External Factors and Business Sustainability

This assignment discusses the significance of determining external forces that can cause harm to a business organization. It emphasizes the importance of size and scope in achieving goals and objectives, as well as the interconnectedness of all company functions for sustainability and success. The document references various sources and provides a detailed analysis of internal strengths and weaknesses, as well as external opportunities and threats.

BUSINESS AND THE
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organizations.......................................................................1
P2 Explanation of size and scope of various types of organizations..........................................2
LO2 Demonstration of interrelationship of different functions in an organization along with their
integration to organizational structure ............................................................................................5
Role of various functions and their relation to mission and objectives of organization.............5
Organizational structure..............................................................................................................5
LO3 Demonstration of positive and negative impact of macro environment on business
operations ........................................................................................................................................6
LO4 Determination of internal strengths and weaknesses of Ryanair and their link with external
factors...............................................................................................................................................6
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Business is an activity to earn money from production or from purchasing and selling
goods and services (Brixiova, 2013). Every business needs capital or investment to start.
Business environment refers to sum of all factors or forces that are not under control of business
but they influence its performance and sustainability. Forces and factors include government,
economic condition, political stability, consumers, investors, competitors, innovation and
technology etc. For purpose of defining concepts of business environment, Cancer Research UK
and Ryanair have been taken. Cancer Research UK is a charity organization established on 4th
February 2002. While Ryanair is an airline company started in 1985. In starting of this report,
various types of organisations that differs from size, type and scope are discussed. Later,
interrelationship between different functions and their integration with organizational structure
has been evaluated. After that, positive as well as negative impact of macro environment on
business operations is given. Lastly, strengths and weaknesses of Ryanair are determined.
TASK 1
LO1 Different types and purposes of organizations
Three types of organization are:
Cancer Research UK: This is a charity organization which formed on 4th February 2002
by merger of 'Cancer Research Campaign' and 'Imperial Cancer Research Fund'. Main purpose of
Cancer Research is to reduce number of deaths occur due to cancer. This can be done through
research on diagnosis at early stage and treatment. Funds are provided by public to run this
organization. Main purpose for establishment is to spread awareness about this disease, to carry
out higher level of research on its treatment, for ensuring that efforts are contributing in
increasing lives of patients suffering from cancer, also to work with other organization in
partnership to fight cancer at global level. Vision of Cancer Research UK is 'Together we will
beat cancer'. This organization has spent on research worth £300 million, also it supported 9
clinical trial units. Regular volunteers of Cancer Research UK are 40,000.
Ryanair: It was started in 1985 with just 57 staff members. There was only a 15-seater
turboprop plane running on one route carrying 5000 passengers. There are type of stakeholders
found as the Ryans, Michael O'Leary, David Bonder-man, Irish Air, EU, Airports and trade
unions are the main stakeholders of Ryaniar. As in 1990-91, Ryanair had 700,000 passengers
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(Boutilier, Black and Thomson, 2012). Mission of this organization is to offer low-fares that
leads to enhanced passenger traffic while maintaining a uninterrupted concentration on cost
policy and efficiency operation. Main objective is to firmly set up itself as Europe's leading low-
fares scheduled (Rosenberg, 2018). On Dublin-London route, Ryanair is the biggest passenger
carrier airline. For first time in 1997, European Union air transport deregulation had allowed this
airline to start routes to Continental Europe so in total it will have 3 million passengers and 18
routes. It was also awarded with Airline of the Year by Irish Air Transport Users Committee in
1999. Ryanair launched its website in Europe as www.ryanair.com which is in three months has
done bookings of about 50000 per week.
NHS: In excess of 14 million individuals in England are presently taking control of their
social insurance by utilizing GP online administrations, showing how advanced innovation is
changing the connection among patients and their GPs. It mirrors the NHS's aspiration to utilize
innovation as a major aspect of its drive to offer an advanced, helpful and responsive
administration to patients, their families and carers. Patients would now be able to book
arrangements, arrange rehash medicines, and view their test outcomes and GP record without
calling or visit their GP practice – all done safely by means of a PC, tablet or cell phone.
National health administrations, is the openly medicinal services framework for England. It is the
greatest single cash handler human services framework on the planet, that are supported through
the general tax assessment framework and directed by the bureau of health.
Purpose – The motivation behind the NHS is give medicinal office and thorough scope
of administrations. It is satisfy to administrations of people patients and their families and their
carers.
Sole traders: This business structure is simplest among all other businesses. Aspects of
business are applied in sole proprietorship. But many relaxations and flexibilities are provided to
them (Scheer, 2012).
Private limited companies: Company has a separate legal identity distinct from its
owner. Shareholders are having limited liabilities according to their share in company.
Partnership firms: Partnership agreement is signed between partners and generally they
ranges from 2 to 20. Partners have unlimited liability.
P2 Explanation of size and scope of various types of organizations
Differences between large, medium-sized and small organizations
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Basis of comparison Large organizations Medium-size
organizations
Small organizations
Objectives Profitability and
customer loyalty
Growth and
development
Survival in
competitive
environment
Goals Achievement of
economies of scale
and establishing brand
image
Enhancing
productivity through
adoption of innovation
and technology
Employee satisfaction
and customer needs.
Better customer
service
Market share Higher market share Medium market share Low market share
Profit share Maximum profit share Moderate profitability Less profitability
Growth and
sustainability
It is also high Medium growth rate Lower growth rate as
compared to medium
and large companies
(Source: Scope and Importance of Business organization, 2018 )
 Global growth and developments of transnational, international and global
organizations
Transnational organizations are those which operates in more than two countries. These
are very complex in nature (Sekaran and Bougie, 2016). Mostly investments are in foreign
operations and have centralized system. This system manages decision-making process, research
and development along with marketing strategies to each individual market in different
countries. Main advantage is that these have ability to maintain facilities and degree of
responsiveness in markets operating in foreign countries.
International organizations are engaged in importing and exporting of goods and services.
Except in domestic country, these does not have any investment in other countries. They have a
stronger base of customers in different countries providing a variety of goods and services.
Global organizations do investment and are also have presence in many countries. These
companies produce a single product for all markets. It is their marketing strategy from which
they promote same product image in different markets. Strategies are made globally in corporate
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office. While making strategies, aspects of sales volume, effectiveness, efficiency and cost
management are taken into consideration.
All these types of organisations contributes to globalization and in enhancing product
quality. Growth and developments of these companies in this era are at highest.
 Differences between franchising, joint ventures and licensing
Franchising is an agreement according to which one party give permission to another for
using business model as independent branch. Party or parent company that gives permission is
called franchisor and another party to whom permission has been given is called as franchisee.
Licensing refers to providing license by one company to another for fees called royalty.
License is for right to produce product or to use property. Company that gives license in called
licensor and another company which operates business on license is licensee (Difference between
Licensing and Franchising, 2018).
Joint venture is more indefinite than franchisee. According to this, two companies enter
into an agreement to provide resources to one another as well as to help each other. This is for a
specific period of time and cost. Goals and objectives that one cannot be able to achieve
individually, acts as a drive to form joint ventures in which there are shared targets. Duration of
joint ventures depend on time to accomplish a particular job or project. Some joint ventures are
only for a single project but some are carried away over many years. Main purpose of these are
to increase profitability or to launch a new product.
 Industrial structures and competitive analysis
Analysis of competition and industrial structure is done through Porter's Five Forces
Model. Competitive forces included in this model are:
Industry rivalry: level of competition reduces potential of earning profit
Bargaining power of buyers: Power if in hands of buyers, then they can influence prices
Bargaining power of suppliers: In case power is in the hands of suppliers then they can
charge any price for goods.
Threat of substitutes: This force limits power to increase in price if substitutes are
available in market
Barriers to entry: It restricts new competitors to enter in the market.
 Market forces and economic operations
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Market forces and economic operations that prevalent in market are demand, supply,
income elasticity, scarcity, choice. Demand is amount of goods and services that consumer
desires and have ability to pay for them (Hallward-Driemeier and Pritchett, 2015). Supply is
quantity of goods and services which are available to consumers for purchasing at a particular
price. Income elasticity is degree of responsiveness of demand and supply to change in income.
Scarcity is a situation of problem which occurs due to availability of limited resources. Choices
are available with consumers in respect to goods and services available in market. More choices
leads to lesser prices and vice-versa.
 Responsibilities of organizations to meet different stakeholder interest and
expectations
There are many responsibilities of organizations for stakeholder interest and their
expectations (Ramasamy, Yeung and Laforet, 2012). There are two types of stakeholders,
internal and external. Internal stakeholders are investors, employees, board of director etc.
External stakeholders are government, suppliers. Different stakeholders have various interest in
organization. For instance, employees wants recognition and reward for effective performance.
Customer wants quality product and their demand fulfilled on time.
LO2 Demonstration of interrelationship of different functions in an
organization along with their integration to organizational structure
Role of various functions and their relation to mission and objectives of organization
Marketing, operations, finance and human resource function of organization are
interrelated and interdependent on each other to achieve overall goals. In marketing function,
strategies are made to increase sale as well as for identification of customer needs. Promotional
activities which comes under marketing are discounts, offers, campaigns, extras, gifts etc.
Finance function keeps record of all expenses, revenues, profits, costs for maintaining stable
financial position. Along with it, decisions related to procurement of funds and their effective
utilization are taken in this function. This is done because resources are in scarce and they have
to be put to alternative uses. Human resources function contributes in developing performance of
employees by improving their productivity. As employees are said to be as an asset for company.
They should be given proper incentives for motivation. Operations function focuses on
management of business practices to reach at highest efficiency level.
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Organizational structure
Organizational structure is defined as system through which activities and functions of
business are directed towards achievement of objectives (Muff, 2012). There are many different
organizational structures which differs from size and scope. Types of organizational structures
are:
Bureaucratic or functional: Division is done on the basis of speciality
Post-bureaucratic: This includes total quality management, traditions, culture. Also ideas and
suggestions of employees are keeping in consideration while decision making.
Parent: In this, ownership and management control is in hands of one company over other. Also
it controls business operations.
Strategic business units: SBU works as independent entity. But reporting is done to headquarters
Matrix: According to this structure, there are many leaders and reporting lines for employees.
Thus, this makes it complex.
LO3 Demonstration of positive and negative impact of macro environment on
business operations
Macro environmental factors are those forces which exists outside business environment
such as economical, technological, social, political, demographic, cultural etc.
Process of operations include conversion of materials and labour into products as well as services
for profit maximization (Robles, 2012). Without human resources department, company will not
be able to create pool of talented employees which in turn performs marketing, finance and
operation functions. If finance will not be managed then it is not easy for marketing function to
prepare their marketing budget. All these in total ultimately contributes to attainment of mission
and objectives of organisation.
Political: Uncertain conditions after Brexit and challenges for the business environment.
Economical: Oil prices in UK are expected to decreased that may increase the
operational margin upon assets. Cheaper fare price of flights.
Social: Consumer preferences of high speed rail and airline routes
Technological: Digital technology and improvement in customer experience through
mobile sites.
Legal: It is require to follow the rules and legislations related to European airports.
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Environmental: EU regulations are expected to increase as per cost for Ryanair.
Operating fleet and Boeing 737-800NG aircraft for six years.
LO4 Determination of internal strengths and weaknesses of Ryanair and their
link with external factors
SWOT analysis
Strength
 Management focus
 Fleet
 Innovation and control Size
Weaknesses
 Brand perception
 Seasonality of earnings
Opportunities
 Improved customer service
 Business traveller New aircrafts
Threats
 Frequency in accidents
 Lack of focus and
 Competitive threats
Internal strengths of Ryanair are cost effective, better customer services, maintained
customer loyalty, reduced operations cost, cheapest airline fare, low advertising costs, brand
image etc. while weaknesses are that they offers so low prices that they can even have to reduce
their cost to maintain profitability. External factors indirectly to internal strengths and
weaknesses.
CONCLUSION
From the above discussion, it has been concluded that for an organization, it is essential
to determine external forces that can cause harm. Determination is necessary because company
can be prepared for future. From point of view of size and scope of organizations, these are all
contributes in achieving goals and objectives. Also all the functions of company are interrelated
with each other so that sustainability can be maintained and success can be achieved.
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REFERENCES
Books and Journals
Brixiova, Z., 2013. Modeling productive entrepreneurship in developing countries. Small
business economics. 41(1). pp.183-194.
Boutilier, R. G., Black, L. and Thomson, I., 2012. From metaphor to management tool: How the
social license to operate can stabilise the socio-political environment for business.
International mine management 2012 proceedings, pp.227-237.
Rosenberg, D., 2018. Introduction. In Israel's Technology Economy (pp. 1-16). Palgrave
Macmillan, Cham.
Scheer, A. W., 2012. Business process engineering: reference models for industrial enterprises.
Springer Science & Business Media.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
Robles, M. M., 2012. Executive perceptions of the top 10 soft skills needed in today’s
workplace. Business Communication Quarterly. 75(4). pp.453-465.
Hallward-Driemeier, M. and Pritchett, L., 2015. How business is done in the developing world:
Deals versus rules. Journal of Economic Perspectives. 29(3). pp.121-40.
Ramasamy, B., Yeung, M. and Laforet, S., 2012. China's outward foreign direct investment:
Location choice and firm ownership. Journal of world business. 47(1). pp.17-25.
Muff, K., 2012. Are business schools doing their job?. Journal of Management Development.
31(7). pp.648-662.
Online
Difference between Licensing and Franchising, 2018. [Online] Available
through:<https://keydifferences.com/difference-between-licensing-and-
franchising.html>.
Scope and Importance of Business organization, 2018. [Online] Available
through:<http://www.businessstudynotes.com/others/introduction-to-business/discuss-
the-scope-and-importance-of-business-organization/>.
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