Exploring Business Models and Organizational Sustainability

The provided document is an assignment that delves into the world of business models and organizational sustainability. It covers various types, sizes, and scopes of organizations, as well as a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis and PESTLE (Political, Economic, Social, Technological, Legal, Environmental) analysis of IKEA, a renowned multinational company. The assignment also discusses the importance of business model innovation and its role in organizational sustainability. It further explores the effects of industry forces, market orientation, and marketing capabilities on business performance, as well as the economic implications of 3D printing and additive manufacturing. The document aims to provide students with a comprehensive understanding of these concepts and their practical applications.

BUSINESS AND BUSINESS
ENVIRONMENT

Illustration Index
Illustration 1: PESTLE Analysis....................................................................................................10
Illustration 2: SWOT Analysis.......................................................................................................11

INTRODUCTION
Business is an activity or process which is carried out by an individual or group of people
to earn money from this by selling their products and services in the market to customers. A
business structure does not allow for corporate tax rates. The proprietor is personally taxed on all
income from the business. It is known as the overall surrounding aspects of that business. It is
very important for the effectiveness of organizational functions to achieve their goals and
objectives. It is a set of conditions which can be institutional, political, economical, legal or
social that is uncontrollable and affects the functions of the organization. Maintaining the
business environment is very important for the owner to run it successfully.
This report will focus on different types of organization and its size, scope and range and
different organizational functions exist in the market. It will discuss the positive and negative
impacts of the macro environmental factors on IKEA and will analyze its strength and weakness.
LO 1
P1 & P2 Different types and purposes of Organizations and size and scope of different firms
Slide 1
Bussiness and Business
Environment

Slide 2
P1 Different types and purposes of Organizations
• Public Sector : These are those organizations which are operated and
owned by the government for the people. In this sector, tax which is
payed by the public is used to finance most of the public sector
organization. It helps to improve the business.
• Purpose : The main purpose of these organizations is to provide
services to the people for their well being and for the benefit of the
society as well.
• Private Sector : These are the organization which is owned by people
for their own profit. All the expenses are maintained by them only. All
the profit earned is used to develop their business in order to increase
their sales in the market. For examples, franchises, companies (private
and public), partnership and sole traders all these come under private
sector business.
Organization is an entity consisting of multiple people, such as an institution or an association,
which has a collective goal and is linked to an external environment. Business environment
also contains different factors like customers, government, suppliers, competitors, local
communities and distributors etc. It can be of different types based on their structure, such
as, public sectors, private sectors and voluntary sector organizations.

Slide 3
Continue...
• Sole proprietorship : These are also known as sole traders. It is
generally owned by a single person. However, he can hire employees
to work in hid business. All the expenses required for the business is
done by him only.
• Partnership : In this type of business, there are two or more people
who are engaged in the business. All the decisions are taken by a
mutual understanding between both the parties. All the profit and
expenses is divided between them.
• Franchises : It a process in which an entrepreneur purchase the rights
from a large organization to open and run a business. This practice can
help them to expand their business in the market and earn a good
profit.

Slide 4
Continue...
• Corporation : These are those business where the owner has a
separate legal personality in the market. It can be both, government
owned or privately owned.
• Cooperative : It is a limited liability business which can organize as
for-profit or not-for-profit. It is different from corporation business, as
it has members, not shareholders, and they share their decision-making
authority with its members.
• Purpose : Their main purpose of this sector is to increase there market
share and maximize the sales which can help them to earn a good
profit. Introducing new and innovative products which can help to
increase their sales.

Slide 5
Continue...
• Voluntary Sector : These are the businesses which can be owned by
any individual or group of people. These organizations collect money
through donations and funds which they use for the business. In this
sector, someone has to take the responsibility to set targets and budget
for the business. These can include NGO's which works in different
sectors, such as, education, environment, women safety, etc. These are
basically identified as non-profit and non-government enterprise which
gets investment in the form of charity.
• Purpose : The main purpose is to help the public by doing various
projects for the betterment of the society.

Slide 6
P2 Size and scope of a range of different types of
organization
• Private Organization : These are the organization which is owned
privately. These companies need to have shareholders but these
organizations cannot issue large number of share to public. These
organizations operate to generate a good revenue and maximize their
sales and production in the market.
• Scope : There is a huge scope for these organizations as they are the
only single person for doing decision making for the business. There
main aim is to provide service to their customers and expand their
business in the market.
There are various types of organization exists in the market. For example, private, public,
cooperatives organization, charities, profit and not for profit and non-government
organizations (NGOs), micro, small, and medium-sized enterprises (SMEs).

Slide 7
Continue...
• Public Organization : These are those organizations which is running
for the welfare of the public. These can be small, medium or business
based on there services provided to the customers. These organizations
are developed to fulfill the requirement or needs of their customers.
• Scope : For public organization there is scope in terms of employment,
as they work for the public. Their main aim is to provide the service to
their customers, whether it a national or international customer
Cooperative Organization : Cooperative organization are those which includes two or more
people which works together to set their business in the market. They work as a partnership
which shares both profit and loss together.
Scope: The scope of the cooperative organization is to enhance their business by coming up with
new ideas to implement. They try to make balance with organization as well as with the
customers.
For Profit Organization : This organization basically works to gain or earn profit from the
business. These usually includes private sector business. The revenue generated by these
organizations is usually reinvested into their business to ensure its development and the
remaining profits are distributed among the parties involved in the business. These can
operate in different fields, for example, retail shops, fashion, technology, etc.

Slide 8
Continue...
• Non-government Organization (NGO's) : These are usually non
profit organization which works independently without representation
from the government. There are different types NGO's based on their
services, such as, operational and advocacy NGOs. Operational NGO's
works on designing and implementing projects which is basically
development based, whereas, in advocacy NGO's, it works for
promoting specific causes present in the society.
• Scope : There is a huge scope in NGO's as most of the people are
interested in giving their services which helps the public in some or the
other way. It operates in variety of fields, like, education, environment,
welfare, etc.
Not for Profit Organization : These organizations operates to provide there services for the
welfare and betterment of the community. These includes charities and social enterprises
which works for a purpose. These organizations generate their funding through donations,
sponsorship's and other similar investments.
Charities : These works to increase the standard of the society by providing services which help
to improve their welfare and culture. They try to make people happy by doing works which
are related to the society.
Scope: There is a great scope in charities. They can widely be used in different fields such as
education, safety policies etc

Slide 9
Conclusion
• There are various types of organizations based on their sizes, for example,
private, public, cooperative organization.
• According to their purposes from the business it can be divided into two
parts, such as, for-profit organization and not for-profit organization.
• There are also some organizations which work for the welfare and
betterment of the society, i.e. NGO's and Charities.
LO 2
P3 Relationship between different organizational functions and their link to organizational
objectives and structure
The organizational function depends on different aspects or factors, such as, human
resource management, marketing, R&D, production and operations, customer service, finance
and IT and administrative. All these factors helps to promote their business in the market and
increase the revenue. As these plays an important role to build a relationship with their customers
and satisfy them by providing services according to their preferences (Karneyeva and
Wüstenhagen, 2017). Proper marketing strategies helps the IKEA to deliver the best service in
the market. There are various factors which helps to achieve organizational objectives and
structure, such as,
 Human Resource (HR) Management : It plays the most important role in the
organization. Recruiting skilled and desirable employees for the organization will help
them to increase service and production. IKEA focuses on their employees in order to
check their growth and work. The HR should make sure that recruited candidates are well

qualified for the post and is able to understand his work. Giving them proper training on
skill development is also done by the HR department.
 Sales And Marketing Department : it refers to that process which the organization uses
to promote their goods and services in the market. IKEA tries to deliver their services
according to their customers requirements and preferences, which helps them to increase
their sales and production. They use various method to promote their service, such as,
advertising in newspapers, magazines or templates, they also use the electronic media as
well for example, TV, radio station, etc (Khan and Quaddus, 2015).
Promoting services through social media can be a good option for IKEA to implement in
their marketing strategy. There are many ways which can used, for example, Facebook, Twitter,
etc. which can be a great option as it is widely used now-a-days.
 Research And Development (R&D) Management : The main aim of the R & D
department of IKEA is to develop new products and services for the company and to also
improve the existing services which are already present in the market, for example, there
are variety of furniture available for the customers in the market but to attract them more
its very important bring some new and innovative designs in their furniture. Before
applying any new strategy or service in the market, proper research has to be done by the
IKEA team to examine the pro's and con's of it, this will help them to increase the
profitability rate of the company (Moutinho and Vargas-Sanchez, 2018).
 Finance and Accounts Department : This department evaluate the overall financial
statement of the IKEA company which will help them to maintain their budget. It also
helps to acknowledge all the expenses which is being don by the company to sell or
purchase any product in the market. This department ensures that all the details are kept
as a record of the cash flow to estimate the overall profit and loss of the organization.
 Production And Operation Management : This department works on planning
strategies in which IKEA decides whether to produce a new product in the company. This
department generally works on planning and scheduling the process involved in the
production of their products. They usually deal with the capital, labor, material, energy of
the company to work (Schaltegger, Lüdeke-Freund and Hansen, 2016).
 Administration Service Department : These services helps in dealing all the
administrative tasks of IKEA which includes the feedback and complaints received from

the customers and tries to resolve it as soon as possible. They are also responsible to do
all the documents related work like forms, newsletter etc.
 Customer Service Management : This depart helps to solve the queries of their
customers which can be related to the services or products. This service will make sure
that all there customers are satisfied from there services.
All these key functions of IKEA has a huge interrelation with each other. For example,
human resource (HR) depart of the organization has a very important role of recruiting the best
employee for the firm which in return helps the organization to enhance their performance and
production as well, which is directly linked with Production And Operation Management
departments of IKEA. Similarly, Research And Development (R&D) Management of IKEA is
directly linked with Finance and Accounts Department as all the financial decision is based on
the research which is done by the R&D department respectively. This will help them in
managing their financial status effectively.
LO 3
P4 Positive and negative impacts of the macro environmental factors on IKEA on business
operations
Macro environmental factors are the external factors which affects the functioning and
decision making process of the organization in various ways. These factors can be evaluated by
PESTLE analysis, which helps IKEA to understand their positive and negative impacts on the
business.
 Political Factors : There political factors generally includes the rules and regulation
which has been made by the government to strictly implement in the business. IKEA has
to follow these rules in order to run their business successfully in the market. IKEA has
more 40 stores worldwide which make it difficult for them to follow these rules. Due to
these factors, supply and sales, both is affected (Explain the different types, size and
scope of organisations. 2016). Political instability on the other hand can disrupt the
business environment. For IKEA, they have to carefully manage their supply chain
different locations, such as, Europe as their political factors can affect their business
activity a lot.
 Economic Factors : These factors plays a very important role in the organization as it
affects to overall profit and revenue of IKEA. Many big brands were in poor condition

during the recession due to the economic condition of the country. IKEA managed its
product's prices very well at that time which helped them to manage some pressure that
arises from economic fluctuations. Moreover, market conditions as per the economy is
also an crucial factor affecting the pricing policies of the organization. The economic
condition of a market can also be considered as an important factor for IKEA that can
affects their pricing in particular regions and areas, respectively.
 Social Factors : These factors has a huge impact on the purchasing nature of the
customers. IKEA tries to offer superior quality furniture with their original concept
which is modernise furniture at lower prices to their customers. There are various social
trends which have a huge impact on their performance and sales as well. And it is very
important for them to respect all the social and cultural values of the local market in that
particular country, in order to maintain a good relationship with them.
 Technological Factors : These are those factors which are related to the techniques
which is being used by the organization for their production. IKEA uses the best quality
technology to do their job which helps to increase their production and sales. They are
also providing an online platform to their customers to shop which can help them save
time and money and giving them a real life shopping experience (Stine and Foster, 2017).
Implementation of new technologies, such as, artificial and cognitive intelligence can
have a huge impact on their business activity. This will help them in improving their
work and can provide the best service to their customers.
 Legal Factors : There are so many legal factors which affects the working of the
organization. There are different laws which they have to follow in their management
system, for example, labor law, health and safety law, etc. Labor laws are an important
concern but there are other laws too that require compliance and can raise operational
costs.
 Environmental Factors : These are the factors which generally includes all the factors
related to environment. As IKEA's main product is the furniture which make its more
difficult for them to concern about the environment. They are focusing on sustainability
and social responsibility (Stott, Stone and Fae, 2016). It is crucial for IKEA to focus on
increasing sustainability for their business, as this will assist them in protecting the

environment. IKEA has already invested some amount on activities like, wind and solar
panels.
LO 4
P5 Internal and external analysis of IKEA to identify Strengths and Weaknesses
SWOT analysis is done to study the internal and external factors of the organization to
evaluate its strength and weakness. This analysis helps the organization to understand that
furniture is their biggest asset as it helps to minimize the overall cost involved in the
manufacturing of the furniture.
 Strengths : There are so many factors which help to increase their strength in the market.
The biggest strength of IKEA is that, it has a clear vision of their goals and objective,
which is to add value to their customers irrespective of the market conditions and delivers
the best products and services. It has worldwide presence with a good brand image and
reputation helps them to sustain their customers. They have variety of designs in their
product range which makes them unique in the target industry (IKEA SWOT & PESTLE
Analysis. 2018).
Illustration 1: PESTLE Analysis
Source : Pestle Analysis. 2018

 Weaknesses : The greatest weakness of IKEA is their performance in the Asian Market,
where they are not up to the mark. As it is a global company, it becomes difficult for
them to maintain their product standards in different countries. It is very difficult for
them to understand the priorities and preferences of their customers which affects their
sales. IKEA faces challenges in managing its environmental policies.
 Opportunities : There is huge scope of opportunities for the IKEA to have. They are
focusing on the “green business” which will have less impact on the environment. There
are chances to expand the business in more countries. They can opt for strategic
partnership with other famous brands to promote their products. They can implement
some new and innovative technologies which can enhance their working and sales as
well.
 Threats : A major threat which they are facing is the increase in the demand of premium
products from their customers. There is a huge competitive pressure from the rival brands
or companies present in the market which can be a little difficult for them to compete
(Takata, 2016). It is very important for IKEA to deal effectively with their threat factors
in order to increase their performance.

From the above analysis, it can be sum up that internal and external factor has a huge
impact on the business activity of IKEA. For example, brand image of IKEA is very good in
their industry but it can only be stable until the political factor is stable in that particular country
as it can affect their performance. Similarly, if there technological factor of IKEA is good than it
can help them to attain better opportunities from the industry. If economic factor of country is
not that good that it can directly affect their strength to a large extent.
P6 Strengths and Weaknesses interrelate with external macro environmental factors
Strength and weaknesses of IKEA are directly interrelate with external macro factors.
External macro factors are those are factors which includes legal and regulatory framework,
Illustration 2: SWOT Analysis of IKEA
Source : (IKEA SWOT Analysis, 2016)

government policies, etc. which affects the overall effectiveness of the organization. Strength
and weaknesses of IKEA has a direct relation with their business. Whereas, there are so many
macro-environmental factors affecting performances, decisions making of firm and strategy
formulation and working of the organization. In relation to this, strength and weaknesses
generally affects the working environment where firm has its operations, but the macro factors
affects in the overall region of geographic in which IKEA operates. The main strength of IKEA
is its brand image in industry and it always offers the best stylish product to their customers
which is directly interrelate with political macro factors. The sudden change in tax rate of
government has directly influenced the brand image of IKEA as well as on its profitability rate
too. The company has always focused on their sustainability which is directly interrelate with the
legal factors. Strengths helps the organization in getting the available opportunities present in the
market which helps for giving positive impact while, weakness leads to maximisation of threats
which affects the functionality of the organization up to a high extent. Apart from this, IKEA's
weakness, for example, the company has to control their business activity in every country which
has to be managed properly in order to run their business smoothly. Sudden change in the
economy of country can affect their financial stability whereas technological factors also affect
the promotional activities of IKEA (Weller, Kleer and Piller, 2015).
There is a huge interrelation between strength and weaknesses with the external factors as
they can affect each others process a lot. Strength and weaknesses can have a huge impact on the
business activity of the organization. For example, IKEA has a worldwide presence with a good
brand image and reputation can helps them to sustain their customers which will eventually
increase their sales and performance as well. Other than this, if IKEA does not focus on their
weaknesses that it can affect their production rate and can decrease their as well. This will create
a huge impact on their brand image. These impact can is directly related the social factors
associated with them. For example, they are very in identifying their customer's needs and
requirements which ultimately affects their sales and has a direct impact on their social factor as
well. So in order to reduce these impacts they have to manage the balance between their
strengths and weaknesses interrelated with external macro environmental factors of IKEA.
These macro environmental factors are not in the control of IKEA so its becomes very
difficult for them to manage these factors. Opportunities are maximized with the availability of
strengths whereas threats are increased because of weaknesses. The internal operations of IKEA

is influenced by the external macro factors which show that there is an effective link present
between each other in the business operations of the company IKEA.
CONCLUSION
Hereby it can be concluded that business management is very important for the
organization to have as it helps them to organize their work. It focuses on the different types of
organizations and their size and scope, such as, private, public and cooperative organization. It
has discussed the positive and negative impacts of the macro environmental factors by
conducting PESTLE analysis which helps them to evaluate their decision making process. From
SWOT analysis, IKEA measures it strengths and weaknesses which can help to estimate the
opportunities and threats in the market. It also focuses on the strengths and weaknesses
interrelated with external macro environmental factors of the organization.

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