Business Environment and Organizational Structures

The assignment provides a detailed analysis of the business environment of a company, focusing on customers, suppliers, employees, and organizational structures. It also discusses the impact of political, legal, and social factors on business activities. The report concludes that these factors are crucial for a company's growth and success.

BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Types of businesses, purpose and their ownership .........................................................1
P2 How stakeholders impact upon the purpose of business...................................................2
TASK 2............................................................................................................................................3
P3 Describe how two businesses are organised.....................................................................3
P4 How their organisational styles helps them to fulfil their purposes..................................4
TASK 3............................................................................................................................................5
P5 Describe the influence of two contrasting economic environments ................................5
P6 Impact of political legal and social factors on business activities.....................................5
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
The business environment consist of the surrounding factors that either help of hinder the
development of business. It needs living person, natural resources and places and things to exist.
The sum of all these factors and forces is called the business environment (Klapper, Lewin and
Delgado, 2011). This project is based upon British Airways (BA) which is the largest airline in
the United Kingdom based on fleet size. In this present report, there will be a discussion on types
of business and their ownership. Along with this, the assignment also consists that there are
various types of stakeholders that put a huge impact on organisations. Economic environment of
business enterprises are also discussed in this report.
TASK 1
P1 Types of businesses, purpose and their ownership
These are the basic types of business ownership and their purpose: -
Sole Proprietorship
A sole proprietorship is a business owned by only one person. It is easy to set-up and is
the least costly among all forms of ownership. The owner faces unlimited liability; meaning, the
creditors of the business may go after the personal assets of the owner if the business cannot pay
them. The sole proprietorship form is usually adopted by small business entities.
Partnership
A partnership is a business owned by two or more persons who contribute resources into
the entity. The partners divide the profits of the business among themselves. In general
partnerships, all partners have unlimited liability. In limited partnerships, creditors cannot go
after the personal assets of the limited partners.
Corporation
A corporation is a business organization that has a separate legal personality from its
owners. Ownership in a stock corporation is represented by shares of stock. The owners
(stockholders) enjoy limited liability but have limited involvement in the company's operations.
The board of directors, an elected group from the stockholders, controls the activities of the
corporation (Belás and et. al., 2015).
In addition to those basic forms of business ownership, these are some other types of
organizations that are common today:
Limited Liability Company
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Limited liability companies (LLCs) in the USA, are hybrid forms of business that have
characteristics of both a corporation and a partnership. An LLC is not incorporated; hence, it is
not considered a corporation. Nonetheless, the owners enjoy limited liability like in a
corporation. An LLC may elect to be taxed as a sole proprietorship, a partnership, or a
corporation.
Cooperative: -
A cooperative is a business organization owned by a group of individuals and is operated
for their mutual benefit. The persons making up the group are called members. Cooperatives may
be incorporated or unincorporated. Some examples of cooperatives are: water and electricity
(utility) cooperatives, cooperative banking, credit unions, and housing cooperatives.
P2 How stakeholders impact upon the purpose of business
Stakeholders are people or groups that are affected by your company's operations.
Shareholders or owners are a commonly recognized stakeholder group. However, you also need
to consider how your customers, community, employees and business partners impact your
business. A well-rounded approach that shows understanding of each stakeholder normally
increases your long-term viability and success.
Shareholders
Company owners usually have a strong voice in the direction your company takes. In a
partnership, each owner-partner has a financial interest in the profit potential of the business.
Commonly, owners participate in the daily operation of the business or vote on critical decisions.
In a corporate set-up, shareholders own a piece of the company. They also vote on major
company decisions and serve as a source of financial accountability driving company leaders to
make logical.
Customers and Community
In the long run business, ability to meet the needs of your customers and community is
key to success. Customers provide the revenue and cash flow that your business needs to operate
and ultimately earn a profit. Managers must understand customer wants and needs and meet
them on an ongoing basis (Blanchard, Tolbert and Mencken, 2011). Community leaders and
activists also hold company's accountability to act with social and environmental responsibility.
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Business Partners
Business partners and suppliers can also significantly influence your business. Partners
are companies that you collaborate with in joint ventures or shared investment opportunities.
Suppliers are companies you rely on for key resources used inside your company and for
products to resell. If managers have strong, trusting relationships with key suppliers, so as they
can normally negotiate more reasonable costs and get more efficient replenishment when their
inventory runs low.
TASK 2
P3 Describe how two businesses are organised
Organisational structures refers to the hierarchy of an organisation and how the
components of this hierarchy work together to achieve the objectives of the company. Below
mentioned various types of organisational structure are stated as follow: - Functional: - Functional structure is set up so that each portion of the organization is
grouped according to its purpose. In this type of organization, for example, there may be
a marketing department, a sales department and a production department. The functional
structure works very well for small businesses in which each department can rely on the
talent and knowledge of its workers and support itself. However, one of the drawbacks to
a functional structure is that the coordination and communication between departments
can be restricted by the organizational boundaries of having the various departments
working separately. Divisional- Divisional structure typically is used in larger companies that operate in a
wide geographic area or that have separate smaller organizations within the umbrella
group to cover different types of products or market areas. The benefit of this structure is
that needs can be met more rapidly and more specifically; however, communication is
inhibited because employees in different divisions are not working together (Chow and
et. al., 2011). Divisional structure is costly because of its size and scope. Small
businesses can use a divisional structure on a smaller scale, having different offices in
different parts of the city, for example, or assigning different sales teams to handle
different geographic areas.
 Matrix: - The third main type of organizational structure, called the matrix structure, is a
hybrid of divisional and functional structure. Typically used in large multinational
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companies, the matrix structure allows for the benefits of functional and divisional
structures to exist in one organization. British Airways follows matrix organisational
structure because it can create power struggles because most areas of the company will
have a dual management--a functional manager and a product or divisional manager
working at the same level and covering some of the same managerial territory.
P4 How their organisational styles helps them to fulfil their purposes
There are given various organisational styles that are adopted by public and private sector
business organisations, such are stated as follow: - Divisions of work: - A divisional organisation structure it gives a larger business
enterprise the ability to segregate larger sections of the company business into semi-
autonomous groups. These are mostly self-managed and focused upon a slight piece of
the company’s products in which they sell off for their services in which they give and
receive. Lines of control : - In a line organisation, with the top management they have complete
control, and the chain of command is clear and simple. Examples of line organizations
are small businesses in which the top manager, often the owner, is positioned at the top of
the organisational structure and also has clear lines of distinction between the top
manager and their employees. Communication: - With organisational communication standards grow out of the
communication choices of executives, managers and also between other employees
(Belás and et. al., 2015). Ideally, organisational communication facilitates sharing of
information with either, event planning, project coordination and social interaction.
Business leaders must create communication plans and information channels to ensure
that their employees are kept informed and are also kept in contact with each other. Span of control: - A span of control means that it is the number of people who report to
one manager in a hierarchy. The people that are under the control of one manager, the
wider the span of control, less means a narrower span of control. With a narrow span of
control allows a manager to communicate quickly with the employees under them and
control them more easily.
 Chain of command : - With chain command it is the line on which orders and makes
decisions in which are passed from the top to the bottom of the hierarchy. In the
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hierarchy and the chain of command this means that a production manager may be higher
up the hierarchy, but ill also not be able to tell a marketing person from what to do.
TASK 3
P5 Describe the influence of two contrasting economic environments
There are given some major factors that are involved in economic environment of the
company, such are stated as follow: -
Boom - It is a period of fast economic growth; this means that it is an output is high due
to being increased demand, this would mean that the unemployment is lower than it should be.
With the business confidence means that it may be a high leading to increased investment. This
therefore means that with the consumer confidence, which then may lead to extra spending. With
boom what happens is that they may have the experience of businesses producing more products
for them to sell.
Recession - With recession this means that it may be a period on time in which the
economical growth may slow down, and the level of output may actually decrease rather than
increase or rise. This therefore means that with the unemployed that it may have the chance on
increasing. If this happens then it will be bad for businesses from the fact that they may lose
confidence and it also may have to experience the reduce on investment (Commander and
Svejnar, 2011). This would be bad because it would mean that their customers may save up
instead of spending their money buying products from the company. During a recession period,
the actual economical activities actually slow down. But when demands starts falling down then
the overproduction and future investment plans are also later on given up.
Inflation Inflation occurs when there is a general rise in the price of the goods in the
British Airways. Not every price is rising but the average price is rising.
P6 Impact of political legal and social factors on business activities
Below mentioned that impact of these factors is stated as under: -
Political factors :-
All businesses need to be regulated. Similarly, the airline industry is subjective to high
regulations. These regulations are useful for the routes that are chosen by the airline, the airport
slots used, the fare that is set, the business partners that it works with, and the infrastructure costs
paid. Governments of different countries all over the world put forward many security measures
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to fight the risk of violence and unlawful immigration (Cornish and et. al., 2011). Airlines
participate along with numerous governments in order to guarantee security and safety.
Social factors: -
People who travel, be it business travellers or individual passengers, always look for a
trusted airline. They try to ensure that their trip goes smoothly. The economic downturn compels
the travellers to be more concerned about prices. They look for a value of money that would give
them high quality service and standards at less costs. They try new airlines that offer a good
value for money. These travellers use price comparison sites on the Internet to look for the
suitable airline before booking their trips.
Legal factors: -
A significant legal factor affecting BA is the power of trade Unions. BA has suffered
many strike actions (August 2004 and August 2005) and is aware of the implications that the
trade unions can cause. The walkout that recently happened in March 2010, expected to last three
days, had forced the airline to cancel thousands of flights. A total of 1,100 flights out of the
1,950 flights scheduled to operate during the walkout were canceled. The airline had leased
planes and crew from rival carriers to take up some of the shortfall.
CONCLUSION
From the above mentioned report, it has been concluded that there are various types of
business environment of the company affect it in many ways. Customers, suppliers and
employees are the main stakeholders of Mark & Spencer that are liable for its growth and
success. Along with this, the present assignment has discussed various types of organisational
strictures in which a company operates its functions and working activities. There are some
major factors, i.e. political,legal and social also put a huge on business activities of the
commercial enterprises.
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REFERENCES
Books and Journal
Belás, J., and et. al., 2015. The business environment of small and medium-sized enterprises in
selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management.
(1). p.95.
Blanchard, T. C., Tolbert, C. and Mencken, C., 2011. The health and wealth of US counties: how
the small business environment impacts alternative measures of development.
Cambridge Journal of Regions, Economy and Society. 5(1). pp.149-162.
Chow, A. T. and et. al., 2011. Broadband network with enterprise wireless communication
system for residential and business environment. U.S. Patent 7.944,948.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Cornish, J.A., and et. al., 2011. The national bowel cancer audit project: the impact of
organisational structure on outcome in operative bowel cancer within the United
Kingdom. Surgical oncology. 20(2). pp.e72-e77.
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.
De Jonge, A., 2011. Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Fisher, D. R., Campbell, L. K. and Svendsen, E. S., 2012. The organisational structure of urban
environmental stewardship. Environmental Politics. 21(1). pp.26-48.
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 UK.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Online
Business Environment, 2017. [Online]. Available through: <http://businessjargons.com/business-
environment.html>. [Accessed on 19th August 2017].
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