict so
that they can focus more on their work. And achieve the target of the organization.
9

10

LO3 Use contemporary examples to demonstrate both the positive
and negative influence/impact the macro environment has on
business operations
The atmosphere and the environment which is closest to the company that affects negative and
positive values it also creates the value of the relationship between the customers .market
success will require building the relationship with the company departments supply chain,
customers and competitors and various functional departments .the factors which affect the
microenvironment are:
 Suppliers
 Intermediaries
 Customers
 Competitors
Suppliers
They are one of the best links for the distribution of the product and the things .the
friendly relations must be signed between them so that everything goes in a
synchronized way. The suppliers are checking everything such as shortage and the
excess of the resource thus they maintained the better and the best efficient channel
(Smallbusiness.chron.com, 2018).
Intermediaries
Intermediary’s acts as a seller they send the product final to the whole seller and the
retailer thus they bring the overall profits for the organizations.
Competitors
To check the competitor's special staff team is deployed whose responsibility is to
continuously audit the market and check their rival products and subsequently bring the
change according to that.
Customers
The customer is very much important for any organization brand affinity should be made
for them .the customer satisfaction should be maintained such as changes to be done
the product should be at reasonable price and time to time distribution of the product
must be done.
11

Macroenvironment
These are those conditions and factors that affect the organization on the larger basics
(UKEssays, 2018). These are the
 Demographic environment
 Economic Environment
 Natural Environment
 Technological Environment
 Political Environment
 Cultural Environment
 Demographic environment
To count the population of that area by doing the analysis of such things i.e. death rate,
birth rate, infatuation rate etc.
Economic Environment
Determines the economic value of the country and factors those that are affecting the
economic growth of the country.
Natural Thing
The natural factors that affects the company such as pollution, the presence of sea
beach, the presence of mountains and many other such things.
Technology
12

The technology affects promotion and SEO in many advertisement modes such as the
advertisement done by the many social and networking sites.
Political environment
Such as present government laws and rules and taxes system that occurs during the
import and export of the product.
Cultural Environment
Many cultural things such as tradition are within the country and many religious factors
that are affecting it.
Also, the PESTEL analysis is done it includes the factors such as Political, Economical,
Social, Ethics & Laws, Subway used it in the best way such as they have the pools of
the good leaders and the managers they completely have the idea of the trending
market and thus they set the target according to that. Subway has ensured that their
every employee must be compatible with the trending technology so they are
scheduling induction training according to that they also maintained technology trends
such as catering partner and advertisement through many social media and networking
sites. They are also using the lab test for the product features such as they are checking
that their product must not contain any adulterated content that may cause health
hazards also they are making sure that their product must be diet friendly and must
contain protein and fiber substances. This factor helps in achieving the efficiency of the
organization.
13

14

LO4 Determine the internal strengths and weaknesses of specific
businesses and explain their interrelationship with external macro
factors
Subway uses the analysis and SWOT method to increase its market strength. It
expands in the abbreviation such as S(Strength) W(Weakness), O(Opportunity)and
t(Threat). SWOT network has widespread infra because of its simplicity and easily
manipulating with SWOT analysis the data can be made up to mark.
There are many things that can be done for the SWOT analysis such as what are the
variations that are happening internally and outside the market that is going to affect the
business, what types of customers, Strength, and weakness of key rival product,
changing current scenario. It includes what are the company resources assets,
intellectual property, things require in competition, what value are there for the product
and services, clients’ problem and solution (OnStrategy, 2018).
Strength
It adds the value and offers to your business organizations. Strength include channels
of distribution, equipment credit and established and loyal customers, existing channel
of distribution and other useful resources.
Weakness
These are the characteristics to view your product and service that gives the growth
refractive index of the organizations. These factors are must be removed from the
organization also the HR .department must ensure that there must not be these types of
the negative things practicing in the atmosphere.
Opportunities
Opportunities refer to the favorable which can be used to expand the market i.e.
Subway has used best of its strategies to open the branch in almost every country
Threat
Threat refers to those things that can cause harm to the growth that’s why innovation
should be done from time to time to increase the dependency of the products.
The following factor analysis is used to look at the external factors affecting a company
growth
Customer analysis: demands, necessity etc.
Competitive analysis to monitor the performance, strength, weakness and all another
such factor
Market judgement- The market judgement consists of profitability, barriers, costs
analysis and many such things
15

Economy Analysis- Consists of the economy of the country such as infatuation rate,
people wages etc.
Besides this, there are also many factors that are responsible such as
Product distribution system-
The product distribution system must be done in a hierarchical way so that the products
can reach to the customer on the time.
Changing Market
This factor must be kept in mind and his innovation of the product done according to
that.
Packaging system
The packaging system is important as packing value proves to be decisive as it attracts
the customer.
Canning partner
16

The friendly relations must be maintained with the canning partner so that there should
be an excellent distributed hierarchy of the products.
17

References
 Business Study Notes. (2018). Scope and Importance of Business organization.
[online] Available at: http://www.businessstudynotes.com/others/introduction-
to-business/discuss-the-scope-and-importance-of-business-organization/
[Accessed 24 May 2018].
 Hierarchy Structure. (2018). What is the Organisational Structure of a Business?.
[online] Available at: https://www.hierarchystructure.com/organisational-
structure-business/ [Accessed 24 May 2018].
 OnStrategy. (2018). Internal & External Analysis. [online] Available at:
https://onstrategyhq.com/resources/internal-and-external-analysis/ [Accessed 24
May 2018].
 Referenceforbusiness.com. (2018). Organizational Structure - strategy, levels,
examples, advantages, manager, model, type, company. [online] Available at:
http://www.referenceforbusiness.com/management/Ob-Or/Organizational-
Structure.html [Accessed 24 May 2018].
 S, S. (2018). Difference Between NGO and NPO (with Comparison Chart) - Key
Differences. [online] Key Differences. Available at:
https://keydifferences.com/difference-between-ngo-and-npo.html [Accessed 24
May 2018].
 Slideshare.net. (2018). Types of Organisation. [online] Available at:
https://www.slideshare.net/WelingkarDLP/11-types-of-organization [Accessed 25
May 2018].
 Smallbusiness.chron.com. (2018). Six Microenvironmental Factors That Affect
Businesses. [online] Available at: http://smallbusiness.chron.com/six-
microenvironmental-factors-affect-businesses-78023.html [Accessed 24 May
2018].
 UKEssays. (2018). Effect of macro business environment. [online] Available at:
https://www.ukessays.com/essays/marketing/effect-of-macro-business-
environment.php [Accessed 25 May 2018].
18