Introduction to Business

This document provides an introduction to the concept of business, including the different types of business organizations, an analysis of Porter's 5 Forces Model, and an examination of macro-level environmental factors. The case study of Little Dessert Shop is used to illustrate these concepts.

Introduction to Business

Table of Contents
INTRODUCTION...........................................................................................................................1
Main Body.......................................................................................................................................1
Type of Business Organisation...................................................................................................1
Porters 5 Forces Model in the Business......................................................................................2
Macro Level Environmental Factors...........................................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5

INTRODUCTION
Business an activity which considered as commercial activity, involve in providing goods
or services with a very primary motive of earning profits (Daniels and et. al., 2016). However in
modern era the concept of business has evolved which now not only run with sole objective of
earning profit but also include the objective of customer satisfaction as this is what results into
profits. If the customer is satisfied, business are considered doing good. For the report purpose a
case study is to be analyse which is, “Little Dessert Shop”. The report include; what type of
Organisation the is Little Dessert Shop, The Business model that analyse the company's
competitive advantages and what are the Macro Environmental factors that affecting business.
Main Body
Type of Business Organisation
There are different forms of business organisation are formed but majorly there are
three types which are as follows; One Person Company, Partnership Firm and Joint Stock
Company (Strydom and Rudansky-Kloppers., 2016).
At Little Dessert Shop company owned by two partners together who contributed equal
investments to form the company. Mary and Sue Stated a partnership form of business in Foods.
Their business is located in the busy Bullring Shopping Centre in Birmingham.
A partnership is form when two or more persons decide to carry business together. They
known as co-owners and they share its profits and losses as per decided ratios in the partnership
deed. A partnership business may come into existence either as a result of the expansion of the
sole trading concern or by means of an agreement between two or more persons who desire to
forming a partnership (Paul, Cadle and Yeates., 2014). There are various features are associated
with this form of business such as:
 A partnership business collect more resources and more funds.
 Reduce the risk of competition.
 A partnership form of business can avail the economies in production and distribution.
 A partnership business have better managerial talent.
 In partnership, partners of the firm share the risk as per decided ratio.
There are two types of Partnership form of Business. These are; General Partnership and
Limited Partnership. In General Partnership the company owners agreed to run the business as
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partners or co-owners. The partners of the business manage the business and assume
responsibility for the partnership’s debts. General partnership is easy to establish, low-cost and
flexible whereas in Limited partnerships which considered as more structured than general
partnerships and It have both general and limited partners. To start a limited partnership,
company need at least one general and one limited partner (Demirgüç-Kunt, Loveand
Maksimovic., 2004). At Little Dessert Shop, Partnership of Mary and Sue from above can be
assumed as General Partnership between the two. The profits in general partnerships are only
taxed at the personal income level not taxed at the company level.
Porters 5 Forces Model in the Business.
Porter’s Five Forces is based on Michael Porter’s article in the Harvard Business Review
(Dobbs., 2014). The model helps in examine the competitive market forces in an industry or
segment. The five forces Porter recognizes in its industry analysis method are:
1. Intense competitive rivalry: It refers to the number and strength of competitive rivals in
an industry that can impact relationships with customers and suppliers. An industry with
a larger number of competitive rivals make it difficult for a company to secure loyal
customer base because customers have more options (Akpoviroro and Owotutu., 2018).
Since the Little Dessert store located in market, therefore company face strong
competition from their rivalry. Maintain a long – term relationship with customers it is
important for company to be updated in the market and maintain a healthy competition.
2. Bargaining power of suppliers: Increase in price of supply or uncertain changes in
supplier pricing impact company's profitability. Ideally, company should position
themselves in the industry where they can work with number of pre- existing suppliers. If
there are only a few suppliers available in market, it’s important to ensure that those
relationships are strong and they see the value of working with the company. Since The
Little dessert Store have options to supply them raw material but their primary suppliers
offer low cost. Therefore in their business the bargaining power of supplier have strong
base in the industry supply.
3. Bargaining power of buyers: Bargaining power refers to the size of any company’s
customer base that may have an impact their ability to influence price and quality of the
product. Sometimes in a highly specialized industry where a handful of buyers account
for the majority of sales, those buyers are become in power to determine the demand for
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product. When company has more buyers, the less reliant they are on other stores. In
Little Dessert Store have strong bargaining power of buyers as the store have only few
savvy customers during week the shop is less busy but in weekends are very busy due to
the volume of shoppers using the Centre. Thus the area offer many similar shops in the
immediate vicinity.
4. Threat of substitutes: If there is substitutes available for the product the buyers will
have more options to seek out for similar products. It’s important for business to ensure
their products do maintain the demand among customers. This way, even if a substitute
appears at some point to a customers as a option but due to the quality of product will
trust them anyway. Due to Covid19 situation company look for new opportunities and
willing to launch new product line to take care the new demand for healthy eating habit.
The company must avoid product which include any similar features with other brand at a
much lower price, buyers may be tempted to use an alternative.
5. Threat of new entrants: Sometimes easy access into the industry make chance of new
entrance into market lead competitive rivalry high. This can also lead to a crowded
industry where many new competitive rivals start appearing regularly and this can result
into unhealthy competition.
Macro Level Environmental Factors
A business is a part of society and the society which include environment and its control
are beyond of any company's limit. The environment have two types i.e. Micro and Macro
environment (Siewiorek and et. al., 2012). Both environment have different components that
affect business different way and also affect its decision making. Macro environment also termed
as External environment in which company have no control. Components of macro environment
are Socio-Cultural, Technological, Economic, Physical, Political or Legal Environment. Among
these environmental factors majorly three of them affect Little Dessert Store that need to be
taken care in to improve its business.
 Socio-Cultural: The social and cultural values have impact on environment and play a
important role in the functioning of the company. Any changes on social environment can
have a direct or indirect effect on the company. Since organisation is part of the society
and therefore it becomes necessary for organisation to take care of the interest of their
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customer. The company can focus on their business of food and the demand of choice of
food, taste preference etc.
 Technological: In the times we live in, technology is constantly changing it is important
that the business can keep up with the changes. As we can see from given case study of
Little Dessert Shop company lacking in its promotional activities that make company less
popular and only known in area where they operate. Also the company company have
less staffs to maintain their store. Using technology can help them to improve their
overall business performance, increase speed and make them more popular in different
area.
 Political or Legal Environment: This refers to political and legal environment of a
country which is the combination of three branches of the government i.e. legislature,
executive, the judiciary and legal environment include the rules, laws, regulations, and
judgements etc. both effects the working of the company in a market (Sinay., 2014).
Since to company reopen after long break after covid a global health crisis. Therefore
company must comply with all the legal guidelines set by the government, all the heath
parameters to keep safe environment within the store for employees and customers who
visit the stores.
CONCLUSION
From the above it can noted that company's performance is slow pace though they have
planning to increase their product line keeping mind the changes that have taken place due to
pandemic situation. Therefore company must focus on their promotional activities as this is vital
to become popular to survive in market competition. Otherwise any effort on new innovation or
experiment on healthy food may go waste. It is important for the company to be more
technological to conduct effective business. Company can hire new people to serve more better
to their customers. This will increase the productivity hence the output will be more and this can
lead higher profit earning for the company.
REFERENCES
Books and Journals
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Daniels, J.D. and et. al., 2016. International business: Environments and operations. Pearson.
Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business management.
Oxford University Press Southern Africa.
Paul, D., Cadle, J. and Yeates, D. eds., 2014. Business analysis. BCS, The Chartered Institute for
IT.
Demirgüç-Kunt, A., Love, I. and Maksimovic, V., 2004. Business environment and the
incorporation decision. The World Bank.
Dobbs, M. E., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review.
Siewiorek, A., and et. al., 2012. Learning leadership skills in a simulated business
environment. Computers & Education. 58(1). pp. 121- 135.
Sinay, J., 2014. Safety management in a competitive business environment. CRC Press.
Akpoviroro, K. S. and Owotutu, S. O., 2018. Impact of external business environment on
organizational Performance. IJARIIE. 4(3). pp. 498- 506.
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