SME Performance and Internationalization

This assignment examines the factors that contribute to the success of Small and Medium-Sized Enterprises (SMEs) in the global marketplace. Students will analyze the relationship between organizational structure, strategic control mechanisms, and an SME's ability to perform effectively internationally. The analysis should consider environmental influences such as government policies, market conditions, and technological advancements.

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Unit Number &
Unit Title
Title
UNIT 1 BUSINESS AND THE
BUSINESS ENVIRONMENT
GlaxoSmithKline plc (GSK)
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Date of Submission April 24th 2017
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Contents
Introduction................................................................................................................................6
TASK 1......................................................................................................................................6
P1 Types and purpose of organizations.................................................................................6
P2. Size and scope of a range of different type of organisation.............................................9
P3. Relationship between different organisational functions and link to organizational
structure and objectives........................................................................................................12
TASK 2....................................................................................................................................15
Introduction..........................................................................................................................15
1. Positive and negative impacts the macro environment has upon business operations and
applying PESTEL model......................................................................................................15
2. Internal and external analysis of organization using SWOT model................................16
References................................................................................................................................18
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Introduction
An organisation constitutes of a group of people who are organized for a particular
purpose. Purpose may be any kind of business, entrepreneurship or any department of
government. Some of the most elemental features of any organisation includes: teamwork,
sharing same goals, leadership, adapting to the risks and the like which indicates of the
organization to be a healthy one.
This particular assignment includes the analysis of the different types of
organizational, its scope size and organization structure. Further, this includes the impact of
the macro and micro environment factor on the business organisation that is GSK.
TASK 1
P1 Types and purpose of organizations
The different types of organisation are discussed hereafter that exemplifies the
structures, scope and size of the organization
a) Public Sectors Organisations
Basic characteristic of Public organisation
Public ownership consists of the all the organisations that are governmental or controlled
by the public. These often include organisations that are publicly funded agencies,
enterprises and the entities that include delivering public programs, services or goods
(Bouckaert, G. and Van Dooren, 2016). The characteristics of the public organisation
includes are presented in terms of the following:
State ownership: The enterprise ownership is vested to state that may be under Central,
local or government ownership.
State control: It is controlled both by government directly in relation to its functionality
and management. The government exercises the control in relation to any kind issues
and exercises the control.
Public accountability: These types of organisations are accountable to the public owing
to their funding being done by public. The accountability is done though committees,
legislations, ministers, audit institutions and the like.
Autonomy: These organisations are free from the daily interference in terms
management and affairs excising the utmost autonomy.
Coverage: These types of organisations cover all areas, fields of activity and operations
of the organisation.
Goals and objective

The goals of the public organisations includes the: economic development, self-reliance,
employment generation, development of backward areas, economic surplus, consumer
welfare, public utilities and egalitarian society, defense, labor welfare and the like.
The Legal form of Public Organisation
The legal form of any public organisation is that of the corporation, companies or
franchises as well. This is because, it has many rights, duties, and privileges as well
(Adamas, 2014)

a) Private sector organisations
Organisations that are run by companies or individuals are the private sector that is
the part of the economy of any country. The goals and objectives of private sector
organization include profit maximization, restricting access, transparency in reporting.
Types of private sector organisation
1. Sole traders: This is determined to be self-employed public sector where individual
is the owner. Main focus of the firm to gain maximum profit and in attaining the set of
goals that are developed by the firm.
 Advantages: Low costs as start ups, owner is the boss. The profits are limited to the
sole trader.
 Disadvantages: Unlimited liability, no legal distinction, limited capacity to raise
capital.
2. Partnerships: The business that is run by people who are not more than 100 members
is known as partnership. Partners has to register as self employed. Scope of this
business is to work coordinating with each other so that the objectives attained can be
reached.
 Advantage: Partners share the responsibility, rich source of capital, minimal tax
fillings, no double taxation.
 Disadvantages: Unlimited liability, self-employment taxes
3. Companies: Company is a distinct entity that is legal and separate from shareholders.
These can be private or public. Scope is to understand the requirement of customers
and provide to them products and services accordingly.
 Advantage: Limits liability to shareholder, easy to transfer ownership by selling
shares favorable taxation rates
 Disadvantage: Expensive to establish, financial affairs are public, profits being
distribute, directors held personally for legal obligations.
4. Joint ventures: Joint ventures are governed by the registered companies. Main scope
of the business is to gain maximum profit.
 Advantage: sharing risks and costs, access to new markets, distribution networks
 Disadvantage: Blurred objectives, difference and management in the organizational
culture.

5. Franchising: Companies are already established and holds reputation commendable
shares in the market. This type of organizations sells their copyright to the public.
 Advantage: The risk of business failure is very less, established market share,
experience is required.
 Disadvantages: Higher costs, monitoring the ongoing franchise is intrusive, profits
shared among all the franchises.
6. Licensing: Licensing means leasing or renting the intangible asset. This allows the
company to carry out the confidential business that is authorized to the holder of the
license in the business. The creation and the management are all done in terms of the
contract.
 Advantage: The investment is lesser for expansion from the side of the owner.
 Disadvantages: Quality is not maintained, less control over the licensed business.
There are different type of legal framework that are to be followed by all the types of
organizations. It is unethical and is illegal when legal frameworks are not followed by
companies.
c) Voluntary sector organisations
A group of voluntarily interested people, who held same viewpoints, are particularly
with the aim to carry out charity. These are also known as non-profit organisations. The aim
and objectives of the voluntary sector is to improve the condition of the society in general.
Often the aim and objectives are particular to any kind of disease or societal issue which will
be needs to be done by them.
Types of voluntary organisations:
There are two types of voluntary organizations and difference between the two
includes the following:
NGOs: NGOs or non-governmental organizations are not maintained by the
government but it is maintained by the funds that organisations which is raised by the
government. The operational area is large. The registration is done through Societies
Registration, Trust Under Public Trust Act and the like (Chelladurai et al.2017).
NPOs: NPOs or non-profit organisations do not go for the division of the funding
between the shareholders and the owners of the organization rather extra funds are raised for
the purpose of the objective of the firm (Chelladurai et al.2017). The operational area is
limited. The NPOs are incorporated under the cats or sections like Company Act.

P2. Size and scope of a range of different type of organisation.
The scope of any organisation relates to the establishment and the widespread of the
business in the particular industries. The scope of any organisation depends on the type of
and structures of the business organization which includes: Sole proprietorship, Joint Stick
Company, partnership and the like.

Factors that determine the size of an organisation:
There are six major factors that determine the size of any business organisation
(Michael and Popov, 2016). These include the following:
 Managerial ability
 Availability of labour
 Nature of the business,
 Availability of Finance
 Entrepreneurial skills
 Extent of the market
Small and medium sized enterprises:
Enterprises employing less than 50 employees but more than 10 are known Small and
Medium enterprises. The number often varies from country to country and in UK the upper
limit is 250 employees. These are independent and non-subsidiary
Importance of SMEs in the UK owes to the following:
 Turnover: This provides a combined turnover of £1.6 trillion in the last financial year
(Owen et al. 2016).
 Employment: SMEs contributes largely to the job creation in United Kingdom that
accounts of 60 % of in the private sector (Kanavos and Angelis, 2014).
 Growth: Owing to innovation, growth is huge that is about 47% raise from 2009 to
2013 that contributed to the recovery of the economy of UK (Bloch and Bugge,
2013).
 Industry: The largest industries are all SMEs, including retail, repairing,
manufacturing and revenues from these include 45% of the economy of the
organisation (Kanavos and Angelis, 2014).
Scope of different organisations
The Scope of the different organisation is different as per the type that includes: National
Company, International Company, Multinational Company and Global Company.
The structure, size and scope of the different organizations determine the
way how it is going to operate the organisational operations in manufacturing any
product or providing the services to the organisation. With the increase in the size
of the organisation the structure is evident to change. The organizational
objectives determine what type of strategies is required for its achievement which

further necessities the increase in the size of the organisation and its structure as
well.

P3. Relationship between different organisational functions and link to organizational
structure and objectives
The different functions that are performed by the different departments of any organisation in
order to achieve the targets and the objectives of the firm as well is known as the
organisational functions.
Figure 1: Different organisational function
(Source: Chelladurai, 2017)
Importance of organizational functions
The different functions that are performed in the different departments including the
production, marketing, delivering, supply chain, customer handling, and human resource are
all driven towards the achievement of the organisational goals of sales, revenue, competitive
advantage and customers’ satisfaction. It also enables to organize the firm in structured way.
All the organizational functions are very important for the business to operate their tasks. For
example, when any new product is developed by research and development, then it is the
responsibility of productions and finance department to make sure that finance is made
available and production are done as per the finance that is made available. It is important to

make sure that all the departments have proper understanding about the type of conditions
that are going on in each department. Organizational objectives can be attained when these
functions of the business are followed in effective manner. When all the functions that are
carry out effectively, then it becomes favorable enough to attain the objectives.
Organizational structure
Figure 2: Organisational Chart
(Source: Basaia et al. 2016)
Types of organisational structures
Organisational structure is the system which defines the system of the
workflow from the hierarchy to the employees (Murray, 2014). This includes the
arrangement of communication, the rights, roles, power and responsibilities of the
individual or group. When employees need to have interaction with their top
management, then they need to have to communicate with their managers and
they will pass on the information. In accordance with the function that is followed
enables the business to develop an effective structure. For example, the functional
structure enables the business to divide the work among employees and to have
effective communication with each other.
The Organizational structure of GlaxoSmithKline plc (GSK)

The organisational structure of GlaxoSmith is that of hierarchical which includes the
board of directors, chairman and then the different departments. The organisational objectives
of the company are to operate globally with increase in sales and get competitive advantage
in global context. The advantage of the organisational structure is that the decision making
process will be faster but the disadvantage is that the company has great inclination to
become autocratic that will make the employees de-motivate.
Figure3: Organisational Structure GSK
(Source: Basaia et al. 2016)

TASK 2
Introduction
Macro environment of an organization deals with the external environment under
which an organization functions. The macro environment is important for an organization
since it helps in determining the external operating conditions that would support
organizational operations. The macro environment analysis is extensively correlated to
GlaxoSmithKline plc (GSK) success since it determines the operating conditions of the
organization.
1. Positive and negative impacts the macro environment has upon business operations and
applying PESTEL model
Positive impact of micro environment is that firm is able to set out strategies that
will be favorable enough for the firm to grow. On the other hand, negative impact is that
business have to make frequent observations so that they are able to identify the changes
that take place in the environment. There are different type of changes that take place within
the environment and when proper analysis is made, then it becomes favorable enough to
determine the business macro environment in effective manner. For example, when there
are recession that take place, then analysis made enables the business to determine that
changes in prices should be done so that customers are able to purchase the products. Using
specific examples, identify the positive and negative impacts the macro environment has
upon business operations, and apply the PESTLE model to support a detailed analysis of the
macro environment of GlaxoSmithKline plc (GSK) (Newton, 2014).
The external macro factors include the PESTLE (Political, Economical, Social,
Technological, Legal and Environmental) factors of any geographical location in which the
firm operates. The positive impact supports the organisation and negative includes the ones
when support is not available (Kanavos and Angelis, 2014). The PESTLE analysis on the
GlaxoSmithKline plc includes the following that will exemplify the impacts:
 Political: This includes the governmental impact on the organisation and the
government of UK is highly conscious about the healthcare and the social welfare.
Regulations and the standards that are propagated by the governmental bodies like
National Health Service, UK must be followed by the organisation or else legal
complications are evident to rise. When any type of changes take place in respect
with fiscal and monitory policy, then cited firm faces issues in setting up price for
the firm.

 Economical: The economy of the country, UK is highly supportive of the
pharmaceutical industry which is evident from 2003as of the high value managers.
The stock value growth rate in this pharmaceutical industry is 10.5% since 2003-
2010 which has contributed to the economy of the company and created scope for
the organization (Kanavos and Angelis, 2014). In a country if there are conditions
recession, then they have to understand that people will not have enough to spend
their money. In this context, cited firm have to reduce their price.
 Social: This includes the habits, lifestyle, prone to diseases of the people (in this
context). People today are highly health conscious and trying to cope up with the
global epidemic which has supported the growth of the organisation. GSK face
issues as they have to make changes as per changes in customers taste and
preferences.
 Technological: Technology is highly crucial for the development organisation. In
the pharmaceutical industry, the technological and the modern scientific ways are
required for the development in the sectors and provide customers quality products
(Augusto et al. 2014). Changes in technology should be done frequently so that cited
firm is able to deliver their customers with high quality services.
 Legal: These include the legislations related to employment, production for
products, safety of employees and consumers as well. In order to avoid legal issues,
it is very important to go for the propagation of the organizational policies that are
aligned with that of the national and international policies.
 Environmental: This determines that the organisation must incorporate the
organisational activities without affecting environment, as it is a global concerned
these days. These are also included in the execution of the corporate social
responsibility of the company.
 The company must go for the planning of its strategies as per organizational
objectives considering the macro environmental factors (Kanavos and Angelis,
2014).
The macro environment is the situation or the condition in which any country or region
exists. This particular environment impacts the execution of operational activities of the
company. The macro environment includes the trends in gross domestic product,
employment, inflation, employment, spending, fiscal policy and monetary policy
2. Internal and external analysis of organization using SWOT model
The analysis of the macro environment is important for a business as it helps in the
identification of the external force that plays a vital role in the business operational activities

of a business. The performance of the organisation is invariably affected if there is a change
of external factors. Therefore, with the analysis the change could be determined. Below given
are the SWOT analysis and made of GSK:
SWOT Analysis

Strengths
 Global sales and established
marketing infrastructure
 Capabilities of driving product
 Research and Development highly
supported
Weaknesses
 Brand image effected by health care
settlements
 Allegations of bribery
Opportunities
 Growth opportunity in world market
 Opportunity in HIV and other
businesses
 Opportunity in businesses related
with vaccine
Threats
 Cost containment pressure because
of drug pricing
 Intense competition due to the
generic drugs.
Table 2: SWOT analysis of GSK
(Source: Self-created)
The analysis that is done above allows identifying the strengths, weaknesses, opportunities
and threat (Bull et al. 2016). This is going to allow the organisation strategies plans for
reducing the impact of weaknesses, overcoming threats and utilize the opportunities in the
most result oriented manner. In accordance with the business, it can be started that main
strength of the business is that they conduct frequent research and survey so that they are able
to identify the areas in which improvement can be made. On the other hand, the weakness is
that image of the business gets negatively affected by health care settlement.
3.3 Critically evaluate the impacts that both macro and micro factors have upon
business objectives and decision-making
The macro and micro factors are highly impacting upon the organisational
objectives that determine the decision process of the firm. The factors if are not
supportive enough or if the organisational strategies are not aligned with the factors
then the achievement of the business objectives will not be available. The decision-
making is going to fix the process and the finalization of the strategies that are
created for the achievement of the organisational objective. Therefore, organizations
irrespective of the industry must go for the propagation of the strategies and the
organizational policies as well aligned with the macro and micro environmental
factors. In order to achieve this, a research by the company and its analysis is highly
recommendable.

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