Your contribution can guide someone’s learning journey. Share your
documents today.
Contents Introduction..............................................................................................................................................3 Different types, size and scope of organizations...........................................................................3 Types of organizations.........................................................................................................................3 Size of organizations............................................................................................................................5 Organizations structure........................................................................................................................6 The interrelationship of the various functions within an organization and how they link to organizational structure........................................................................................................................7 The positive and negative influence/impact the macro environment has on business operations..............................................................................................................................................10 PESTLE analysis................................................................................................................................11 The internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors. Understand the organizational purposes of businesses.............................................................................................................................................13 Strategic capabilities of on organization..........................................................................................13 Value chain of an organization..........................................................................................................13 SWOT analysis...................................................................................................................................14 TOWS analysis...................................................................................................................................17 Conclusions...........................................................................................................................................19 References.............................................................................................................................................20 1
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
Introduction The environment of a business can affects the running of an organization and also its functions. In a market, there are different types of business, different sizes, and scope. Also, the businesses can have different functions and also different structures. There is a link between the functions of a business and their structures. The macro environment of a business can affect every organization. The macro environment can be analyzed using PESTEL analysis. The political factors, economical factors, social, technological, environmental and also legal factors are influencing the business. For analyzing the internal environment of a business is using the SWOT analysis. The SWOT analysis is about strengths, weaknesses, opportunities and also threats. TOWS analysis is using the information from SWOT analysis to give strategies for the organizations. Different types, size and scope of organizations Types of organizations 2
Inbusinessworldaredifferenttypesoforganizationswhichhavedifferent structures, a different number of employers and are developed by one or more people. Depending the sector in which the business is developed, there are three types of businesses: Organizationsfrompublicsector:theseorganizationsareledbythe government. The government is the owner of the organizations, and he is the one who decide what the organizations objectives are and how the organization is using resources tohelp the community. These organizations are usually medium size organizations which are developed locally or nationally. One of these public organizations is ESPO. The main objective of ESPO is to provide different types of products and services to help the community. The organization has over 27,000 products and if there is any left products the company will give them to the people. Organizations from private sector: these organizations are led by individual people. The main goal of the organization is to make profit. If the government is involved in the organizations leadership, the sector is called citizen sector. JCB is a big British company with headquartered in UK. This corporation produce tools used in construction, also in agriculture and waste handling. Organizations from voluntary sector: For voluntary organizations profit is not important. The objective of these organizations is to have an impact on society, to improve people. The voluntary organizations are non-profit organizations, independent businesses, which want only the good of the society. One example of these organizations is Macmillan cancer support. The organization is a charity organization, which is established in London. Macmillan is a large charity in UK which offers help, financial and informational, to people which suffer by cancer (Salamon and Sokolowski, 2016). The organizations from private sector can have different structures. The main types of private organizations are: sole traders, partnerships, limited companies, co- operatives. Sole trader business: is very easy to set up with does not require complicate papers. This type of business is very common and can be establish in many 3
domains.Allthedecisionsaretakenbythepersonwhoestablishthe company. These person is the one who collects the business’s profit, but also he is the one who can also suffers if the company goes bankrupt. Sole traders are small size organizations which are develop by the owners locally. Being small organizations, sole trader are in a big number in UK. Partnership business: is a business which is led by two or more partners. The advantage of this type of business is that the owners can work together for the goof of the business and also can increase the profit easier. Partnership businesses can be small or medium size organizations which can be develop locally or national. Cooperative: are private businesses which are develop by the people who use the services and products of the businesses. The size and the type of these organizations can be different. The cooperatives can be small, medium and also large size organizations, and are create and led locally as well as nationally. Also, these type of business can be develop for obtaining the profit or not. Size of organizations Businesses can have different structure and size. In UK over 90% are small and medium size companies and only almost 10% are large enterprises. The people and the profit of the large businesses are more than the employees from small and medium organizations (Department for Business, Energy and Industrial Strategy, 2017). Depending the number of people employers, the business are classified as: Microenterprises with less than 10 employees Small businesses with 10 to 49 employees Medium businesses with 50 to 249 employees Large businesses with over 250 employees(Department for Business, Energy and Industrial Strategy, 2017). Every organization has a strategy and some objectives to make profit or to make good to customers. 4
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
For example, ESPO is an organization from public sector. ESPO is considered a large organization, because it has around 300 employees. Regarding the revenue of the organization, can be considerate a medium size organization, with a revenue estimated at £12, 93 million (ESPO, 2020). Also, JCB Company is a business developed in private sector. JCB is also considered a large organization, but with a biggest number of employees. The company has around 12000 employees. The company revenue was estimated in 2017 at £3.35 billion, and these organization is a large size organization (JCB, 2020). RegardingMacmillancancersupport,thisoneisavoluntaryorganization. Macmillanisalsoalargeorganizationwithapproximately2900employeesand regarding the revenue, in 2017 this was of £356.98 million (Macmillan, 2020). Organizations structure In an organization, the products and services are linked with the size of business, the structure and also with its scope. Any organization has a structure which help the different levels of the business to communicate, and if these levels have a good communication, the business will grow. Usually, the small businesses have a functional or divisional structure because these type of business have few employees. Also, the small businesses develop a few products and services and have a reginal or national geographical coverage. Regarding the large businesses, these have a matrix or a transnational structure with many products and services developed. The geographical coverage of these types of businesses is national or international. ESPO is a business which develop around 27000 product catalogs with over 120 frameworks. ESPO offers guidance for products from the organization team of expert. This help is offered free. The mission of ESPO is to give “value-for-money for the public sector” (ESPO, 2020). ESPO has a variety of products from furniture, school equipment to electronic service and also catering service. ESPO has a divisional structure of organization and the geographical coverage is national (Guliyev et al, 2018). JCB is a large organization which provides products like forklifts, excavators and other equipment used in construction and in agriculture. The mission of JCB is to developthehighestqualityoftheirproductsforthecustomers.JCBisalarge 5
organization with a matrix structure and an international geographical coverage. JCB operates in UK, Germany, Brazil, India, China, Australia and North America (JCB, 2020). Macmillan cancer support is the largest British voluntary organization which provides financial and emotional help to people affected by cancer. The mission of Macmillan is to help people suffered by cancer from UK. Macmillan has a national coverage and a functional structure (Macmillan, 2020). 6
The interrelationship of the various functions within an organization and how they link to organizational structure All the organizations have a structure to manage the role of employees in the organization. This structure is important for an organization because in this way the employees know exactly what to do and they are not working at same task. There are five different types of structure: functional, multidivisional, matrix, transnational and project. In functional structure, the roles of employees are divided by the organization’s functions.Themultidivisionalstructureisusedwhentheorganizationhasmore products and services and also the organization has a larger geographical coverage. The matrix structure is a combination between functional anddivisionalstructure. Transnational structure is used internationally. The project structure is used to form team for a special job and after the work is done, the team is dissolved. Every organization has an organization structure and plan their objectives based on the customer needs. JCB creates their business objectives to grow the production. Also, the products developed must correspond with what the customers want. The organization structure is helping the people to know their role in the company. Al the departments of JCB work together to achieve their goals. The financial department has different roles in an organization: to keep the record of money, incomes and outcomes, to pay employees. The financial department is linked to production department to control the balance of expensive. If JCB wants to develop a new product, the marketing department needs to do a research to find want are the customer needs. To find want are the customer needs the human resource department will conduct a research, a questionnaire on clients. After the human resource department finds the clients desires the production department will project the new product. The financial department will calculate how much the materials cost and what will be the price of the product. In conclusion,ifJCBwantstogainprofit,tohavethebestqualityproducts,the departments of JCB must communicate and work together. Every organization has a sale department. If between sale department and marketingdepartmentisagoodcommunication,thesale’sproblemsareeasily communicated to marketing officials, who will make every that is possible to remediate the problems. If the R&D departments communicate between them, the feedback from 7
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
clients is easily communicate to R&D by marketing department. If these departments are linked together the new products developed will fulfill the customer needs (Cegarra- Navarro et al., 2016). There are some advantages and also disadvantages if in an organization exist a relationship between organizational functions: Advantages: If the employees work together, they can share their information and develop new skills. Every department is led by a person who has experiences, skills and knowledge If the people from organization departments work together the business profit will increase. Disadvantages: The competition between different departments can increase. People from departments will not be all together on meetings, so they will not share their knowledges. Joseph Cyril Bamford is the founder of JCB. He started his business with one vehicle, a tipping trailer. After he have sold the vehicle, he and other 6 people who worked for him had made a hydraulic tipping trailer. In this period, JCB was a small business with a product developed and a functional structure. After their success in UK, the JCB tractors arrived on North American market. JCB started to develop new products. With new products, JCB arrived on Indian market, and after India, JCB entered on Japan market and Brazil market. So, JCB became a large business who operates in four continents. JCB has more than 12000 employees and also over 300 products. The structure of JCB became a matrix structure (JCB, 2020). 8
The positive and negative influence/impact the macro environment has on business operations Macro environmentof a business can have positive or negative impacts. Even for Tesco, a big British retailer, the macro environment is very important. Thedemographic factorsare very important for macro environment. This demographic factors have a big influence on the business. All other the world are developed countries and other countries less developed. For countries which are well developed, the demographic factors are influencing the quality of the products and also the demand of products is bigger. If demographic factors are not well developed, the country is earning less money from the sales. Theeconomic factorsare also very important for macro environment of a business.Therearetwomainlyeconomicfactorswhichcanaffectan organization:thedemandofproductsandservicesandthesupplyof products. If a business has a high demand of products, the business will earn more profit, but if the business has a low demand of product it is possible that the organization will go breakdown. Other forces that can affect the macro environment of Tesco are thenatural forces. This factors can have a positive or a negative impact. The natural resources which are available are affecting the business developing. These resources can affect the business’s production. Thetechnologicalfactorsareaffectingthemacroenvironmentofthe organization. If Tesco wants to survive on the market, the business must be able to update all the time the technological factors. Tesco had implement self-check-out to attract more customers. Also, the online shopping are used by more and more people. Thepolitical factorsimplemented by the government can affect the macro environment in a positive and also a negative way. If the government will help Tesco with loans, governmental assistance or other legal factors, then the government has a positive impact. The political factors have a negative impact on Tesco, when the taxes are very high. 9
Thesocial and the cultural forcescan also impact the environment of a business. Tesco is developing its products and services based on customer’s needs. If the products of Tesco, are what people want, then, the business will earn more money (Schaltegger & Wagner, 2017). PESTLE analysis PESTLE analysisis used to analyses the macro environment of a business. In the next section is used PESTLE analysis on Tesco. In figure 1 is represented PESTLE analysis. Politicalfactors:Thepoliticalfactorsarehelpingthegovernmentlowsto analyzetheenvironmentof abusiness.Also,thepoliticalfactorscangive another view for Tesco on establishing their condition. The political factors have a big influence on exporting and importing the products in an efficient and effective way. There are various political factors which can affect the environment of Tesco, as business, such as: tax and economic policy, different rules and regulations of employment laws.Brexit situation creates for Tesco uncertainty in UK but also in other countries where Tesco operates. Tesco proved that the organizationcanadapttolegislationofdifferentcountries.Despitethis uncertaintycausedbyBrexit,Tescoprovedthatthebusinesscanoperate further. Economicfactors:Theeconomicfactorsfromacountrycanhaveabig influence for a business. If the economic factors are well developed, then, Tesco willincreasetheirproductivityandthebusinesswillhavemoreprofit.The economy of different countries from all over the world is affected by Covid-19. Because of Covid-19, lots of people lost their jobs so their earnings are smaller now. So, they will spend less money for shopping. If people didn’t buy, the profit of Tesco will go down. Socio-cultural factors: These factors are very important for the environment of Tesco. The macro environment of Tesco can be influenced in a negative and also in a positive way by the socio-cultural factors. If the socio-cultural factors are diversified, Tesco will produce as well more products to satisfy the customer’s 10
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
needs.In last year’s Tesco was trying to make some changes and to meet the new demands of customers. One example of this changes is that Tesco is selling halal meat to their Muslim clients. Also, Tesco introduced kosher items for Jewish clients in UK stores. Technological factors: The new technology can help the business to increase the production of products. Also, the new technology can help Tesco to reduce the cost of production, so, the organization will have more profit.Thanks to new technology, Tesco introduced the Clubcard, which had a great success for its customers. Also, Tesco introduced the self-checkout service which is helping the business to reduce some costs (Tesco, 2020). Environmental factors: The environmental factors can give information about the customers’ needs and desires, needs which can be switchable according the season. Tesco is encourage the customers to use the site Tesco.com to make their shopping. The drivers of Tesco are using fuel-saving to reduce the costs. Legal factors: Every business, small or big, must follow the government laws if they want to have an efficient business. If Tesco is following the government rules, the customers will have a good image about the business. Tesco cannot pay its employees with less than the minimum wage. Also, Tesco is not selling alcohol to underage clients. (Cook, 2016). Figure 1. PESTLE analysis 11
Demplates, (2020) The internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors. Understand the organizational purposes of businesses Strategic capabilities of on organization The strategy of a business is about linking the business’sresourcesand also competenceswith the external environment for achieve the strategic capabilities of a business.Theresourcesofafirmcanbetangibleandintangible.Thetangible resources represent the physical things and also the financial assets. The tangible resources of Tesco are, for example, the 6800 shops,£63,911 billion revenue (Tesco, 2020).The intangible resources are skills, the technology, reputation of a business. The intangible resources of Tesco can be a good reputation among its customers, a large knowledge of retailing. Abusinessmusthaveresourceswhicharevaluableanduniquetohave competitive advantage. The resources of a business must be valuable, rare, inimitable and also organizational supported (Grant, 2005) There is a difference between capabilities and core competences. Capabilities means the steps which a business must do to survive. Tesco needs to create a friendly environment for its customers for having more clients. Thanks to capabilities a business can survive in front of its competitors. Core competencies describe the ability of an organization to create a chain of activities. For doing this, the business must be capable to combine its resources and capabilities to create a link which must be strong and inimitable(Johnsonetal,2008).Tesco’scorecompetencesareaboutvalueof products, customer services and also the range of products (Tesco, 2020). Value chain of an organization Thevalue chainmeans the activities from an organization which conduct to a new product or service. There are five primary activities and another four support activities which define the value chain. 1.Primary activities: 12
a.Inbound logistics: Tesco wants to make the distribution system more efficient. Also, is trying to implement a new quality control procedure which is better in order to prevent damaging goods. b.Operations: All the activities from Tesco are service oriented. Tesco is trying to maintain the stores open 7 days per week, on opening hours with its shelves full with products. c.Outbound logistics: Tesco wants to improve its car parks, the personal from tills for maximize its profit and gain more customers. d.Marketing and sales: Tesco is using ‘Clubcard’ to offer discounts to its loyal customers. e.Service: Tesco wants to improve its problems with the customers which are not satisfied. 2.Support activities: a.Infrastructure: Tesco is focusing its planning functions on controlling its cash and costs. b.Human resource management: The business is increasing its training schemestodevelopnewknowledge.Tescowillinvestmoreinits customer service. c.Technology development: The organization manifest a control on its suppliers. Tesco identifies the customers’ needs using its customer data system. d.Procurement:Tescowantstofocusonitsinformationaboutits communication (Tesco, 2020). SWOT analysis The internal and external analysis for any business can evidence all the factors which are affecting the business. After the analysis of internal and external factors Tesco is knowing its strengths and weaknesses. After this, the business must plan a strategy to reduce the weaknesses (Mohamedand and Lashine, 2012). Some of the strengths and weaknesses of Tesco are: Strengths: 13
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
oTesco has products which have a good quality which can satisfy all the customer’s needs. If the customers are satisfied, the people will have a good image about the business oTesco is trying to deliver their products and services on time to customers. Also, Tesco’s suppliers are doing all the best to ensure the business with the right materials and products. oTesco is the leader on British retailer stores in front of its competitors: Asda, Sainsburys, Morrisons, M&S. Weaknesses: oTesco failed in US and in Japan: Tesco closed their stores from US and Japan in 2012, after 5 years of operations in US and 9 in Japan. oAfter the Brexit referendum, Tesco had a decline of 9% of profit (Tesco, 2020). Everybusinesshasstrengthsandweaknesses.Thesestrengthsand weaknessesareinfluencingthemacroenvironmentofabusiness.Theexternal environmentofabusinesscanaffectmoreanorganizationthantheinternal environment. Not all the time the managers of a business can identify a problem from macro environment of the business and apply a good strategy on time. If the business knows its strengths and weaknesses the managers can apply an efficient strategy to reduce their weaknesses and grow their profit. A good manner to analyze the environment of a business is to use SWOT analysis.SWOTanalysisidentifythebusinessstrengths,weaknesses,business opportunities and also its threats. By using SWOT analysis, the managers of a business can find the opportunities of their business on the market. Also, they can identify the business threats. On macro environment of a business are many factors which can affect the organization. The political factors can be a threat for a business. Also, the social factors can affect a business in a positive and also in a negative way. The social factors are 14
important because without society, people, a business cannot exist. The corporate social responsibility can affect the business in a negative way. Every factor can affect the environment of an organization. The economic factors, social factors, and also technologicalfactorscancreateproblemsandalsoopportunitiesforabusiness. Regarding the political factors, this ones can be strengths and weaknesses depending thesituations. The economic factors can affect the national and also the international environment of a business. This factors are related with the decisions making by the managers. In conclusion, the weaknesses and the business strengths are linked with the macro environment of an organization (Na & Lee,2017). By applyingSWOT analysison Tesco, the managers can find their strengths, weaknesses, opportunities and threats: Strengths: oTesco is the biggest retailer in UK. Tesco has the higher revenue in UK, higher than its competitors. oTesco is the leader on market share: Tesco is the popular supermarket in UK. oTesco is geographical diversified: Tesco has stores in Europe, Asia and NorthAmerica.Tescohasaround6800storesinUKandother14 countries. Weaknesses: oFailure from US and Japan: Tesco closes its stores in America and Japan in 2012. oNot very good performance for some countries: In some countries, Tesco is not very well developed. Some experts said that market research for entering on the market wasn’t enough. oDropofprofit:In2018,TescohadadeclineofprofitduetoBrexit Referendum. Opportunities: oBy promoting the sale of fresh food, the sales of vegetables and fruits growth at Tesco 15
oAlliance with other brands: If Tesco will develop an alliance with others businesses, they will have more products which will attract more clients. oJointventures:Tescohasthepossibilityforjointventuresissome countries were the business has not so much influence and is not gaining profit comparative with other countries. oTheonlineshopping:Tescoencouragecustomerstomakeonline shopping. By using the online shopping and also the delivery services, Tesco will grow. Threats: oBrexit situation: If UK is not part of European Union, the cost of services can be higher. oCompetition: Tesco has other competitors who are doing all them can to beat Tesco and to become the biggest retailer in UK. TOWS analysis After SWOT analysis, Tesco can make another analysis of internal and external environment. This is TOWS analysis. TOWS analysis is using the information from SWOT analysis. This analysis is combining the internal and external factors to create different strategic information. In figure 2 is represented the TOWS analysis. By combiningstrengths withopportunities, the organizationidentify a maxi-maxi strategy, used to maximize its opportunities using its strengths. By being the leader of the market share, Tesco can start growing organic food and sell them using its name and the position on the market (S2-O1). Weaknesses and opportunities are used as a mini-maxi strategy. The drop in profit of Tesco can be due to the focusing on fresh and organic food (W3-O1). 16
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
A maxi-mini strategy is using the organization strengths to minimize the threats.Bybeingtheleaderofmarketshare,Tescocanusethe information about its competitors to maintain its position (S2-T2). Mini-mini strategy is used to minimize weaknesses and avoiding threats. The drop in profit of Tesco can be because of its competitors (W3-T2) (Tesco, 2020). Figure 2. TOWS analysis Medium (2020) 17
Conclusions Running a business, it’s not all the time easy. In present, the government laws, some regulations and other policies can affect the environment of a business. But, the modern technology, media can help the developing of business. A business can find and improve its weaknesses by developing a SWOT analysis on the internal environment of the business. Also, the SWOT analysis can provide information about the business strengths, weaknesses, opportunities and also about its threats. SWOT analysis can be run in every business, doesn’t matter if is small or large, if it is a public or private organization. The information obtained with SWOT can be analyze using TOWS matrix. PESTEL analysis is used to help business on analyzing the macro environment of the organization. There are different factors which can affect a business. 18
References Cegarra-Navarro, J.G., Soto-Acosta, P. and Wensley, A.K., (2016).Structured knowledge processes and firm performance: The role of organizational agility. Journal of Business Research, 69(5), pp.1544-1549. Cook,S.,(2016).LeadingtheCustomerexperience:Inspirationalservice leadership. Routledge. Demplates, (2020), [Online] Available athttps://demplates.com/pestle-analysis- templates/[Accessed:10/06.2020]. DepartmentforBusiness,EnergyandIndustrialStrategy(2017).Business PopulationEstimatesfortheUKandRegions2017[online].Availableat https://assets.publishing.service.gov.uk/government/uploads/system/uploads/ attachment_%20data/file/663235/bpe_2017_statistical_release.pdf[Accessed 10/06/2020]. ESPO,(2020).Aboutus.[Online]ESPO.Available at:https://www.espo.org/About-us-(1)/About-ESPO[Accessed: 10/06/2020]. Grant, R., M., (2005).Contemporary Strategy Analysis: Concepts, Techniques, Applications, 5thEdition, Blackwell Publishing, Harlow. Guliyev, I.A., Litvinyuk, I.I., Mekhdiev, E.T., Bondarenko, V.N. and Vereshchagin, A.S., (2018).Establishment and Marketing of New Oil Benchmarks in the Structure of Global Oil and Oil Products Mercantile Trade: the Russian Case. International Journal of Energy Economics and Policy, 8(2), pp.95-101. JCB,(2020).Aboutus.[Online]JCB.Availableathttps://www.jcb.com/en-gb [Accessed: 10/06/2020]. Johnson,G.,Scholes,K.andWhittington,R.(2008.)ExploringCorporate Strategy: Text and Cases. 8th Edition, Prentice Hall, Harlow. Macmillan,(2020),Aboutus.[Online]Macmillan.Availableat https://www.macmillan.org.uk/about-us[Accessed: 10/06/2020]. Medium, (2020), [Online] Available athttps://medium.com/@warren2lynch/from- swot-to-tows-analysis-55ac394064b7[Accessed: 11/06/2020] 19
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
Mohamed, E. K., and Lashine, S. H. (2012).Accounting knowledge and skills and the challenges of a global business environment.Managerial Finance,29(7), pp. 3- 16 Na,D.S.andLee,B.C.,(2017).AStudyon3C&PEST-SWOT-Timing Positioning-AHPMethodologyforStrategicTaskExtractionandPrioritization. International Journal of Pure and Applied Mathematics, 116(23), pp.743-754. Salamon,L.M.andSokolowski,S.W.,(2016).Beyondnonprofits:Re- conceptualizing the third sector. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 27(4), pp.1515-1545. Schaltegger,S.andWagner,M.,(2017).Managingthebusinesscasefor sustainability: Theintegrationof social, environmentalandeconomic performance. Routledge. . 20