Business and Business Environment Report

This report explores the business environment, analyzing different types of organizations, their legal structures, and the relationship between organizational functions and structure. It uses JP Morgan as a case study, conducting a PESTLE analysis to identify external factors influencing the company. The report also analyzes JP Morgan's internal strengths and weaknesses, interrelating them with external macro factors.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purpose of organisation and their legal structure...................................1
P2. Explain the size and scope of a range of different types of organisation.............................3
TASK 2............................................................................................................................................5
P3. Explain the relationship between different organisational function and organizational
structure.......................................................................................................................................5
TASK 3............................................................................................................................................8
P4. Pestle analysis of JP Morgan company ................................................................................8
TASK 4..........................................................................................................................................10
P5 Internal and external analysis of organisation to identify strengths and weaknesses..........10
P6 Interrelate strength and weaknesses with external macro factors.......................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment means sum total of all external and internal factors that influence a
business. The external and internal factors influence each other work that affect an enterprise
through their performance, profitability, growth and survival. This includes employees,
customers, competitors, government, social, political, technological, management, supply,
demand and business regulations. The changing needs of customers and innovation in the market
are a part of business environment. To survive in a market means to adapt the changes, to adapt
the changes means to aware about the surroundings (Adeoye and Elegunde, 2012).
This project reports covers types, purpose, size and scope of JP Morgan company. It is a
multinational banking and financial services established in Hong Kong. It is the world's seventh
largest bank in their total assets in Europe. In this report, there are two more company from
public and voluntary sector that is audit commission and Oxfam. Also bring highlights on
relationship between the organization functions, positive and negative affect of macro
environment. Moreover, includes the internal and external analysis with strength and
weaknesses.
TASK 1
P1 Different types and purpose of organisation and their legal structure
There are different types of organisation these are as:
Public company is a company that issue securities to the general public through an initial
public offering and listed in stock exchange. These organization are controlled and owned by
central , state or local government authorities (Bryson, 2017). It includes health and education
services, defence, law, order of respective company.
Purpose of Audit Commission firm is to do inspection, auditing, journalising the
transaction of other government firms. It plays a vital role in at a time of filing returns, making
statement of audit commission company and so on.
Legal structure
Local government is an authority to determine and execute measures within a restricted
region inside and smaller than the whole state. Some local bodies can elect officials, enact taxes,
do many other things that a national government do but in smaller scale. It is an important for the
freedom of locality to decide and act.
1

State government is a unit of government that specifically makes and enforces laws for a
state. It is responsible for regulating trade within state borders for establishing rules for local
bodies. They also needs many smaller local government by establishing charters for country and
city.
Central government is a national government of a nation. It corporates the rules and
regulations of whole country. It manages regional state, provincial, local and other parts of
administration (Carroll and Buchholtz, 2014). In other words, it is a basic political system where
two or more level of government exist within a country that are govern through common
institutions or law.
Voluntary company are also known as guarantee companies. If any profits generated are
reinvested into a business enterprise to achieve the objectives of a firm which are often
charitable in nature. The members of this type of company are divided as decision makers rather
than owners of the company.
Purpose of voluntary company is to achieve the social objectives regarding social
welfare. In case of Oxfam, it is a non- profit organization whose goal is to achieve the common
objectives of Oxfam company. They generally depend upon donations from profit making
organisation.
Private company are set up by an individual entrepreneurs that seek to make profit from
their business activities. These firms are controlled entrepreneur or from different people, also
owner's liability is limited to its ownership and holding its restrictions to shareholders from
publicly trading shares such as JP Morgan company.
Purpose of JP Morgan company is to provide banking and financial services. The main
aim is to connect customers to opportunities that helps people to fulfil their hopes and ambitions.
They help to create long term customer relationships to achieve integrity, ethics and managerial
oversight.
Legal structure
Sole proprietorship is a legal set up in which a business is owned and controlled by a
single person. The business owner is not legally separate from their business and therefore,
owner is personally liable for all the aspects of a business firm, including finance too (Gelder and
Singh, 2017). If any profits are generated from business owner's to keep all debts owed by
business are also at business owner's personal liability. In a sole proprietorship there is no legal
2

distinction between the owner and business entity. The owner has personal and unlimited
accountability for losses and borrowed by the business this can be done through settling there
own personal finances or asset of a business enterprise.
Partnership are business companies that are owned by two or more parties. The
relationship between the parties are governed by a deed of partnership that helps in defining the
scope and structure of a business partnership (DeasyMeyer and et. al., 2016). In this method,
they specify the responsibilities of a partners, how the profits are distributed, investment and
sharing and losses in business.
Limited organization are an incorporated which means that they are separate legal
entities and have their own legal status therefore, they are vary from their owners. When
companies are incorporated, they must have a constitution that help the shareholders and
directors regulate their relationship.
Franchising refer to hiring out or licensing of use of good ideas to other companies. A
franchise grants permission to sell their product or services under a certain name in specific
region. If an individual have a good idea can sell a licence to trade and carry out a business while
using that idea in a particular region.
P2. Explain the size and scope of a range of different types of organisation
There are different types of organization that consists of private, public and voluntary.
These organizations are have different sizes, scope, mission and vision that are describe as
below:
Audit commission
The Audit commission is was a statutory corporation that has a prime objective to appoint
the auditors in the England within a range of public bodies. Its size, scope, mission and vision is
given below -
 Size – The employees in Audit Commission was 180 and its annual budget was £213
million according to the financial year 2009 – 10. This budget was generated from the
charged fees to the bodies which was audited with just £28.0m that was the 13% of
central government grants.
 Scope – Audit Commission audited the National Health Service in the year 1990, fire and
rescue services in 2004, Department of Health, local education authorities (LEAs). It was
also running National Fraud Initiative (Ebert, 2011).
3

 Mission – It came in inception with a mission to audit the public and government
organisation's financial state.
 Vision – Organisation's vision was to provide safety to the public with analysing their
income sources and utilize the revenue for the better future.
Oxfam:
This is an independent organization that focuses on the removing the poverty and thus it works
for the welfare of the society.
 Size – Oxfam has some shops which are used to generate funds for the organization that
is spread is across developing countries such as Africa, Asia and South America (Hilton
and Platt, 2013). It has approximately 1200 shops worldwide among which more than the
half are in the United Kingdom. This organization is running around 750 Oxfam GB
shops more than this it has various stores with its name that consists of IBIS (Denmark),
France, Germany, Great Britain, Hong Kong, India, Ireland, Novib (Netherlands),. New
Zealand, America, Australia and so on.
 Scope – This can also enhance it function to support the well being and needed areas that
requires funds to re-establish.
 Mission – Oxfam established with a mission to directly reach to the people who are
facing the poverty and injustice requires the help from the institution.
 Vision – Its vision was to give the fundamental human rights that consists of sustainable
livelihood, basic social services, life and security, heard and the right to an identity..
JP Morgan company
This is a one of largest baking and financial institution that provides the bank facilities to
the public.
Size - JP Morgan company is an international investing network that has around 26,000
employees and merged with chase and Manhattan bank in 2000. There headquarter in New york
city, New york, United States. (Jarvis, 2017).
 Scope – Institution has a scope to explore in the developing firms as they can get the
higher revenue from respective countries.
 Mission – It originated with a mission to provide the funds to the public to develop their
company whether it is small, medium or large.
4

 Vision – In the recent years, it has acquire its goal to offer its services to the population
with internet services.
There are different sectors which are related to above mentioned business enterprise. These
sector are described in brief under below:
Primary sector Secondary sector Tertiary sector
According to this sector, it
involves extraction of raw
material from the earth surface
that resultant into coal, wood,
iron and so on. This type of
employees includes farmers,
coal miner and hunter.
This sector involves the
transformation of raw
materials into goods. This
includes wooden pieces into
furniture, steel made into cars
or textile being made into
clothes. It is a development of
this sector can demand for
more and more goods and
foods that are leads to
industrialization. Oxfam is an
example of such kind of sector
that helps them to generate
revenue for their day to day
expenses.
The service sector is also
known as tertiary sector. This
includes the activities that
provide services, knowledge,
financial resources,
infrastructure, goods, products
and so on. This render services
to an individual and plays a
vital role in national economy
of nation. JP Morgan company
and audit commission are
examples of tertiary sector that
assist them in providing
facilities to their customers.
TASK 2
P3. Relationship between different organisational function and organizational structure
An organizational function and structure render the different activities which are
performed by Mark and Spencer company which are able to achieve their goals. This involves
how information flow among various department of a business firm. Generally, it is an
arrangement of authority, communications, rights, duties and responsibilities of a respective
company. The main aim of organizational function is to arrange the required things which are
necessary for a business organization such as source of funding, marketing, networks, customer
services, sales, human resource and so on (Jorfi, 2017). These are described in detail below:
5

 Finance: This department deals with keeping the records on financial transaction such as
sales of past years. It also depends on provisions and information for the higher job
positions such as managers to decide and influence to improve the cost of initial
production of certain product or services of Marks and Spencer in achieving their
business objectives. Management accounting needs to supply the information while
taking decision at a time of making a profit and introduce more and more goals to
accomplish them on targets.
 Marketing: It is an essential part of organization function to meet and identify the
customer's needs by improving their services to satisfy them. The marketing areas works
on production to ensure the development of new schemes or services that are rendered by
M&S. Therefore, it is necessary to use the marketing mix at a time of launching new
schemes by a respective company such as advertising while launching new schemes that
can reach to customers.
 Customer services: The needs make sure about the relationship with their business and
their customers that creates a way to increase the cost productivity of a Marks and
Spencer. This portion includes the demand of customers such as quick and easy going
transaction of cash, easily get fund transfers from one account to another, redemption of
amount into one or two days, providing bank facilities without charging extra fees from
customers and so on (Klapper and et. al., 2011).
 Sales: This is an eminent part for for a business to increase their sales of schemes and
opening more and more account for banking institution. It reacts with marketing region to
view their regular transaction to see what they actually want from the company. To
increase the current value of M & S. they should adopt different innovative strategies
such as easy and quick transaction, using digital technology for opening account, using
electronic gadgets to enhance their sales. This can be done through door to selling,
window sale can help them increasing the sales ratio of respective company that is Mark
and Spencer.
Organisational structure can define framework of production, sales, research of a
business firm. It can be defines as interaction between business to identify how business run
through different levels of M & S. To set up business structure for an effective business
organization function, structure also influence to it. This part includes two different structure of
6

different companies (Dutta and Mukherjee, 2017). There are different types of organizational
structure which are described in detailed as follows:
 Functional structure: It is a hierarchical organization structure where people are
grouped as per their specialization. It is a simplest part and most prevalent form of an
organizational structure. In this each department has coordinated with head that can
further divided into detached sections (Moore, 2016). This helps Mark and Spencer
company to use effectively utilize the skills of employees, that ultimately helps business
enterprise in achieving their objectives.
(Source 1: Functional organization. 2016)
 Divisional structure: Under this structure, it deals according to the division that are
dealing in different categories of product. Each department has various functions such as
production, logistics, finance, sales in order to achieve business objectives. Also, each
division has a divisional manager who is responsible for working with full authority
(Savruland, 2014). This will help to Mark and Spencer company to manage their
department in a well manner.
7
Illustration 1: Functional structure of an organization

(Source: Divisional organization, 2012)
From the above reference it is gather that Mark and Spencer company should adopt
functional structure for the more authenticity related to company work and also, manage their
function to the respective department. This includes marketing, production,logistics, IT and
many more.
TASK 3
P4. Pestle analysis of JP Morgan company
It is essential to analysis the external factors of JP Morgan company to take an overview
while planning new strategies for a respective company. These are discussed in detailed as:
Political factors : Existing or new government policies have a direct impact on the
enterprise. These factors include labour law, environmental law, trade tariffs as well as foreign
exchange currency, foreign trade policy, monetary policies and so on. Positive impact : Foreign exchange currency help the country to get the high profit.
When the JP Morgan company bank goes to the country whose currency rate is low with
their home country than they are able to earn more amount of profit.
 Negative impact : JP Morgan company bank operates in different countries for which
they have to follow their rules and regulations. The company have to follow all policies
8
Illustration 2: Divisional organization. 2012

of every government to carry their operations successful and effectively. It becomes very
difficult for the company to adopt every time new rules and regulations (Smith and
Dodds, 2017).
Economical Factors : Growth of JP Morgan company bank depends upon the stability of
the economic factor of foreign exchange rate and stock market. It includes inflation rate, saving
rate, interest rate, foreign exchange rate which determines the demand and investment of the
country.
Positive impact : JP Morgan company bank performance and revenue increases because
of global commercial banking in a developing countries like ASIA where economic conditions
are continuously increasing. These all things help them to survive the crises of 2008.
Negative impact : Fluctuation in economic conditions make JP Morgan company bank
difficult to expand in other countries. Change in the inflation rate ,interest rate create problems
for the bank to operate with the same or stable services. Various taxes and import duties make
bank difficult to operate at the same price.
Social Factor : Cultural aspect,attitudes and beliefs affect the demand of the commodity
in the particular market. For establishing at different country business should undergone with
their environment and culture. The social factor of the pestle analysis focus on the changing
trends and the changing consumer taste (Taneja, 2017). It includes population analytics,
culture ,attitude changes,lifestyle trends ,ethical issues and demographics . Positive impact : For surviving in the other country JP Morgan company bank make
good relations and good name in the society. JP Morgan company conducing various
education programs in different city to create a relationship with the people of society.
They perform all these things because they want to please their customer. They tried very
hard that the society get equal chance of the resources present in the environment.
 Negative impact : Climate change and the money laundering are some of the issue that JP
Morgan company has currently dealing with it. They face many problems like people
want to lead a luxurious life on credit and government encouraging SME 's businesses for
their country development.
Technological Factor : Continuous innovation and new technology affect the market or
industry. It include digital technologies,intellectual properties issues ,information and mobile
technology. Business always focus on improving digital technologies but they have to find
9

different techniques of distribution and production. Improvement in the technology help business
to survive for a longer period of time. Positive impact : development of media and internet help JP Morgan company to rise its
customers in the society . It happens because people are now more informed about the
services at their home. The bank is established at a global level and are working with the
latest technology. Due to this latest technology business able to transfer its money from
one point to another by just one click this techniques is popularly known as online
banking (Watts, 2018).
 Negative impact : JP Morgan company due to not providing protection to the consumer
data lost many customers to their competitive firm. Because of their inefficiency
customers sensitiveness data get loss. The data which get lost does not affect the
management of the company but due to that organisation loss many loyal customer's.
Legal Factor : Every nation have their own rules and regulation which have to fulfilled
by the enterprise who want to enter in some other country. It includes employment law,
consumer protection law, health and safety law etc. every business is governed under various
rules and legislation in which JP Morgan company is not different. Positive impact : This law says that business have to ensure emergency exist, fire alarms,
safety gadgets for the country and its people (Wetherly, 2014). The bank should follow
all laws regarding protection of the employee so that they can't get hurt by working in the
organisation.
 Negative impact : Legal disputes create a huge damage to the company and its financial
image. To get protected from this situation business should take effective measures that
no law remain unfulfilled. Many a time they make to payment protection insurance
without the information of their customers. This will create a negative imager and which
led customers to walk out of their bank.
Environmental Factor : With the increase in awareness people are more attracted to the
organisation who does not harm the society. Business should ensure that their business does not
harming the society in any way .It includes geographic location, climate change, waste disposal,
recycling of the product etc. before entering into some market business should firstly evaluate
the environment standards which are necessary to operate there because on these the demand of
the product depends.
10

 Positive impact : JP Morgan company goal is to reduce the carbon emission to protect
their employees for this they improve the procedure and their technology. To protect the
environment they start many things which are waste reduction, E co-efficiency fund,
green building projects, paperless banking, as they know today's customer get attracted to
these things.
 Negative impact : Increasing the obligation regarding society welfare as well as corporate
social responsibilities can be affected the organisation functions and its profitability.
TASK 4
P5 Internal and external analysis of organisation to identify strengths and weaknesses
SWOT analysis is must be required to identify internal strengths and weaknesses of an
organisation so that better decisions can be made to get higher profitability and productivity as
well. JP Morgan company group is one the world's leading financial institution with banks that
are to be located at global level (Watts, 2018). They can analyse their inner strength for taking
several advantages of many opportunities and expand business to increase market share as well.
These can be understood by following such as:
SWOT Analysis
Strengths:
 The major strength of this bank is that well capitalised and financially strong company so
that it is able to beat with different competitors and achieve sustainability as well.
 This bank have number of branches at different places which is also another major
strength as it assist in creating strong position among competitors and increase market
share.
 JP Morgan company has undertaken various measures to identify costs costings while
operating functions or activities so that it can make entire business operation more
effective and efficient in getting profits (Zhou, 2017).
 JP Morgan company also dealing new financial market and added some new financial
products as well as instruments that have major impacts on revenues or profits of the
firm.
Weaknesses:
11

 Customers are confused regarding brand recognition due to different name at various
countries as well. In the last century, JP Morgan company established number of
branches of banks at different countries under the name of Honk Kong Bank of Canada,
JP Morgan company Banco Robert and British Bank of the Middle East etc.
 It has founded that they have weak retail banking as compared to other competitors at the
marketplace.
 JP Morgan company is focusing on creating position at global market so it is impacting
on local audiences and their connections due to homogenised image.
Opportunities:
 JP Morgan company has strong reputation among the competitors and have large
customers base due to serving various financial services in an adequate manner. They
can expand their business at Asia continent due to having huge market share.
 There are high level of capitalisation in the JP Morgan company so they have
opportunity to make strong position by acquiring various assets as well.
 Other opportunity for JP Morgan company is that purchase or acquire number of banks
to maximise its size as well as wealth.
 They can consider the advertisement tools that competitors are not using, can be
beneficial in encouraging customers to choose the JP Morgan company for banking
services.
Threats:
 There are various competitors that available in the marketplace can affects the
organisation and its profitability at various ways.
 Changing government regulations can be biggest threats for JP Morgan company in
financial crises such as recessions and declines as well.
 Increasing competition from global leaders (Watts, 2018).
 UK economy is getting down and expenditure is growing high so it can affects on the
business operations or functions as well.
For the above discussion, it is concluded that external factor are uncontrollable and are
not in hand of JP Morgan company to take corrective measure while making an effective
decision-making. Therefore, it is necessary to analysis the external factors which help them to
control the external factor risk.
12

P6 Interrelate strength and weaknesses with external macro factors.
Micro environment can be reefer as the evaluation of intrinsic environment in which
distinct determinants are being assessed in regard of considering the basic impact of those factor.
For every financial and investment institution, it is necessary to be aware with their strength and
weaknesses of business firm. These extrinsic factors are interlinked with the intrinsic
determinants as these shapes their basic traits so as JP Morgan Firm's. These are discussed in
below as:
Political factor: The political instability have to suffered while dealing with their clients
on international basis. It majorly focus on country politics that are depends on other countries
relations. In case of JP Morgan company which is a foreign bank investment, but political
conditions affects its activities with interrelated to different countries.
 Strength: This will helps in establishing more effective relations with other countries, in
resultant bring productivity to domestic country.
 Weaknesses: Due to political factor, this can disturb the business of respective country,
which bring a negative impact on a business.
Economical factor: The economical aspect includes the growth in consumption and
investment basis. This can effect business of JP Morgan company company through low capita
income, lack of proper infrastructure in rural areas, urbanization and inflation which can harm
business activities.
 Strength: For an economy, company can increase their finance condition which help
them to bring stability into a business firm.
 Weaknesses: Whereas, in this case company should focus on their investment which
should be affected at a time of recession period.
Social factor: The social aspect is related towards different culture that is adopted by
different countries which can be consider a major factor for JP Morgan company company. Due
to above factor that is political, economical that can bring uncertainty on financial institution.
 Strength: While adopting a the social culture of other countries a respective business
enterprise can bring a positive outcome on their business.
 Weaknesses: Although, if company do not adopt other nation culture and custom, it will
be difficult for JP Morgan company company to survive into a business environment.
13

Technological factor: This factor deals in the advancement of technology which increase
their usage, which being a transparency in the system (Watts, 2018). This bring trust to the
customers while using upgraded technology such as mobile application, online transaction,
transferring funds through online procedures and many more.
 Strength: While adopting latest technology will reduce the time that are consumed in
bank queue.
 Weaknesses: In this case, customers are sharing their bank information on internet which
can be hacked by third party which may bring a negative result to business reputation.
CONCLUSION
From the above discussion, it is concluded that, every business enterprise is influence by
business environments such as internal and external factors in which they work such as an
environment of region, state or a country. There are numerous structure and types of organisation
that varies from each other on the grounds of size, scope, purpose, mission, vision or basis of
other determinants. The change in business environment are unpredictable. Therefore, the nature
of an organization is differs from place to place, region to region and country to country. This
enables to identify business opportunities, assist in planning and bring enhancement in present
working conditions. Along with this, it also talks about organization structure which every
business follows through their own business activities performed by achieving their target.
Additionally, some external factors are beyond under control which are also known as external
constraints.
14

REFERENCES
Books and Journals
Adeoye, A.O. and Elegunde, A.F., 2012. Impacts of external business environment on
organisational performance in the food and beverage industry in Nigeria. British
Journal of Arts and Social Sciences. 6(2). pp.194-201.
Bryson, J., 2017. Effective library and information centre management. Routledge.
Carroll, A. and Buchholtz, A., 2014. Business and society: Ethics, sustainability, and
stakeholder management. Nelson Education.
de Vries, R.E., Pathak, R.D., van Gelder, J.L. and Singh, G., 2017. Explaining Unethical
Business Decisions: The role of personality, environment, and states. Personality and
individual differences. 117, pp.188-197.
Deasy, S., Meyer, R., Newell, C., and et. al., 2016. Controlling use of a business environment on
a mobile device. U.S. Patent 9.247.042.
Ebert, R.J., 2011. Business essentials. Pearson Education.
Hilton, R.W. and Platt, D.E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Jarvis, M.J., International Business Machines Corp, 2017. Providing location and spatial data
about the physical environment. U.S. Patent 9,710,564.
Jorfi, S., Nor, K.M. and Najjar, L., 2017. An empirical study of the role of IT flexibility and IT
capability in IT-business strategic alignment. Journal of Systems and Information
Technology, 19(1/2). pp.2-21.
Klapper, L., Lewin, A. and Delgado, J.M.Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan, London.
Kumar, A., Kumar, R., Dutta, S.K., Kumar, R. and Mukherjee, A., 2017. Reconceptualising co-
opetition using text mining: inductive derivation of a consensual definition of the field
(1996-2015). International Journal of Business Environment, 9(2). pp.114-137.
Moore, J.F., 2016. The death of competition: leadership and strategy in the age of business
ecosystems. HarperCollins.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment. Procedia-Social and Behavioral
Sciences.150,.pp.35-45.
Smith, B. and Dodds, B., 2017. Developing managers through project-based learning.
Routledge.
Taneja, N.K., 2017. Driving airline business strategies through emerging technology. Routledge.
Watts, H.D., 2018. The large industrial enterprise: some spatial perspectives. Routledge.
Wetherly, P., 2014. The business environment: themes and issues in a globalizing world. Oxford
University Press.
Zhou, W., 2017. Institutional environment, public-private hybrid forms, and entrepreneurial
reinvestment in a transition economy. Journal of Business Venturing, 32(2). pp.197-
214.
Online
Functional organization. 2016. [Online]. Available through : <https://www.management-
square.com/functional-organization/>
15

Divisional organization. 2012. [Online]. Available through :
<http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/Divisional
%20Structures.aspx>
16