Business and Business Environment Report

This report examines the business environment of The Lego Group, a leading toy manufacturer. It analyzes different types of organizations, their legal structures, and the relationship between organizational functions and objectives. The report also examines the impact of the macro environment on business operations, including political, economic, social, technological, legal, and environmental factors. Finally, it conducts a SWOT analysis to identify the company's strengths, weaknesses, opportunities, and threats, and how they interrelate with external macro factors.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Different types and purpose of organizations and its legal structures....................................1
Size and scope of range of different types of organizations...................................................3
TASK 2............................................................................................................................................5
Relationship between different organizational functions and how they link to organizational
objectives and structure..........................................................................................................5
TASK 3............................................................................................................................................7
Positive and negative impacts the macro environment has upon business operations...........7
TASK 4............................................................................................................................................9
Internal and external analysis of organizations in order to identify strength and weaknesses9
How strengths and weaknesses interrelate with external macro factors .............................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is a combination of all the internal and external factor that directly
affect entire functions of company such as customers, management, workers and so on. Mainly,
the business environment is dynamic as it continuously changing. Along with this, it is totally
different from one place to another and from region to region. For example, political condition of
UK is totally different from another country (Bovee, 2010). Hence,this will aid organization to
attain various opportunities in which they can easily improve their performance level at market
place. Current report is based on The Lego Group, is plastic construction toys firm. It is a
privately held business organization that serve various products like, Lego interlocking plastic
bricks and so on. This project discuss about different types, purpose of business organization
with its legal structures. Relationship between organizational functions which is relatable with
organizational structures is also mentioned in this project. Along with this, positive and negative
affect of macro environment on business operations are also mentioned in this project. At last,
Strengths and weaknesses interrelation with external macro factors is also discussed.
TASK 1
Different types and purpose of organizations and its legal structures
As per current scenario, various type of business organization operate their activities to
accomplish their target in appropriate time span. In this, some companies are operating for
making profitability and other work for social development. Thus, it is important for manager to
effectively understand the purpose of business so that they can easily establish their positive
image. Mainly, there are three type of organization such as private, public and voluntary. All
these are operating their activities with their specific purpose.
Private organization:
These type of businesses are owned by small family, provide investors for attaining
success at market place. In this there is no control of legal bodies because it is owned by private
people. The main aim of this type of business organization is to gain profitability level. For this
they serve their quality products and services to customers. Along with this, they try to introduce
their business at higher level in order to enhance their productivity level (Bryman and Bell,
2015). Lego is private company as it is a line of plastic construction toys which are produce by
the Lego group. This company was established in 1949 with the name of The Lego Group in
1

Denmark country. In this, they operate their business in delivering new and innovative services
to customers with the purpose of attaining profitability level at market place.
Purpose of Lego: The main purpose of The Lego Group is to enhance their productivity
level by delivering quality toys and plastic bricks. Along with this they try to make their
customers base strong. This will help them in increasing their brand image in market place and at
the same time also capture market share form its rivals (Buckley and Casson, 2010).
Legal structure of private organization: It consist various examples of owing a business
activity. All these can be understood by following points:
 Sole Trader: This type of business is operated by single person with the purpose of
generating money. Along with this, all the decisions and liabilities is highly owned by an
individual. A single person who start and control business is also able to pay credits and
attaining profits as well. One of the main benefit of this type of organization is to take
quick decision. On the other side, drawback of this business is that it required lots of
investment to operate organizational activities.
 Partnership: When two or more than two person comes together for operating business is
called partnership. Along with this, all the partners are sign deed of partnership in which
they are able as well as responsible for all kind of debts and profits. In this, all the
partners share responsibilities to control the business.
 Limited company: This type of business organization has separate legal identity and
operated by board of director. Along with this, there are limited liabilities which is based
on guaranteed ratios.
 Cooperatives: These kind of business activities are owned by its employees with the
purpose of generating profits. In addition to this, it is necessary for all workers to
contribute within the organization to make effective control on the business activities.
Public organization:
These type of business organizations are controlled by government bodies. It is wide in
nature as they operate their business with the purpose of providing betterment to society. Along
with this, they provide their share from IPO in order to raise their funds. Thus, it is vital for them
to utilise their resources in optimum level in order to provide number of benefits to society
(Commander and Svejnar, 2011). Bank of England is public organization, which is the central
bank of the UK of Great Britain and Northern. This bank was established in 1694 as it is world's
2

8th oldest bank. Along with this, it is owned by stockholders. The bank is responsible for
managing monetary policy.
Purpose of Bank of England: The main purpose of this bank is to work for monetary
stability. In addition of this, they serve financial services to larger number of customers (Cuervo‐
Cazurra, 2011). Bank also provide personal banking services for workers in order to enhance
their living standard.
Legal structure of public company: It include various term which can be defined the legal
activities are as follows:
 Central government: It include all administration department which help in regulating the
country. Along with this, UK government develop various rules and regulations which
shared by state and central agencies.
 State government: It refer to the separate unit who operate government functions. Along
with this, it is considered as important as it provide control to educational institutions and
many more with the purpose of providing them betterment.
 Local government: It include all public administration in which they cover all the local
part of economy. In this, the main aim of this is to improve the policies to enhance the
economic growth.
Voluntary organization:
These type of business organizations are operate their activities for improving the
economic condition. It is not regulated as well as controlled by any kind of legal authorities.
Along with this, it is refer to non- profit organization in which they put their efforts for providing
social welfare by giving advantages to society. Unicef (United Nations Children's Fund) is a
voluntary organization as they provide developmental assistance to children and their mother.
They also provide emergency food and health care services to children's.
Purpose of Unicef: The main purpose of this organization is not generating profits but
also provide unique programs to children's with the purpose of realize them about their rights
(Gebauer, Paiola and Edvardsson, 2010). For this, they provide various development programs to
children and mothers for their betterment.
Size and scope of range of different types of organizations
In market place, every business organization having their specific size and scope in which
they operate their activities. With the help of this company easily improve their performance
3

level at market place (Halbert and Ingulli, 2011). In this context, size and scope of various
organizations are mentioned as follows:
The Lego Group: Size: The Lego Group is a line of plastic constructions toys which is privately held firm
in Denmark. This company formed in 1932 with the purpose of providing quality
products such as vehicles, building and working robots. Along with this, they also
produce new products like they change the design of kiddicraft bricks. Under this, the
designer employees are more than 19000.
 Scope: In this, Lego operate their business for attaining profitability level by delivering
Lego bricks to young children. In addition to this, six bricks of Lego of 2* 4 studs which
can be combined in approx 915,103,765 ways. As the main aim of this company is to
provide quality products and services to its customers as per their needs.
Bank of England: Size: Bank of England is central bank of UK which has established in 1694 with the
purpose of providing banking services to public. It is world's 8th oldest bank as it operate
their activities in various countries. Along with this, it is privately owned as well as
controlled by stockholders.
 Scope: As Bank of England operate their activities for providing services to public for
their betterment. In addition of this, bank tackled two main areas by ensuring the
functions efficiency such as monetary stability and asset purchase facility. As a central
bank, they are not offer customers banking services but it manage public facing services.
UNICEF: Size: United Nations Children's Fund is voluntary firm which provide humanitarian and
developmental services to mother and children. It is established in 11 December 1946 by
United Nations General Assembly. They operate their activities in 190 countries with the
purpose of delivering development services to children.
 Scope: As a voluntary organization, Unicef work for development of children and
mothers then they provide emergency food and healthcare services. One of the main
purpose of this company is to promote health and well- being of children (Hamilton and
Webster, 2015). In addition of this, they also established various policies and programs
for betterment of society.
4

TASK 2
Relationship between different organizational functions and how they link to organizational
objectives and structure
Every business organization have some specific objectives and they operate their
functions accordingly. As Lego operate their business in various countries in which they affected
by various factors. Thus, it is important for manager to effectively evaluate their activities for
making appropriate results (Hilton and Platt, 2013). Along with this, company also set different
organizational functions for executing their activities with the purpose of attaining desirable
objectives in appropriate time frame. In this, the main aim of this organization is to generate
larger profitability by delivering quality services to its customers. For attaining the same, Lego
provide new and innovative services to make their strong customers base. In addition of this,
company make their Lego bricks in order to attaining competitive advantage form its
competitors. Mainly, company manufacture Lego brand toys which consisting interlocking
plastic bricks. For attain success at market place, company define various functions such as HR,
marketing, finance and many more. All these functions of department are highly interrelated with
each others. This will help in attaining objectives in an appropriate frame. In this context,
interrelation of organizational functions of Lego are as follows:
Marketing department: For understanding customers taste and market trends,
marketing department play important role. In this, manager of company undertake an effective
research in order to understand customers needs. With the help of this, Lego can easily serve
their toys and attain customers satisfaction. This department is related with production function
as it helps in delivering quality products and services as per customers taste. It contribute in
attaining set goals and objectives in appropriate time frame.
Human resource department: It is one of the important department of business
organization as it helps in recruiting as well as hiring skilled and capable workers who are able to
perform all the task in effective manner. In this, manager of The Lego Group is to make as well
as develop policies and strategies to make their process appropriately. Along with this, the main
purpose of this department is to prepare compensation, performance appraisal and many more
(Kang, Lee and Kim, 2010). This department is related with marketing function because the
manager of marketing help in finding the able employees which helps in attaining desirable
objectives. Collaboration between the functions of both the department helps in achievment of
5

the target of sales and profitability through effective utilisation of the higher capabilities of
employees which are employed by human resource department.
Finance department: Enough finance resources play important role in managing entire
activities of the firm. This department is responsible for making as well as preparing budget for
providing adequate finance to all departments (Kian Chong, Shafaghi and Leing Tan, 2011).
With the help of this, Lego can easily attain its objectives and at the same time also enhance their
productivity level.
Production department: This is one of the effective and important department through
which Lego produce their quality toys to fulfil their needs and wants. In this marketing activities
and are highly relate with production department. Thus, it is important duty of manager to
evaluate customers needs and wants before manufacturing products. This will helps in increasing
the chances of attaining set objectives.
Organizational structure: It define various based which implement by the company at
the time of producing its products and services. As all can be understood by following points: Geography based: Lego organizational structure is based on various regions. As Lego is
privately held company which based in Billund, Denmark. Function based: In this, the organizational structure is segment as per its functions which
is set by the company like, marketing, human resource, finance and many more. In this
Lego, perform their function by evaluating their entire function to make their entire
process appropriate effective as well. Product based: Under this, Lego segment on the basis of products which is manufacture
by company by considering customers requirements. In addition of this, Lego serve toys
to children as per their needs and wants. In addition of this, the organizational structure is
based on its products.
 Customers based: In this, company segment their services as per customer's buying
behaviour as it help in satisfying their needs and wants of consumer in appropriate way.
Mainly, number of customers like children's are attract towards Lego toys.
In addition of this, Bank of England is also formulate their business activities with the
purpose of attaining success in market place. In this context the organizational structure are there
which follow by the company for enhancing their performance level. Bank of England follow
vertical structure in which director or department head at the top level and at middle level
6

manager and every more lower level positions. In this all the decision are made by top level
management and also define policies to customers. By this all the task are perform effectively
and improve positive work environment at workplace. This will help in increasing profitability
level of the company at market place.
Apart from this, Unicef is work for society with the purpose of providing social welfare
in order to improving living standard of people. This will contribute in enhancing economy of
the country. In this context, Unicef follow division based structure. As they also carry out
mission and unique programs in more than 120 countries. Along with this, government also
provide support to organization which may contribute in enhancing economy growth of the
country.
TASK 3
Positive and negative impacts the macro environment has upon business operations
Macro environment consist different kinds of factors which impact on business
operations, decision-making and profitability in both positive and negative manner. It affects a
firm majorly when it conducts business on international level (Klapper, Lewin and Delgado,
2011). As Lego Group is the largest toy making company of world in terms of revenue so, in
order to determine impact of macro environment upon operations, PESTLE analysis is going to
conduct by management in following manner:
Political factors: It has observed that when UK exit EU, then all laws and legislations of
this country are reformed again. Along with this, it is necessary for all organisations to follow
these laws while conducting their business activity. In context with Lego, political factors create
a large impact on business of this firm in both negative and positive manner which can be stated
as:-  Positive impact: It is necessary for Lego Group to follow all political laws as well as
update system with new legislations. It will give advantage to this firm to run operations
in a smooth manner (Klapper and Love, 2010). Negative impact: Some political rules like high import duties in some nations, stop Lego
to enter in such market era. Along with this, if company will not follow laws of this
country then it will impact on image of business at marketplace in negative manner.
Economic factor: Economical crises of a country majorly impact on performance of an
company in terms of production and sales. In this manner, performance of industries in toy sector
7

include Lego Group which does not seem to be satisfactory especially in Europe because of Euro
Zone crises. In this context, Economics blocs like EU give opportunity to Lego to sell their
products in across EU countries. As Lego Group also taken advantage of lower priced market in
order to increase profitability level of the company. Positive impact: Outsourcing goods in other developing companies help this firm in
decreasing production cost. In inflation period, companies gain advantage to increase
price of products as well as it also boost growth of business as well. Negative impact: As Lego Group is founded by Danish Company so, due to outsourcing
commodities in European countries and products are not manufactured by labours of this
country, it increases chances of not welcome by devotees. This would produce negative
impact on sales performance and profitability as well. In addition to this, when there is
recession period of economy, then unemployment of a country increases. Under this
condition, sales and revenues of a company also decreases due to which employers feel
unable to expand business in other market area as well.
Social factors: It is duty of every organisation in a country to invest their funds for
society development. So, in this manner, Lego Group has promised to UNICEF for making an
investment of near about 8.2 million dollars in upcoming years. Positive impact: As products of Lego Group are most closely connected to children in
emotional manner, therefore, it give advantage to this firm to manufacture such goods
which act in healthy way on minds of them (Prajogo, 2016). Long term relation can be
made by John Lewis through developing a proper plan where CSR activities took place. Negative impact: Today, children are seemed to be mature more as compared to earlier
days so, demand of them are related to playing toys which increase at fast rate. It would
negatively impact on existing goods of Lego Group as this firm has to make improvement
in production.
Technological factors: As per development in technologies, preference of customers are
also changes in high manner. They demand from a firm to manufacture more innovative products
which complete their desires. In context with toys industries, they have to modify their
technologies on regular basis so that higher expectation of customers can be fulfilled.
Introducing new technologies in business aid organisations in manufacturing high innovative
products in easy manner. Along with this, it will also them in promoting products of company in
8

wider area also. For example, Change in technologies are largely affect the Lego because by
implementing new technology like cloud technology, social media, artificial intelligence and
many more. All these are positively influence entire system of Lego and improve positive brand
image of the company at market place. This will enhance productivity level of Lego as compare
to its competitors. Positive impact: By advancement of technology and collaboration with Texas instrument,
products of Lego are manufacturing in high superior manner which are helpful not only
for play but also education purpose (Ullah and Lai, 2011). In this context, one of the best
product is Ninjago characters which is creation of animated series. Negative impact: Due to growing demand in new media age, it is difficult for toy
industries to keep interest of customers towards products in large manner. Any kind of
change will lead to risk of failure.
Legal factor: Each company of a country are needed to follow rules and laws of
marketplace where it carry out operations or transactions. Positive impact: Rules and regulations regulated by government helps a firm in securing
its intellectual property and ideas. In this manner, one of a reputed company of China
named by Coko has made same products like Lego, so due to legal laws this firm has to
apologize in front of Lego. Negative impact: Because of legal laws, every organisation has to be cautious as well as
careful about its design which consumes much time in securing and making use of
patents.
Environmental effect: It is mandatory for all toys or manufacturing firms to concern
more on waste system in order to protect environment. Positive impact: Usage of Eco-friendly toys help children from avoiding many kind of
bacteria and frugal infections that comes from plastic products generally.
 Negative impact: As per environmental standard ISO 14001, all firms deal in constructing
sites are certified due to climatic changes. Therefore, Lego Group need to produce
wooden toys in place of plastic ones.
9

TASK 4
Internal and external analysis of organizations in order to identify strength and weaknesses
Both internal and external factors are highly affecting the business activities in positive and
negative manner (Welford, 2013). Thus, it is important responsibility of Lego manager to
evaluate entire factors with the purpose of reducing negative impact on company. With the help
of this, firm improve their overall performance at market place and at the same time also
establish competitive place. For this, Lego conduct SWOT analysis which are as follows:
Strengths: It is referred to those area where company is best in their operations. As there are
some strength of Lego: Toy with a difference: Lego consider as a set of bricks which can be used in 915 , ways
and combinations. This is main strength through which company operate their business in
success level. Creative expression: Lego is a toy company which defines creative expression through
which kids gain skills who are regularly play with Lego toys. Variety of options: Lego define variety of options which helps in evaluating creativity in
Lego blocks. This will contribute in inviting number of customers towards its products. Tie- ups with movie franchises: As company is associated with Harry Potter along with
they also has movie titles which may contribute in inviting more attention towards its
products and services (LEGO Group – SWOT Analysis, 2017). Multiple Themes: Lego toys consist multiple themes which define new and creative
experiences to children. With the help of this, they provide lots of memories for adults
and children as well.
 Attention to detail: Lego has quality toys which is always papular as they easily grab
attention of customers. As intrinsic detailing in every toys define a perfect detail which
helps in increasing sales of the company at market place.
Weaknesses: Expensive: Lego toys are more expensive as compare to another companies so that
middle class people which fails in buying its products. High cost of research: Under this, Lego USP is related with appropriate age group toys.
As company tries to make new design which required lots of research that increase
overall cost.
10

 Taste of customers: Lego products are only for kids age group as everyone can not taste
its products. Thus, few kids are know about Logo toys.
 Cost of materials: Lego toys are made by ABS plastic which is considered as a high
grade plastic and it is also more expensive.
Opportunities: More parental focus on creative toys: Lego focus on development of children in which
they invest in toys. For example, company is beneficial for developing brain and other
skills as well.
 Increase in activity driven learning: As various schools are focused on learning, thus
Lego manufacture interesting toys that help children to increase their core concepts. The
result is that various schools are investing their toys and it is considered as big
opportunity for Lego to enhance their brand image (Werther and Chandler, 2010).
Threats: The threat of substitution: Lego toys are more expensive as sometime, it is not
affordable by customer.
 Counterfeits: As there are various counterfeits are available in market which produce
cheap plastic. Thus, it is considered as major threat for Lego because it reduce the sale of
the company.
How strengths and weaknesses interrelate with external macro factors
For attaining success at market, company need to evaluate the external macro factors with
strength and weaknesses. This will help in determining the ways to enhance productivity level of
the company. Lego is biggest company as they operate their business in international level with
the purpose of grabbing attention of the children towards its toys (Wild, Wild and Han, 2014).
For analysis this, Lego conduct PEST for defining the interrelation with strength and weaknesses
are as follows:
Political: Every country has their political condition which directly affect the Lego
activities because they take source from another countries. This will directly affect the
production cost.
 Strength: The main strength of this is that Lego make their products more competitive
which enhance tits brand image.
11

 Weakness: Due to political condition, it is difficult for Lego to control intellectual
properties as well as supply chain also.
Economical: They are outsourcing almost 80% of their products in European nations and
rest in 20% is in Billund.
 Strength: By this Lego can easily reduce their production cost and making their products
more attractive. Weakness: Due to this, the product cost is high which is difficult for middle class people
to consume. This will negatively affect the brand image.
Social: Lego offer their products to children with age group of 3 to 15. along with this,
kids are more demanding towards the toys.
 Strength: Due to this, Lego easily produce new and innovative toys which invite larger
number of kids in front of toys. This will increase the profitability level of Lego. Weakness: Under this, Lego does not having any kind of accurate and successful strategic
plans which may increase risk factors. As it negatively affect on overall performance of
the firm.
Technological: As per current scenario, new generation use digital gadgets as compare to
traditional toys. Thus, Lego also use digital technologies within their production line to make
quality and digital toys.
 Strength: The main strength of this is that Lego can enhance their brand image and
customers base as well.
 Weakness: Due to this, cost of the company get increased because its products are more
expansive in which some customers are not able to consume. This will reduce the
productivity level.
CONCLUSION
From the above mentioned report it can be summarised that, business environment is
effective combination of internal and external factors which influence entire business activities in
positive and negative manner. For this, company have to consider all the factors of business
environment before executing entire activities of the firm. It help in enhancing the chances of
attaining desirable growth at market place. Along with this, business environment is complex in
nature as it directly affect the decision making process of the company. Various type of business
organization such as private, public and voluntary are also comes under business environment.
12

For attaining success at market place, it is important for manager to effectively analysis internal
and external factors in order to reduce the chances of arising any kind of negative issues. This
will contribute in attaining desirable goals and objectives and at the same time also also increase
the chances of establishing competitive image at market place.
13

REFERENCES
Books and Journals
Bovee, C. L., 2010. Business Communication Today, 10/e. Pearson Education India.
Bryman, A. and Bell, E., 2015.Business research methods. Oxford University Press, USA.
Buckley, P.J. and Casson, M., 2010. Models of the multinational enterprise. InThe Multinational
Enterprise Revisited (pp. 147-176).
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics.93(1). pp.309-337.
Cuervo‐Cazurra, A., 2011. Global strategy and global business environment: the direct and
indirect influences of the home country on a firm's global strategy. Global Strategy
Journal.1(3‐4). pp.382-386.
Gebauer, H., Paiola, M. and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
International Journal. 20(2). pp.123-139.
Halbert, T. and Ingulli, E., 2011. Law and ethics in the business environment. Cengage Learning.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Hilton, R.W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Kang, D., Lee, J. and Kim, K., 2010. Alignment of Business Enterprise Architectures using fact-
based ontologies.Expert Systems with Applications. 37(4). pp.3274-3283.
Kian Chong, W., Shafaghi, M. and Leing Tan, B., 2011. Development of a business-to-business
critical success factors (B2B CSFs) framework for Chinese SMEs.Marketing
Intelligence & Planning.29(5). pp.517-533.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan, London.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. InEntrepreneurship and Economic Development(pp. 108-
123). Palgrave Macmillan UK..
Klapper, L.F. and Love, I., 2010. The impact of business environment reforms on new firm
registration.
Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics. 171.
pp.241-249.
Ullah, A. and Lai, R., 2011. Modeling business goal for business/IT alignment using
requirements engineering.Journal of Computer Information Systems. 51(3). pp.21-28.
Welford, R., 2013.Hijacking environmentalism: Corporate responses to sustainable
development. Routledge.
14

Werther Jr, W. B. and Chandler, D., 2010. Strategic corporate social responsibility:
Stakeholders in a global environment. Sage publications.
Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.
Online
LEGO Group – SWOT Analysis. 2017. [Online]. Available
through:<https://blog.cayenneapps.com/2015/05/27/lego-group-swot-analysis/>.
15

16