Business environment assignment : LEGO

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P 1. Different types and purpose of organisation : public, private and voluntary sectors and
legal structures ............................................................................................................................1
P 2 . Size and scope of a range of different types of organisations ............................................3
TASK 2 ...........................................................................................................................................4
P 3 Relationship between different organisational department and how they link......................4
TASK 3 ...........................................................................................................................................6
P 4.Identify the positive and negative impacts the macro environment has upon business
operations ....................................................................................................................................6
TASK 4............................................................................................................................................9
P 5. SWOT analysis of organisation............................................................................................9
P 6. Strength and weakness interrelate with external factors ....................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
A business organisation is formed by one, two or more persons who carry on a
commercial enterprise to provide services and products in exchange for products from
consumers. A business environment means all of the internal and external factors that affect how
the company functions including staffs, management, customers, supply & demand and business
regulations. It is essential for corporation to set its targets in that manner so that goals and
objectives can be accomplished effectively. The aim of this report is to provide specific
information about three different organisations which are Lego, Unicef and Bank of England. In
this report, following topics are covered such as : different types, size and scope of corporations,
interrelationship of the various functions and how they link to organisational objectives and
structure, positive and negative impacts of macro environment upon business operations. Apart
from this, it also discuss about internal strengths and weakness of specific businesses and their
interrelationship with external macro factors.
TASK 1
P 1. Different types and purpose of organisation : public, private and voluntary sectors and legal
structures
As per different methods of distribution of authorities and responsibilities, the
corporation are of various types on the basis of its purpose. There are different aims and
objectives of each organisation and it focuses to achieve the goals. There are many types of
companies such as public, private and voluntary.
Private company : It is a firm which held under private ownership and it can not issue
shares in public because its article of association restrict it and it a legal norm for it. As per the
legal norms of stock exchange share can not traded. Lego is comes under private organisation
which is a toy manufacturing corporation and company has expanded its business in various
countries and famous for branded toys. Organisation has founded by Ole Kirk Christiansen in the
year 1932 and operating income is around 12.4 billion as on 2016 (Osterwalder and Pigneur,
2010).
Purpose :

The main purpose of these types of organisations is to generate maximum profits by
increasing sales and sustain in the market for long time. Private companies are established so that
limited individuals can control the business operations.
Legal structure : Partnership : It is an agreement which is performed by two or more
individuals for the purpose the carrying the same business activities and generate profits.
Partners have to follow the rules and regulations as per the partnership deed and profits and
losses are shared as per the contract or mutual agreement.
1. Sole proprietorship : In this type of business organisation is owned and controlled by
one individual and who manage the operations of it. Profits and losses does not
distributed to others persons. Owner is liable to pay all debts of its business (Osterwalder
and Pigneur, 2010).
Public company : It is that company which can issue securities through an initial public
offer and shares are traded on stock exchange. Shareholder are the owners of the organisation
because they contributed their capital in this business. Bank of England is a public corporation
which was established in 1694 and it is central bank of United Kingdom. It can control the
money supply in the country.
Purpose :
The main purpose of organisation is deliver public services so that more number of
persons can take the services of company. Therefore, it does not operate its business only for
profit motive.
Legal structure :
 Central government : It makes sure that entire management and operation must be
followed in respect to determine or control the mistakes early.
 State government : It is operating with the motive of increasing the local job those are
supplied and it is basically related with public sectors people that involves local bodies.
 Local government : This government is responsible to ensure that all legal compliance
and rules which are made by central and state government are effectively followed by all
individuals.
Voluntary organisation :
A voluntary organisation is a group of persons who enter into an agreement, generally as
volunteers, they make a firm to achieve its goals. This type of corporation has formed to satisfy

the needs of society. Unicef is a type of voluntary organisation and it founded in the year 1946
and the main aim of company is to provide emergency food and healthcare to children in
different nations. This type of corporations has to follow the legal rules and compliances which
are made for it that is organisation does not work for the purpose of profit making and emphasis
towards the social goodness.
Purpose : The main purpose of this type of organisation is to work for the welfare of
people who lives in a society. These voluntary corporations does not form for the purpose of
profits where as it is form for the benefit and welfare of persons (Pikka and Page, 2011).
Legal structure :
Trust : In this type of organisation trustees can run the business and other persons have no
right to participate in the business activities. Capital is contributes as per the trust deed and it no
separate legal body from the individuals trustees.
Charitable incorporated organisation : All members of this type of corporation have a
legal duty to act in good faith. Constitution ( based on 2 charity commission models) and no
income threshold for registration with the commission It is incorporated as separated legal
entity.
P 2 . Size and scope of a range of different types of organisations
There are different types of organisation which are made for various purposes so that
respective goals and objectives can be fulfilled as per the need. Companies can be distinct on the
basis of their size and scope and it can be divided into small, medium and large. Different types
of corporations which are below :
Micro : This type of organisation has small size and having less than nine workers to
work for the achievement of targets of corporation. Turnover of these types of organisations are
less than 2 million. Micro business can be started by one or two individuals because it requires
less amount of money. Because of their quality products these types of firms can create its good
image in the market. It preform its business activities at small geographic location and make
strategies to expand the business so that more market share can be capture. Corporation has good
scope to increase its share by providing quality products and services so that more number of
consumers can attract towards the company as a result sales can be maximize which leads to
higher profits.

Small and medium enterprise : Small and medium size of organisations are privately
owned bodies, partnership firms which needs minimum fifty staffs but less than two hundred &
fifty staffs. They perform their roles in that manner so that company can accomplish its goals and
objectives. To start this type of business there is more capital required as compare to the micro
firms. These types of corporations does not have resources like large firms. It performs the
business activities within the country and makes strategy to generates more profits and garb more
market share. There is huge scope available in front of small and medium corporation to build its
brand image by satisfying the needs of consumers so that more number of people can attract
towards the firm. As a result profitability can be maximize. Airdrie is a small and medium
enterprise but is has a good brand image so scope is available for it to expand its business in
other nations and grab more market share.
Large : These types of companies have large resources and having more employees
which are above 250. To start large organisations there is requirement of huge capital
investment. It is establish to capture big market share and earn more profits. For example, Lego
is operating its business operations at different countries because it wants to expand their
business so that sales can be increase and it can grab high market share. So it perform its
business operations at various nations and makes strategy to earn more market share by
expanding its business. There is huge scope available in front of large corporation to bring some
innovative ideas and make the products which can satisfy the demand of consumers so that
profitability can be enhanced. Organisation can expand its business in those nations where
currently it is not operating as a result sales can be maximize which help to generates higher
revenue. BBC is a large corporation and have more resources so there are huge scope available
to expand its market share so that it can earn higher revenue. (Shigang, 2010).
Private company : As Lego is a private organisation and it has around 19000 employees
and its initial share capital is commonly less than 100 GBP so it is not large in the size. There are
huge scope available in front of company to expand its share in the market as a result its sales
can be maximize which help the corporation to increase its share capital.
Public company: As Bank of England is a public company and its size is large because it
requires with a minimum share capital of 50000 GBP to starts their business. These corporation
can issue its share to general public so it has a huge scope available to grab more m,market share

by opening new branches across the various nations. As a result it can generates more profits abd
achieve its objectives.
Voluntary organisation : As Unicef is a voluntary corporation and size of these types of
corporations are not large as compare to the public companies because it is not mandatory for
members to bring capital. It is formed for social welfare and benefit for people so there are huge
scope available in front of this corporation to expand its business at various nations in the globe
so that more persons can get benefited.
TASK 2
P 3 Relationship between different organisational department and how they link
An organisation has to perform various business functions to operates its business
activities. There are various departments in the company which have to manage various
functions in the company on regular basis which help the corporation to achieve its goals and
objectives. Lego is branded toy manufacturer corporation and it operates business across various
nations and behind the success of company their different departments performed their functions
effectively as a result organisation has good brand image. It consist of various divisions such as :
marketing, finance, human resource and operation department.
Marketing with finance department : This function has been performed by the
marketing department of the organisation and it helps the companies to aware consumers about
its products and services. Marketing department of Lego provides help to promotes its business
and makes advertisement so that more number of persons can aware about the products of
company as a result sales can be enhanced. It help the organisation to achieve its goals that is to
maximize profits and finance department provide financial assistance to marketing department so
that promotional activities can be performed in effective manner. Without the allocation of
sufficient fund promotion activities can not performed in better sense. Marketing department
takes help from the sales division so that it can know the sales of previous year and on the basis
of it marketing budget can be prepared..
Operational with sales department : The main duty of this department is to utilise all
valuable resources that can give providence of quality items to their consumers. Operation
department in Lego helps the company in production planning, production control and quality
control. As a result corporation can achieve its objectives which is to produce more products as

per the requirement. With the help of sales department operation manager can know how much
unites they have to manufacture so that demand of consumer can be fulfil. Finance department
provides financial assistance to the operational division so that they can produce more and sales
department will able to maximize its sales.
Human resource and marketing department : This department is responsible to recruit
more talented and suitable candidates in the organisation so that work can be performed as per
the needs of company. HR manager of Lego recruit the candidates as per the need of corporation
so that its objectives can be fulfilled which is to select more skilful and knowledgable persons.
As a result employees perform their duties in effective manner which can maximize the
efficiency and productivity of business which leads to accomplish its targets on time. There are
various departments which are link to this for example, if marketing team needs a candidate who
have marketing skills and knowledge. In that case HR manager of corporation can help the
marketing team by recruiting the person as per the needs of organisation. So human resource
department is very helpful for the growth and success of company.
Research & development with marketing and sales department : This department is
responsible to do research regarding new products which can be develop by the organisation. It is
very useful for new product development. R & D department of Lego helps the company to
conduct research on the basis of demands of consumer so that persons can satisfy and it can
maximize its profits. Marketing and sales department provide the information about consumer
habits, taste, preferences and recent trends in market and on the basis of these information
products are developed by R & D division. Finance department provides financial assistance to
the research and development department. As a result objectives of corporation which is new
product development can be fulfilled.
Organisational structure of private company :
Function-based : It divide the overall corporation hierarchy on the basis of various
department such as HR, marketing etc.
 Geography based : According to this types of market the structure has been decided
with the segmentation of market.
 Product based : It has been decided with the diversified offering structure with Lego
such as : branded toys.

 Consumer based : This particular structure of Lego is segmented on the basis of conquer
demand and behaviour.
Public company : There are different organisational structures has been followed by
distinct corporations as per their suitability. As Bank of England has various functions such as :
sales, marketing, IT, finance and operation and it performs its roles to accomplish the goals and
objectives of bank which is profit maximization. Its follows the functional organisational
structure because businesses are organised according to the roles and skills of smaller group or
department. It is a large corporation and always makes strategy to grab more market share.
Voluntary organisation : As Unicef is a voluntary corporations and if follows the
vertical structure because executive director command and control other persons in the
company . All individuals have to performs its functions as per their roles and duties. It is a
medium organisation and can makes strategy to expand its market share so that more number of
persons can be satisfied.
TASK 3
P 4. Identify the positive and negative impacts the macro environment has upon business
operations
To analyse the external factors is essential for an organisation so that negative impact of
macro environment factors can be eliminate or minimise. With the help of PESTEL analysis
influence of macro environment can be analysed so that Lego can perform their business
activities in effective manner (PESTEL analysis. 2018). It helps the corporation to sustain in the
market for a long time as a more market share can be captured and company can earn higher
profits.
Political factor : To analyse the impact of political factor on business operations is
essential for a corporation. It involves : political stability, foreign trade policy, government
policy, environment law etc. Business of Lego has been affected due to political factors. From
the beginning, European Union has regulated that all members have to follow the compliance
regarding “ Toy safety Directives” rules which union pay close attention to the security of
products for children and what products are made from. As per this rule company is prohibited
adopting phthalates in production process since 1999. As a result its manufacturing has been
influenced (Nishitani and et. al., 2012).

 Positive : If organisation manufactures most of products in Denmark then it can
minimize the negative impact of political factors because company belongs to that
country. So, it aware about the political fluctuations in the nations as a result its business
does not get affected much
 Negative : As per the rule of “Toy safety Directives” organisation is prohibited to
adopting phthalates in production process which affect the manufacturing as a result
production can be minimize which can influence the sales of company.
Economic factor : To analyse the impact of economic factor is necessary for a company
which involves inflation rate, unemployment rate, exchange rate etc. Due to change in economic
parameters, external environment of Lego can be influenced. For example, appreciation in
exchange rate causes a dragging growth of GDP because of a fall in net profits and increase the
demand for imports. So, it is necessary for company to effectively analyse the economic factors
so that it can protect its business from the negative impact of it.
 Positive : If company effectively analyse the exchange rate which is associated to export
and import than its profits not get reduce and organisation can able to generate more
revenue from the exports of its products. As a result business of corporation does not
affect due to the impact of macro environment.
 Negative : Due to the appreciation in exchange rate, company have to some extra amount
in the process of import in context to raw material as a result profits of organisation can
be minimize (Kolk, 2016).
Social factor : To analyse the impact of social factor is necessary for a corporation so
that it can protect their business . It involves age distribution, growth rate of population, income
distribution, cultural barriers, safety and health consciousness etc. Due to the innovation now a
days children's prefer to play video games rather than to play with toys. As company launched
the new online multi player game more children's has attracted towards the organisation which
shows that it is emphasis towards the social factor by satisfy the needs of consumers. As a result
business of corporation does not affect due to the impact of macro environment.
 Positive : Lego analysed this social factor and decided to enter digital scene in order to
capture some attention from consumers and launched an online multi player game
called as “Lego Universe” and “Lego World”. As a result, it is able to satisfy the needs

and wants of persons which help the organisation to grab more market share and
maximize the profits.
 Negative : If corporation does not focuses to satisfy the needs of consumers than
people can not prefer to purchase the products of Lego. As a result sales can be reduce
which shows that organisation does not able to analyse social factor effectively. As
price of the Lego toys are high so a normal person can not afford it as a result its sales
can be reduce. (Karagiorgos and Giovanis, 2011).
Technological factor: To analyse the impact of technological factor is necessary for a
company so that it can protect their business from the negative influence of it. It involves
technology innovation and up gradation etc. Lego has changes in its business as per the
technology up gradation. It always emphasis to expand its business in various countries so that
more profits can be generated. Company has collaborated with Texas instruments to manufacture
robot that runs on superior technology. The robots toys build with innovative technology and it is
controlled by remote control. Corporation is known as apple of toy industry because of its
continuous innovation and so it able to operates its business in more than hundred nations across
the world. Due to the more market share organisation is able to generates more profits.
 Positive : As organisation is giving more focus towards the technology innovation, its
profits and market reach is increasing which is a good sign for Lego. It shows that
business of corporation does not affect due to the impact of macro environment.
 Negative : If corporation does not bring new and innovative technology then its business
can not grow and its sales can be reduce as a result company can not survive for a long
time in the market.
Legal factor : For an organisation, it is essential to analyse the legal factors so that
business of corporation does not affect. It involves: business law, international trade agreements
& treaties, environment laws etc. Lego always follow legal compliances and regulations when it
goes to expand its business in other countries and it analyse all necessary factors related to the
legal matter. As a result organisation is able to operates its business effectively which help the
company to gain sustainable growth, advantage and success.
 Positive : As organisation is following legal norms and compliance properly, which
cenable to operates its business effectively and goodwill of company can also enhance in

the market. So it reflects that business of corporation does not affect due to the impact of
macro environment factor (Hamilton and Webster, 2015).
 Negative : If organisation does not analyse the legal factor effectively than it can not
expand the business in different countries as a result market reach can be restricted. So
company can not generate more profits.
Environmental factor: To analyse the environmental factor is necessary for an
organisation so that it can perform its business operations effectively. It involves : geographical
location, climate, weather, environmental offsets etc. Lego always emphasis this factor so that its
corporation does not affect and company signed a deal with World Wildlife Fund to minimize
the carbon emissions from manufacturing plants so that environment can be protected.
Positive : As company is performing its business activities effectively by analysing the
environmental factor, as a result it is able to expand its operations at various countries. It help the
corporation to generates more profits and sustain for a long time in the market.
Negative : If organisation does not able to analyse the environmental factor than its
business does not grow as a result profits can be reduce. If Lego deny to sign a deal with World
Wildlife Fund to minimize the carbon emissions from manufacturing plants than its business
operations can get affected because people create a perception in their mind that company is
polluting environment.
TASK 4
P 5. SWOT analysis of organisation
Strength:
Lego is very popular in toy industry and the strength of this company is to make
differences in their products and always introduce different theme. Variety or differentiation in
the product is the main strength of organisation and it is best in this part. Lego blocks create a
different expression which is very popular in this toy, according to a research who play Lego
toys regularly, they have supper motor skill. It is not only game for it's users, it become
challenge to make it and people get addicted of this toy. Corporation promote it's toys in Harry
Potter's movie, this promotional activity increase the sales of its products (Hair, 2015).
Weakness:

Biggest weakness of this toy company is it's price, because it is too expensive. This toy is
not for all class of people, it is like a luxury item for lower class people. This organisation use
high quality of material to manufacture it's product, and it is costly too. Lego is known for its
toys but mostly children's don't know how to play Lego, this corporation made products for the
kids from age 4 years and above. It spend huge amount in research because they manufacture
products according to age and never repeat it's designs.
Opportunities:-
To focus on those parents who want to increase their kids creativity and the skills,
according to research Lego Toys will increase the creativity, concentration or motor skills of
kids. So it is best to focus on parents through it's promotional activity. And another big
opportunity for Lego maker is to focus on education because in today's life there is many
activities included in the schools which is good for kids. It is a big opportunity for corporation to
focus on schools because most of the schools prefer to invest in educational toys (Cavalcante and
Ulhøi, 2011).
Threats:-
Ample threat of Lego company is it's price, it is too expensive that's why only rich people
can purchase it, and because of this price people will prefer it's substitute. Most of the persons
can not able to afford it's price, so they shift to another product which is cheaper than Lego Toy.
And another big issue is the copy of Lego Toys, counterfeits is easily available in the market
which effect its sales. People use low quality plastic and manufacture same as Lego Toys, and
those persons who does not able to afford original toys they can purchase duplicate. Even for
those people who just want to buy Toys, they don't care about original or duplicate they just buy
product which one is available at lower price.
P 6. Strength and weakness interrelate with external factors
Strength and weakness of an organisation is interrelate with the external factor because a
company have to perform its business activities in an environment. So it is essential to know the
relation and it helps Lego to make improvement so that business can growth and corporation can
maximize profits.
Interrelation of strength and weakness with external factors
Political factor:

 Strength - Organisation follow the political factor when it goes to expand its business in
other countries. As a result, political factor does not affect its business negatively.
 Weaknesses - As per the rule of “Toy safety Directives” organisation is prohibited to
adopting phthalates in production process which affect the manufacturing of Lego. As a
result production can be minimize which can influence the sales of company (Bovee and
Raina, 2016).
Economic factor:
 Strength – Company is able to analyse the exchange rate which enables organisation to
generate more revenue from the exports of its products. As a result business of
corporation does not affect due to the impact of macro environment.
 Weaknesses – Organisation does not able to emphasis unemployment rate as a result
persons are not getting same employment opportunities.
Social factor :
 Strength: As company launched the new online multi player game more children's has
attracted towards the organisation which shows that it is emphasis towards the social
factor by satisfy the needs of consumers. As a result business of corporation does not
affect due to the impact of macro environment. It is the strength of company to analyse
social factor effectively.
 Weaknesses : As company launched the new online multi player game but it is costly and
all persons can not afford it so company should try minimise the price.
Technological factor:
 Strength : As organisation is giving more focus towards the technology innovation, its
profits and market reach is increasing which is a good sign for Lego. It shows that
business of corporation does not affect due to the impact of macro environment.
 Weaknesses : As organisation is giving more focus towards the technology innovation
but its toy products are too costly as a result sales does not increasing which is a
weakness of organisation (Avramenko, 2012).
CONCLUSION
As from the above report, it has been concluded that there are different types of
organisation which are formed for different purposes such as on the basis of size and scope.
There are various functions of company which are linked with the objectives of it. With the help

of PESTEL analysis corporation can protect its business from the negative impact of macro
environment. SWOT analysis provides help the organisation to know its strength, weakness,
opportunity and threats so that it can improves its business operations which help the corporation
to expand enterprise and generate higher profits.

REFERENCES
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Online:
PESTEL analysis 2018.[Online]. Available through:
<https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-
analysis>

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