Business and the Business Environment

This document provides an overview of different types of organizations and their purpose in the business environment. It explains the size, scope, and legal structures of these organizations. It also explores the relationship between different organizational functions and their link to the objectives and structures of the firm.

BUSINESS AND THE BUSINESS
ENVIRONMENT

CONTENTS
INTRODUCTION .........................................................................................................4
Lo-1 .............................................................................................................................5
P 1Different types of organizations and their purpose............................................5
P 2 Explaining the size, scope and legal structures of different types of
organizations............................................................................................................6
LO – 2 ..........................................................................................................................8
P 3Relationship amid different organizational functions and their link to the
objectives and structures of the firm.........................................................................8
LO – 3 ........................................................................................................................11
P 4 Determining the positive and negative influence of macro factors on the
business operation of Virgin money ......................................................................11
LO-4 ..........................................................................................................................13
P 5 Carrying out internal and external analysis of Virgin money............................13
P 6 Explaining inter-relationship of strengths and weaknesses with the external
macro factors..........................................................................................................13
CONCLUSION .........................................................................................................15

INTRODUCTION
Business organization is defined as an entity with a main aim to perform
commercial enterprise through offering products and services for meeting out the
demands of the customers. Environment in which the business operates is very
complex and it is related with both internal and external factors that impacts the
functioning and operation of the business. These factors typically include employees,
customers, supply, stakeholders, demand, laws, government and many other that
influence the decisions of the business. Thus, it is quite necessary to analyse all
these factors for successful running of the corporation (Hamilton and Webster,
2015). The current research report also aims to comprehend the functions of
different types of organizations with wider business environment. Focus will be made
on varied organizations, there sizes and scope being linked to the products and
services and business objectives of the organizations. Further, analysis of the inter-
relationship of different organizational functions linking to their business structure will
be carried out. The final part of the study will throw light on both positive and
negative impact of macro environment on the business operations and will determine
the internal strengths and weaknesses and their relationship with the external macro
factors.

Lo-1
P 1Different types of organizations and their purpose
There are various types of organizations which have purpose to operates a
business in effective manner. Those sets of purpose are help to make positive image
at workplace (Caprotti, 2012). There are various kinds of Organization whose
business and reason for existing are different from one another and are being
clarified underneath:
• Public organization – These are not-for-profit government owned firms which offers
services mainly for some or the other social purpose. The main purpose of public
sector enterprise is to look into the delivery of public merchandise and legislative,
administrations services including military, police, public frameworks, travels and
many others for the advancement of the general public. Example, Virgin group.
• Private organization – Private enterprises incorporate for-profit associations that can
be owned either by non-governmental organizational or by other small number of
people and groups. They are considered as fundamental piece of the nation's
monetary framework which is possessed by private people as well as groups
consequently carrying out activities for creating more turnover (Besley, 2015). Other
than this, they are likewise regarded as a significant basis of development and
advancement and creator of per capita income for the nation and in this way,
enlarging the gross domestic product of the country. Example, TESCO.
• Voluntary organization – Focusing on the voluntary organizations, they incorporate
those bodies that preforms social actions attempted particularly by some
predetermined not for revenue driven associations which are additionally non-
governmental in nature. As voluntary organizations involves different associations,
there sole reason lie in giving advantages and improving the general public with no
motive to earn profit. They further make social wealth and helps in the improving the
general public. Example, Cancer Research UK (Cancer Research UK Centre, 2018).
• Profit organization – These associations incorporate organization, sole trader
organizations and the principle point of these organizations is to build their income.
Profits is being viewed as a significant hotspot for their survival. Benefits earned by
these associations are invested into those undertakings which can give them further
rewards and welfare of the society is the minimal need for these organizations.

• Non-profit organization – Serving the humankind and society is the principle intention
of foundation of non-benefit organization. They utilize their income being earned for
the welfare of the society and common habitat where they play out their business
exercises. For non-benefit associations, gifts and awards assumes an essential job
for their survival.
• Non-governmental organization – These firms are shaped by the overall public and
there primary point is to serve the general public and humankind. They are not
related with government and offer fundamental need to the penniless individuals.
Relation of different types of organizations with the chosen firms
Considering the example of Virgin group, it is British multinational venture
capital conglomerate of United Kingdom with a main focus positioned on the
approach that pursue to provide a good value to the clients and thus, helping in
delivering an optimistic contribution to the whole general public or community. In
addition to this, Tesco is also a perfect example of private sector enterprise, which is
also a leading a British multinational retail company. The main emphasis of the firm
is to generate huge amount of profit as well as income and thus, obtaining a
competitive edge over the competitors in the market (Bendell, 2017). Finally, Cancer
Research UK is the example of voluntary organization which shed light on the social
services through carrying out research as well as campaigns for preventing cancer
from the humanity. As they work voluntary, their main aim is to spread awareness
between all for the purpose of eliminating this deadly disease from all the levels.
P 2 Explaining the size, scope and legal structures of different types of organizations
There are three types of firms based on the size and scope such as micro,
small and medium & large enterprise.
 Micro enterprise–Throwing light in relation with the micro enterprise,
they involve small business sectors wherein the level of employment is quite
low and investment capital is also very small. For instance the company pf
micro enterprise that is Issoria includes 0 to 9 employees and the turnover is
around 2.5 million.
 Small enterprise – Further, small enterprise are owned by the
independent bodies which significantly encompasses small amount of
employees that aims to improve the business in longer period of time and

thus, helps in increasing the volume of sales (Langdana, 2009). For example
Harvey water softner company and its turnover is around 5.7 million and the
employees are fewer then 250 employees.
 Medium and large enterprise – Finally, medium & large enterprises
comprises both workers carrying out activities as voluntary members and
generally include multinational bodies which possess the likelihood of
increasing the growth of these firms at a reckless speed. For example: Tesco
is the larger company of UK. The large company is required maximum 250
employees for work. As per the balance sheet company have larger size and
the profits are high.
Legal structures
 Sole-proprietorship – In this type of business, the structure is not much
followed because of the reason that this is a very small size of busienss and
does not include any of the structure. for example coordinator, controller,
administrator, leader and so forth. Further, he is just the obligated individual
for disappointment and achievement of the business (Storey, 2016). Main
advantage of the sole proprietorship is that profit is retained solely by the
owners. Liability may extend to the personal assets of owner is the
disadvantage of this structure.
 Partnership – According to this business, every single partner meets up
with common understanding so as to frame a partnership firm. According to
the understanding, they bring capital into the business. Accomplices go about
as an administration and both commonly chooses in respects with the
different vital choices related with the tasks of the business. Advantages of
this structure are Resources are pooled by all the partners this increases the
resources availability. No one party hast the obligation of bringing resources.
The partnership involves unlimited liability of the partners of firm.
 Limited – These are characterized as the organizations, which are
being controlled and built up by a gathering of individuals for example investor
(Chiron and Aubier, 2001). They have a distinct legitimate substance,
unmistakable from its proprietors. Furthermore, the proprietors are likewise
not answerable for any obligation. It tends to be two sorts, public limited and

private limited. Private limited organization is claimed by little gathering of
individuals and they can't exchange their offers straightforwardly on stock.
Advantage is public limited organization is permitted to exchange on stock
and raise capital. All the transaction are guided as per the statutory
provisions. It involves high legal frameworks to be followed for its formation.
(Charles, Schmidheiny and Watts, 2017).
 Cooperatives – This is likewise another sort of a business, which
happens at local or regional level. At the point when the business is being
established, it is being viewed as the lawful element, which is separate from
its investors. Further, the possession is additionally transferable. Advantage of
cooperatives is that they have easy formation. They have limited liability and
have and is a voluntary organization. Where the disadvantage is members of
cooperative societies lack business acumen. They do not have secrecy in
financial records. (Rostamkalaei and Freel, 2016).
LO – 2
P 3Relationship amid different organizational functions and their link to the objectives
andstructures of the firm
According to Alanet, the structures of the organization is mainly based on the
business function of the firm as the organizational ways along with structure and
objectives are being dependent on the role being served to the customers
(DemirgucKunt, Love and Maksimovic, 2011). With increasing level of competition
along with risks, different roles of the department have risen up within the corporation
Virgin money in order to offer supporting hand in maintaining an appropriate position
of their own. Some of the vital functions of the firm are as follows:
• Marketing – This function of Virgin money is being regarded as the most vital pieces
of the business activities which help them to build up a strong relationship along with
association with the clients and different organizations. The marketing function is
further dependable to convey a resilient brand picture of the given association
consequently doing a functioning support identifying with different publicity active
and client connection utilizing successful instruments and strategies. They are
responsible for carrying out marketing research as well as to determine the market
segments and target market for the firm.

• Finance – the finance is defined as the money which is being used in the business.
No business can run without money and for this the finance of whole Virgin money is
maintained by the finance department only. All the other function are linked with the
finance department because no function can run without money. the organization in
order to keep up their revenue (Schiffer and Weder, 2010). The main function of this
department is making and receiving payments, preparing budgets and many more.
• Human Resource – The human resource function of Virgin money performs viable
and key administration of the internal work procedure and thus make use of all the
business assets proficiently. In addition to this, this function also spotlight on doing a
viable enlistment process. In this way, it helps in procuring the best workers to add
on to the organization's profit and help in expanding their profitability. This function is
related to marketing because the marketing outlines the need of human resources
and then the human resource will recruit the marketing people.
• Operations – This is again considered as one of the most vital function of the
company as they try to direct the whole manufacturing process and in this way,
helps in drawing out a smooth and effective service to fulfil the desires and needs of
the clients properly.
Every single function being characterized above necessities to cooperate as
each firm have indistinguishable goals. They have to work as a team with
correspondence in the midst of them as a key movement. Every single firm get their
base from its structure. An appropriate structure being received by the firm will
bolster the firm in having better execution level. For the most part, there are 3 sorts
of association structure, for example, divisional, functional and matrix structure
(Craig and Campbell, 2012). Discussing the
Functional authoritative structure, it helps in separating the firm dependent on
the various capacities being performed by them, for example, marketing, deals,
production, human asset, accounts and so forth. Advantage : The functional
structure helps in grouping employees by specialization ensuring departmental level
of departmental competence. Disadvantage ; Common purpose may not require
output from other groups this some times results in lack of coordination. On the
opposite side,
Divisional structure isolates the organizations dependent on the jobs and
duties of the workers as indicated by their ventures, division and plans. Last yet not
the least, Advantage ; It gives the business ability of segregating large sections into

semi autonomous groups. Disadvantage ; divisions may bring compartmentalization
which could lead to incompatibilities.
Matrix or hierarchical structure isolates the firm according to both the capacity
and items or division (Organisation Structure, 2018). It is considered as one of the
most multifaceted structure in which the specialists that control the movement is very
differed. Therefore, it tends to be said that it is especially basic for the organizations
to choose appropriate association structure according to their industry and their bit of
work. Advantage ; There is defined level of leadership in the organization as level of
responsibility and authority are defined. Disadvantage ; Communication between the
different departments is less effective and bureaucracy can slow down the decision
making process.
Virgin money adopts functional organizational structure, as it has numerous
functions and people are divided based on their roles and specialisation.
Figure 1: Functional organizational structure of Virgin money
(Formal Organization – Functional Organization. 2019).
With this type of structure in place, Virgin money can maintain consistency by
actual control and monitoring of the business activities. Better functionality is
achieved through this, as each of the function and related people are connected with
any department or project that possesses thorough understanding of his or her role.
Thus, effectiveness in the setting of objective as well as structure of the firm can
support the firm to accomplish functions.
Bureaucratic structure is the one which includes the hierarchical structure under
which the power and role are divided among the employee in their order of
command.

The functional structure is the one in which the whole structure of organization is
made on the basis of the common functions. This is like marketing, sales,
production,and many other functions.
The divisional structure is the one which is prepared on the basis of different regional
divisions and relating to the various product line and geographical regions. This is
done on the basis like Northern division, southern division and many other regional
divisions.
LO – 3
P 4 Determining the positive and negative influence of macro factors on the business
operation of Virgin money
According to Childand Möllering, many new risks and challenges do appears
in the macro environment and it is really very hard to find out for any firm. In regards
with the retail sector, it is not imaginable for any firm to reject the change as they
increase in number rather they have to adapt all these alternations effectively
(Weatherley and Otter, 2014). The macro environment typically includes economic,
political, social, technology, environment and legal influences. While making
decisions, Virgin money is needed to evaluate all these different aspects as well as
factors at the time of making decisions as they might have effective influences and
consequences. In the subsequent paragraph, PESTEL Analysis of the Virgin money
is being carried out which can be utilized in the decision making process effectively
and can impact the operations of the business.
PESTEL
Factors
Analysis
Political
Holding a presence as universally acclaimed bank, the firm is
carrying out its operations in United Kingdom, Australia, South
Africa and many others, under different laws, guidelines and
approaches.The present estimates in regards with tax of the
United Kingdom government has influenced Virgin money to a
great deal. Shopper spending has been impacted in view of the
expansion in VAT in the year 2011. This will reduce the sales of
the retail firms and will in turn affect the bank as well.
The other main political factor impacting good business
performance is that there is currently stability in the political
sector. And because of this there is not many changes in the
political parties and not many changes in the policies of them.
Economic
Virgin Money has encountered an enormous development in
relation with steadiness of the monetary components pursued
by different remote trade rates and financial exchanges on a

worldwide scale. Their director has accordingly commended
making vital monetary changes inside their organization to
broaden their advancement and activities. This has additionally
helped them to survive with the 2008 monetary emergency.
Another opportunity for the bank is that the inflation is rising and
for meeting the needs the person will take loan form the bank
and this is an opportunity for Virgin money as people will take
more loans and this will increase the income of the bank.
Social
So as to get effective in business, Virgin money have made
different endeavours to fulfil their client’s needs. This has
empowered them to centre on the altering social patterns with
varying needs of the clients (Gupta, 2013).
Technological
In regards with the technology, the firm has made different
innovative developments, in this way ensuring themselves from
digital assaults. Additionally, they have found a way to secure
the client information along these lines suggesting different
specialized supervisory crews to improve their usefulness.
Environmental
Virgin Money have defined objectives to lessen carbon outflow
and thus, creating strategies to improve their innovation and add
against a supportable commitment and production network
coordinated effort (Glasson, Therivel and Chadwick, 2013).
Legal
Being represented by different guidelines and rules, the
organization has laid accentuation on accepting payment
assurance protections. In this manner, they safeguard their
future awful exposure from developing up. They have
additionally embraced the FCA demonstration to deal with their
PPI
guarantees and accordingly building up their activities auxiliary
to this (Jones, 2013).

LO-4
P 5 Carrying out internal and external analysis of Virgin money
Internal factors Analysis
Strengths
• Virgin money have the mastery in creating brand value
• Wide range of choices are being offered to the customers
Weaknesses
• With the passage of time, the firm have stepped up into
monopolistic firm, because of which the expansion of the firm
is very critical
• The management layers of the company is very minimal and
there is no strong board (Virgin money UK, 2019)
Opportunities
• Virgin money offers old services by making use of novel
modes that helps them in becoming more innovative. It also
aid in enhancing the opportunities for their future growth.
• The firm was also in a position to decrease their costs of
operation by adopting different effective strategies
Threats
• The major threat being faced by the firm is from the presence
of competition all across the world
• There has been increase in the financial crime these days
which poses great threat to the effective working of Virgin
money (Helpman, 2016)
P 6 Explaining inter-relationship of strengths and weaknesses with the external
macrofactors
Within each and every business corporation, analysis in regards with different
factors is required to be done for the purpose of making effective decision that might
influence the whole effectiveness of the firm. This can be performed by evaluating
the internal as well as external analysis that clearly explains the strengths and

weaknesses of the firm effectively and support in making useful decision that further
leads to the generation of higher amount of profits. According to the above SWOT
analysis of Virgin money being conducted, it can be attributed that there exist some
relation between these internal factors with the external macro-factors (Craig and
Campbell, 2012).
There is immediate connection between the strength and shortcoming of
Virgin money with the external elements of macro condition. With the assistance of
opportunities and threats, firm can decide the hazard present in the market. This will
assist them with operating successfully. Due to Brexit, movement will be stopped and
subsequently, it is crucial for the firm to look and utilize nearby individuals of UK so
as secure work supply (Belleflamme and Peitz, 2015). What's more, the organization
is bound to confront difficulties following Brexit submission, for example, increment in
the food costs and so on. It is crucial to makes changes in the valuing procedure of
the firm. Through this, the firm will have the option to snatch enormous piece of the
pie. Further, Virgin money additionally need to tailor their shortcomings to strengths
in order to clutch the chances. For example, they ought to grow outside UK and must
expand their business. This will unquestionably help them in their production network
and circulation related issues. Also, the firm ought to consider the political and
monetary factor and should verify their future by extending their business sectors in
different countries of the world (Hamilton and Webster, 2015)
Supporting the discourse, the inner condition of Virgin group incorporates
financial specialists, clients, contenders and laborers. They impact the business
choices just as goals of the firm. For instance, speculators of the firm offers money
related assets to them and if there has been change in light of a legitimate concern
for these speculators, choices relating to the monetary strategy will be upset. Indeed,
even the workers have direct effect on the basic leadership of the firm. A slight
change in the industry policies, market conditions and needsof the clients will
definitely influences the monetary choices in the Virgin group by bringing numerous
financial adjustments. Along these lines, it very well may be said that small scale and
full scale factors influences the way company works its business and its basic
leadership arrangement. It likewise impacts the achievement of the firm (Afonso and
Sousa, 2012).

CONCLUSION
Consequently, the above study and discussion clearly infers through stating
the comprehension of different business functions as well as related environment
with the main emphasis on Virgin money in the context of United Kingdom. The
present study has significantly highlighted the structure, scope, purpose, legal
structures and size of different types of firms. In addition to this, the study has also
explored that the objective of carrying out business of each and every firm is quite
different and it is largely reliant on its organizational structures. Even the activities
are also founded on the primacies of the business. In the current report, focus has
been made on carrying out internal as well as external environmental analysis and
came to the conclusion that all these factors impacts the operation, functioning as
well as decision making of the business significantly.
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