Types and Purposes of Organisations

This document provides an overview of different types and purposes of organisations, including public, private, and voluntary sectors. It explains the size and scope of organisations and their legal structures. It also discusses the relationship between different organisational functions and how they link to organisational objectives and structure. Additionally, it identifies the positive and negative impacts of the macro environment on business operations, supported by specific examples.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................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.............................6
TASK 2............................................................................................................................................8
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................8
TASK 3..........................................................................................................................................10
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples..............................................................................10
TASK 4..........................................................................................................................................11
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................11
P6 Explain how strengths and weaknesses interrelate with external macro factors.................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business Environment is characterised as the surroundings in which a company operates
its functions and operations. It includes various intrinsic and extrinsic components that influence
the working of overall organisation (Anolfatto and MacDonald, 2019). There are three different
types of sectors including public, private and voluntary under which firms operate. This report is
based on Tesco which is a multinational company of Britain that offers groceries and other retail
products to customers. The firm was established in year 1919 and its headquarter is located in
Welwyn Garden City, Hertfordshire, United Kingdom. This assignment covers diverse types and
purposes of organisations along with their size, scope and legal structures. Moreover, it defines
relationship between different functions of entity and their link with its structure and objectives.
Apart from this, positive and adverse impact of macro environment upon business operations
and SWOT analysis of company is included. At last, the report demonstrates interrelation
between strengths and weaknesses and external macro factors.
TASK 1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures
There are different types of organisations and each one has its own purpose and legal
structure that leads it towards success. The primary aim of each company is to satisfy needs and
requirements of customers and earn high revenues in market. Below mentioned are different
types of sectors:
Public sector organisation: These includes the organisation that are completely owned
and run by government. Primary aim of public sector companies is not only to earn maximum
revenues, but it also emphasize on satisfying needs and wants of customers (Argyris, 2017). An
example of public sector organisation is NHS which is a government owned public organisation.
Purpose:
 To earn adequate amount of profits by satisfying needs and requirements of customers
and public welfare.
Types of legal structure:
Central government: This government handles all the affairs of state and local authorities
and gather funds in the form of tax raised from public.

State government: It handles all the issues and affairs of a particular state and have some
powers that are applicable in certain areas (Birru and et. al., 2019).
Local government: It have the power to manage affairs of local areas only including
towns, cities etc. and gather funds in the form of council tax.
Private sector organisation: It includes the companies whose functions are owned and
operate by private individuals or entity. The main motive of private sector organisations is to
earn maximum revenues and capture large number of shares in market. An example of private
sector organisation is Tesco which is a general merchandise retailer of England, United
Kingdom.
Purpose:
 To earn maximum revenues and capture large number of market shares by offering
innovative products to customers.
Types of legal structure:
Partnership: It is a legal structure in which organisation is formed by the partnership of
two or more people. A partnership deed is signed between both the partners with their mutual
agreement. All the profits and losses are equally divided among all partners.
Sole proprietorship: In this legal structure, the entire business is own and run by single
individual only and is solely responsible for all profits and losses of company. A license from
local government is required to run sole proprietorship business.
Limited company: It is the organisation which is registered under Companies Act and its
owners are legally accountable for the debts or liability only to the extent of their stake in
company or the capital they invested in the company.
Voluntary sector organisation: It includes those firms which are run by group of
volunteers who are willing to work for welfare of society (Bocken, Rana and Short, 2015). These
organisation operates only for the purpose of improving life of people who lived in society and
enhance their living standard. An example of voluntary sector firm includes Oxfam which
operates for the purpose of reducing poverty from nation and all over the world.
Purpose:
 To work for welfare of society and improve living standard of people by fulfilling their
basic needs required for survival.
Types of legal structure:

Trust: It can be set up to manage property and land and to receive money for the specific
purpose of benefiting wider community. These are non-democratic organisations and do not
require any formalities to set up a trust, thus, set up quickly.
Association: It has no isolated legal existence and is not also a legal entity but, entered in
an agreement and operates accordingly with the purpose of cater needs of people (Charter, 2017).
Growth of International Business Environment:
As many organisations operate in similar area and render identical goods and services,
the local market reaches to saturation because of this where people are not preferring to buy
products of organisation. In order to overcome this situation, companies have started to operate
their business at global level. It enables them to reach the large market and satisfy the needs of
maximum number of people which makes it easy for organisations to reach the targets. For
gaining popularity in global market, organisations expand their business that ultimately
contributes in growth of international business environment.
P2 Explain the size and scope of a range of different types of organisations
The size and scope of each organisation or entity varies as per their investment, areas of
operations etc. Different types of organisations are there including public, private and voluntary
sector firms. Size and scope of organisations operates under these sectors are mentioned below:
NHS (Public sector organisation) Background of organisation: NHS is a health and social care organisation of United
Kingdom that provides health care services to people for free or in minimum charges. Products and services: Organisation offers healthcare facilities like optical care, dental
treatment, medical care etc. Size and Scope: NHS have around 200 healthcare centres and clinics in Whales, Scotland
and England and employed around 1.4 million employees who provide healthcare
services to people (Crane and et. al., 2019). The scope of organisation is wide as it offers
high quality care services to local citizens and other visitors of country and spends around
£115 billion each year in providing services. Vision statement: “To provide high quality medical care to local citizens and people
outside the country.” Mission statement: “To become the leading health care service provider in UK by
contributing in healthy lives of people. ”

 Business objectives: Primary objective of organisation is to render emergency treatment
to people for free or in nominal charges. Organisational structure: NHS follows functional organisational structure in which the
roles and responsibilities are assigned to each care provided as per their knowledge and
expertise (Cyphert and et. al., 2019). Legal structure: The structure of NHS is formed from Department for Health, Clinical
Commissioning group, NHS foundation Trusts and NHS England.
 Information about stakeholders: Main stakeholders of organisation includes service
provides, patients, local community and investors.
Tesco (Private sector organisation) Background of organisation: Tesco is a general merchandise and grocery retailer of
United Kingdom. It is a British multinational organisation which was established around
100 years ago in 1919. Products and services: Its products includes groceries and other non household products
such as clothes, books, electronics etc. Size and Scope: Firm is one of the leading retailer of UK which runs number of super
markets, hypermarket, convenience shop and superstores. Approximately 6800 stores are
operated by Tesco and employs around 4 lakhs employees worldwide. The scope of
company is huge as it offers variety of products under one roof to customers for their
convenience (Deshpande, 2018). Vision statement: “To earn maximum revenues by offering high quality products to
customers at one place.” Mission statement: “To gain long term sustainability in market by catering diverse needs
of customers and become the leading grocery retailer worldwide.” Business objectives: Company's main objective is to fulfil needs of customers by offering
them products at discounted prices and earn high revenues. Organisational structure: Tesco follows hierarchical structure as it emphasize on diverse
departments of business in order to run its operations successfully. Legal structure: Tesco's legal structure includes board members, audit committee,
nominations, remuneration, nominations and corporate responsibility committee.

 Information about stakeholders: Main stakeholders of company includes suppliers,
investors and employees.
Oxfam (Voluntary sector organisation) Background of organisation: Oxfam is a non-profit organisation which is confederation
of nineteen autonomous organisations that emphasize on removing poverty from all over
the world. It was founded in year 1942 in England and serves all over the world (Evans
and et. al., 2017). Products and services: Oxfam emphasize on providing services that helps in poverty
eradication, disaster relief. It also provides medical assistance to people who are
suffering from life threatening instances. Size and Scope: The company performs its operations in around 94 countries and have
approximately 2000 local partners who work voluntarily for social welfare. The scope of
firm is huge as it has many volunteers who work for it. Vision statement: “To eliminate poverty from all over the world and improve living
standard of society.” Mission statement: “To tackle the main cause of poverty and develop lasting solutions.” Business objectives: To help needy people in ensuring their survival and improve their
living standard is the objective of company (Georgescu and Popescul, 2015). Organisational structure: Oxfam follows flat organisational structure in which all the
volunteers work at equal level towards attainment of common purpose of organisation. Legal structure: The legal structure of Oxfam is formed of CEO, directors and trustees.
 Information about stakeholders: Its stakeholders includes trustees, donors, institutions
and governments and other members working for the organisation.
TASK 2
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure
In an organisation, various functional departments are exists and all are working
collectively to attain common business goals. These departments includes human resource,
marketing, finance, sales, operations and IT department. Each department in Tesco has its

specific roles and responsibilities and work in coordination with other departments to fulfil them
effectively. The interrelation between different departments in company is mentioned below:
Human Resource and Marketing: The main responsibility of HR department is to hire
manpower with diverse skills and knowledge within firm. For this, it works in coordination with
marketing department and provide it all the details of vacant job position. Marketing department
advertise the job vacancy to attract potential candidates and it enables HR department to hire
required workforce within firm. It provides skilled and knowledgable individual to marketing
department of Tesco that helps it in carrying out marketing activities in proper way.
Operations and Finance: The role of operations department is to carry out all the
operations of company including proper utilization of resources, technology, equipments etc. For
managing all the equipments and resources in proper way, it requires funds which are provided
by finance department. Effective operations of company helps finance department in gaining
high incomes and revenues (Golovnev and et. al. 2013).
In this way, all the departments are interlinked with each other and work in coordination
to attain objectives of Tesco in an effective manner.
Organisational structure:
The structure of organisation defines interactions and relationship among parts of
business and determines the way chain of command runs. Hierarchical organisational
structure is followed by Tesco in which the chain of command run from top to bottom. All the
key decisions are taken by senior management which then passes down by subsidiary levels. As
the power is centralized, it becomes easy to identify who is the authorized person to take
decision. The structure of Tesco reflects its large size and helps employees in performing all the
activities in proper manner (Hillary, 2017).

Illustration 1: Tesco's Organisational Structure
(Source: Tesco Organizational Structure, 2016)
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples
Macro environment includes external factors that affect the working and operations of
business either in positive or negative way. For determine the impacts of macro factors on
business operations of Tesco, PESTLE analysis is used that includes six factors which are
mentioned below:
Political: It includes factors like political stability, government policies, trade tariffs,
physical policy, tax rates etc. that influence business operations of company. In UK, there is high
political stability due to which rules and regulations are not change frequently (Huang and et. al.
2013). This provides an opportunity to Tesco in running its operations smoothly without making
frequent changes in the policies. On the other hand, Brexit negatively influence firm's operations
as due to this the transportation and logistics costs are increased that ultimately increase cost of
operations of Tesco.

Economic: It involves inflation rates, economic growth patterns, interest rates, foreign
exchange rates etc. High economic growth of the country impacts positively on operations of
Tesco as this increases its profit ratios and enables firm to invest more in operations. However,
recession in country impacts negatively on company's operations as this reduces the purchasing
power of customers and they switch to low cost products which declines sales of company.
Social: It involves demographics, cultural trends and beliefs of people living in society.
In UK, people have high living standard and they prefer to buy only those goods which are of
high quality. This impacts positively on company's operations as Tesco offers good quality
products. However, frequent changes in tastes and preferences of customers may pose negative
impact on operations of company as it is require to makes changes in its offerings in frequent
manner (Teng, Thekdi and Lambert, 2012).
Technological: This factor comprises of technological changes and innovations. Use of
self service check out points in its stores impacts the operations of Tesco in positive way as this
reduce the labour cost of company. However, use of obsolete technology in operations may pose
negative impact on company as this may leads to inefficiency in services.
Legal: This includes legislations and policies made by government that directly influence
Tesco's performance. Firm is compliance with all the legislatives requirements and provides
price reductions on fuel that customers purchase. It impacts positively on its operations.
However, non-compliance of laws pose negative impacts on entity's operations and it may not
enable to run its operations effectively.
Environmental: This includes factors like climate change, whether, geographical
locations etc. Tesco is committed towards reducing carbon footprint by 50%. This impact
positively on operations of company as it helps in running business activities smoothly without
facing any criticism from society. On the other hand, if Tesco do not compliance with the
environmental laws and operate activities that may harm environment, then it impacts
negatively on its operations (Wetherly, 2014).

TASK 4
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses
For analysing internal and external environment of business, SWOT analysis is used.
This will help company in determining its strengths, opportunities, weaknesses and threats that
aids in running business operations successfully. For analysis of internal and extrinsic
environment, SWOT analysis of Tesco is mentioned below:
Strengths Weaknesses
 Company is one of the leading
grocery retailer of UK that offers
excellent shopping experience to
customers.
 Firm recognises globally due to its
diversified product range and high
brand equity.
 High dependence on UK and poor
operational performance on particular
market.
 Low cost pricing strategy leads
company to decreased profit margins
(Teng, Thekdi and Lambert, 2012).
Opportunities Threats
 Strategic alliance with other brands
can provide excellent opportunity to
company.
 Firm can avail opportunity by
upgrading and growing its online
shopping business.
 High competition in market from
companies like ALDI, Carrefour etc.
poses threat for company.
 Increasing raw material's cost impacts
negatively on profit margins of Tesco.
P6 Explain how strengths and weaknesses interrelate with external macro factors
The strengths and weaknesses of an organisation are interrelated with macro
environment factors . This interrelationship is mention below:
Political factor: It is related to government policies, tax rates and political stability of
country (Golovnev and et. al. 2013).

 Strength: Political stability of country helps Tesco in running its business operations
smoothly which makes company a leading retailer of UK (Evans and et. al., 2017).
 Weakness: Brexit impacts negatively as due to it, costs associated with transportation,
logistics and raw material is increases which consequently decreases the profit margins
of Tesco.
Economic factors: It is related to the aspects associated with inflation and interest rates,
These GDP, currency fluctuations etc.
 Strengths: High economic growth of country increases revenues of company which
improves its brand equity in market and enables it to provide diverse range of products.
 Weaknesses: Due to recession, the buying power of customers is decreases in UK and
because of high dependence on this particular nation, its operational performance
decreases.
Social factors: It includes culture, beliefs, value, preference and choices of people of
people of a particular nation.
 Strengths: Company offers high quality products to its customers as per their needs
which contributes in global recognition of the brand name.
 Weakness: The taste and preferences of customers are frequently change and high
competition in market leads the customers to switch to other brand when they are not
provided with the product and service they want.
Technological factors: This factor is associated with technological up-gradations, changes and
innovation.
 Strengths: Use of high end technology like self service check out point helps in
providing excellent shopping experience to customers (Anolfatto and MacDonald, 2019).
 Weaknesses: Use of obsolete technology in business operations leads company towards
its declining operational performance.
CONCLUSION
As per the above mentioned report, it has been concluded that various internal and
external factors are exist in business environment that influence operations of company. The
purpose, size, scope and legal structure of each business is different and it depicts from it areas
of operations. Different functions are exist within an organisation that works collectively to
attain common objectives of firm. Macro factor like technology, economy, political environment

etc. impacts in both negative and positive way on operations of business. Conduction of SWOT
analysis helps company in determine its strengths, opportunities, weaknesses and threats that aids
in performing operations effectively.

REFERENCES
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Online
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