Table of Contents INTRODUCTION...........................................................................................................................1 TASK 1............................................................................................................................................1 P1 Different types and purposes of organisations.......................................................................1 P2 Different types and scope of organisations............................................................................4 TASK 2............................................................................................................................................5 P3 Relationship between organisational functions and link with structure and objectives........5 TASK 3............................................................................................................................................8 P4 Identify positive and negative impacts of macro environment upon operations...................8 TASK 4............................................................................................................................................9 P5 Internal and external analysis of JP Morgan..........................................................................9 P6 Interrelate external macro factors with strengths and weaknesses......................................11 CONCLUSION..............................................................................................................................12 REFERENCES..............................................................................................................................13
INTRODUCTION Business environment includes internal and external factors which directly and indirectly influence organisation and its operations. It is essential that management design system and implement appropriate technologies and equipments to execute business activities effectively to achieve business goals and objectives. Companies provide variety of products and services to satisfy and fulfil demands and requirements of people. This help executive to establish and maintain position and reputation in market in respect to rival firms (Business Environment. 2017). Present report is based on JP Morgan which is multinational firm which provide financial and banking services to people. It is largest and leading firm established in UK and other countries.This assignment defines different types and purpose of organisation which have variance size, structure and scope. There are various functions which are present in firm and have interconnection with other department. Management of JP Morgan conduct PESTEL and SWOT analysis which help them to have complete information about internal and external environment. This help them to make changes in system and formulate strategies to make system function effectively. TASK 1 P1 Different types and purposes of organisations In present fast development, business environment of company is upgrading at fast rate. This help firms to have large opportunities to implement innovative and creative ideas and gain good amount of profit from business. Public, private and voluntary are different kinds of firms which conduct activities for enhancing conditions of country. For this, companies increases employment opportunities, deliver products and services in market for development of society and generate adequate revenue to sustain its position in market. These are different types of organisation which are described below(Bryman and Bell, 2015): Public organisation:This industry includes enterprise which are controlled and regulated by local or central government to strengthen and enhance economy of nation. These organisation are funded by authorities to increase job opportunities to give facility to people to generate income for maintaining their living standards.Bank of England is public bank of UK which is main authority regulating country's operations by issue of currency and other financial services to other financial institutions and public. 1
Purpose:Bank of England aim is to raise funds, provide money to other banks and keep gold reserve as custody to maintain and sustain economic conditions of UK. Along this, bank is lender of last resort and regulator of nation for which monetary policies are framed by authorities. Legal structure: Local government:This tactic includes organisation which need to function in according to policies which are formulated by state authorities. It is necessary that adequate products and services are provided to people to fulfil their demands and needs. State government:It is another segment which comprises firms and business operations that are conducted by authorities for development and enhance conditions of state(Buckley and Casson, 2010). Central government:This structure defines organisation which are run by authorities to govern the unitary state of country. For this, government formulate rules and regulations which state and local authorities require to follow for betterment of nation. Benefits:Public organisation conduct business for betterment of society by providing them appropriate facilities that is education, health care, electricity, transportation services such as road, rail and other things to public. Disadvantage:Government require to have skilled staff to provide appropriate services to people. For this, tax is only source of income for authorities which determine quality of services that are provided and operations conducted by them. Private organisation:This sector comprises firms which are started, managed and owned by either individual or group of people or shareholders which invest money in business to conduct operations and gain good amount of revenue. For this, companies deliver products and services in market to satisfy demands and requirements of people and sustain its position in market. Primary, secondary and tertiary are three forms in which private firms conduct business to provide products and services to satisfy demands and needs of people(Commander and Svejnar, 2011). Primary sector includes agriculture business which is to provide raw material to other firms and people. Besides this, secondary industry comprises firm which manufactures and produces products for fulfilling demands and demands of customers. Third segment is tertiary 2
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which includes banking, advertising, warehousing, transport and other firms which provide services to people. JP Morgan is private bank which is conducting business in financial and banking sector. Itisfirmswhichprovidesinvestmentbanking,assetmanagement,brokerage,wealth management, treasury and securities services to public. Purpose:JP Morgan goal is to become leading financial firm by providing quality and appropriate variety of financial services globally. Legal structure: Sole proprietorship:This is one form of structure in which includes firms which is owned and controlled by individual for utilising funds and generate profit from business. In this, entrepreneur is the person which have sole decision making power and is liable for debts and losses(Cuervo‐Cazurra, 2011). Benefits:In sole proprietorship, entrepreneur is single person which have decision- making power, so fast and appropriate judgements and selection of things are possible. Disadvantage:Individual have shortage of funds which affect on quality of business operations and firm position and reputation in market. Partnership:It is another structure which comprises companies which are controlled and managed by two or more people. For this, individuals sign agreement and bind themselves in formal deed which specifies responsibilities and duties require to be performed by them. Along this, company have sufficient amount of capital to organise business activities and generate profit for sustaining its position in market. Benefits:Partnership firm is started and managed by more than two people which help companies to have good amount of capital and resources to conduct business effectively. Along this, firm have possibility and chance to expand business and have branches in different nation. This help businessperson to have large market reach and customer base to enhance sales volume and profitability(Gebauer, Paiola and Edvardsson, 2010). Disadvantage:Companies have number of shareholders and members which have different opinions and experience which affect on decision activities of firm. This lead to conflicts and time lag in judgement-making for firm. 3
Limited company:This tactic includes firms in which shareholders have limited liability in respect to their investment amount and regulations of authorities. Limited by share or liability are two types in which members have power whichever is chosen by company. Benefits:Companies which follow this structure are beneficial for members to have limited functioning in business which protect them from risks. Disadvantage:Executive of limited company find it difficult to raise funds, as owner have less control in respect to sole trader and partnership(Hamilton and Webster, 2015). Voluntarysector:Thisindustryincludesorganisationwhichconductbusinessfor development and welfare of society. It is essential that in market there are firms which execute activities for providing products and services to people and without aim of profit. OXFAM is an independent and charitable firmwhich conduct operations for reducing poverty and enhancing conditions of nation. Purpose:Oxfam aim is to increase job opportunities to provide chance to people to generate adequate income for securing and maintaining their living standards. Along this, company enhance solutions for making country free from poverty. Legal structure: Trust:This is oldest form of structure which voluntary firm uses to provide appropriate services and products for betterment of society. For this, government provide property to person for conducting activities and deliver facilities to needy people(Halbert and Ingulli, 2011). P2 Different types and scope of organisations Public, private and voluntary are different forms of organisation which are present in market to provide products and services to people to satisfy their demands and requirements. Along this, these firms conduct business operations to generate profit and sustain its position and reputation in market.These are sector which have different availability of resources which determine size, objective and scope which vary for each organisation. Bank of England, JP Morgan and Oxfam are various scale of firms which have different amount of capital that affect on area of operations and market share. These companies have different objective and size which is described below: Bank of England:This is public organisation which is central bank of United Kingdom. Company formulate monetary policies and regulate functioning of country by keeping reserve of commercial banks(Hilton and Platt, 2013). 4
Scope:Bank of England is central bank of UK whose objective is to maintain and formulate policies for regulating and managing conditions of country. bank provides financial services and other facilities that is brokerage, asset management and many other to people. JP Morgan:It is private company which has headquarter in United Kingdom and is conducting business worldwide. Bank provide financial and banking services to people to provide them facility of saving and loan to public(Kang, Lee and Kim, 2010). Scope:JP Morgan require to become popular and leading bank in the world. For this, top personnel are making efforts and arranging funds for increasing outlets and expanding business to have large market reach and customer base to enhance profitability. Oxfam:This is voluntary firm which is charitable trust that enhance employment opportunities to provide facility to people to generate adequate income for maintaining their livelihood. This help authorities in development and enhancement of conditions of country. Scope:Oxfam is MNC which is conducting business to fight for poverty by conducting businessandincreasingjobchances.Thishelppeopletohavesufficientemployment opportunities to gain money for regulating and maintaining living standards. TASK 2 P3 Relationship between organisational functions and link with structure and objectives Eachandeveryorganisationhavedifferentdepartmentwhichareformulatedby management to execute business operations and achieve business goals and targets. Human resource, finance, operation/ production, marketing, sales, R&D are various department which are present in companies to conduct activities and attain objectives. These are different unit which have relation with each other and help management of JP Morgan to deliver adequate products and services in market to sustain firm's position and image in market. These are different organisation functions which are described beneath(Kian Chong, Shafaghi and Leing Tan, 2011): Human resource department:This unit plays essential role in company which is to conduct HRM practices and have adequate manpower in firm to execute business operations and achieve objectives. Recruitment, staffing, performance appraisal, compensation, training and development are various activities which help HR of JP Morgan to have skilled and competent people to provide quality services to customers. It is necessary that bank have adequate 5
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workforce to provide financial services to people to sustain its position and reputation in market inrespecttorivalfirms.Along this, managementconstructandmaintain relations with employees to have motivated and dedicated staff to perform tasks effectively. Finance department:This is another segment which comprises important part in firm which is to prepare budget and have information about requirements of capital to conduct business activities effectively. It is essential that each sector gets adequate money to organise and implement appropriate technologies and equipments in system to conduct operations properly. JP Morgan bank require to provide appropriate financial and banking services to people (Bovee, 2010) . Operation/ production department:It is another unit in which employees responsibility is to provide products and services to people. Besides this, this department also have duty to conduct manufacturing activities to produce items and deliver services to people to satisfy their needs and requirements. It is necessary that resources are utilised efficiently for efficiently execution of operations. JP Morgan provide financial and banking services to people, for which management require to execute operations and provide appropriate facilities about saving and loan to customers. In this marketing team helps manager to acknowledge demands of people and make operation members provide services and facilities accordingly. Marketing department:It is organisation function which is to promote and advertise information about products and services. Marketing is process which helps management to establish appropriate position and image in market and in mind of people. For this, market research is technique used by superior to have complete information about requirements and demand of public. Along this, competitor's offerings are also acknowledged by firm to design items and services accordingly (Bryman and Bell, 2015). JP Morgan is bank whose marketing unit uses promotional techniques that is online advertisement, electronic and print media to promote and inform people about financial services and rate for each scheme and facilities. This help bank to attract clients by creating good market position and brand value. Along this, marketing also helps sales people and operation membersto have adequate customer base to enhance sales volume and profitability. Sales department:This unit responsibility is to build and maintain customers by interacting with them and providing them information about products and services. People require to get support and guidance from company people about variety of items, its features and 6
attributes. It is necessary that management have members to influence and make customer's mind to purchase products from them. JP Morgan bank provides financial and banking services to public. For this, financial products that is account, loan and other services are given to each member as target which require to be completed within defined time. In this, marketing team plays important role which is to inform people about financial services which gives support to salespeople to easily grab attention of customers and make their mind (Buckley and Casson, 2010). Researchanddevelopmentdepartment:Thisunitresponsibilityistoimplement innovativeandcreativebusinessideasforbettermentofcompany.Itisessentialthat management make changes and alterations in products and services in according to needs and requirements of people. Along this, superior of JP Morgan even require to implement advance and latest technologies in system to provide quality and appropriate financial services to clients. Organisation structure:Top personnel formulate organisation structure which define a systematic order which superior and members require to follow. Different department that is HR, finance, production/ operation, marketing, sales, R&D are given proper order to utilise resources efficiently and execute operations to attain business objectives. These are different organisation structure which are stated beneath (Commander and Svejnar, 2011): Divisionalorganisationstructure:Thisisefficientstructurewhichisusedby organisation to manage and have outlets in different nation to have good market reach and customer base. It is essential that management utilises resources that is funds, material and manpower efficiently to conduct business operations effectively. Functional organisation structure:This is essential and commonly used structure which define thatHR, finance, production/ operation, marketing, sales, R&D are various department which are designed by management. In this employees are provided and distributed into unit to make them perform tasks in group. Along this, members are given duties and responsibilities in according to their skills and knowledge to make them perform tasks effectively and deliver quality services to people (Cuervo‐Cazurra, 2011). In JP Morgan, management uses divisional and functional organisation structure to organise and conduct business activities to achieve objectives and sustain its position in market. Divisional structure helps bank to operate branches in different nation to have large market reach and customer base. Besides this, functional structure which define that HR, operation, finance, 7
marketing, sales and R&D department are given duties and tasks to provide financial services to people. This help bank to have sufficient manpower and funds to provide appropriate services to clients to sustain them for longer period. TASK 3 P4 Identify positive and negative impacts of macro environment upon operations Macro environment include factors which are present outside firm and indirectly affect onbusinessoperations.Itisessentialthatmanagementhavecompleteandappropriate knowledge about market conditions to make changes in system and conduct business activities effectively. For this, PESTEL is appropriate technique which is used by manager of JP Morgan tohaveinformationaboutexternalcomponentsthataregovernment,economy,public, technological, environment in functioning of bank. It is necessary that positive and negative points of each factor are acknowledged by administration to design system and execute operations in efficient manner (Gebauer, Paiola and Edvardsson, 2010). Political factor:This tactic define that state of country determine policies and rules that are framed by government to regulate and coordinate functioning of organisation. For this, authorities have even made compulsory for companies to register firm and take licensing to make system function legally. JP Morgan is leading bank which provide financial and banking services to people. It is necessary for bank to conduct operations and provide services in according to government rules and policies. Positive impact:J.P Morgan offers various financial services to its customers which are attract more number of customer's as it provides opportunities for growth. This organisation provides its services in UK which is already stable country and does not not changes its policies frequently (Hamilton and Webster, 2015). Negativeimpact:ChangesintaxationpolicieswithintheUKmayimpactthis organisation in negative manner. Economic factor:This factor includes recession, saving rates, interest rate, economic growth pattern of the country. In context to J.P Morgan, economical factors affect will affect the growth of this financial institution. Positive impact: J.P Morgan majorly provides its services in financial strong countries whose exchange rates are stable. 8
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Negative impact: Recession in UK will affect its sales of financial products in negative manner. Social factor:Changes in culture of trading country have its own influence over the business. Along with this social factors also affects the working pattern of organisation. Positive impact:Educated people of developed country are aware of financial benefits which increases usage of financial services. Negative impact:Culture of UK believes in living their life with high lifestyle. It reduces the usage of financial products of J.P morgan (Halbert and Ingulli, 2011). Technological factor:According to the changing scenario, technology is developing every day and makes the work of employees easier and less time consuming. Advance technology have both positive and negative impact on the growth of J.P Morgan. Positive impact:This company can introduce automated machines in its financial institution which will save the time of customer's as well as employees. Negative impact:Adoption of technology is expensive for this company as it will affect the budget in negative manner. Legal factor:Legal factors involves discrimination law, safety law, consumer protection law and employment law of the country. These factors affects the growth of J.P Morgan. Positive impact:J.P Morgan follows all the employment which helps the management in building positive relation with its employees and increase the work efficiency of employees. Negative impact: Changes in consumer protection laws has increased difficulty for J.P Morgan in order to follow them. Environmental factor:These factors includes rules and regulation of environmental pollution andwastemanagement.Itinvolvesvariousenvironmentalstandardsthatmayaffectthe profitability of the J.P Morgan (Hilton and Platt, 2013). Positive impact:J.P Morgan should use solar panel in its stores for using natural resources. This will not harm the environment. Negative impact: If J.P Morgan will not follow environmental policies its brand name will be effected. TASK 4 P5 Internal and external analysis of JP Morgan SWOT analysis of J.P. Morgan 9
J.P Morgan is a leading financial institution that operated its business globally. They are mainlydealingin5differentbusinesssegmentslikecorporateandinvestmentbanking, commercialbankingandcorporateentity,consumerandcommunitybankingandasset management. In order to know internal strength and weaknesses company has conducted SWOT analysis which is explained below for better understanding: Strengths: As company operates its business in around 60 countries which is making this institution one of the leading global financial services provider. They are giving facilities to government clients, different customers, businessmen and other institutions(Kang, Lee and Kim, 2010). As compared to other companies J.P Morgan has strong liquidity and capital ratio is great and making position better at market area. According to study it has been evaluated that during the period of 2008-2013, their loan ratio has increased to 174%.In term of diverse revenue system, company has 5 different shared segments that are investment banking, asset management, commercial banking and cooperate entity and consumer and community banking. Weaknesses: Although company is very big but there are some weaknesses that can hamper business operationsand drop in sales and profitability can be seen. In context with J. P. Morgan, management is very weak in terms of managing company's non-interest expenses and in the year 2013, it has raised to around 72% of total net revenues (Kian Chong, Shafaghi and Leing Tan, 2011). Other factor which is creating problem for the organisation is over dependence on certain market area. For example: over 65% of market dependence can be seen in North America which is slowing down business at market area.Fluctuation in markets is also consider as one of the major issue for J.P. Morgan because implementing policies is not being done in a better manner. Opportunities: As in this current market scenario, business are growing in rapid speed and company are getting various services and resources through which they can grab opportunities. J.P. Morgan has set their targets of reaching to $102 trillion by 2020 which is about 6 percent. 10
With the increase in credit card market, company has got an opportunity of improving its sales and profitability.As company is situated in limited area so they can think of expanding their businesses to those nations where they have not expanded yet. It will assist firm in increasing customer base in different locations (Klapper, Lewin and Delgado, 2011). Threats: With the change in governmental bodies, there is a possibility that rules and regulations also modified. Thus, for financial institutions working in worldwide in can act as a challenge because of which cost are increasing due to which operating margin is getting affected. Threat of financial crisis is always there for example: recession in a country can drop economic value for organisation because of which sales and productivity can get decreased. P6 Interrelate external macro factors with strengths and weaknesses ManagementofJPMorganacknowledgePESTELfactorstomakeappropriate judgements and decisions which are beneficial for company's performance in respect to market conditions and competitors. Political:This factor define that management of JP Morgan frame policies in according to rules and regulations of government. Economic:In UK, fluctuation in inflation rates and changing currency is one of the greater weakness which can affect its decision making process. In 2008, economic recession also hinder sales and profitability of companies through which UK public was unable to invest their money into banks (Klapper, Lewin, and Delgado, 2011). Social:In this modern era, needs and wants of customers is rapidly changing but JP Morgan is focused to conduct more and more market research thus to recognise customers' needs and wants and make develop effective decisions. Technological:Advanced technologies are take place in business environment as it help in improving the overall performance level at market place. As consideras company strength if company implement new and advanced technologies within their production activities than they easily attaining success at market place. 11
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Internal factors influence on decision-making:In present business scenario, there are several micro environmental factors which can affect company's decision making and working activities. Although, such elements involves – strength, weaknesses, opportunities and threats. For example – JP Morgan has wide range of customers that help it in increasing sales and firm should modify its policies and tactics thus to grab better future opportunities. Therefore, it is necessary that J.P. Morgan lookout all the factors which is providing benefits and creating barrier in operating their business in an better and effective manner (Klapper and Love, 2010). CONCLUSION From the above report, it can be comprehended that business environment has different types of organisation that are public, private and voluntary. This tactic also includes various intrinsic and extrinsic components which affect on business operations. Market have various forms of firms which differ with each other in respect to size, scope and structure. HR, finance, operation/production,marketing,salesandR&Darevariousdepartmentwhichhave interconnection and are formulated by top personnel to execute business operations effectively and accomplish objective and goals. Along this, organisation structure is designed which help managementtodefinehierarchythatspecifiesmembersauthoritytowhichtheyget responsibility and are accountable to them.Administration identify macro environment factors to acknowledge their impact on business activities. Besides this, internal and external factors are also anticipated by superior to have accurate and complete information about system capabilities and market conditions. This help management to interrelate external macro factors with strengths and weaknesses to make appropriate decisions for beneficial of company. 12
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