Business Environment: 4G internet and Telecommunicatio

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK...............................................................................................................................................1
1. Different types of organisations and their growth in international market........................1
2. Difference between public, private, voluntary firm...........................................................2
3. Interrelationship between various functions of organisation..............................................5
4. Positive and negative impact of macro factors by using PESTLE analysis.......................6
5. Internal and external analysis of business..........................................................................7
6. Interrelationship between strength, weakness and macros factors.....................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is consists of micro and macro factors that impact on overall
operations of business unit to great extent (Mutuku, 2014). Internal components are in control of
organisation and enterprise can make changes in its internal market position by taking effective
decision but it is very difficult to control over external macro elements. Present study is based on
Vodafone that have many branches across the world. It provides 4G internet and
telecommunication services globally. Current assignment will give explanation of various
organisations such as public, private, voluntary etc. Furthermore, it will conduct internal and
external analysis of Vodafone. In addition, interrelationship between internal and external
factors will be described in this report.
TASK
1. Different types of organisations and their growth in international market
There are various firms that operates their business differently. Purpose and growth of
these firms are far differed from each others:
Public organisations
Public enterprises are institutes that are governed by government. The main objective of
these firms is to render services to people. Generating profit is secondary purpose of public
enterprises (Ross, 2016). These public entities operate at different level: international, national,
regional and local. Government has more than 50% shares in these public firms. Board of
directors are not responsible for any kind of liability in business. For example: Associated British
Foods Plc is working as public firm in UK. It is operating in food processing industry and
provide high quality food to the consumers. The company is listed under London Stock
Exchange. In the year, 2017 entity has generated 15357 million revenues. Its operating income
is1336 million and net income is 1211 million for the same fiscal year. Being a public limited
organisation its 54.5% shares are owned by Wittington Investment.
Private organisation
Private companies are such firms that are not governed by government. Partnership, sole
traders etc. are part of private organisations (Bryman and Bell, 2015). Private entities are the
major contributors to economic of nation. The main objective of these entities is to generate huge
profit and expand operations in other locations. Shares of these entities are not traded into stock
exchange. Vodafone Group Plc is working as private company, it is mobile communication
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providers that has branches in more than 150 locations. It has approx 444 million consumers
across the world (Teece, 2018). Recently enterprise has started providing 4G services that helped
the organisation in raising its profit to great extent. The main agenda of Vodafone is to enhance
its profitability and productivity. It continuously works for increasing number of customers
across the world. It wants to become leading brand in telecommunication industry.
Voluntary organisation
It is another kind of organisation that is form with group of people those who enter in an
agreement and ready to work as volunteers. Such kinds of firms may be incorporated or
unincorporated (Hickman and Silva, 2018). The main purpose of such kind of enterprises is to
provide high quality services to population and contribute well in raising their standard of living.
Red cross is working as voluntary organisation in UK. Its main purpose is to protect life of
human being and improve their health conditions. It continuously organises camps so that
population can be prevented from suffering from critical illness. Red Cross has approx 17million
volunteers those who are providing their services across the world. Red Cross has provided relief
assistance to people in their emergencies. It also contributes well to make local health care
projects successful (Forsgren, Holm and Johanson, 2015).
2. Difference between public, private, voluntary firm
Criteria Public (Associated
British Foods Plc)
Private (Vodafone) Voluntary (Red Cross)
Background It is the biggest public
firm that operates its
business in retail
sector. It operates in
five different
segments: sugar,
agriculture, retail,
grocery, ingredients.
It always produces
such goods that can
create value for
stakeholders. Entity
Vodafone is
multinational
telecommunication
firm, recently it has
branches in 150
countries. In the year
1991, Racal Telecom
has been demerged
with Racal electronics
and has formed
Vodafone group
(Jensen, 2017).
Red cross is the
voluntary firm that
works in health and
social care sector. It
was founded in 1863
in Geneva. It is
awarded with Nobel
peace prize three
times in 1917, 1944,
1963.
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has headquarter in
London. Primark is
the retail division of
Associated British
Foods Plc that has
approx 345 stores
across the world.
Product and services It provides food and
other ingredients such
as enzymes,
emulsifiers to its
customers.
Enterprise offers
mobile, internet
services to consumers
across the world.
Fixed line telephones,
broadband, digital
television, internet
services are offered
by business.
It proves health care
services to the human
being and always try
to improve their health
condition.
Size and scope In the year 2017,
entity has generated
1336 million
operating income and
have reach to 1211
million net profit. It
has employed 132590
employees globally.
Associated British
Foods Plc has high
scope to grow well in
international market,
as 54.5% sharing of
Wittington
investments help the
Vodafone has
generated 46.57
billion revenues in the
year 2018, its
operating income was
4.299 billion. It has
employed 111556
employees across the
world those who
contribute well in
order to achieve
organisational goal
(Teece, Peteraf and
Leih, 2016).
Red Cross has
17million volunteers
across the world those
who are continuously
working for
improving lives of
individuals. In the
year 2017 enterprise
has generated
US$2,714,189,000
revenues. Company
has huge scope to
grow well
internationally. It has
made connection with
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firm in fulfilling its
monetary
requirements. That
assists the
organisation in
expanding its
operations across the
world.
local, national and
international
individual those who
have become
volunteers of the
organisation.
Mission and Vision Vision of business is
to serve best to all its
consumers and create
value for them
(Alcácer, Cantwell
and Piscitello, 2016)
Vision of Vodafone is
to become
communication
leader. Its mission is
to enrich consumers
by providing them
amazing network
services.
Mission of Red cross
is to provide high
quality procurement
services to all people.
Vision of firm is to
improve health status
of people globally.
Business objectives The main objective of
Associated British
Foods Plc is to
provide safe and
affordable food
products to buyers
that can b valuable for
them.
Objective of business
is to enhance its sales
and expand operations
globally.
Main objective of Red
cross is to identify
victims of disasters
and raise their
capacity so that they
can live healthy life
(Khan and Quaddus,
2015).
Legal structure Public companies are
run by board of
directors and these
people take decision
on behalf of its
shareholders.
Enterprise can sell its
Private firms have
separate legal identity.
Entity cannot sell its
share to public under
any circumstances.
Shareholders have
legal liability for
They have traditional
structure, volunteers
are not responsible for
any kind of debts.
They get support from
government and other
big firms.
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shares in market or to
public (Yee-Loong
Chong and et.al.,
2014). It is essential
for company to have
atleast two
shareholders and it is
necessary to be
registered at
companies house.
company’s debts.
Stakeholders Customers,
government,
investors, suppliers
are major stakeholder
of public companies.
Vodafone’s
stakeholders are
customers, investors,
management,
employees,
Victims of disasters,
needy people,
government,
volunteers, investors
are the main
stakeholder of Red
Cross (Virglerová,
Dobeš and Vojtovič,
2016).
3. Interrelationship between various functions of organisation
Organisational structure can be defined as level of hierarchy within firm. Vodafone has
functional structure where firm has divided its employees to perform specific task. People can
coordinate with their higher authorities easily (Botha, Kourie and Snyman, 2014).
Figure 1: organisational chart
(Source: 4 types of organisational structure, 2018)
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Entity has various functional units such as production, sales, finance, marketing etc. All
these have strong relationship. Marketing department continuously works for identifying needs
of consumers and providing them satisfactory services. Their main agenda is to promote products
of business and attract more people. Marketing departments collects necessary information about
market and production department makes changes in its existing practices accordingly so that it
can provide goods and services to buyers as per their desires. If there is no coordination or
relationship between both then entity would not be able to enhance satisfaction level of
consumers and will not be able to generate more sales (Savrul, Incekara and Sener, 2014).
Furthermore, customer service department has to provide immediate services to its customers.
Employees of Vodafone minimises waiting time for consumers and give immediate response on
their quarry. This assists finance department in increasing its sales revenues. By this way cash
flow can get increased. This helps in allocating adequate budget to all departments so that entity
can improve tits services and can expand its business across the world (Wetherly, 2014).
4. Positive and negative impact of macro factors by using PESTLE analysis
Political factor- government provide favourable positive business environment to work
like low interest rate,ease of doing business facility, low cost public services like electricity,
energy, public transportation and infrastructure facility, government policies for business and
legal framework to business. Frequent change in government and its policies make atmosphere
of uncertainty for business (Mutuku, 2014). For instance Vodafone follow the data law of
government which enhance trust among customer and also help in maintain quality of service.
Vodafone has to work instruct given by government which harm its freedom to take some
decision, like net newt raticly practice is categorised as offence to telecom sector.
Technological factor- change in technological factor help organisation to keep its
product up to date and innovative as per the need of customer. An organisation having the latest
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technology pratice help in reduce cost of production and service maintains. Vodafone made
innovation in its product by delevopmobile application for mobile rechage and payment of other
facility. Frquenet change in technology can raise the cost of acqure the technological software,
traning and development of employee (Jensen, 2017). Vodafone has high oprating cost of store
the customer data (Ross, 2016).
Environmental factor-environmetl factor postive affact the business when positive
envirmental change happnes which suit that buniess like tourism industy take advatage of rain,
winter and snow fall to attrach the customer. But if weather condition play adverse role to
organisation in act like evil to the organisation. In some countries Vodafone's performace is poor
just beacuse of heavy rain, floods and hard geographical structure (Forsgren, Holm and
Johanson, 2015).
Legal factor- legal factor is set of rules and regulation which by an organisaion to make
its policy within it. For example consumer law, patent law, health and safty law, moternaity
benefit etc. This legal structure indirectly help an organisaion. For example it gives the idea to
service provider about ethical and legal pratice of countary. Vodfone strtcly follow the priavcy
law of telecome sector so it earns the customer loyaly and brand image by these. When an
organisaion pratice all the legal strucute, it may raise the cost. For instance-vodafone pay salry
to pregent lady even when she is not performing any job.
Economical factor- economical factor consit rate of employemnet, tax rate, labour cost.
Economical factor gives financial profit as well as loss to the organisation. If there is high
inflation in economy, people have low disposable income and customer do not spend money on
luxary iteams. On the other hand if there is positive economic change like low labour cost than
business get human resource at low cost. Vodafone enjoyes the lower exchange rate in asian
country. It has problem to hiring technical staff in african countries as low education level in
africa (Yee-Loong Chong and et.al., 2014).
5. Internal and external analysis of business
SWOT analysis use to identify the weakness, strength an organisation have. These
strength are related to internal capacity of organisation which can be use for avail the opportunity
and minimise the weakens. Weakness show the internal constraint a organisation face. This
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limitations weakness the organisation to get advantage of opportunity also increase the threat to
company. Organisation make its balance of strength and weakness with opportunity and threat
(Savrul, Incekara and Sener, 2014).
Internal analysis of Vodafone.
Strength
 strong marketing strategies
 Brand image and popularity
 sound financial position
 global presence
 product diversification policy
 strong human capital assets
Weakness
less market share
frequent call drop
weak internet network
unequal distribution of number of telecom
tower.
Threat
poor service quality.
Other strong competitors
portability facility to customer
easy entry for new player
less possibility of product differentiation
internet service provide by tv and broadband
service provider.
Change in Government rules and regulation for
telecom sector.
Natural disaster
Opportunity
innovation in product and service.
Improvement in network.
Adopt latest spectrum speed and quality like
6G to 7G and so on.
Customisation of internet package
make I.T base strong.
External analysis of Vodafone.
Porter's 5 force use to get the knowledge and information about competition factor that can
affect the organisation's profitability and market share . Porter's 5 of Vodafone is given below.
Competition in industry- it provide the information number of competitors provide
same product and service. It also take indicate the competency of product and service offer by
competitor (Khan and Quaddus, 2015).
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Vodafone as number of competitors in telecom industry, which make Vodafone more customer
conscious.
Power of supplier- where organisation have few supplier of its raw material supplier,
distribution service provider than company have limited option to switch from one supplier to
another .On the other hand if there are so many supplier available , organisation can easily switch
if it found unsatisfactory material and high cost of supply.
Government is the only supplier to any telecom company. Vodafone also bear high cost for
internet spectrum purchase (PESTLE Analysis of the Telecommunication Industry, 2016).
Power to customer- if there are so many options available to customer to buy things
from low price or advance facility. Customer is in strong position. Other telecom service give
their best to customer so Vodafone has weak position.
threat of substitute- if there are so many product and service is available. at same with
more feature than customer can easily change it buying decision. But if there limited options to
change the customer preference and choice than customer will pay amount demanding by the
organisation. There are limited substitute of internet and calling but Vodafone's competitors
provide some extra privileges with basic calling facility (Botha, Kourie and Snyman, 2014).
Potential of new entrants into the industry- if the industry have easy entrance
norms,rules and regulation than chances of increase the competition is high where low barrier
smoother the entry for new player. Vodafone has this threat because entry in telecom is not so
tough task.
6. Interrelationship between strength, weakness and macros factors
External Business environment factor are called macro factor. These factor indirectly
affect the decision, policy, and actions of the organisation. Change in these external factor can
enhance and reduce the strength and weakness of organisation. these macro factor are
political,economical,social,technological,legal and environment factors (Teece, 2018)
Political factor- political factor consist government policy,rules and regulation and political
structure. if government change the law and policy for business which weaken the organisation,
will create disturbance in work. But if government liberalise its business policy that will be
beneficial to the organisation. Government gives special tax rebate to Vodafone on amount
which is spend on CSR activities. Vodafone has to work under the strict data law and telecom
law instruct by government which can weaken the Vodafone (Teece, Peteraf and Leih, 2016).
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Technological factor- change in technology in production,distribution,marketing by an industry
to meet customer satisfaction can affect the organisation. if company has adequate fund to adopt
the technical change and research and development than it will not act as weakness to company.
If company has a weakness which make organisation tough to adopt the change than it become
threat to organisation. Vodafone as huge financial fund available so it can quickly adopt the
technical changes. But Vodafone's employee are less innovative skills so any technical change
not adopted by Vodafone so quickly (Mutuku, 2014).
Economical factor- economical factor consist employment rate, tax rate, interest rate and
exchange rate. Change in economic factor also have negative and positive effect for example
Vodafone has huge finance strength in dollar and want to expand its business in Asian market ,
so it can easily get advantage of lower exchange rate. As Vodafone has low innovative and
skilled people with it, so it want to hire employees who have creativity and eager to implement
innovation but lack of education more weaken the Vodafone. Vodafone pay huge amount for
deputation of the employee (Bryman and Bell, 2015).
Legal factor- legal factors include various legal framework. An organisation can not make its
policy beyond this legal framework made by government for public interest. This laws are health
and safety law, customer protection law, labour law, maternity law, patent law etc. when an
organisation work within these, company get strength like goodwill, reputation, trust,brand value
of people. If government change a law which limit the organisation it will act as weakness. for
example- Vodafone follow data protection law so public have faith with brand,Net neutrality rule
Vodafone has give huge fine for call drops which come under customer protection. This put huge
financial burden on Vodafone (Jensen, 2017).
Environmental factor – environmental factors include availability of natural resource, climate
and weather. Organisation has to spend money on extraction of natural resources and transform
it as end customer product (Forsgren, Holm and Johanson, 2015). Any uncertain negative
change in environment can effect the strength of organisation as Vodafone huge global presence
but it get unequal return from differ differ country because network and call drop issue come
frequently in weather sensitive countries.
CONCLUSION
From the above study it can be concluded that micro and macro environmental factors
influence overall working efficiency of business to great extent. Each firm has different purpose
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and legal structure, But they have to ensure providing satisfactory services to their consumers so
that organisation goal can be accomplished. Political, social and technological elements have
high impact on enterprise. Changes in laws, technological development increases cost of firm
and rising profit of firm to great extent. Each functional unit have interrelationship with other
departments. This coordination supports in achieving goal of the firm.
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