Types, Purpose, and Legal Structure of Different Types of Organizations

This study material provides an explanation of the types, purpose, and legal structure of different types of organizations. It discusses the interrelationship between different organizational functions and the positive and negative impact of the macro environment. The case of Marks and Spencer (M&S) is used as an example of a private sector organization. The material also covers the size and scope of different organizations.

Business and the
Business Environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
LO1..................................................................................................................................................3
P1: Explain types, purpose and legal structure of different types of an organisation............3
P2: Size and scope of different organisation..........................................................................5
L0 2..................................................................................................................................................7
P3: Interrelationship between different organisation functions.............................................7
L0 3..................................................................................................................................................8
P4: Determine positive and negative impact of macro environment.....................................8
LO 4...............................................................................................................................................10
P5: Conduct the strength and weakness of business ...........................................................10
VRIO ANALYSIS OF M&S...............................................................................................11
P6: Internal and external analysis in order to identify strength and weakness of M&S......13
CONCLUSION..............................................................................................................................13
REFRENCES.................................................................................................................................15

INTRODUCTION
Business environment refer to the condition or event that influences the functioning as
well as affect the performance of surrounding. So it is essential for the business to effectively
shape itself as per the environment by exploiting the opportunity or threat exist in external
environment in order to bring affirmative changes within the society (Andersson, Forsgren and
Holm, 2015). For the better understanding of report Marks and Spenser company has been
selected which is multinational retailer whose headquarter is in United Kingdom. The company
deals in non-food item where it focuses to sell premium quality of apparel, home décor items as
well as food items. This report cover following topics like explanation of different organisational
type on the basis of their type, size & scope. Figure out the interrelation with different
organisational function in relation with the organisational structure and objective. Determine the
positive and negative impact of macro environment within the operations of business.
Furthermore, demonstrate the strength and weakness of business are covered in this report.
LO1
P1: Explain types, purpose and legal structure of different types of an organisation
Private sector organisation is managed and controlled by the individual who is the
owner of company. It functions with the purpose to earn sound revenue and long term
profitability. Here all the decision are made by the internal management without any interference
of legal authority. Countries having capitalised economies have less restrictions on private sector
organisations so that they can earn as much possible and can utilise their best potential than those
where economies are social in nature. Mixed economies have less restriction but more then those
in capitalised economies. Private sector organisations can be in many forms like small and
medium size businesses, large multinational corporations, professional and trade associations.
Private organisations also include those in which at least 51% shares are owned by private owner
other shares can also be earned by government and is controlled by private owners and their
management. In relation with the Marks and Spenser which is private sector british organisation
and multinational retailer headquartered in U.K. and is listed in London Stock Exchange and
deals in food products has the objective to maximize the wealth and diversify business in various
geographical area in order to enhance market share. Thus, following are the types of private
organisation that is defined below:

Sole proprietor are basically the owners of small firm who take initiative to run and take
all decision by controlling the operation of business. This is not a legal entity and operate under
the name of operator or a fancy name. Unlike legal entity sole proprietary is not different from
its owner. All the legal activity required for sole proprietor is having an local license and
registration of business. Here all the decision making power resides in the hands of single
individual who is core responsible to manage the profitability of firm. This proprietor is only
bearer of all the profit and loss of the enterprise. A lawsuit can be bring against the owner of sole
proprietor if they run business in loss and debt. All the contract related to sole proprietor are
signed under name of owner. Government regulations on these businesses are least.
Partnership business include the role of minimum two or more partners that function
together in order to expand the business and share profitability with the motive to earn desirable
amount of profit. Each partner is responsible to perform functions of the firm and get the
advantage of limited liability (Cavusgil, Ghauri and Akcal, 2012). They work with motive of
sharing knowledge and resources and profit and loss of the organisation. However proportion of
sharing may not necessarily need to be equal and partners take decision on the basis of consent.
Partnership can be of several types that are general partnership, limited partnership, limited
liability partnership. The partners can be of several types that are active partner, sleeping partner,
nominal partner, partners in profit only, sub partner, minor as a partner. Further, Large
multinational are especially those companies that conduct portfolio investment by diversifying
the business in various developing and developed country. They usually get the advantage of
their economies of scale. Thus, the purpose of company is to generate the interest of middle as
well as high income group people by offering them supreme quality of food and non food item.
This help the company to build the long lasting experience of an employee. Along with that
M&S company adopts corporate legal structure as the company has distinct authority and take
the viable decision in order to maintain its position.
Public sector organisation Those organisations, whose 51% or more ownership remains
with either state government or central government are known as Public sector organisation and
are controlled and managed by either central government or state government whose aim is to
deliver services to the public instead of just focusing on profit. Here funds are provided by the
local authority which is utilised for the efficient functioning of business. National health service

is the public organisation of England that offer the medical facility to the patient at very minimal
rates. Some of the types of public sector are defined below:
Within Central government majority of the stake that is 51% rest in the hand of
government which utilised the fund to enhance the infrastructure or improve economic
condition. The other type of public organisation is State government where they are responsible
to make the regulation and formulate the better rules and regulation for the adequate functioning
of business.
Therefore, the purpose of NHS is to offer comprehensive range of services like optical
care or dental treatment in order to improve the condition of local resident. Thus, the company
follows Central government legal structure which is liable to run the business and form policy
for the welfare of economy.
Voluntary organisation involves the association of people who are like minded and
have similar type of interest that helps to resolve the social issue faced by people (Charter,
2017). These people are termed as volunteers who generate the fund and utilised it for the
welfare of society instead of just focusing into the profitability. These organisations are also
known as non profit organisations. Most responsible person for fulfilling objective of these
organisation remains with its Board of Directors who keep its activities on track. Members are
drawn from automatic pool, are non paid members who are only interested in the objective of
the organisation. Then these members are divided under teams on various basis like regional or
functional. Like Oxfam, which is an international organisation functions with the motive to
eradicate global poverty and inequalities based on gender, class etc. Therefore, following are the
type of voluntary organisation that is discussed below:
Trustee are the people who have the special right or power to take the effective decision
and conduct the business activity by collecting funds and utilising them properly. Whereas,
Charity is the source by which the organisation raises fund and carry on its activity in order
successfully perform business activity.
Oxfam exist with the purpose to look after the basic need of people and enhance their
condition by solving the poverty issue and make people self-sufficient to conduct the business
activity. Further, respective company follows trust legal structure which function with the
objective to generate the fund and participate voluntarily in order to attain the objective (Crane
and et. al., 2019).

P2: Size and scope of different organisation
M&S (Private Organisation)
This organisations comes under retailing sector which has been operating its function for
more than 135 years in various part of the world since its foundation in 1884 in Leeds. From that
time to now company has grown to a very extent. The company has huge size and currently has
950 stores employing more than 80,000 employees and generate revenue of 10,300 million euro.
Further, the company makes significant effort in order to enhance its scope by constantly
updating its technology and offer supreme quality of trendy products to the customer in order to
gain sustainability and competitive advantage over others. The prime objective of company is to
remain competitive and update the quality or product range as per the changing taste of
customer. M&S Bank is its subsidiary which is owned by HSBC Bank since 2004.
NHS (Public Organisation)
The role of NHS is to offer comprehensive services delivered by the specialist and at a
low price. There is wide size or range of workforce like doctors and nurses who are the part of
organisation and help to deliver facilities like dental facility (Huang and Wilkinson, 2013). In
order to maintain the objective that is offering valuable services to the customer and help them
to lead healthy life. The company exclusively make effort to enhance its scope and make the use
of technology in order to reduce the waiting time and take emergency actions successfully.
Hence, such actions helps the society as their problem are addressed within short span of time
that finally lead to long term sustainability of an organisation.
Oxfam (Voluntary Organisation)
This voluntary organisation works (with 19 independent charitable organisations) against
the poverty issue which is spread widely in different part of the world and tackle inequality that
make and keep people poor. So in order to address it the company takes significant action and
widen up its size as well as scope by including the people to be the part of society. The
objective of company is to enhance the economic or social condition of the poor people by
providing them the platform to function. Main objective of Oxfam is to create a world where
everyone can speak up for their power, where people can claim and exercise their rights and
build a better future for themselves. They believe that a life of dignity is everyone's right and not
a privilege to entertained by selected people. Moreover, the scope of company is to cover

different nation and take affirmative action to reduce the poverty issue and maintain sustainable
development.
L0 2
P3: Interrelationship between different organisation functions
Organisation structure refers to the flow of information or conduct the decision making
process for the proper functioning of different level of an organisation. This help to maintain the
business activity by coordinating the task and allocating the resources effectively. The purpose
of adopting most suitable structure is to outline the business activity and achieve the long term
objective of firm successfully (Jenkins and Williamson, 2015). Herein M&S company follows
functional structure amongst other structure like matrix or hierarchy. On the basis of functional
structure the company divide the structure into different category as per specialised skill and
different department like customer service and sales for the proper functioning of an
organisation.
Illustration 1: Functional structure of an organisation
§
(Source: Functional structure of an organisation, 2018)
Interrelation between different departments of company is defined below:
The function of operation department is to plan and produce the final output by
transforming the final product effectively. It is the functional head that helps in the creation of
innovative design by seeking out all the valuable information with the help marketing
department. Thus, it help the functional department by providing insights about the demand and

availability of resources which is used in the preparation of final product. Thus, interdependence
like this can help the company to make the effective use of resources to produce the quality
product in order to attain long term existence objective of firm. Further, this structure helps the
employee to gain expertise knowledge and perform work efficiently.
Marketing department is responsible to understand the customer response and
determine their need by providing them valuable service. The manager of M&S constantly
analyses the information regarding changing preferences of customer and perform various
activity like promotion. Thus, this function depends upon finance department because of the
budget they prepare on which basis of which people remain familiar with the activities they have
to perform and within confined budget. Moreover, the application of functional structure helps
the employee to perform their work efficiently and remain interconnected with each other. This
help the firm to attain its long term sustainable development objective (Oriesek and Schwarz,
2016).
L0 3
P4: Determine positive and negative impact of macro environment
Retail sector of UK constantly changes due to the new trend or force which deeply affect
the functioning of firm. Along with that competitive pressure and pressure of adopting latest
technology are the part of macro factor that shape the future of whole sector. Hence, Pestle
analysis include the external factor which positive and negative affect the sector in following
manner.
Political factor: It include the sound policies or regulation made by local authority that
need to be abide by whole retail sector which affect their profitability or revenue. The companies
usually like to operate in those regions which are more political stable and does bear the issue of
political instability as it disturbs its functioning (Pestle analysis of retail industry. 2019).
Positive impact: The big retailers like M&S can take the advantage of their economies of
scale and instead of just focusing in developed country can widen its operation in emerging
economies like Asian market for the profitability of their firm.
Negative impact: The government of various countries restrict the trading activity or
foreign direct investment that even create difficultly for the firm to function and expand its size.

Economical factor: This is one of the most essential factors in terms to undergo the
trading or operation of business as it includes the disposable income of local resident. Here the
retail sector need to identify different economic conditions on the basis of which it can take
affirmative decision.
Positive impact: With the growth of globalisation has led to increase in employment
opportunity that enhanced the livelihood of local resident. This act as an opportunity of
increased demand for the retail sector by which it can cater valuable services for the welfare of
people.
Negative impact: During the time of inflation the purchasing power of customer
decreases as they become more inclined towards saving rather than consumption. This lead to
negative impact on the sales of company (Hilton and Platt, 2013).
Social factor: Demographic changes as well as changing attitude or preferences of
customer deeply affect the functioning of retail sector. This makes essential for the retailer to
change the way they serve the market and design innovative service in order to build long lasting
experience of customer.
Positive impact: Most of the retailers crafts the popular services that leads to customer
engagement like availability of organic food and healthy snacks has assisted the people to
maintain balance diet or proper consumption habits.
Negative impact: As the taste of customer keep on changing after a short span of time
due to which at times it becomes difficult for retail sector to constantly serve the upcoming need
of customer.
Technological factor: Technology has helped the company in all ways whether it is
related to customer service, sales or supply chain. This has helped the people to build long
lasting user experience.
Positive impact: E-Retailing platform has received immense growth as it is the most
convenient source that help the customer to build valuable shopping experience by just ordering
the product with single click.
Negative impact: Technology can even portrait negative image of retail company like on
the basis of feedback or any unfavourable post uploaded on social media can deteriorate the
reputation of company (Quinlan and et. al., 2019).

Environment factor: Existence of retail sector affect the sustainability concern of firm
due to which firm takes the precaution to manage the waste and make the optimum use of
renewable resources.
Positive impact: There are certain large companies like Walmart, Amazon and M&S that
has invested the huge amount in order to reduce the carbon footprint and work to accomplish
100% use of renewable sources for the sustainable development.
Negative impact: Making suitable precaution for the welfare of society or environment
at-times creates immense burden on company. Along with that taking special precaution is cost
and time consuming for company.
Legal factor: There are various laws within the retail sector that need to be followed by
each and every company like within labour law the company need to offer fair wages and does
not exploit the interest of worker. Absence of regulation of such law can lead to charges of legal
actions.
Positive impact: Implementation of law can assist the firm to create valuable image and
build long lasting relation with both employees as well as customer.
Negative impact: The government of different region makes different law which each
and every company has to maintain so this can adversely affect the functioning of company.
LO 4
P5: Conduct the strength and weakness of business
To identify the internal strength and weakness SWOT analyses which is an effective
planning tool has been adopted by retail sector in order to analyse the external business
environment effectively and maintain its dominant position.
Strength
As international retail sector function in various part of an economy due to which the firm
experiences the privilege of high recognition value. This has helped the firm to maintain the
interest of brand loyal customer.
The company cover the need of both men and women's category for which it offers wide range
of designer brand such as North Coast, Autograph, Indigo and so on.

Opportunity
The company can make the use of digital media in order to create the value for the customer and
promote its latest addition. Such platform acts as an opportunity because it helps the firm to gain
result at real time.
In order to generate additional revenue retail sector can cover the whole emerging economies
successfully which is the potential market for firm to succeed.
Weakness
Although the company offer wide range of offerings but still it has received the negative
publicity in terms of delivering non trendy outfits. In order to overcome such weakness, the
manager of company build effective strategy in order to decrease its negative affect on
reputation of company.
Although the company has presence in various market of an economy but the main problem with
it is that it is not able to penetrate in different market successfully (Ward, 2015).
Threat
Fluctuations in the price of raw material act as a threat for company because this directly affect
the overall pricing strategy of company that finally impact on its sales (Sena Ferreira and et. al.,
2012).
In terms of food item there are various competitor of company such as M&S that sell supreme
quality product but at cheaper rate. Thus, due to which most of the customer are more likely to
switch because of high switching cost.
VRIO ANALYSIS OF M&S

Illustration 2: value chain diagram
M&S also analysed the importance to understand the internal and external factors of the
business environment which will help the company to increase the efficiency and provide the
core competency to the company.(Zhang and et.al, 2016) This model help the company to
allocate the resources in such manner which allow the company to get the competitive advantage
and also increase the sales and profit margins of the company. This allows the company to
increase the performance and also focus on the human resources of the company.(Adeola and
Ezenwafor, 2016) The company have analysed to increase the employees knowledge and skills
by training and development with the help of different methods and techniques. This also helps
the company to make an effective strategy to increase the efficiency of the company and make
all the possible changes as effective as possible. As there is a large competition n the retail
industry and being the leader of the market M&S have to make effective strategy to maintain
their position and also increase their share in the market optimally. The resources are the
tangible and intangible assets which help to increase the value of the final products capture the
market and increase the sales of the company. M&S also have analysed and focused on the
customer satisfaction and increased the quality of the product so that they can improve the

goodwill of the company and also increase the customer base as well. (Hachicha and et.al.,
2016)
Valuable
M&S also have to analyse with the help of research analysis abut the resources which
will help the company to increase the value of the product and also decrease the cost. This will
help the company to improve the financial positions of the company. (Foss and Saebi, 2018) The
company will also do the stake holder analysis in order to determine all the important key player
which help the company by contributing in the company by doing the operations efficiently.
M&S have to evaluate the resources which are internally present and also external resources
which can improve the quality and efficiency of the products and services are valuable to the
company. This will also help the company to decease the cost of the product which will increase
the profit margin of the company giving them a competitive advantage in the market. (Boone
and et.al., 2019)
Rare
Rare resources should also be the part of the company so that not any company can effort
to have the resource which will make M&S have more revenue generations and more uniqueness
in the market. These resources are limited in the nature and not every company have it in the
market which makes the resources rare and rarity also brings the monopoly with it which will
increase the market share of M&S. This rarity can also bring the competitive parity which means
the competitors which have the same rare resources uses the same strategies to exploit it which
will make the same effect in the market and the competitive advantage will be shared in the few
players In the market and decreasing the profit margin of the company. (Suyono and et.al.,
2017)
Hard To Duplicate
M&S also have to invest in research and development in order to innovate or develop the
resources which will be very costly that not every company can use. (Noe and et.al., 2017) The
effectiveness of finding resource strategies which make the process more expensive and the
maintenance of the resources are also very typical. This gives M&S competitive advantages and
in these resources the threat of new entrant will be very less as the new companies will not be
able to invest the large capital in the market as the level of experience is low and risk of failure
is high which will also make the new company discourage to join the industry. (Hosseini,

Foroumand and Negahdari, 2015 The trademarks, patents are the resource which not every
company can duplicate and if they want top use the resource they will have to take the approval
of M&S to increase the growth of the new companies.
Organised
M&S have to analyse that the resources which they have found are allocated in the
operations of the company optimally so that the company can exploit the resources by making
the effective strategies and increase the profits of the company. To incur the competitive
advantage of the company in the market the company have to make the efficiency in organising
the resources so that they can also increase the profit of the company. (Hassanien and Dale,
2019)
P6: Internal and external analysis in order to identify strength and weakness of M&S
Factor Strength Weakness Political The retail sector abide by the political regulation and
offer the food items on the basis of health guideline that help the customer to gain the trust over
brand. Along with that in terms of E-retailing the retail industry need to keep their data
confidence on basis of regulation that help to avoid issue like privacy breach. Any change in the
political party or missing of stability factor can turn out the survival problem for the large
international companies like M&S and retain their share. Economical Due to the high
profitability within retail sector more of the investors remain keen to invest their funds in such
industry which leads to rise in profitability (Zairi, 2012). The functioning of retailing business
gets affected due to change in foreign exchange rate or at the type of recession that negative
affect the revenue of company. Social The company usually gets benefit by understanding the
psychology of customer such as targeting ads for discount or bulk buying can gain the attention
of customer as they find it favourable deal. Due to changing attitude of customer towards
product can affect the existing offering of company as they become outcome and less likely gain
the attention of customer. Technology Digital media has offered the retail sector a huge platform
where they can meet the need of customer through virtual environment (Poon, 2016). This also
help the company to determine the interest of customer and engage them effectively . The
companies which fall under retail sector cannot constantly update their technology and adopt
advance innovation for changing trend of people. Environment Retail industry manage their
waste successfully and avoid the use of plastics in order to retain the interest of surrounding and
create positive image in society. Most of the retail shop offer the food product but the external

surrounding hamper the product quality.Legal Retail sector meet the legislation condition and
render the labour or taxation law due to which they expand their business through overseas
successfully. In case of not following the law exactly in the manner it was proposed can create
certain trouble for company like foreclosure issue (Laudon and Traver, 2016).
CONCLUSION
From the above report it has been concluded that business environment is the mixture or
dynamic factor which is uncontrollable but assist the firm has to exhibit all the performance
within it successfully. As there are variety of organisation that pertain with the unique objective
that differ from one to another on the basis of its structure or functioning. Along with that
organisation structure is the significant part that defined the roles, functions and communication
amongst the manager and employee. The purpose of adopting most suitable structure is to
coordinate the activities of various department in order to achieve the overall objective.
Moreover, it is essential for the firm to analyse the internal environment with the help of Swot
analyses and external environment on the basis of Pestle analyses that assist the to adopt the
most suitable strategy for the effective functioning of business. The report also had information
about how organisation need to get the competency in the market so that they can increase the
customer base and improve the efficiency of the company. The external and internal factors also
helped the companies to evaluate effective strategies in achieving the organisational goals.

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