Business Environment - River Island Assignment

Business Environment

Contents

From: Management Accounting Officer
To,
General Manager, River Island
Subject: Explanation of different types of organisations and the growth of the international
business environment.
INTRODUCTION
Business environment comprises of intrinsic as well as extrinsic factors which can affect
business operations of firm both in adverse and positive way so it is important to manage such
factors through settling suitable plans and policies on the basis of market influences. For this, an
association must attained skilled management and workforce in order to deal with such
influencing factors in more effective way. Internal factors incorporate employee morale, culture,
technological advancement and so on though external factors incorporates political conditions,
economical situations, legitimate laws and so on. The present assignment report is based on
River Island; a UK based privately owned business which is engaged in giving quality clothing
products over around the world. The project includes different kinds of organisations along with
their purposes, size and scope. Role of different departments towards achievement of
organisational goals, SWOT and PESTLE analysis along with their positive and negative impact
on company are also explained under this report.
TASK 1
P1:
There are different kinds of organisations operating in market condition with an aim of
satisfying the necessities and prerequisites of clients in such an appropriate way that will help in
boosting their satisfaction level. Number of association incorporates private, public and
voluntary. Such kind of association is preformed at their own way to accomplish shared
objective i.e. satisfying necessities of customers. However, to maintain their sustainability in
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market world, they have to pursue all rules and regulations defined by governmental authorities
of such nation in which the business works (Bovee, Thill and Raina, 2016)
Types of organisation along with their legal structure
Illustration 1: Forms of business organisation
Source: Forms of business organisation. 2018
Private company
An organisation which are owned privately and controlled by at least two people is
known as privately owned business. The government makes no impedances in the business tasks
of organization therefore can be operated its business more effectively. As there are heaps of
limitations as well executed by government on privately owned business. For instance, privately
owned business is not permitted such company to allot share directly to the public.
River Island is a privately owned business which is engaged in manufacturing and
selling wide variety of clothing products at an effective places all over the world. It has worked
in excess of 70 stores in UK itself and has produced £925.8m in 2014. River Island in Peru has
additionally chosen to extend its business through opening two stores in Jockey Plaza and
Miraflaroes Lima (Cavalcante, Kesting and Ulhøi,2011)
Purpose of River Island:
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 Increasing way of life of individuals through offering quality garments products at an
affordable price.
 Increasing rivalry in fashionable clothing industry.
 Provide extensive variety of garments products for all age groups.
Legitimate structure of privately owned business
Partnership: It incorporates through an agreement between two or more person having
common goals and objectives (Commander and Svejnar, 2011).. Such agreements describes all
terms and conditions of business that includes sharing profit/loss ratio, partner's capital and
rights in the business etc.
Sole proprietorship: It is easiest form of business which is owned and run by single
individual known as sole trader. As single owner, all the losses and profits earned by the
company are burdened by itself.
Limited organization: It is an organization in which the individuals are not by and by
subject to pay any obligations of organization as they are liable to pay up to the extent of unpaid
capital subscribed by them in company. Such organization has separated into two types which
incorporates limited by share and guarantee.
MNC :- MNC is defined as an organisation or an enterprise which deals in several
countries but managed from one country which is called head quarter of these enterprises. Such
companies have their own offices or industries in various countries and they usually controlled
by a centralized own office or head office. In MNC the best example is Vodafone it is a UK
based MNC with headquarters in London. It is basically deals in telecommunication product and
it is widely expending its business in various countries of U.S.A
Global companies :- Global companies are a form of business companies which are
operates in two or more countries in other words global company is a small part of the MNC's. It
defines as taking advantage of other country's natural resources and various things. In the global
companies the best example is Aviva it deals in insurance sector and it is UK based global
corporation. With headquarters in London.
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Transactional company- Those organisation which are more complex is known as
transactional organisations. They invest in foreign countries and give decision making power to
every individual.
Public organisation
It is an organisation which is possessed and monitored by government experts by
subscribing over 51% offer in capital of organization. Along with this, government has
accomplished all rights and powers to monitor business activities in more compelling and
proficient way. The main target of such kind of association is to enhance the way of life of
individuals through providing quality items at an affordable price (Karagiorgos, Drogalas and
Giovanis, 2011).
NHS is an instance of such kind of association which is working for well-being of people
through giving health services to the needy people. which is engaged in offering quality well-
being and health related services at a reasonable price. Dental and optical care services likewise
includes in their offering lists. Their main motive is to improve the way of life of individuals by
organisation awareness programs so as to educate people about the importance of maintaining
health lifestyle.
Purpose of NHS:
 Enhancing healthy lifestyle of individuals and community as a whole.
 Create awareness about smart dieting in order to live sound way of life. Covering maximum number of needy people under their health services
Legitimate structure of Public organisation
• Central government: It is supreme authority of nation which regulates the
activities of whole nations through formulating laws and regulations for state.
• State government: It regulated the organisations operated in different states of
nation. Such government is responsible to identify the issues and local
requirements of a particular state.
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• Local government: It regulated the companies operated at regional level such as
city, town etc. It has attained power to exert power over particular region.
Voluntary organisation: It is an organisation which is formed by number of volunteers
who has common objectives and purposes i.e. providing social welfare benefits. For this,
volunteers need to follow some documentation process in order to get permission from the
governmental authorities (Kolk, 2016). Oxfam is an instance of such type of organisation which
is engaged in similar sector with an aim of destructing poverty from the world. It performs
various functions, for example, giving relief to individual who are influenced from calamity, pro-
migration and so on. It originally appeared in the year of 1942 with help of taking support from
volunteers which incorporates businessmen, industrialist in terms of donations. Through their
support, the organization can give essential necessities of life to destitute individuals.
Purposes behind Oxfam:
• Elimination of destitution from the world.
• Encouraging to enhance standard of living of individuals.
• Conducting educational awareness programs and its role in enhancing their life of
people.
Legal structure
• Trust- It is usually established by a group that doesn't need membership. It is a
structure form of charity.
• Association- A union of people who agreed to accomplished a common objectives
other than profit.
National Trust is an association who work to preserve culture heritage and natural beauty.
P2:
Every organisation operating its business functions in competitive market have possess
distinctive size which depends on their workforce as well as scope which depends on their wide
range of offerings (López-Gamero, Molina-Azorín and Claver-Cortés, 2011). So the diverse size
and scope of such kinds of organisation are described under below:
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River Island:
Size: River Island, a UK based association which has played out its business exercises in
various countries including America, Ireland, Netherlands and some more. As the association is
occupied with giving garments and material items in market which are popularity after in every
country along these lines the odds of accomplishing development and advancement in
augmentation of business in different countries are high. The association has made approx.
£925.8 million out of 2014 which constructs their circumstance in market. To develop business,
the administration of River Island has opened new stores in Chile and Peru with a manner of
thinking of getting huge market share.
Scope: As River island bargains in different things, for instance, attire, materials,
footwear and distinctive frill as a result of which the odds of accomplishing manageability in
market for longer time period will be more. The association can without a lot of a stretch find the
generous number of customers in light of which they can keep up their unfaltering position in
market and salaries as well (Roederer, Nozzi and Nason, 2011).
Vision: The primary vision of association is to give quality things and administrations
with the end goal to achieve solid brand picture in forceful economic situation.
Mission: The mission explanation of River Island is that they are revolves around giving
the most smoking looks to their focused on customers. Hence, they always endeavored to convey
new and designable pieces of clothing things to increase the satisfaction dimension of customers.
NHS:
Size: It was first came into the presence in 1948 and from that point to now, it has
achieved 1.5 million people in United Kingdom which are uses their prosperity related
administrations. The association has furthermore gone under the once-over of best five world's
workforces. As NHS has offered restorative administrations to the prosperity related issue people
as such the odds of successfully improvement of business to a generous scale are high. There are
in excess of 150273 pros close by general specialists joins approx. 40548 and 314966 specialists
are giving their noteworthy administrations to the improvement of an association.
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Scope: NHS has anchored far reaching area of country where they offered prosperity
related administrations at free of expense therefore the odds of getting piece of the overall
industry all through the world are more. As it in like manner consolidates dental and optical
services in their commitments list.
Vision: NHS has set a reasonable vision to improve the way of life of every individual of
the world.
Mission: The mission articulation of NHS communicates that the association has set a
goal to accomplish their prosperity related administrations to most extraordinary number of
people who needs to get their services because of having absence of cash (Saleem, 2017).
OXFAM
Size: Oxfam joins in excess of 20 charitable associations which gives their most
noteworthy huge responsibility in expelling destitution from the world. It gets satisfactory
assistance from broad number of volunteers hence have greatest opportunities to develop their
business exercises to vast scale.
Scope: As by and large countries are encountering neediness on account of which Oxfam
has more chances to exist in market for longer time allotment and help destitute people to give
fundamental necessities of life on consistent commence.
Mission: The mission of Oxfam states is "Every individual can access to get crucial
necessities of life and should not encountered any life disparities.
Vision: The standard vision of Oxfam is to expel away the desperation from the world
and enhance the lifestyle of people.
Stakeholders Analysis: It is a gathering which keeps enthusiasm for the business
activities of organization and can influence or to be influenced by the business. It incorporates
financial specialists, workers, clients, providers and network all in all. The development and
accomplishment of business are extremely rely upon such partners in this way it is required for
the board of organization, for example, Nestle to speak with them on customary premise.
Rundown of partners according to their enthusiasm for association is given under beneath:
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 High power – high interested people such as CEO or higher authority
 High power – less interested people such as shareholders
 Low power – high interested people such as employees
 Low power – low interested people such as customers.
TASK 2
P3:
Illustration 2: Organisational Chart of Company
Source: Organisational Chart of Company. 2013
There are different departments which gives significant help to an organisation from
background with an objective to accomplish desired objectives and aims. Such departments
incorporate Human resource, marketing, operational and many more. In this way the managers of
various departments are held responsible to recognize the qualities and shortcoming of their
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separate department in order to expel the shortcoming zones through utilizing their strengths
(Yoon, 2012),
Interrelation between the departments of River Island:
Human resource department: This is the department who is mainly concentrates on
procuring skilled workforce with an expectation of gaining most extreme help from them in
accomplishing desired goals. HR managers are liable to recognize the aptitudes and capacities of
workers and on the basis of which allot them work position in organization. Appreciating
workers based on their past execution will enhances the profitability and proficiency level of
workers which result in maximises the profitability of organization.
Finance department: This is valuable part of organisation which help organization in
obtaining new advancements and devices through giving money related assets in order to execute
business activity in more beneficial way. Utilizing most recent innovation will help in
minimising wastage because of which the expense of manufacturing process will be limited. This
will have positive outcome on the productivity of organization too.
Production department: It is the department which plays an important role in helping
organisation to meet market needs and requirements on timely basis. River Island is engaged in
providing fashionable garments which are more in demand in UK. It needed support from
marketing department to bring their products into market and influence buying behaviour of
people in favour of company's products through communicating with them regarding new
changes the company made in their clothing products. Both departments mutually supports
organisation in achievement of organisational goals and objectives.
Organisational structure
The structure of an association is ordered by the necessities and requirements that are
resolved as underneath:
Capacity based: It relies upon the business capacities executed by the workforces of an
association. For example, human asset, advertising etc.
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Geography based: This sort of structure relies upon the territories in which the business
exercises has been worked. It depends upon the necessities and essential of things in such
places.
Product based: This sort of structure relies upon the sorts of things offered by association
in market. For example, River Island offering pieces of clothing and materials things.
Consumer based: This sort of structure relies upon the taste and inclinations of clients
which help in taking off upgrades in their present products on proceeds with premise
(Relationships among PEST and SWOT, 2017)
TASK 3
P4:
Macro-environmental factors incorporates political, economical, social, technological
factors and so forth that can influence the presence of organization in aggressive market because
of which it is critical for managers to recognize and examine their effects by directing PESTLE
investigation. It is additionally talked about under the beneath:
Political factors: It alludes to the political conditions that can impact the operations of
River Island. It has performed its operations in various nations therefore needed to centre around
changes in political dynamics, for example, tax collection, import trade and so forth. Positive
effect is that if brings favourable import-export strategies by new government having beneficial
outcome on the manageability of River Island. Negative impact is that if High tax assessment
rate builds the cost of items and declines the buying power of customers in this manner it brings
unfavourably influence on revenue of River Island.
Economical Factors: It alludes to the changes in economy of nation which forces the
management of River Island to roll out improvements in their current plans and strategies.
Positive effect is that Formulation of analysis report facilitate in gathering information in regards
to expansion rates and distinctive income levels. Negative impact is that Inflation circumstance
causes incremental changes in cost of items that builds the chances of moving faithful clients
towards substituent items.
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Social factors: It incorporates interest and buying pattern of customers and society in
general. It influences the sales and productivity of organization. Positive impact is that Rising in
demand of River Island offerings, for example, fashionable clothing products increases revenue
and sustainability of items. Negative impact is that awareness about quality over price guides
customers to purchase high priced products as they mainly focuses on quality products. In this
way, it influences the business focus of River Island.
Technological factors: It is connected with innovative technologies which makes simple
for organization to work its business exercises all the more easily. Positive impact is that offering
items through web and internet business assist organization in attaining huge customer base.
Negative impact is that using of outdated technologies because of putting less in innovation
builds the expense of various business operations (Business Environment, 2018)
Environmental factors: It incorporates the functions which are executed to secure
environment. River Island has engaged with CSR activities which upgrades their brand image
picture in market in favourable way. Positive impact is that utilizing friendly equipments in
production process helps in limiting the wastage which specifically secure environment.
Negative impact is that not following environment related laws may bring presence of River
Island come into threat.
Legal factors: It is connected with legal legislation and enactment framed by
governmental authorities for the organization in which it has performed its primary functions..
Positive impact is that Following diverse acts, for example, equality act, data protection act and
so on help in accomplishing high supportability. Negative effect is that failure of compliance
with legal laws may influence their manageability in unfavourable way.
TASK 4
P5:
The management of River Island should conduct SWOT Analysis in order to determine
the internal factors so that an effective decisions and suitable plans can be made for the
betterment of an organisation. It assist management to identify strength and weaknesses as well
as opportunities and threats. It can be further explained as under:
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SWOT Analysis
Strengths:
• It has owned in excess of 350 stores in United Kingdom, Ireland and all through the Asia
and Europe. The organization has likewise 6 online sites which are working in 4 monetary forms
because of which the organization has extend its business activities on expansive scale.
• River Island has achieved huge market share through giving fashionable clothing
products at an affordable prices to all age groups of individuals.
• At past, the organization has worked together with Rihanna with the assistance of which
the organization can without much of a stretch draw in expansive number of customers and
expanding their business figure also.
• Providing fashionable garments product items at moderate costs.
Weaknesses:
• River Island does not offer rebate to the understudies in the entire year like others little
retailers, for example, Top Shop and New Look (What SWOT Analysis is in simple words, 2016).
• Availability of menswear collections in many stores are low due to which the customers
finds difficulties in searching such store where they can easily get menswear clothing products.
• River Island don't give plus size collection which turns into the primary shortcoming of
organization because of which different organizations, for example, New Looks, Boohoo takes
preferences.
• The sales figure and turnover of organization are not expanded as much as their rivals, for
example, Zara turnover's identity expanded quickly (Business Environment. 2018).
Opportunities:
• Should Focuses on joint effort to more big celebrities names in order to to pull in huge
number of customers over around the world.
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• The organization should attempts to grow its business at global level, for example,
opening new stores in Australia in the wake of propelling an online webpage.
• Should begin to offer discount on their clothing products and services to compete with to
rivals in more viable and productive way.
Threats:
• Political threat, for example, increasing in the minimum wage permitted by law which
may influences their number of stores accessible crosswise over around the world. It would
diminish their financial position and additionally lessening outlets also.
• Due to expansive number of rivals, for example, Zara which builds their business
revenues in less time because of which it gives extreme rivalry to River Island.
• Changing in weather convey danger to organization as the organization offer regular
apparel wear items subsequently in seasonal season the demand of winter garments of clothing
are low which influence their profits.
TASK 5
P6:
It is important for organisations operated at global level such as River Island to
interrelate external factors with their strengths and weaknesses so that further actions are taken
for the betterment of an organisation in competitive market world. It can be further understood as
under:
Political factors: It is related with fluctuations in political conditions that can affect the
sustainability of an organisation. For example, changes in government policies and taxes.
• Strengths: Having different legal teams in different countries enable River Island to
understand the legal laws and legislations so that it can be properly followed and
achieve high sustainability.
• Weaknesses: River Island is operated at global level thus managers have difficulties
to understand the policies and regulations implemented by new government.
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Economical factors: It is related with the fluctuations in economical stability of nations
which can either affect negative or positive way to an organisation.
• Strengths: River Island can achieve growth and success in its business operated in
Asia where the economy stability are very much high
• Weaknesses: Higher international exchange rates in some countries affects the
profitability of River Island.
Social factors: It is related with interest and behaviour of customers while buying products
in market. It may either influence due to having new trends in market related with particular
clothing segments.
• Strengths: R&D team of River Island is strengthening their brand position in market.
Through conducting market research, River Island is able to fulfil the needs and
requirements of targeted people.
• Weaknesses: there are large workforce employee in River Island due to which the
management may faces difficulties in managing and monitoring the activities of all
due to which the chances of conflicts within an organisation are high
Technological factors: It is related with technological advancement which brings company
ahead in the competitions among their rivals in competitive market.
• Strengths: River Island invest more in adoption of an effective marketing tools which
can easily grab an attention of large number of people.
• Weaknesses: This will requires more funds due to which the company can raise funds
from different sources which charges high rate of interest. Thus, it increase cost of
business.
CONCLUSION
It has been concluded from the above project report that the management of organisations
operated at global level should focus on the changes arises due to internal and external factors of
business environment and accordingly deal with market situations in an effective and efficient
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manner. For this, the role of various departments is also required to identified so that proper roles
and responsibilities has been given to them. Along with this, SWOT and PESTLE Analysis shall
be conducted to analyse internal as well as external factors respectively.
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REFERENCES
Books and Journals
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