Different Types and Purposes of Organizations in Business Environment | Desklib

This document discusses the different types and purposes of organizations in the business environment. It explores the relationship between different organizational functions and their impact on business operations. The document also provides study material on Desklib for further understanding.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
P1. Different type and purposes of organization.........................................................................3
P2. Range of business organizations...........................................................................................6
LO2..................................................................................................................................................8
P3. Relationship between different organisation functions.........................................................8
LO3................................................................................................................................................10
P4. Macro environment impact upon business operations .......................................................10
LO4................................................................................................................................................12
P5. Impact of internal environment over business organisation ..............................................12
P6. Interrelation of strength and weakness with external business environment......................13
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment is a term used to denote all the external and internal factors linked
up with business organisation (Herbert and Brown, 2016). It also involves all stakeholders
associated with the corporate organisation in order to conduct business operations. This report is
based on the case study of Marks and Spencer (M&S). Company was established in the year
1884 by Michael Marks and Thomas Spencer. M&S operates worldwide business operations in
retail sector. Company has an specialization in dealing with high quality clothing, home products
and food products. Henceforth, this report will focus over various types and purposes of
organisations in business environment. Based on the size and scope business organisation types
will also project in this report. Emphasis of this report will also on the relationship between
different organisational departments of the company. Impacts of macro business environment
over business organisation operations will also summarised in this report. SWOT analysis will
also conduct to assess about the strength and weaknesses of an organisation.
LO1
P1. Different type and purposes of organisation
Corporate organisations can be considers in following parts.
Public Sector: Public sector is considers as government organisations or all such companies
owned by government. Government owns organisations always frame as per the legislations. IN
case the government is holding company it must be registered as per the companies act.
Advantages:
 Government own such organisation.
 Aim of the organisation is to conduct any social cause.
Disadvantages:
 Profits is not the prime objectives of operation's.
Private Sector: All organisations other than government is called as private sector. Private
sector is segregated into following parts.
Sole Trader: Sole trader are considered as an corporate organisation consist of only one person
operating all business operation's. Aim of the sole trader is to earn profits out of the business
operation's.
Advantages:

 Profts are solely distribute to one person.
 No scope of any conflict between business partners.
Disadvantages:
 Resources are limited in nature due to one person involve in the business.
Partnership: Partnership is considered as conducting business by more than one person involve
in the ownership claim. Partnership business do not necessarily require registering like
company's.
Advantages:
 Less capital requires to operate business.
 NO need to register the business.
Disadvantages:
 Limited resources available for conducting business operations due to only few owners of
business.
Limited: Companies are part of this segment. All corporate organisation resisted under the
companies acit is a part of this segment.
Advantages:
 Huge involvement in economic growth and development.
 Provide products and services to people in society.
Disadvantages:
 Profit objectives is such a huge in this segment.
Cooperative: Cooperative sector organisations is considers as bunch of organisations come
together to conduct operations who shares the same business objectives.
Advantages:
 Cooperation of more than one organisation expand the scope of business operation's.
 Improves profitability.
Disadvantages:
 This cause to unusual issues in regards to profit segregation.
Voluntary Sector: Voluntary sector are considers as non profit sector or non commercialised
sector. Organisation under this sector so not conduct operations to generate revenue out of the
services.
Advanatges:

 Sociel development improves the society.
 It improves awareness towards social issues.
Disadvantages:
 Many organisartions take unethical advantages on the name of social activites.
Legal Structure: There is no legal structure involve in this sector.
Corporate organisations are segregated into different types that can be projected in the following
ways.
Point of
difference
Profit making
organisation
Not for profit
organisation
(NPO)
Non government
organisation
Government
organisation
Meaning All the business
organisations
carrying the
purpose of
making products
out of business
operations are
considered as
profit making
organisation.
Different
companies,
partnerships firms
and other
business
organisations
working for
making profits are
covered in this
Not for profit
organisations are
such
organisations who
do not conduct
activities to
generate revenue
out of the
operations.
NPO work for the
betterment of the
society for
example doing
some social cause
like plantation.
Non government
organisation are
such
organisations who
are involved in
solving social
activities for the
betterment and
improvement of
the society.
All such
organisations
owned by either
state government
or central
government or
any other
governmental
body is denoted
as government
organisation.
All such
companies in
which any of the
government
organisation or
government body
owned a
shareholding of

category. more than 50% is
called as
government
organisation.
Objectives Profit making
organisations has
a primary
objective is to
earn profits out of
business
operations.
NPO has an
objectives to
make some
positive social
change for the
betterment of the
society.
NGO runs its
operations to
make any social
impacts on the
society out of its
operations in
order to
incorporate any
positive social
change (Ebitu,
Glory and Alfred,
2016).
Government
organisation
involved in both
the objectives
revenue
generation and
betterment of the
society out of its
operational
functions.
Funds / Revenue Profit making
organisation
generate revenue
by its business
operations.
Company make
policies and
strategies to earn
profits or to
generate revenue.
NPP raise fund
from the society
in process to
conduct its
operations.
NGO raise funds
from government
or any of the
government body.
Funds are
available to
government
organisation is
either generated
out of the
operations or in
form of budgets.
Size Size of the profit
making
organisation is
either small,
NPO cam have a
small or big size
that depends upon
its operational
NGO can be of
big or small size
organisation.
NGOs funds are
Size of the
government
organisation can
be small or big

medium or larger
depends on the
scale of business
operations.
IT also further
segregated into
micro, small, and
small and
medium size
enterprise (SME)
as per the scale of
operational
functions of the
organisation.
functions.
NPO are framed
not to earn profits
so generally the
size of the NPO is
not larger or huge
as it invests most
of its resources
for the betterment
of the society.
raised by
governments so
mostly the
organisation get
chances to expand
its services.
based on its
operational
functions (Ström
and et.al.,2017).
Justification: Marks and Spencer belongs to profit making organisation as the aim of the
business of the company is to earn profits.
P2. Range of business organisations
Organisation can be categorized in the following manner.
Point of
difference
Micro Small Medium Large Business
Meaning Micro business
organisations are
such business
entities who witness
the sales turnover of
less than $34,040
(Masih and
et.al.,2019).
Micro businesses
Small business
organisations
are considered
as such units
who has a sales
turnover of
more than
$34,040 million
but less than
All such business
organisations who
contain the sales
turnover of more
than $680,875 but
less than $1.3
million are
considered as
medium size
All such
business units
who has a sales
turnover of
more than $1.3
million are
considered as
large scale
business

also contains the
number of
employees to be
less than 5 which
also includes the
business owner.
$680,875 (Hong
and et.al.,2016).
Number of
employees in
small business
organisations
are also less
than 500.
business
organisations (Del
Giudice and et.al.,
2017).
organisations.
Market Share Micro business
organisations
contains a very
small amount of
market share as the
scale of business
operations is
relatively smaller
than other types of
business houses.
Small medium
size business
organisations
carry the market
share of more
than micro
business
organisations
but still it is less
in nature.
Medium size
business
organisations
operate its business
effectively and
contains a market
share more than
micro and small
business houses.
Large size
business
organisations
contains an
effective
market share as
the companies
operates its
business
operations at
both national
and
international
level.
Growth Potential Micro business
organisations are
smaller in term of
scale so the growth
potential of such
companies is also
restricted in nature.
Small business
carry the growth
potential
relatively
smaller than
medium and
large scale
business
Company's comes
under medium size
carry the growth
potential but not
effectively as
compare to large
scale business
houses.
Large scale
business
organisations
witness the
immense
growth
potential out of
the business

houses.1583757
694 (1)
operations.
Amount of
resources
companies has
also impact the
growth
opportunities
for such
companies.
Legal structure of organisations
Legal structure is a term denote to implement the legislative requirements associated with
the business organisations in order to conduct its business operations.
Sole Traders: Sole traders also considered as sole proprietorship. This is a business organisation
owned by owner and also consider no other employee in process to conduct business operations.
The organisation is indicted by an individual legal entity (Bîrsan, Shuleski and Cristea, 2016).
Sole traders needs to register as an organisation in process to operate business functions. Sole
trader owns by an individual so all the risk is associated with such owner of sole proprietor.
Owner needs to meet all the liabilities while closing up the business.
Partnerships: Partnership firms don't need to get register the business in order to conduct
business operations. Partnership firms can be segregated into limited liability partnership firm,
guaranteed partnership and in other ways. Partnership firm involve minimum two owners so all
the liabilities are segregated as per the partnership deep incorporate between all the partners
involved in the business.
Private Limited companies: All such business organisations registered themselves as a private
limited company is called as private company. Such companies needs to put Pvt. Limited at the
end of the name. Private limited company can't authorized to offer shares to public so all the
liabilities of the company are associated with the individual involve in the registration process or
the guarantor of the company.

LO2
P3. Relationship between different organisation functions.
Organisation function are specified by the operational activity of the company.
Organisation structure of M&S are segregated into different functional activities that can be
projected in the following manner.
Marketing Function: Marketing is a crucial functional activity of M&S. Company conduct
branding of its product and other promotional activity with the support of marketing department
(Koshesh and Jafari, 2019). Marketing function of company support the sales of the M&S that
directly impact over company's revenue and profitability. Marketing function dominate all the
operational activities of the company as it influence the revenue generation of the organisation.
Advantages:
 It improves company revenue and profitability.
 Improves company presence in target market.
 It improves the brand value of company's products under target market such as retail.
 Other departments like human resources also take support of marketing function to
conduct its operational activity like recruitment and selection.
Disadvantages:
 Many times bad marketing strategies restricts the potential outcomes of operational
functions in target market.
Finance Function: Financial department of M&S conduct the financial function in the company.
Financial function involve preparation of budget for all the operational function of M&S. It also
involve allocation of budgets as well (Chan, 2019). All departments and functional activity of the
M&S are highly depends upon the financial function as it enable resources for all the operations.
This functional activity also impact over the infrastructure development of the company which is
directly linked up with all operational functions in M&S.
Advantages:
 Provide suitable financial resources in order to implement operational functions
effectively.
 Enables smooth operational function in M&S.
Disadvantages:

 Lack of planning related to finance function reduces the efficiency of all operational
functions of the company.
Human Resource Management (HRM) Function: HRM is also a crucial functional activity
involve in the organisation structure of M&S. HRM provide efficient human resources to all
functional departments like marketing, finance and other operational functions as a part of the
service. Effective human resources play key role in the growth and development of corporate
organisation as it influence the efficiency of all operational functions by providing potential
employees. HRM also conduct activities like motivation, incentives, bonus, promotion and other
human resource management function which enable employees to work more effectively in order
to achieve higher work efficiency.
Advantages:
 Provide potential human resources for all functional activities of M&S.
 Improves employee motivation to improve work efficiency of all functional activities of
the company.
Disadvantages:
 Many times due to bad functional strategies ineffective human resources gets to operate
different functions of the company that reduces the work efficiency.
Operation Function: Operational functions involve inbound and outbound logistics and other
associated functions of M&S. All business operations are majorly depends upon the work
efficiency of operation functions (Luke, Carnelley and Sedikides, 2018). As this operational
function comprises with company's business activity so as this functional department impact
over company's profitability and sustainability. All aspects of this functional role impact every
functional activity of the company.
Advantages:
 Improves company's presence in target market with quality products and services.
 Improve effectiveness of other functional activities of the company.
Disadvantages:
 Company's sustainability also depends upon the work efficiency of this functional
activity.

LO3
P4. Macro environment impact upon business operations
MACRO environment is considered as the external business environment that put an
impact over company's presence in target market. To assess the macro environment PESTEL
Analysis is an effective tool that can be used.
PESTEL Analysis
Political Factor: Political factor involve government policies and strategies related to retail
sector. Political factor is among the major business environment factor as it put a huge impact
over company's operations in the target market (Xu and et.al., 2016). Policies of government like
taxation policy, export import policy, foreign policy and other associated policies drives the
business strategies and decision-making of the company management. Political factor also
involve political environment such as political stability in the country. Business entity's operate
profitable business operations in case of stable political situation in the country which drives to
governments to make long term policies to support corporate culture of the country.
Economical Factor: Economic factor is among the major external business environment factor
influence over company's operations. This factor involves economic stability and currency
exchange rate. Inflation is also a crucial aspect of economic factor that directly impact over
purchasing power of target customers of M&S. Company management frame all business
strategies as per the economic situation of country. Factors involve in economic factor also
impact over company's growth potential in target market.
Social Factor: Social factors has a major implications over company's operations in target
market. All strategies and policies framed by company management reflected the social
environment of the country. Social factor involve culture, tradition, religious beliefs of people,
education background of target customers, mentality, attitude, nature and other social aspects.
Company launch all its retail products based on the social aspects of the country. Social factors
impacts over decision-making of the target customers so all policies like products launch are
framed as per the social aspect of the country.
Technological Factor: Technological factor is another business environment factor influenced
the company's presence in target market. All the technological development and advancement
are involved in the technological factor of the country. Management of M&S are always keen
towards introducing new technological advancement and development in order to expand the

efficiency of company's services (Igliński and et.al., 2016). Company utilise technology for all
operational functions such as marketing, operations, sales, customer care and other associated
services which also expands the growth opportunities for the business.
Environmental Factor: Environment factor is also a crucial macro environment factor that put a
crucial impact over company's operations. Due to recent development in respect to social
awareness in respect to environment protection which drives the society toward utilising eco
friendly products and services. Company management involve this factor while making business
strategies related to new product launch and product improvement. Company also involve in
various corporate social responsibilities influenced with the environmental factor that also
improved the brand image of the M&S in target market.
Legal Factor: Legal factor involve all laws and legislations of the country. Company
management of M&S needs to implement all legislative requirements in conducting all business
operations. Legislations like equality act, minimum wage payment act and other legislations
implemented in the organisation of M&S which are influenced by the legal factor of the macro
environment.
All the above factors involved in the external business environment put a huge impact
over every aspect of the company and its decision-making process related to the business
development and growth.
LO4
P5. Impact of internal environment over business organisation
Internal environment is identified with the internal aspect of the corporate organisation
that can be denoted by SWOT Analytical tool.
SWOT Analysis
SWOT Analysis is comprises with various strengths, weaknesses, opportunities and
threats of business organisation.
Strength: M&S has a following strength that enabled company management to make a different
image in retail sector.
 High recognised brand: M&S is considered as a high recognised brand in retail market.
Company has a business outlets in more than 1400 locations that indicated about the high
brand value of the company (Vigna and et.al., 2018).

 Wide products range: M&S product range is well diversified that provide multiple
product choices to target customers. Company deals in high quality clothing, food
products and home products and company offers all leading brand associated with all
product segments.
 Large number of stores: M&S is among the leading brand in retail sector and the major
reason behind is that company owns a wide range of retail outlets comprises with more
than 1400 locations across the globe. Huge number of retail outlets enables company
management to serve a huge number of retail customer base across the globe.
Weaknesses: Following weakness is also associated with the M&S.
 Bad publicity as non trendy products: Company is known for offering non trendy
products that has also reduced the brand image of the company in target market. Apart
from huge number of business outlets company is known for offering unfashionable
products which also reduces the brand image of the company.
 High cost products: Company offers wide range of products but all the products of the
company look more expensive as compare ti other competitors in the market. Due to high
cost company could not cope up with the expectations of its target customers.
Opportunities: Opportunities of M&S can be denoted in the following ways.
 Business expansion: Company has a huge opportunities to expand its business by
opening new retail outlets (Zharan and Bongaerts, 2017). Big corporate organisations
generally do not face any concern in respect to resources which motivate them to open
new outlets and expand the business opportunities.
 Products expansion: Company can expand the offer product range in order to cater more
effectively to its target customers. It will also enable customers to choose more precisely
in order to meet its requirements.
 Online sale: Company can expand its services over internet and sale its products with the
support of social networking sites. Online sale is an effective approach company can use.
M&S already engage with selling products over internet but company management can
make it more accessible by improving the technology.
Threat: M&S is facing the following threats.

 Increased competition: Retail sector is among the major growing sector across the
globe. Due to huge growth of the sector industry has become one of the most competitive
industry across the globe.
 Constant improvement: Constant improvement and development in respect to products
and services as also become a huge threat for company. In order to cope up with the
expectations of the target customers its crucial for the retail companies to upgrade its
products and service continuously.
P6. Interrelation of strength and weakness with external business environment
Management of M&S has witnessed various strengths and weaknesses due to external
business environment factors. Technological improvement in external business environment has
provided business opportunities to company for selling its products over internet which also
improved the brand image of the company in target market. It also improved brand recognition in
the target market. Business environment factors like economic and social factor has improved the
company's presence in target market and its also provided business opportunities to the company
which caused to the business expansion of the company. Company currently owned retail outlets
at more than 1400 locations. Due to economical factor like inflation company management could
not effectively deal with inflation that also resulted into increased selling prices of company's
products.
CONCLUSION
This report concluded the difference between micro, small, medium and larger corporate
organisations based on the turnover and number of employees. This report also projected about
the different types of organisations. Interconnection of different functions like marketing, HRM,
finance has also projected in this report. To assess the external business environment PESTLE
analysis has concluded. This report also projected the strengths like huge retail outlets and other
strengths, weaknesses, opportunities and threats of retail organisation as a part of internal
business environment factor. Opportunities like business and product expansion by opening new
stores and product improvement has also discussed in this report.

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Online:
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