Purpose and Scope of Organizations

This document discusses the purpose and scope of different types of organizations, such as public, private, and voluntary sectors. It also explores the interrelationship between organizational functions and objectives, using British Airways as an example. Additionally, it examines the positive and negative impact of macro environmental factors on the airline industry.

Business and Business environment

Contents
Introduction......................................................................................................................................2
LO 1.................................................................................................................................................2
P1 Purpose of different organizations..........................................................................................2
P2 Size, scope of different type of organizations........................................................................4
LO2..................................................................................................................................................5
P3 Organizational function and their interrelationship with objectives......................................5
LO 3.................................................................................................................................................7
P4 Positive and negative impact of Macro environmental factors..............................................7
LO 4.................................................................................................................................................9
P5 Internal and External analysis of British Airways..................................................................9
P6 Interrelationship between strength, weakness and external macro factors...........................12
Conclusion.....................................................................................................................................12
References......................................................................................................................................13

Introduction
Business environment consist of many internal and external factor. These components
impact on functioning, supply, demand of the firm. It is difficult for the management to predict
the future because business environment is dynamic in nature. Uncertainty can take place
anytime thus, it is essential for the entity to manage internal and external environmental factors
effectively (Grant, 2016 ). Present study is based on British Airways which is the leading airline
company and having strong command over market. Current assignment will discuss purpose of
different type of organization their size and scope. Furthermore study will shed light on functions
of an organization and its relationship between objective and structure. In addition, SWOT
analysis and PESTLE analysis model will be used in respect to British Airways.
LO 1
P1 Purpose of different organizations
British airways are the leading private airline in United Kingdom. It carries more than
34.6 passengers every year and has strong customer data base. It offers luxurious travel facilities
to its travelers which help the entity in satisfying these people and gaining their trust as well.
There are many organizations which run for different purposes (Fleisher and Bensoussan, 2015).
Public organization
Public firms are those entities which are governed by government and are publically
traded. These types of organizations are operated, governed and controlled by government. NHS
is the great example of public limited firm. National Health Service is the government body
which work for the well fare of population. Its main objective is to provide satisfactory services
to customers so that their needs can be fulfilled (Yee-Loong Chong and et.al., 2014). Another
objective of this firm is to create value for shareholders so that they be associated with the
organization for longer duration. These corporations pay more attention on fulfilling corporate
social responsibilities so that they can improve condition of society. They work to earn some
profit so that cost can be recovered and it can conduct further operations easily.

Tesco is another public limited firm which main purpose is to offer products and services
as per the need of customers. They work in such manner so that it can contribute in the economic
development and can generate employment opportunities for population (DeFusco and et.al,
2015). It has many shareholders which have direct power to influence the operations of the
company. It is listed in stock exchange.
Private organization
Private organizations are those firms which do not ruled by government. British Airways
is the private organization, board of directors take decision for the company. Its main purpose is
profit maximization. Company works to earn high profit so that it can sustain in the market for
longer duration and can gain competitive advantage. British airways provide luxurious travel
facilities to its customers which attract new consumers and make them satisfy towards the brand.
Apart from this, it has large customer data base which support entity in increasing its revenues
(Abrahamsson and et.al., 2017). Another purpose of the cited firm is to gain competitive
advantage. There are many firms those which are operating in the same field such as Easyjet etc.
These competitors provide same services to passengers. In such condition it becomes difficult for
the British Airways to sustain. But it offers unique facilities and luxurious travel benefits which
make it different from others. This helps the firm in gaining competitive advantage. Another
objective of British Airways is to satisfy consumer’s needs and make them loyal towards the
brand so that they give their positive reviews to others. Expansion across the world is the
purpose of the company, it plans to expand its business in different location so that it brand
image can be spread across the world (Batista and Cornachione, 2014).
Private organizations have no intervention of government, these firms can make their
decisions by own. It has limited liabilities, they are listed in stock exchange. It needs to have
paid-up share capital of one lakh and it is restricted to transfer its shares. Two or more person
can hold maximum share in private firms and these persons have high power to take decision for
the growth of the organization (Virglerová Dobes and Vojtovic, 2016).
Voluntary sectors
These are another type of organization which generally work for social welfare. Profit
maximization is not the aim of these firms. They just work for providing satisfactory services to
population so that they live their life easily. For example Red Cross is the voluntary firm which

continuously works for society welfare. Another objective of such type of entities are to promote
positive values. It works to utilize existing resources well so that future complications can be
minimized soon (Savrul, Incekara and Sener, 2014).
These firms are controlled by government and authorities take decision and provide funds
to this type of corporation.
P2 Size, scope of different type of organizations
There are many organizations which continuously work for different purpose such as
public, private, voluntary etc. There size, scope is different from each others.
Small size organization faces difficulty to sustain in the market because they have limited
financial resources and there are many big firms which have strong command over market. But
these small size firms can change their strategy anytime, they need not to look upon the external
situation, they can make any new management strategy for the growth and can implement in the
workplace easily. On other hand medium size business have good position as compare to small
size organization (Hashemi Karimi and Tavana, M., 2015). These medium size units can make
changes in its strategies twice in a single year and they have good customer data base which
support then in earning high profit. Though these firms have to face huge competition because
there are many big organization which are spreading across the world and are attracting mass
audience by offering luxurious facilities as per their needs and requirements.
British airways is the private organization which has global presence, it is the leading
brand in airline industry. As compare to previous year its customer data base has been increased
by 9.7%, this year cited firm has carried 136.6 million travelers. Number of passengers carried
by the company in 2016 was 42005314 (Suarez, Cusumano and Kahl, 2013). Its services are
available in more than 150 destinations, demand of British airlines are increasing day by day. As
consumers are satisfy thus, it is able to earn high profit. Profit of British Airways has been raised
by 20.7% as compare to last year performance. It shows that company is continually growing
well. It concentrates on needs of passengers and accordingly provides them services. That is why
people are satisfied with the entity and they are giving positive review about the firm. Company
has high scope to grow well in near future. It has strong supply chain, lower fuel prices are
positive sign for entity because I will support in minimizing cost and earning high revenues in
future. British Airways mission is to become the leading brand in airline industry worldwide and

maximize its profit (Zott and Amit, 2013). As the manner it is working, it reflects that cited firm
has full scope to grow well and enhance its customers and profit as well.
NHS is public organization which is working for social welfare. It mission is to provide
satisfactory hospital facilities so that death rate can be minimized. It gets funds from government
and is being controlled by government authorities. Higher authorities take decision for the firm.
Last year pre tax profit of NHS was recorded 831m which was quit high as compare to previous
year performance. Net expenditure of NHS has been increased from 78.88 billion to 120.512
billion in the year 2016. It has skilled employees, approx 106430 medical professionals and
many other employees. It is continuously working for improving facilities of hospitals so that
patients can get best services there. It has scope hat it will grow more and will increase its
funding (Paustian-Underdahl, Walker and Woehr, 2014).
From the above discussion it can be summarized that NHS and British Airways both are
working as big firms and both have high scope to grow well in future. Being a private firm
British Airways is earning high profit and it has capability to expand its business worldwide.
NHS if public firm so it is working for accomplishing its objectives.
LO2
P3 Organizational function and their interrelationship with objectives
British Airways is performing well in the market, it has many function (Bhattacharyya,
2015).
Human resource management
It is one of the main departments of the company which works to manage human
resource of the organization. HR manager of the cited firm hire skilled employees those who can
contribute well in the success of business unit. Main objective of British Airways is to earn high
profit and became market leader in airline industry. For that it requires experience and talented
employees. Meeting with this objective company provides rewards to its existing workers so that
skilled employees can retain in organization for longer duration. Furthermore, it has flat structure
which supports the entity in accomplishing its goal (Hashemi Karimi and Tavana, M., 2015). Flat
structure assists in enhance communication between managers and employees so that confusions
can get minimized. Thus this function of the company is related with structure and objective of
the firm and support in accomplishing its purpose.

Finance function
Financial department of the British Airways has to spend in order to conduct its business
effectively. For that financial department supervise its all transactions and manage cash inflow
and outflow. With the help of this function company becomes able o minimize its expenditures
and increasing its revenues (Abrahamsson and et.al., 2017). It has supported the firm in fulfilling
is objective of increasing revenues. Now British Airways has sufficient monitory resources
which help the firm in implementing new technologies and providing luxurious facilities to
travelers. If it does not have adequate monitory resources then it would not be able to sustain in
the market for longer duration.
Customer service function
It is another main department or function of British Airways. Company aims to satisfy its
travelers by offering services as per their needs and requirements. For that it has customer
service department where skilled employees work to resolve issues or complains of consumers.
If any client raises any issue then these workers immediately take action to resolve their issues.
This function of the firm supports in meeting with its objective (Batista and Cornachione, 2014).
That is why company gets positive reviews from its valuable travelers and has become the brand
image in the market. It is interrelated with its objective and structure. British Airways has flat
structure which helps the firm in coordinating with employees directly. If any workers have any
issue then they can communicate with higher authority. By this way they became able to resolve
consumer’s complain immediately.
Marketing function
It is considered as one of the most important function of the corporation. It has
relationship with company’s objective and structure. British Airways market its products and
services in order to attract more consumers towards the brand. It supports organization in
identify needs of travelers and offering them services as per their requirements. By this way cited
firm gain trust of its consumers (Yee-Loong Chong and et.al., 2014). This supports entity in
fulfilling is objective of increasing revenues. Flat structure of the company supports in
conducting operations well. Marketing department inform other departments about needs of
consumers and accordingly management make strategy and modify its existing operations. This
aids in smooth functioning of organization and meeting with its objective. If marketing

department does not perform its duties well then it will not be able to run its operations in
smooth manner.
Research and development
It is another function of British Airways in which research team of cited firm conduct
investigation about needs of consumers, current trends, market condition etc (Suarez, Cusumano
and Kahl, 2013). It support the entity in identifying its loop fall and making necessary changes in
its operations so that it can sustain in the market for longer duration and can accomplish its
objective of gaining competitive advantage.
All functions of British Airways are interrelated with its objective and structure.
Company has flat organizational structure which supports in effective coordination. By this way
all department share information and discuss each aspect so that overall goal of the company can
be obtained (Paustian-Underdahl, Walker and Woehr, 2014). Apart from this entity also work as
per the needs of consumers and make time to time change in its operations as per the market
condition so that it can sustain in the market for longer duration.
LO 3
P4 Positive and negative impact of Macro environmental factors
British Airways is the largest and leading international airline which is conducting its
operations in approx 148 destinations. PESTLE analysis is the conceptual framework which
defines the macro or external environment of the company. External environment impact on the
entire industry and indirectly company also gets affected by it (Batista and Cornachione, 2014).
Political factor
It is considered as one of the major element which impact on performance of company to
great extent. Political stability, political norms affect the regulatory system of industry. British
Airways is operating in many places so it has to conduct its operations as per the political
condition of the nation (Zott and Amit, 2013). If government of the nation is not stable then it
may increase issue of safety. It can impact negative on the business unit because people will not
take interest in flying with this airline. On other hand if political stability is here that means
protection is here. It will encourage people to take experience of British Airways airline.
Corruption, bureaucracy can negatively impact on the operations of the organization.

Economic factor
It is another external environmental factor which impact on the entire industry to great
extent. Inflation rate, currency exchange rate, employment rate impacts on the business
significantly. For example if there is low employment rate then people will not have adequate
income sources. In such condition their purchasing power will get negatively affected and they
will not be able to afford air tickets (DeFusco and et.al, 2015). This will negatively impact on the
overall profit of organization. On other hand If there is sufficient job opportunities for the people
then they will be able to spend money to buy air tickets. Currency exchange rates are another
major element which impact on the business unit. If rate of exchange is high then it will increase
cost of tickets and consumers will not buy it whereas if it is nominal then travelers will buy
tickets easily because it would be affordable for them. Thus, changes in exchange rates impact
positively and negatively on the British Airways to great extent. For example in the year of 2015
prices of fuel got down and due to which its expenditures decreased by 484 million (Grant,
2016). This has helped the firm and has given benefit by increasing its profit.
Social factor
It is another external environmental factor or macro element which affects business.
Change in season, lifestyle, needs impact on organization to great extent. In the pre summer
season customers do not plan to go to holidays. In such condition profit of the company gets
negatively affected. For example in the year 2016 due to social unrest, ATC union strikes British
Airways were not able to fly its airline. In such condition its business got negatively affected and
that year revenues off the firm got decreased (Batista and Cornachione, 2014). On other hand if
social conditions are favorable then it may impact positively on the cited firm. If weather
condition is good then people will plan to go on holiday that will raise demand of airlines. By
this way British Airways will be profit and its revenues will get increased.
Technological factor
It is another macro environmental factor which impact positively or negatively on
business unit. Digital technology has changed the scenario of entire world. Advancement in
technologies has helped the firms in growing and improving efficiency level of their operations.
For example if there is IT failure or company fails to implement new technology successfully
then it will affect its operations and entity will not be able to provide satisfactory services to

consumers. By this way people will become negative towards the brand and they will move
towards other brands. In such condition revenues of the firm will get minimized (Virglerová
Dobes and Vojtovic, 2016). For example British Airways has tried to reduce impact of disruption
of digital technologies. It has made investment in digitizing boarding passes. This facility has
given benefit to passengers because they do not have to wait for longer time for getting their
passes. That has attracted new consumers and profit of cited firm has risen to great extent. For
example in the year 2017 due to IT glitch British Airways had to face compensation cost of
worth 100 million which was the negative impact of technology.
Legal factor
Laws, regulations impact on the business to great extent. For example if government
makes changes in its airline laws then British Airways have to modify its operations which may
affect its growth. In the year 2017 government has announced legal wrangles for airline industry
for advance booking customer’s claim (Bhattacharyya, 2015). This has impact negatively on the
business unit. But changes in fuel laws and decreasing prices have positively affected the British
Airways.
Environmental factor
British Airways has faced issue in the year 2016 due to adverse weather condition. It has
negatively affected its business, due to this cited firm was unable to fly flights and its profit got
down. But British Airways fulfill its responsibilities towards environment and conduct
operations in such manner so that it does not harm surrounding. It affects positively to the
organization and has helped in smooth functioning of the entity.
LO 4
P5 Internal and External analysis of British Airways
Internal analysis
Internal analysis is the conceptual framework which supports the entity in identifying
internal position of the firm. It can be done with the help of SWOT analysis. SWOT analysis of
British Airways is as below maintained:
Strength

 Strong brand presence is the main strong point of British Airways. It is globally present
and is conducting its operations across the world (DeFusco and et.al, 2015).
 Excellent marketing and advertisement strategy is another strong point of the company.
Due to its strong marketing strategies cited firm has become able to identify needs of
consumers and attracting new consumers as well.
 It has its presence in 150 international destinations which helps the firm in increasing
profit of the entity. That is the main reason that every year it carriers many foreign
passengers.
 Strong financial background is strength of British Airways, due to having sufficient
monitory resource it has become able to conduct its operations in smooth manner.
Weakness
 High competition is the main drawback for the British Airways. EasyJet etc. are many
successful big airline organization which offers luxurious services to consumers. Most of
the passengers move towards these firms due to their cost and facilities. Due to this
company has to make effective strategy so that it can gain competitive advantage (Savrul,
Incekara and Sener, 2014).
 Over dependence on UK market is another weak point of British Airways. Cited firm is
highly depended upon the United Kingdom.
 Constrain capacity of Heathrow airport.
Opportunities
 Internal expansion is opportunity for British Airways by iis way cited firm will be able to
enhance its revenues to great extent.
 Strategic cooperation with other airlines.
Threats
 Terrorist attacks is the biggest threat for British Airways because due to which
passengers do not take interest in travelling through airlines.
 Changes in fuel prices is another threat to the company because due to which its
expenditures will get increased to great extent and its profit may get down (DeFusco and
et.al, 2015).
External Analysis

It is essential for British Airways that to identify its external market so that it can make
effective strategy s and can sustain in the market for longer duration. It can be done through
Porter’s five force model. These is explained as below:
Figure 1Porter's five forces
Source: (British Airways Porter’s Five forces analysis, 2016)
 Threat of substitute: British Airways is the leading airline but threat of substitute services
is significant. There are many firm which offer same services to passengers. Many
consumers move towards other brand if they get same services at lower cost.
 Threats of new entrant: Airline industry is too large and now firm has to invest huge
amount if it plans to enter into this industry. Apart from this there are successful big
organizations which have strong command over market so new firm cannot be
established easily (Batista and Cornachione, 2014).
 Bargaining power of buyers: It is moderate, though company is highly depended upon the
consumers. But there is limited alternative for customers so they cannot move easily
towards other airline thus, their bargaining power is moderate.

 Bargaining power of suppliers: Suppliers power is high because there are limited
suppliers in airline industry so British Airways has o be depended upon these suppliers. It
has strong relationship with them that helps the firm in getting timely fuel and other
services (British Airways Porter’s Five Forces Analysis, 2016).
 Industry rivalry: Competition is high, EasyJet etc. are successful airline firm which are
providing luxurious facilities to customers so threats of rivalry is moderate. British
Airways has strong strategy and strong market position which support the firm in gaining
competitive advantage.
P6 Interrelationship between strength, weakness and external macro factors
British Airways is adequate monitory resources which is strength of the company. It
supports the firm in dealing with external environmental factors easily. With the help of financial
resources company is able to run its operations easily. If there is any changes in legal norms,
regulation then cited firm is in position to deal with it and make changes in its current operations
easily (Virglerová Dobes and Vojtovic, 2016). If it does not have funds then it would be difficult
for the entity to make sudden changes in the workplace. Apart from this British Airways is the
leading brand and has global presence. This support the firm is implementing new technologies
in the organization easily. As it is operating its business globally so it has strong and advance
technical equipments. It supports the firm in improving its operational efficiency and providing
luxurious services to passengers. This strength of the firm has helped the entity in sustaining in
the market for longer duration and gaining competitive advantage.
On other hand weakness of British airways is also related with external macro
environmental factors. High completion is the major drawback for the cite firm. Due to which it
faces difficulty in facing industry rivals (Hashemi Karimi and Tavana, M., 2015). It concentrates
on needs of consumers but sudden changes in trends, requirements of consumers create difficulty
for the business unit because it has to make major changes in its operations . That affects its
operations and sometimes it impacts on its customer satisfaction level as well.
Conclusion
From the above report it can be concluded that business environment plays significant
role in the organization. If company is able to manage its internal and external environment well
then it helps the firm in sustaining in the market for longer duration. British Airways is the

leading airline brand and has global presence. It has strong financial background and have
advance technical support which helps the entity in gaining competitive advantage. It takes cares
of needs of consumers and offers them services as per their requirements. But due to external
environmental factors its operations get affected badly but entity has capabilities to deal with
these macro elements effectively.

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Online
British Airways Porter’s Five Forces Analysis, 2016. [online]. Available through
<https://research-methodology.net/british-airways-porters-five-forces-analysis/>