Business Environment: Organizational Functions, Objectives, Impacts

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This report provides a comprehensive analysis of the business environment, focusing on organizational functions, their relationship to organizational objectives and structure, and the impact of the macro environment. It begins by explaining different types of organizations, including public, private, and voluntary sectors, along with their legal structures, using examples like Marks and Spencer, the Royal Air Force Club, and Oxfam. The report details the size and scope of these organizations, their objectives, and their organizational structures. Furthermore, it explores the interrelationships between different organizational functions within Marks and Spencer and their link to the company's objectives. Finally, the report identifies both positive and negative impacts of the macro environment on business operations, employing a PESTLE analysis to illustrate these effects, considering political, economic, social, technological, environmental, and legal factors, and offering insights into how these factors influence business strategies and performance.

UNIT 1 Business & Business Environment
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Table of Contents
Introduction:.................................................................................................................................... 3
Scenario 1:....................................................................................................................................... 4
TASK 1............................................................................................................................................ 4
TASK 2............................................................................................................................................ 9
Scenario 2......................................................................................................................................11
TASK 1.......................................................................................................................................... 11
TASK 2.......................................................................................................................................... 15
Conclusion:.................................................................................................................................... 19
Reference list:................................................................................................................................ 20
Bibliography.................................................................................................................................. 22
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Introduction:
Business environment is the overall external and internal environment that influences its business
performance and its growth (Schaltegger and Burritt, 2017). It covers factors like customers,
suppliers, raw material, competitors and many others. Every business is dynamic in nature as it
involves its own factors from its processes and external forces like political environment. It is
important for creating good business image, increasing customer base and many other reasons.
The relationship between different organisational functions and its link to its objectives and
structure will be analysed. Also the advantages and disadvantages of interrelationships between
different organisational functions and its Impact upon organisational structure will be analysed.
The effects of macro environment on the business processes will be discussed and PESTLE and
SWOT model will be used to analyse business environment.
Mark and Spencer is a one of the leading UK based retailer, which specialise in selling in high-
end fashionable clothing. It also sells daily items like cornflakes. It is also currently operating 29
countries and has around 979 stores across UK. The Royal Air Force Club was founded in 1918
and operates in Britain with leadership from military forces and royal family members (Frith et
al., 2016). Oxfam is a confederation of 20 independent charitable organizations focusing on the
alleviation of global poverty (Hajnal, 2018)
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Scenario 1:
TASK 1
a) Explain three different types and purposes of organisations. (Such as public, private and
voluntary sectors). You are also required to explain the legal structures of these
organisations. (P1)
Organizations are divided into three types according to their purposes, structure as well as
investments and profitability schemes. Those three organizations are namely Profit, Not for
profit and non-governmental organizations. The main purpose of profit organizations is top
earn more profit. On the other hand, not for profit organizations, those are owned by
governmental bodies focuses on profit gaining. Lastly, the non-governmental organizations
or the NGO’s do not practice business with the purpose of gaining profit; rather they focus
on reducing social problems and fulfilling some societal responsibilities (Mazzucato, 2015).
Private organizations: These types of organizations serve only one purpose, which is to
increase their profit and lead the existing market. Marks and Spencer is one such organization
and the primary aim of this company is to increase their profit and market share by influencing
customers (Rudder et al., 2016).
Public organizations: These types of organizations aim to gain profit for their subsidiaries and
are mostly government owned. The Royal Air force club of UK is such sector that does not
directly aim at making profit but serves the purpose of profit gaining indirectly. These
organizations do not count profit making to be their only concern like Profit organizations
(Denhardt and Catlaw, 2014). The employees engaged in the non-profit organizations are able to
acquire additional benefits from the government. This particular type of organizations does not
consider liberalization however, as the government of UK is open for globalization, there is a
chance that these organizations will be able to operate in wider business context in few years (An
et al., 2016).
Voluntary organizations: The main purpose of these organizations is to deal with societal
problems and they do not consider making profit important. However, these particular types of
organizations are able to acquire help of governments and many famous personnel are seen to be
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donating some amount to the NGO’s for societal betterment. The old age homes or the
orphanages are considered non-governmental and they are also known as voluntary
organizations. As these organizations do not contribute towards profit making, they have fewer
roles to play in globalization (Butler and Wilson, 2015). Oxfam is considered one of the most
active non-governmental organizations in the UK context.
Legal structures of Private and Public organizations:
Differences Private organizations Public organizations
Members One member is enough to start
the company
This company requires around
seven members to develop their
operations
Prospectus requirements These companies do not have
the advantage of starting
prospectus for inviting
consumers
These companies can use
prospectus to influence and
engage public as well as
stakeholders
Share transfer The share transfer of these
companies are only done with
the consent of the board of
directors
This companies do not have to
worry for share transfer or seek
for any permission
Statutory meetings These organizations are not
bound to hold statutory meetings
For these type of organizations,
it is very important to hold
statutory meetings and sent the
acquired report to the head
office
Names These companies end with
Private limited
These companies contain only
the word limited.
Table 1: Legal structures of Business
(Source: Butler and Wilson, 2015)
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b)You should further explain the size and scope of the organisations discussed in P1. This
may include, the products or services they supply, the size and the scope of the
organisations; larger, medium-sized and small organisations including the objectives and
goals, market share, profit, number of employees etc. (P2)
Categories Marks and Spencer Royal Air force Club Oxfam
Background details Marks and Spencer
is a supermarket that
started their journey
in 1884 (Marks and
Spencer, 2018).
Royal Air force Club
was founded in 1918
and deals with
strategic assessment
of air power
(Rafclub.org.uk,
2018)
Oxfam was founded
in 1942 and this
organization is a
charitable one that is
in charge of gathering
funds for the needy
people with the help
of campaigns (Oxfam
GB, 2018).
Product offered by
the organization
As a multinational
chain this company
offers diversified
product ranges to the
customers (Marks and
Spencer, 2018)
This company
conducts research on
leveraging the rational
horsepower for the
RAF persons
(Rafclub.org.uk,
2018)
This company
provides shelter and
support to the
unprivileged people
and raises fund for
their wellbeing
(Oxfam GB, 2018)
Size of the
organization
Large scale
organization and has
various branches
across the world
(Marks and Spencer,
2018)
Medium sized
organization and
looks after the needs
of organizations
dealing with horse
power
(Rafclub.org.uk,
2018)
Medium sized
organization and is
only limited in UK
(Oxfam GB, 2018)
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Scope of the
organization
This company has
huge scope of
globalization, as it is
itself a large-scale
organization (Marks
and Spencer, 2018)
As UK is coming up
with many institutions
that are researching
on air power, there is
an opportunity for the
organization to
expand their
operations
(Rafclub.org.uk,
2018)
Every developed
country is influencing
disparity and
inequality and this is
why Oxfam has a
wide scope in UK, as
it deals with social
betterment (Oxfam
GB, 2018)
Vision The vision of the
company is to
introduce diversified
product ranges in the
market in order to
increase their
profitability and
market share (Marks
and Spencer, 2018)
Their vision is to
innovate new ideas of
leveraging horse
powers
(Rafclub.org.uk,
2018)
This organizations
consists of the vision
to provide better
lifestyle to the
unprivileged people
(Oxfam GB, 2018)
Mission The mission of the
organization is to
fulfil the requirements
of the consumers and
increase profit (Marks
and Spencer, 2018)
Their mission is to
strive towards
providing quality
research for studying
air power
(Rafclub.org.uk,
2018)
Their mission is to
serve the unprivileged
people so that they
can get a better life
(Oxfam GB, 2018)
Business Objectives To earn profit and
maximise market
share And cater to
customer taste and
To bring out more
researches regarding
the study of air power
(Rafclub.org.uk,
To help the needy
people with better life
(Oxfam GB, 2018)
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preference (Marks and
Spencer, 2018)
2018)
Organizational
structure
Formal
Organizational
structure along with
matrix organizational
structure (Marks and
Spencer, 2018)
Line organizational
structure
(Rafclub.org.uk,
2018)
Matrix organizational
structure (Oxfam GB,
2018)
Legal structure Sole Proprietorship Corporation Partnership
Stakeholders Consumers, the
suppliers and the
other share holders of
the organization. The
employees are also an
important stakeholder
(Marks and Spencer,
2018)
The air force academy
of UK and every
institution dealing
with horse power
research
(Rafclub.org.uk,
2018)
Other charitable
organizations, few
governmental bodies,
some famous
personalities and
unprivileged people
(Oxfam GB, 2018)
Table 2: Comparison among different types of organizations
(Source: Rudder et al., 2016)
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TASK 2
a) Explain the relationship between different organisational functions of your chosen
organisation and how they link to organisational objectives and structure. (P3)
Organizational structure of Marks and Spencer:
Marks and Spencer consists of various departments like production, retail, store management,
international relations department, marketing, operations, financial, HR department, and the
corporate governance department. Marks and Spencer is noted to follow a formal
organizational structure and along with that, the company follows a matrix organizational
structure (Marks and Spencer, 2018). As the company follows formal organizational structure,
the roles of the authority, any financial obligations and the job specifications are defined clearly.
As the company follows both formal and matrix organizational structure, the employees and
management are seen to be working with greater efficiency in fulfilling the organizational
objectives, which is to gain profit and increase their market share.
Figure 1: Organizational structure of Marks and Spencer
(Source: Created by learner)
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Director
Executive director
Director of food
Director of womenwere
Chief Financial director
Director of Retail
Directorod Interantional relations
director of Human Resource
Director of corporate governance

Organizational functions:
The HR department of the company plays an active role in assessing the requirements of the
employees so that they remain motivated and helps the marketing, finance and the R&D
department to work in coordinative manner with each other. The marketing department is
responsible to incorporate new strategies and policies after discussing with the HR department,
R&D that will help the company gain more profit and increase their market share. On the other
hand, it is the responsibility of the finance department to make budgets and plan investments
after discussing with the marketing, HR department, R&D so that the operating need of the
company is fulfilled.
The retail director makes sure that every department is coordinating with other to ensure better
business operations and Marks and Spencer is focusing on fulfilling their objectives with the
help of the departmental coordination (Marks and Spencer, 2018). The production department
of the organization is responsible to maintain proper production so that the consumers get the
services within time. It is also responsibility of the production department to maintain a proper
supply chain management so that the delivery process becomes simpler. Along with these, the
retail department of the organization is responsible to coordinate with the other departments so
that the outcomes of the business operations are smooth enough. However, it is the responsibility
of the administrative department of the organization to look after every administrative issue so
that the company can acquire undisruptive services and plan for further betterment.
The organizational objectives:
 To increase their market share and become the top most leading supermarket chain
 To reduce the employee attrition and engage the employees in every decision-making to
avoid reduction of productivity
 To increase their sales in future and bring more diversification of products
Interrelation:
From the above discussion on the organizational functions, structures and the objectives it can be
said that the structure followed by the company is effective enough to meet the objectives as they
are planning to include more coordination among the teams so that their business operations
become more proper and manageable. In case the organizational structure would not have been
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coordinative, the company would not have reached the current position and function in the
market or compete with others.
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Scenario 2
TASK 1
a) Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples. (P4)
In order to analyse the impacts of the macro environment on the business environment, it is
important to conduct a PESTEL analysis. The PESTEL analysis to shed light on the negative and
positive impacts is done below:
Political factors: Marks and Spencer experiences both threats and opportunities from the
political environment of UK. Due to the impact of Brexit, the political scenario of the country is
allowing organizations to globalize their operations. This is acting as an opportunity for
Marks and Spencer as they are getting a chance to increase their market share and enhance
their business organizations. Apart from this opportunity, the company is dealing with threat of
competitive rivalry. It is because of the practice of agreements of free trade by the
government that new entrants are getting opportunity to operate in UK and along with that
European integration is helping many companies to open their business operations in UK
and due to which there are an increase of similar industries (Bbc.co.uk, 2018).
Economical factors: The rate of interest and the level of recession are drastically impacted by
the retail sector of the country. At present, the country is undergoing a negative economical
phase due to which the rate of unemployment is increasing. Other than that, there is a
decrease in the level of disposable income and the lifestyle of the citizens has changed. The
citizens are not eager to buy any unnecessary items (Bbc.co.uk, 2018). As there is a change in
the lifestyle, the organizations are facing trouble with profit making. Similarly, Marks and
Spencer is also facing trouble with making profit in the UK market. Another negative factor that
the business sector of UK is undergoing is to hold back their past market position, which has
destroyed after the recession in the year 2009. However, the economical environment is only
favourable for the tourists as it is central area of attraction. The inflation rate of UK of the year
2018, as recorded by Statista is 2.4 percent (Statista, 2018).
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