Types and Purpose of Organization in Business Environment

This report discusses the different types and purposes of organizations in the business environment. It explores the interrelationship between organizational functions and their link with objectives and structure. It also identifies the positive and negative impacts of the macro environment on business operations.

Business and business
environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1 Different types and purpose of organization..........................................................................3
P2 Size and scope of different types of organization..................................................................5
M1 Analysis of structure, size and scope of different organization............................................6
LO 2.................................................................................................................................................7
P3 Relationship between different organizational functions and link with organizational
objective and structure.................................................................................................................7
M2 Advantage and disadvantage of interrelationship between organizational functions...........8
D1 Critical analysis of complexity of different types of business structure................................8
LO 3.................................................................................................................................................8
P4 Identify negative and positive impact of macro environment................................................8
M3 Support analysis of macro environment..............................................................................10
LO 4...............................................................................................................................................10
P5 Conduct internal and external analysis of organization for strength and weakness.............10
P6 Explain strength and weaknesses interrelate with external macro factor.............................12
M4 Justify internal factor affect to business decision making..................................................12
D2 Evaluation of macro and micro factor.................................................................................13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14
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INTRODUCTION
Business environment is the sum and collection of all the internal and external factors
such as the employee, customers, supply, demand, client, management, owner and other
activities. This refers with current and present trends which are happen at marketplace. The
present report is based on the John Lewis partnership firm which a brand of high end department
stores operating throughout the Great Britain. The type of company is public limited company
and belongs with retail industry. Present the company have 38100 numbers of employees with 51
stores. The report will explains different types and purpose of organization as well as explaining
size and scope of different organization. Report will explain relationship between different
organizational functions and link with objectives and structure. This will identify negative and
positive impact of macro environment upon the business operations and conduct internal or
external analysis like strength and weakness. At the end of report will also explain strength and
weaknesses interrelate with external macro factor.
LO 1
P1 Different types and purpose of organization.
There are different types and purpose of organization which establish for achieving goals
and objective of company in effective manner. There are two types of organizations like profit
making and non profit making business. Explanations of both are as follows:
Profit making business: profit making organization has one main goal and objective for
establishing their business which is earn higher level of money and profits with their business
(Aithal, 2016). These kind of businesses are provide products and services against of money.
Non profit making business: non profit making business has focus on keeping itself for
going in effective manner at the market place. These kinds of businesses are only providing
better services to people without any money.
Different types of organizations
Private organization:
Private organization is type of organization which is run by individual people and
companies in order to earn higher profit margin. For establishing this kind of organization has
main purpose to grow at market place with effective economy. Private organization is also
having certain kinds which are explains below in effective manner are as follows:
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 Sole proprietorship: is types of businesses are owned individual people. This type of
businesses have one goal is to retain effective margin of profits with purpose to keep cost
lowers. On the other side, objective of businesses is to make money for fulfil goals. The
legal feature is minimum government unlimited liability. For example: beauty salon, ice
cream parlour and another street shows are counted into sole proprietorship business.
 Partnership firm: partnership organization is owned by two or more people. The main
goal of partnership firm is to share profit and losses equally within the business in
effective manner. Another objective of company is to bring together their skills and
resources for get effective success at marketplace (Aydiner and et.al., 2019). Like the
Berkeley partnership firm is the best example of Partnership Company.
 Public limited company: public limited company is started their business with limited for
share. This kind of companies is share take of share from market and earns money with
market and with customers. The goal of company is to earn higher profit and purpose is
the happiness of all our members by satisfying needs and wants of employees in effective
manner. For example: john Lewis is the public limited company who has ability to
sustain and enhance position both as an outstanding retailer and employee ownership.
 Private limited company: this company is started their business entity with owner is
completely liable for their share. This type of company has their effective goal and
purpose of earn money with market by selling product and services on lower price.
Public sector:
Public sector organization is owned and started by government in order to provide
services to people. This type of organization have effective goal to provide better services to
people and doing welfare. The best example of public sector organization is NHS, which is
provide free and better medical services to people always protect to them with any injuries and
another affects (Erasmus, Strydom and Rudansky-Kloppers, 2016). The main feature of company
is to provide comprehensive services to people with objective is to keep safer to all the people in
effective manner.
Voluntary sector:
This type of organization is including all the social activities that are undertaken into the
non profit organization. OXFAM is the independent charitable organization which is focus on
the alleviation of global poverty line. The main goal and purpose of establishing organization is
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maintain and emphases best relationship within the society and providing effective benefit to
people.
P2 Size and scope of different types of organization.
There is different range and types of organization as per the size and scope which are
defined are as follows:
 Small and micro size organization: this type of organizations is established by individual
with the aim of earning money.
 Medium size organization: this type of organization is established by individual and has
small number of employee.
 Large size organization: this type of organization is including multinational businesses
and have aim to increase market share at market place in effective manner.
Micro sized
organization
Medium sized
organization
Large sized
organization
Example of company Real beauty salon John Lewis company NHS
Goals To earn profit by
providing product and
services at market
place.
To increase suitability
at market place.
To provide better
services to customers
and people.
Objective To sustain excellent
customers services
(Gaganis, Pasiouras
and Voulgari, 2019.).
To increase profit
margin by offering
product and services
at market place.
To make effective
brand image at market
place by keeping
people.
Market share Not have any kind of
market share.
Company has 25%
market share
60% market share
Number of
employees
Maximum 10 More than 250
employee in one
brand
More than 500
employees
Number of product
and services
Various services Multiple product and
service line.
One best services to
keep people healthy
Legal structure Not have legal
structure
Company has follow
proper legal structure
Company follow all
the legal entities
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which include legal
formalities and
agreement of
partnership as well as
follow AOA
which are important
for company. this
includes MOA in
there, company have
effective board
directors for taking
best decision.
Internal expansion Company need to
extend their business
by increasing services
like home services.
Company need to
organize training and
development session
for employees in
order to familiar with
using technologies
(Gebauer, Haldimann
and Saul, 2017).
Need to train
employee for giving
better medical
services to people.
External expansion Think about
expanding business at
another place by
opening another
branch of business.
Invest on
technological and ion
research and
development
department.
Enhance interaction
with other medical
firm for taking
medicines.
Those are the companies as per the size and scope like small, medium and large
companies.
M1 Analysis of structure, size and scope of different organization.
Every organization has own product and services as per requirement of market place.
Through that management has sets their aims and objectives for earning higher margin profits.
As per that, micro organization is providing services to customer on day to day product. On the
other side, large company have aim to developing economy through providing employment to
unemployed people at market place.
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LO 2
P3 Relationship between different organizational functions and link with organizational objective
and structure.
For the success of business and organization it is very important to have effective and
valuable relations between different functions of organizational functions such as human
resources, finance, marketing, production and research or development departments.
Interrelationship between those organizational function are describe below:
Marketing and research and development department:
Marketing department is very important for the business because that is completely
responsible for promoting product and services at market place by doing various marketing
activities (Hamilton and Webster, 2018). On the other side, research and development
department is another important department of organization because this department is
responsible to analysis whole market and gather information about current trends which are
happens at market place. Through that research and development department help to marketing
department for understand needs and wants of customers with the company. That is very
important to have correct information about customers is help to attract them. Objective of
organization john Lewis is to earn money from market place that is linked with organizational
functions and structure for that R&D department gather information and handover to marketing
department and marketing team complete needs of customers.
Human resource and production department:
Human resource department is another important function of organization that is
completely responsible for hiring and selecting best candidate for company. On the other side,
production department is producing product and services for company in order to fulfil the needs
and wants of customers. For that production department requires eligible team and candidate. In
that production department is take help from human resource department because hiring
candidate for team it is responsibility of human resource department (Kasemsap, 2018). Other
side, production department sets criteria for HR which is help to hire best employee for the team.
As per that both departments are interrelated with each other at workplace in effective manner.
Change in the business is affect to the HR department for aligning resources in better manner.
This help to maintain perfect organization culture.
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M2 Advantage and disadvantage of interrelationship between organizational functions.
Organization has various kind of organizational function human resources, marketing,
finance, research and development function. That had impact to the business and its structure as
company john Lewis is follow hierarchical structure than the entire department. All the
departments are performing their own role and responsibility within the proper coordination
within the company and its department. With the help of this, advantages and disadvantages for
the company in effective manner. The main advantage for company to work with structure is
done in proper and effective manner (Likoko and Kini, 2017). On the other side, disadvantage is
the lack of communication due to work level of all the departments is different. That is creating
biggest issue and challenge for company and for difficult to manage time.
D1 Critical analysis of complexity of different types of business structure.
Business performs their task and project by following different organizational structure and
functions. Through that business face some of the complexity because through that various
people are involve for completing job. That is making some of the complexity for business and
their operations which are lead changes in business environment. Change and complexity is
affect to the organizational functions due to polices are change and strategies are also (Newman
and et.al., 2020). Large organizational structure is more complex for company and face different
types of difficulties at market place.
LO 3
P4 Identify negative and positive impact of macro environment.
There are various factors which are affecting to business in negative and positive manner.
That is very important for john Lewis to analysis those factors external factors from macro
environment for that here is use PESTEL analysis model and leads of changes. This model
includes political, economical, social, technological, environmental and legal factors.
Explanation of those is as follows:
Political factor:
Political factor is consist with the all those factors which are reflect to government
bodies. This refers with tax rate like corporate tax, trade tax, government policies etc. for
example: political stability of country is good than it is beneficial for john Lewis Company
because through that company is able to sales product and services in effective manner.
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However, if the country faces political instability through the changes in those policies which are
affect to business in negative manner.
Economical factor:
Economic factor have the significant impact on the organizational business. This includes
economic growth, interest rate, exchange rate, inflation rate, customer disposable income and
businesses. This gives impact on business in negative and positive manner. Business grows at
global level, it is very important to analysis economic condition of country and decide to take
their business in another country (PESTEL analysis of John Lewis, 2017). For example:
economic condition of country is good than it is beneficial for john Lewis because through that
customers are attracted towards business for purchase product and services. On the other side,
economic condition is not good than it is decreased inflation rate. Through that customers
purchasing power is also lower which is affect profitability of the john Lewis affect by
uncertainly in economic condition.
Social factor:
Social factor is the important factors which are affect to business in negative manner as
well as on positive manner. This refers with attitude, taste and preference of customers. Those
factors are directly affect to business understand customers and drives them. For example:
present day customers are purchase product and services in organic. In this business need to
focus on organic products for customers to used those and increase their profit margin. On the
other side, if company not focus on organic food items than it is affect to business because
through that customers are not purchase any items with company. so, in that management need to
analysis needs and wants of customers.
Technological factors:
Present day, technology is growing continuously which is affect to business by reducing
cost of business operations. New technology is creating difficulties for business to adjusting and
adopting workplace in effective manner. For example: present day all the customers’ are
purchase product and services through online platform due to corona virus affected (Pan, Chen
and Zhan, 2019). In this company need to use and provide their products on online platform is
help to make good sales. However, if company is not adopting this than it is affect to business in
negative manner.
Environmental factor:
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Environmental factor is different in each and every country. For the growth of company
at the market needs to maintain effective and valuable standard or produce some eco friendly
techniques. This factor refers with changes in the climate conditions, weather and locations. For
example: environment is the most important and effective to analysis in the proper and effective
manner. In that case, John Lewis needs to ensure about the factors which affect to business in
negative and positive manner. In that government is taking various steps in order to protect
environment. In that john Lewis have to follow those government standard help to make positive
growth at market place.
Legal factor:
Legal factor is consisting with all those government laws and regulations which can
affect to business. This factor includes consumer rights and laws, product labelling and product
safety important and effective for companies to know about all the legal factors. For example:
employees compensation act say provide compensation to employees against of their valuable
working at workplace (Parboteeah and Cullen, 2017). In that, management of john Lewis needs
to know about those policies which are included within the law. This affect to business either in
negative manner when employee is injured and employer not provide proper compensation to
employees. However, if employer is not providing proper compensations to employees than it is
gives positive effect on business.
M3 Support analysis of macro environment.
The above mention analysis reflects about the PESTEL analysis of company which includes
political, economic, social, technological, environmental and legal factor and its affect on
business. In order to analysis affect of those factors company need to change their business
operations as well as strategies which are help to sustain business at market and at global level.
In that change in the taxation polices, exchange rate, inflation, technological and another changes
affect to business in negative and positive manner.
LO 4
P5 Conduct internal and external analysis of organization for strength and weakness.
For the success of business, it is very important to analysis internal strength and weakness
of company. On the other side, for taking business at greater level it is important to analysis
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external opportunity and threat. For that here is select SWOT analysis matrix which is help to
analysis strength, weakness, opportunity and threats of john Lewis Company are as follows:
Strength Weakness
 The company have effective and
strength brand image at market place.
 Company provide product and services
with effective and strong online
presence.
 Company’s employment relationship is
at the effective level (SWOT analysis
of John Lewis, 2018).
 Company have extensive product
range.
 John Lewis has continues focus on
innovation and creativity platform.
 John Lewis is not having international
business experiences.
 Recently slump in the profit.
 Company not have any effective
marketing strategy.
 Lack of competitive advantage.
 Inconsistent in profitability.
Opportunities Threats
 John Lewis has effective opportunity to
extent their international market.
 Development of new and unique selling
propositions.
 Formation of strategic partnership in
the global market.
 Development of new product at market
place.
 Rising focus on healthy foods.
 Company have negative affect with the
new legislations.
 Cash flow problems.
 Emergences of new competitors with
stronger competitive advantage
(Prajogo, 2016).
 Failure in the new market with the
cultural differences at market place.
 Intense competition dominated by
strong players.
Those are the strength and weakness of john Lewis as well as opportunity and threats. In
order to overcome weakness company should use strength of company and overcome threat
company need to use opportunity at market place.
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P6 Explain strength and weaknesses interrelate with external macro factor.
John Lewis Company have effective management system with strong and hard working
employee team which is help to company to achieve their goals and objective in effective
manner. John Lewis is the multinational retail company recruiting talented employees in order to
handling their work place in effective and in proper manner. Company one of the best and strong
building and effective level of employment relations as well as with their customers are help to
increase business presence at market place (Quinlan and et.al., 2019). With the help of this john
Lewis is able to take best and effective advantage which is political stability. With the strong
brand image company is ready to provide employment to those unemployed people is help to
build more effective brand image at market place.
On the other side, company have weakness which is lack of effective marketing strategy.
In that company need to analysis attitude and preference of customers are help to make better
and effective marketing strategy which will help to company for achieving goals and objectives
of company. With the help of this, company is able to enhance their competitive advantages in
effective manner.
John Lewis have various opportunities in that one is best expansion of business at
international level is help to increase sales and presence of company in effective manner. In that
company can take advantage from economic analysis (Singh and Agrawal, 2017). Through that
company is able to understand economic condition of country is good or not.
Another, threat of the company is negative affect to new legislations. In that business
requires to get updates about all the new rules and regulations by taking analysis of legal factors.
This creates effectiveness for business in positive and in effective manner.
M4 Justify internal factor affect to business decision making.
With the help of SWOT analysis, here is mention all the strength, weakness, opportunity
and threats of john Lewis which is affect to company and their decision making process. That is
completely help to understand internal analysis of john Lewis is consist with the changes with
the operations and another decision making. With the help of this, productivity of company is
effective and improved in positive manner (Surin and et.al., 2016). On the other side, weakness
of company is needed to make best marketing strategy to overcome weakness. For company
required to consist with various opportunity which are helpful for getting effective and valuable
success of company.
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D2 Evaluation of macro and micro factor.
Both the factors has affect to decision making process and objective of john Lewis by
making some of the changes in economic conditions and political environment. With this
company faces various challenges in order to achieving objective. As per that company make
effective changes in their business objectives and decision making process in order to meet goals
in successful manner.
CONCLUSION
From the above study, it had been concluded that the understanding business environment
has helpful for getting success to business in effective manner. For that company requires to
change their business operations and strategies to compete with market policy. There have
various kinds and types of organization which has included within the report such as private,
public and voluntary sector. Those has sets their goals and objectives to complete their task at
market place. As per the size and scope have three types of organization such as micro, medium
and large company which has limited number of employees for working at workplace. different
organizational functions like human resources, finance, marketing, research and development
department has interrelated within the organization in order to working with organization
objectives and under working of organizational structure. Political, economic, social,
technological, environmental and legal factors has affect to business in negative and positive
manner for that management needs to analysis those factors in effective manner. In order to
analysis strength, weakness, opportunity and threat of company had been helped to make better
decision for the success of company at market place. Macro and micro factors had been affect to
decision making process and objectives of business in negative and positive manner.
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Singh, V. and Agrawal, A., 2017. Impact of business environment on balancing innovation
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ONLINE
PESTEL analysis of John Lewis. 2017. [Online]. Available through: <
http://fernfortuniversity.com/term-papers/pestel/nyse4/6653-john-lewis-of-hungerford-
plc.php>
SWOT analysis of John Lewis. 2018. [online]. Available through: <
https://www.swotandpestle.com/john-lewis/ >
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