This article discusses the different types and purposes of organizations in the business environment. It also explores the impact of macro environment on organizations. Read more on Desklib.
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UNIT 1 - BUSINESS AND THE BUSINESS ENVIRONMENT
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TABLE OF CONTENT INTRODUCTION...........................................................................................................................1 LO 1.................................................................................................................................................1 Types and Purpose of Organisation.............................................................................................1 Size and Scope of Different Types of Organizations..................................................................3 LO 2.................................................................................................................................................6 Relationship Between Different Organisational Functions........................................................6 LO 3.................................................................................................................................................8 Positive and negative impact of macro environment...................................................................8 LO 4...............................................................................................................................................10 Internal Analysis........................................................................................................................10 Interrelation of external factors and internal factors..................................................................12 CONCLUSION..............................................................................................................................13 REFERENCES..............................................................................................................................14
INTRODUCTION Business environment is the entire study of the internal and external factors of the organization which are technological, needs, customers, employees, suppliers, owners, expectations, clients, innovations, etc. These environments directly and indirectly on the organization which needs to be control or managed by the organization effectively so that they can have a better functioning for themselves. The decisions which are being made for the future by the organization have to be thought through so that the company can have better functioning for themselves. Thereportisgoingtoconsistofinternalandexternalenvironmentof organizations so that there are effective and better decisions for the organization which can be taken. SWOT and PESTLE is going to be analyzed in this report to understand the internal and external environment. Types and purpose of organization in the market is also going to be discussed. There are a lot of changes which are taking place in the market therefore understanding them is important only then the company should plan for the future. LO 1 Types and Purpose of Organisation Public Organisation Publicorganisationsarethosewhichareownedbygovernmentwithmain objective of social welfare(Kot, 2018).The main focus of the public company is to support citizens of country and increase their standards of living h providing products and services. NHS is health care organisation of UK which provides its health care services to its citizens effectively. Purpose ï‚·NHS provides services to public at lower cost to ensure the health safety of people in the country and treat every citizen equally irrespective of charges. ï‚·Public organisation also provides better innovative services to its citizens and increases their satisfaction effectively. 1
ï‚·There are many agencies which government provide to public to ensure their well being which includes, police, education system, healthcare system, transportation. This also helps to increase the quality of living of public in the country effectively. Legal Structure ï‚·Public organisation is able to trade their shares in public to increase their capital and improve the size of the company effectively. ï‚·Liabilities of the public organisation are unlimited as they have to provide all the information to the government before making any decision. Private Organisation Private organisation are those which contributes in the national economy to increase the productivity of the nation(Okeyo, Gathungu and Peter, 2016). Organisation which are operated by individual or group of individual in order to earn more profits. For example, Tesco is private organisation which helps to provide grocery products to customers and earn profits and also compete in the market effectively. Purpose ï‚·The main purpose of private organisation is to increase profit maximisation and improve the quality of products and services to develop higher market share and compete in the market effectively. ï‚·Tesco has to focus on customer satisfaction which helps to increase their brand value and business expansion very easily. Legal Structure ï‚·There are many types of private businesses which are limited in liability and increase the size of the business to compete in the market. Sole proprietor, limited company, cooperative company, partnerships are types of private businesses. ï‚·Privatecompanyhavelimitedliabilitytotheinvestmentdoneinthe commencement of the business due to spate legal entity concept. Voluntary Organisation Voluntary organisations are those which put emphasize on social betterment with their activities and also improve the development to increase living of standard.These
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organisations are the network of volunteers which provide air to society and reduce social issues without any interference of government. For example, Mencap organisation provide support to disable citizens and also collects funds from different sources to provide better future to every citizens effectively(Amos and et al., 2019). Purpose ï‚·To provide better quality living to all the people in the particular region by support them with different activities. ï‚·Voluntary organisations are working on moral ethics and do not work for profit maximisation. ï‚·Improvement of infrastructure, education system, and also support government activities in order to increase the social betterment. Legal Structure ï‚·Mencap has increased their trust in the society and also appreciated by UK government for supporting disabled patients in UK this also helps the organisation to collect more funding to carry their activities effectively. ï‚·Company is formed by board of trustees which helps to donate funds and also attract more donations from around the world. Size and Scope of Different Types of Organizations Micro OrganisationSmall OrganisationMedium and Large Organisation SizeMicrobusinessesare thosewhichhireless than 10 employees to achievetheirdaily activitiesofthe business.Thecapital investmentofmicro businesses is very less Small business is those whicharerunningin themarket.Itis interdependent on other businessorganisation toincreaseits productivity.Small organisation which has Thesearethe international business whichoperatein differentcountries andincreasetheir profitmarginsby developingnew products and services
and it also reduces the costofinterestwith higher returns. lessthan500 employeesandalso providesbetter productsandservices tocustomersto increasetheirprofit margins effectively. whichhelpsto increasethe satisfactionlevelof customereffectively (Muraandetal., 2017). ScopeDue to increase in the demand of customers it isveryessentialto understandthe opportunity to grow in the market. Increase in theincomelevelof customersinUKhas alsoimprovesthe marketformicro businesses to innovate andincreasetheir marketshare effectively. Mencap is microorganisation whichhasthe opportunity to grow by reducingthecostof operationsandalso innovatetheir techniquestoconduct social welfare in UK. There are many small businessesinthe market which helps to increasethe productivityofthe supplychainand increasingsatisfaction level effectively. there aremany collaborationswhich helps business to grow andexpandinthe market to compete and gainhigherprofit marginseffectively. For example Tesco is retail store which uses differentproductsof other businesses to sell inthemarketand provide better services tocustomersand Largeandmedium sizebusinessesare majorlyoperatingin global market and are ownedby governmentwhich helps the organisation to increase their profit margins and invest in themarkettogrow business and become leaderintheglobal market effectively.
increase customer base effectively (Jayasundara and et al., 2019). Key Stakeholders Stakeholderofmicro organisationsis customersand suppliers.Asthe businessispersonally ownedbyindividual withlesscapital investmenthelpsto increasetheir satisfactionlevelof business to grow in the market effectively. Employees,directors, government, shareholders, suppliers, societyinwhich businessisoperating arethekey stakeholdersofsmall business organisation. Creditors,Boardof directors,employees, government, shareholders, suppliers,financial institutions, customersarekey stakeholdersof mediumandlarge organisationto developeffective strategies to increase their satisfaction. From the above difference of in the types and size of organisation as micro organisation are majority in UK business which also contribute in the economy of UK effectively.Increase in the small sized organisation helps UK to increase employment opportunities and inventions and innovation in the market(Purnama and Subroto, 2016). This also provides fair competition in the market with medium and large business organisation. UK government also support small organisation by proving subsidies and loans to increase the productivity of the market and also increases the products and services for customers to increase their satisfaction effectively. Growth opportunity for businesses is very essential due to change in the taste and preference of society this also impact the quality of products. This also increase encourage many micro and small business to grow and increase their products to compete with international brands and
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also focusing onproducing the low cost products for customers to attract them and increase their satisfaction effectively.Tesco come under small business which operates in UK market and is providing different household products and services to public. Change in the technology also helps the small businesses to attract more customers by adopting that digital technology in different parts of business activities. Digital marketing is one of the effective tools which helps to increase the customer engagement and is cost effective to increase the profit margins of the businesses. Large organisation have the potential to compete and expand in the global market Unilever is effective example of retail industry which produces consumer products and supply them all over world effectively. there are many factors which also helps the medium scale business as they provide support to large scale in providing raw material at low cost and also increasing their profit margins. UK has improved the quality of products due to high quality of raw material at low cost. This also helps to increase the profit margins of and employment of the country to boost economy(Belas and et al., 2018). LO 2 Relationship Between Different Organisational Functions Increase in the global demand has led to increase in the competition in the market which has also impacted the internal working of the organisation to achieve its objectives and develop strategies. There are different functional are in very business which helps business organisation to analyse all the changes in the market and develop effective policies to compete in the market and increase profitability effectively. Marketing and Finance It is very essential for business to grow and with the help of marketing business increases the interaction of customers and provides effective communication to increase sales of the products and services(Ahmadi, Rahimi and Rezaei, 2018).Marketing is related with finance function as every activity which is done by marketing is funded by finance department and also develop budget for all the promotional activities by reducing overall cost to increase the profit margins of business organisation effectively.Finance department also develops financial statements which improve the decision making of
marketing department to increase customer satisfaction and also achieve objectives of the company effectively. there are many factors which helps the company to understand the internal environment of the business.Marketing is very essential which also helps company to compete and survive in the market and also attract more customers in the business effectively. Marketing and HR Human resources is very essential function is any business as it is the integral part of business and provide effective management of employees. Hr also develops effective policies to improve the organisational culture which increases theperformance of employees to achieve the objectives effectively(Alotaibi, 2016). This helps marketing department to increase their efficiency to by having high performance teams. HR department provides effective training and development to increase skills and knowledge of employees according to market research done by marketing department.HR also provides potential personnel which are required by marketing department to increase the efficacy and improve satisfaction level of customers effectively. Marketing and Operations Operations help to manage all the activities of the business in order to develop product and services according to demand in the market. Marketing department provide effective information to operations department about the demand of product or services. This helps operation department to produce products and procure raw material at low cost by formulating effective operation management planning. Inventory management also helps business to reduce the cost of products and maintain the quality with maximum stockaccordingtodemandofcustomerstoincreasetheirsatisfactioneffectively. Operation and marketing are also related to meet the needs and demands of customers and product effective products and services effectively.
LO 3 Positive and negative impact of macro environment There are a lot of changes which are coming in the market which needs to be analyzed by the organizations in the market so that they can plan their strategies and take measures accordingly(Fabus, 2018). The external factors of an organization are not in control of the business which is why the company will have to take decisions for them. Tesco has been analyzing the external factors in the market so that they can have a better functioning for themselves which is going to make the reputation and stability in the economic factor and for the products and service as well. PESTLE framework is going to be used in the further for the best analyses for the company. ï‚·Political Factors There is an interaction of government with the activities which are taking place in the company which needs to be analyzed by the company. It is due to Brexit the stability in the governmental activities has changed which are impacting the functioning of Tesco in the market. There are new trade policies which have come up in the country which is making it difficult for Tesco to purchase low cost products. Brexit has helped the company to get higher profit margins in the market by eliminating the small businesses in the competition of the organization. ï‚·Economic Factors The factors which are included in this factor are inflation rates, unemployment rate, foreign exchange rates, interest rates, GDP rates, etc which are having a great impact on the productivity of the organization in the market. Brexit has reduced the market share of Tesco due to the inflation which is taking place in the country. The company is being able to get in employees in low wages because the unemployment rates in the country are increasing which is a great advantage for the organization. ï‚·Social Factors
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There is a great influence of the customers in Tesco because the company has to produce products which are matching believes, culture and values of the customers only then the company will be able to have loyal customers. There is a decrease in the income level of the customers so they do not spend their money on luxury products which Tesco is not focused on so that the recession in the country can be useful for the company. This is a great segmentation which the company has created for themselves in the country which can make the profitability increase and attract more customers. There are new products which are being developed by Tesco so that they can provide the customers with low price products which is going to make the company have higher market shares which is going to be getting the company a competitive advantage(Martins and Nienaber, 2018). ï‚·Technological Factors There is a technological increase in the company over years which are making the company have a great advantage for a long run(Tur-Porcar, Roig-Tierno and Llorca Mestre, 2018). The satisfaction of the customers is high globally which is due to the technological aspect since the company is being able to fulfill the needs and demands of the customers effectively. Innovation is also high in Tesco which is a great factor for the company like online stores and digital technology which are like self check out and etc which the company has adapted to over years. ï‚·Legal Factors Equality act, health and safety act which the company is focused on so that there is a better functioning. There are a lot of benefits which the company is following for the employees to give their best in the organization so that there is a high productivity in the organizationwhichcanbebeneficialfortheorganization.Thisincreasesthejob satisfaction level of employees this is going to make the satisfaction level of the customers also increase with Tesco. ï‚·Environmental Factors
The company has taken a lot of measures so that they can control the damage they are creating on the environment(Batocchio, Ghezzi and Rangone, 2016). The company has taken measures to get zero carbon footprints in this industry which is a great factor for the reputation of the organization. The environmental taxes which the company is paying the government is making the limitations on the profit margins of the company which needs to be improved by the company so that they can expand themselves further with a strong portfolio. LO 4 Internal Analysis It is very important that the organizations which are functioning in the market are having control on their internal factor or environment of the company so that they can get a competitive advantage as well as loyal customers in the company(Alotaibi, 2016). This is going to help the company to make effective decisions for the future and the company will be able to get higher profit margins. SWOT is a framework which is going to be used in the further report to analyse the internal functioning of the organization.Strengths Tesco is the largest retailers in Britain which is a great advantage for the company which can make the company have a strong base for themselves in the market. Over years the company has built a strong and large network for themselves which is making the company successful globally. There is a great focus of the company on the technological andinnovationinthemarketforthecustomerssatisfactionandloyaltyforthe organization. The customer’s needs, demands and the trends in the market keep changing which is very important for Tesco to maintain there reputation in the market so that the company can get higher profit margins and better brand recognition.Weaknesses The company is giving the best of quality of products to the customers which the company is not being able to make a profit of because they are providing the customers
those products at a low price. It is very important for Tesco to find ways so that they can have a better functioning for themselves which is going to help the company to have a better functioning for them(Hamilton and Webster, 2018). There are changes which are taking place in the company which is a switch card which is being played by Tesco in the market which is that the information is not reaching the customers and that can be a great threat for the organization. Financial errors are taking place in the company which is a great loss for the company because the company is not being able to price their products effectively which is a very essential factor for the organization.Opportunities TherearealotofcountrieswhereTescocanexpandthemselvessothatthe organization South Korea, Indonesia, Turkey, etc(Erasmus, Strydom and Rudansky- Kloppers, 2016). Tesco will have to be using technological changes in the company so that they can get a competitive advantage like the customers prefer to visit online stores which are more convenient for them. This is a great opportunity for Tesco because they will be able to get the satisfaction level of the customers higher in the organization which is a very essential factor for the company. There are alliances which are present in the market which Tesco can enter with other brands so that the customers can increase and the competitors in the market can be defeated.Threats The competition in the market is growing which is a great threat for the company because they will not be able to get more customers. The greatest competitors for Tesco are Sainsbury’s, ASDA, Morrison’s, etc, who have taken away Tesco’s market share which the company had created for themselves over years(Alaloul, Liew and Zawawi, 2017). This can be controlled by the company by adapting new strategies and methods for the company to operate in the market. The expectations and the demands of the customers are also shifting because they want the best in low price. Currently fluctuation in the currency is another great threat for Tesco which is making the company’s economy
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get affected and then Tesco will not have enough to invest in technological aspect or for expanding in other countries. Interrelation of external factors and internal factors The internal environment of Tesco is getting affected because of the political aspect in the country. After Brexit has taken place in the country there are a lot of laws and regulations which have taken place in the country due to which the company has changed the way they operate in the market. There are a lot of restrictions on exporting and getting in raw materials in the organization for the production purpose. Tesco is an experienced organization therefore they have taken the best strategy for themselves even to operate effectively in this situation because they have faced a lot many changes in the environment of functioning before(Dee and et al., 2019. For the company to maintain their reputation and their brand image in the market it is very important for the company to protect the data of the organization effectively. This is going to help the company to have loyal customers in the company and the company will be able to handle them with care and best services. The trends and demands of the customers is being well maintained and managed by the company from time to time which is changing rapidly in the market because the competitors are getting more variety in the products which are present in the market. There are a lot of sales, discounts, offers which are present for the customers of the company and it is due the help of technology the company is being able to communicate and make the customers aware effectively. Even the changes in the company are being told to the customers on time so that the company can have a better functioning for themselves. The demand for products in the market is also increasing and the company is being able to meet those because of the help of technology. It is due to technological changes in the company the pressure on the employees of the organization are also less which is making the internal environment of the company also effective and satisfactory. The laws and regulations which are made for the customers and the employees are being maintained in Tesco which is not just helping the company to have an effective
functioning but also making the people have a better experience in the organization. The employees are having a satisfaction with the job they do in the company because they are being paid well according to the law and they have safety and security in the organization (Liu and et al., 2017). The environmental factor is giving the company strength because there is minimum wastage in the organization and disposal planning of the company is also good which is being followed effectively in the company. The image of the company and the portfolio is very strong which is making the company have more customers and the company can easily expand themselves in other countries. The company is working on internal and external factors which can harm the organization to function in the market so that they can maintain their standards and reputation in the market. The problems in the organization are also being solved from time to time so that the employees are satisfied and the company will be able to have a better functioning for them(Safar and et al., 2018). CONCLUSION Fromtheabovereportitcanbeconcludedthatitisveryimportantfor organizations to understand the functioning of the internal and external factors which are going to impact on the functioning of the company. The competitors in the market are increasing which is why it is very essential for businesses to have an effective and efficientproductivityinthecompanysothattheorganizationcanhaveabetter functioning for them. There is a brief description of the size and scope of the industries in the market as well so that the company can plan accordingly in the market so that they can have a better functioning for themselves. There are a lot of strategies which are present in the market so that the companies can have a better functioning but there has to be a right decision after looking at the internaland external factors of the company so that the operations in the company does not get affected.
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