Business and the Business Environment: Types of Organizations and Their Legal Structures

Running head: BUSINESS AND THE BUSINESS ENVIRONMENT
BUSINESS AND THE BUSINESS ENVIRONMENT
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1BUSINESS AND THE BUSINESS ENVIRONMENT
Table of Contents
UNIT 1.................................................................................................................................2
Introduction..........................................................................................................................2
LO 1.................................................................................................................................2
1. Explain different types and purposes of organizations; public, private and voluntary
sectors and legal structures..........................................................................................................2
2. Explain the size and scope of a range of different types of organizations..................6
LO 2.....................................................................................................................................8
3. Explain the relationship between different organizational functions and how they
link to organizational objectives and structure............................................................................8
LO 3...................................................................................................................................10
4. Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples..............................................................................10
LO 4...................................................................................................................................14
5. Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................15
6. Explain how strengths and weaknesses interrelate with external macro factors of the
business Tesco operates.............................................................................................................18
Conclusion.........................................................................................................................19

2BUSINESS AND THE BUSINESS ENVIRONMENT
UNIT 1
Introduction
An organization is generally organized by group of individuals with distinctive aims and
purposes such as business or public service. There can be witnessed a certain surrounding or
situational contexts whereby business enterprises execute their operations which is further
regarded as business environment which essentially comprises an amalgamation of certain
external as well as internal factors. However, these factors have the propensity to impact each
other and further function in accordance in order to influence the business strategy1. Tesco, on
eof the leading multinational grocery and merchandise retailer organization has evaluated the
change in the business environment in the globalized era. The paper will aim to evaluate the
positive and negative impact on macro environmental forces by further shedding light on the
internal and external analysis of the company. In addition to this, the paper will analyze the way
strengths and weaknesses of Tesco correlate with its external macro forces.
LO 1
1. Explain different types and purposes of organizations; public, private and
voluntary sectors and legal structures
Private sectors are generally owned by private individuals or groups whereby the
primary purpose of the organizations is to generate revenues and further create profits.
1 Carroll, Archie, and Ann Buchholtz. Business and society: Ethics, sustainability, and stakeholder
management. Nelson Education, 2014.

3BUSINESS AND THE BUSINESS ENVIRONMENT
Furthermore other private sector business purposes intend to include further development with
the elevating market share and maximising sales2. However by contrast, establishment which is
part of the state serve as element associated with the public sector whereby non-profit
associations are referred as a vital part of the voluntary sector.
The primary types of businesses engaged in private sector are:
 Sole trader- Sole traders is recognized as one of the most universal type of trade
ownership and thus is initiated in a broad variety of activities such as electronic work,
accountants. In the UK it has been noted that around 20% of sole dealers execute their
operations in the construction sector, further 20% in the retailing sector and the rest in
financial domain and catering3. As the rate of significance of complicated documentation
process is considerably low the process of decision making executes in an effective
manner with the strong association of customer and employees.
 Business Partnership- Individuals in business partnership share their competences and
ideas in order to facilitate the process of capitalization. Furthermore, partnerships are
established by legal documentation witnessed by an official solicitor and seek vital
information such as the distribution of revenues4. However, forms of partnership are
common in professional services such as accountant, solicitors and law. Partnerships
draw similarity with sole trading in terms of partnerships being unrestricted liability.
Private Sector Limited Companies
2 Trebbin, Anika. "Linking small farmers to modern retail through producer organizations–Experiences
with producer companies in India." Food policy 45 (2014): 35-44.
3 TESCO PLC (Tescoplc.com, 2016) <https://www.tescoplc.com/media/1542/q1_ims_2014.pdf> accessed
2 July 2018
4 Christopher, Martin. Logistics & supply chain management. Pearson UK, 2016.

4BUSINESS AND THE BUSINESS ENVIRONMENT
These forms of business enterprises are regulated by shareholders thus necessitates a
Memorandum of Association and Articles of Association which includes the authorities of
stakeholders, procedures for recruiting directors and other arrangements in terms of auditing
company accounts.
 Private Limited Company or LTD-limited liability, with private shares- In these
organizations owned by stakeholders, the owners can create regulations on the percentage
of shares being purchased5.
 Public Sector Public Limited Companies- There are over 500,000 companies in the UK
whereby around 4% of them are engaged in public limited sector. However, the name of
these organizations ends with PLC and the shares of the companies can only be
purchased and sold with the authorization of the Board of Directors6. Furthermore, the
shares of public limited companies with restricted liability can elevate considerable rate
of capital, economies of scale and enhance the dominance of the market.
` The public sector is often recognized as the state sector that is owned and regulated by
the government for their citizens. The primary purpose of this sector is to deliver services
required by the general public regardless of the income or wealth for instance health and
education7. Furthermore, these business enterprises are aided through taxation process. The
organizations engaged in the public sector includes
5 Anheier, Helmut K., Nonprofit organizations: Theory, management, policy. Routledge, 2014.
6 Tugby L, Waller-Davies, B and Tugby, L, 'Profile: Tesco - The UK’S Largest Retailer' (Retail Week,
2013) <https://www.retail-week.com/home/profile-tesco-the-uks-largest-retailer/5046179.article> accessed 2 July
2018
7 Doherty B, H HaughF Lyon, 'Social Enterprises as Hybrid Organizations: A Review and Research
Agenda' (2014) 16 International Journal of Management Reviews

5BUSINESS AND THE BUSINESS ENVIRONMENT
 Central Government- Defence, national health services, social security, police and
universities constitute a major portion of the public sector.
 Local Government- Local government fundamentally comprises primary and secondary
education system, refuse collection, social services as well as sport facilities.
Voluntary Sector
The organizations constituting the non-profit or voluntary sector vary from both public
and private sector whose fundamental aims and objectives were reliant on profit generation.
While voluntary organizations such as charitable organizations, trade unions along with public
art enterprises do not share its profits and revenues to its stakeholders or owners but further
utilize the profits to accomplish its targets8. Furthermore, non-profit enterprises possess the
capacity to transform their share of revenues as surplus to attain its self-preservation,
advancement and other prospective strategies. Thus are devoid of any acts of liability in most
nations specifically in terms of income and property taxation.
The legal structure of a business enterprise aims to be vital to the way the business
executes its operations. A limited company exists as a legal entity in itself in seclusion from its
ownership. Furthermore, the development of limited company necessitates the documentation of
several permits with the Registrar of Companies which must involve a Memorandum of
Association and Articles of Association. If necessary documentation is satisfactory, legal
incorporation is issued further establishing the company into significance as a legal entity. Tesco,
being a public limited company (PLC) aims to pursue a strategic business unit (SBU) pertaining
all of its operational areas to enhance the rate of competitiveness within the domain of individual
8 Young, Dennis R., and Jesse D. Lecy, "Defining the universe of social enterprise: Competing
metaphors." Voluntas: international journal of voluntary and nonprofit organizations25.5 2014: pp.1307-1332.