Different Types and Purposes of Organisations with Their Legal Structures

This report explains the different types and purposes of organisations, including public sector, private sector, and voluntary sector. It also discusses the legal structures of these organisations and their size and scope.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types and purposes of organisations with their legal structures.............................3
P2 Size and scope of different types of organisations.................................................................5
TASK 2............................................................................................................................................6
P3 Organisational functions and their interrelationships with each other...................................6
TASK 3............................................................................................................................................8
P4 Identify the positive and negative impacts of macro environment........................................8
TASK 4..........................................................................................................................................10
P5 Conduct internal and external analysis of organisation by analysing strength and
weaknesses................................................................................................................................10
P6 Explain how strength and weaknesses interrelated with external factors............................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
The business environment consists of all the internal and external factors and forces that
influence the business efficiency and performance. They also affect the ability of business to
build string and long-term relations with their customers. These factors can be either internal i.e.
can be controlled and changed like employees, board of directors etc. while there are also
external factors which cannot be changed or controlled but can only be dealt with by changing
the strategies and policies of business by the management like political, economic factors etc.
This report explains about different types, purposes, size and scope of organisations which can
be private, public and voluntary (Al-Mutairi, Connerton and Dingwall, 2015). The organisations
taken for successfully completing the report are H &M which is a private organisation, Cancer
Research UK which is a voluntary organisation and Network Rail which is a public sector
organisation. All these organisations have their bases in UK and various factors of the country
affects these organisations which will be discussed in detail in this report.
TASK 1
P1 Different types and purposes of organisations with their legal structures
In an economy of the country different types of organisations work and function so as to
earn profits, contribute towards the GDP of the country, provide opportunities to general public
and provide customers with the goods and services they need and want which helps in growing
and developing the economy of the country. Following types of organisations that exist in UK
are given below :
Public sector : The organisations belonging this sector are generally owned and operated by the
government and work towards providing welfare services to the citizens.
Purpose : These organisations do not seek to earn profits but they charge reasonable fees
from the citizens for their successful functioning and maintenance.
Example :Network Rail is an example of public sector organisation in UK and is
responsible for maintaining the infrastructure of most of the railway network in Great Britain
(Calabrese and et. al., 2018).
Legal structure of Public sector - Central government : They collect funds from public through income tax. Local government : They collect funds from Community charges i.e. council tax.

 State government : They own some of the organisations where central government cannot
interfere.
Private sector : These organisations are a part of economy and are sometimes also called citizen
sector as they are owned and operated by the individuals or groups.
Purpose : They operate in the economy for earning huge amount of profits by providing
customers with the goods and services in relation to their demands and play an important role in
bringing innovations in the market so that the unfulfilled demands of the customers can be met
and they can be provided with quality products (Gomes and Romão, 2015).
Example : Hennes and Mauritz (H&M) is one such private sector organisation that is
present in UK. It is a multinational clothing retail company and is well known for the fashionable
clothings it offers to its customers.
Legal structure - Sole proprietorship : This is owned and operated by a single person such as grocery shop,
taxi drivers. The sole traders are the people who open their business organisations
without facing government interventions and they do not have to be answerable to the
government about their working in the environment. Partnership : Formal agreement between parties which describes their ratio of sharing of
profits and losses. These organisations are established by forming a partnership deed
where the liabilities and the ratio in which the partners will share the profits and losses
associated with the company are determined so that conflicts do not occur in between all
the partners and the company can work within the rules of the deed. This deed helps the
firm in achieving its goals and objectives. Limited company : It is a legal structure that limits the liabilities of the company members
in relation to their contribution. These companies cannot offer their shares directly to the
public and are restricted by the government rules and regulations related to the limited
companies which helps the company in achieving its company goals. The stakeholders of
the company are limited to the value of shares they hold in the company or they can also
be limited to the amount they have guaranteed to pay in case the company face any
losses.

Voluntary Sector : Organisations belonging to this sector voluntarily take up the duty of serving
the society by providing them with goods and services that can help in dealing with the problems
of the citizens if the country.
Purpose : These are non-governmental and non-profit making organisations which
contributes greatly towards saving money of the public sector and providing them with better
services.
Example : Cancer Research UK is one such voluntary organisation that works in UK.
This organisation is a Cancer Research UK and awareness charity in the UK and aims to reduce
the number of deaths caused by cancer.
Legal structure- Trust : These are not legal entities but work in providing services based on trust of all the
members.
 Unincorporated Association : These organisations are formed by a group of individuals
who come together to accomplish a particular purpose like clubs, societies etc.
International business environment
there is growth in the development of international markets that has led to increase in
competition globally. This is because the companies in order to earn ,ore profits enter those
markets where the demand of customers are unfulfilled and the local businesses of that country
are either financially or technologically backward to produce such goods and services to the
customers. Also governments have adopted less restrictive trade policies to allow entrance of
multinational companies in their countries so the international environment that affects
businesses have grown rapidly (Hillary, 2017).
Differences between organisations for profit, not-for profit and NGOs
Basis For profit Not for profit NGOs
Definition The primary goal of these
organisations it to make
profit by making goods
and services available to
customers based on their
tastes and preferences so
that sales can be increased
The main aim of these
organisations is to provide
social welfare or to
achieve common social
objectives. The surplus
earned by these
organisations are used to
These are non-profit
voluntary organisations
established by citizens
that can be organised on a
local, national or
international level.

and profits can be earned.
Their main focus is on
earning profits.
further achieve the
objectives.
Functions These organisations aim at
providing the customers
with goods and services
they need and want so that
profits can be earned by
selling the items to
customers. This will help
the organisations to
compete in the market
effectively and they can
also increase their market
share by reaching to large
number of customers.
These organisations
basically aim at providing
social care services so that
welfare and overall
upliftment of the societies
can be achieved. They do
not earn profits as this a
charitable work and the
persons involved form a
group by their own will to
bring social change with
no expectations of earning
profits.
These organisations are
not established by the
government of the
country but the people
involved in the
organisation aim at
providing welfare services
at a large scale so that
benefits can be given to
all the people of the
society.
Scope These organisations can
spread there businesses at
various locations as per the
assessment of the
profitability of their
expansion to different
places. Thes can be present
at the local, national and
international levels.
These organisations are
generally established to
bring welfare to a specific
community so that the
problems faced by that
community can be
eradicated. These
generally do not spread on
international levels.
These organisations aim
at bringing social welfare
at a large level and so
they can be established at
all the levels involving
local, national and
international so that
welfare at large scale can
be achieved.
Differences between micro, small and medium-sized enterprises
Basis Micro enterprises Small enterprise Medium enterprise
Meaning A micro-business has
less than ten
A small business has
less than 50 employees
A medium-sized
business has less than

employees and has
either a turnover of up
to €2 million or a
balance sheet total of
up to €2 million is
present in the
organisation. The
enterprises must clear
this criteria to be
called as small
enterprises.
and has either a
turnover of up to €10
million or a balance
sheet total of up to €10
million are defined as
small enterprises.
250 employees and has
either a turnover of up
to €50 million or a
balance sheet total of
up to €43 million is
present in these
enterprises.
Validity These organisations
are large in number
but they employ a
lesser number of
people than all the
other type of
organisations. But
these play an
important role in the
economic
development of the
country.
These organisations
are lesser than the
number of small
enterprises present in
the country and range
from convenience
stores to small
manufacturing plants.
These also includes
restaurants, small
grocery shops etc.
These organisations
are larger than small
and micro
organisations and
involve more number
of employees and
funds. They contribute
towards generation of
revenue of the country.
Examples of each
enterprise
Mantons Cards is one
of the examples of
small enterprises that
is located in UK and
offers greeting cards
for various occasions
Cafepod Coffee Co. is
an example of small
company which is
engaged in various
activities like
providing their
Orion Electro tech is
an example of medium
sized organisations
which gnerally works
for recruiting
employees for other

to their customers. customers with freshly
brewed and aromatic
coffee giving them the
best coffee experience.
organisations that
work in UK. The
company has a staff of
60 people and the
turnover of the
company is less than
€35 million.
P2 Size and scope of different types of organisations
The size and structure of the examples of private, public and voluntary organisations that
are present in UK are as follows :
H&M Vision : The business operations are aimed to run in a way that is socially, economically
and environmentally sustainable. Mission : Offer their customers with fashionable and quality clothing at best prices. Size and scope : H&M is an international company and there are about 5,000 H&M stores
across the globe. The scope for H&M is high as the awareness and preference of people
towards fashionable clothing is increasing with increase in their disposable incomes. Business objectives : To provide fashionable clothing to customers with changing fashion
(Jaber and et. al., 2015). Products or services : Provide fashion clothing to customers and earn profits. Legal structure : It is a public limited company and is owned by Stefan Persson.
 Stakeholders : Owner, managers, customers, government, suppliers etc.
The legal structure, size and scope of the company helps the company in achieving the its
business objectives and also the products that are offered by the company are in accordance with
the desire of the customers which helps it in increasing its sales and thereby the profits of the
company also increases. The number of stores of the company helps it in reaching to a large
number of customers and also the number of employees that work in the company help iot in
achieving its goals and objectives. The company is a public limited company which means it can
offer its shares to public that can help the company in gaining funds from a large number of
people so that it can expand its business into many untapped markets. This helps the company in
offering its products to the people in a large markets so that high profits can be gained.

Network rail Vision : To deliver safe railway services to citizens so that their journey can be made
enjoyable. Mission : To increase its railway networks all across the UK and provide safe railway
services to citizens. Size and scope : Network rail infrastructure manages about 21,000 miles of track and
40,000 bridges and tunnels in England, Scotland and Wales. It owns nation's 2,500
railway stations. As the population and pollution both are increasing at fast rate, the need
for more sustainable mode of transport arises which creates wide scope for Network Rail. Business objectives : To provide safe railway facilities to general public. Products or services : Railway services to citizens. Legal structure : Central government funded public organisation.
 Stakeholders : Citizens, government, external stakeholders etc.
The legal structure, size and scope of the company helps it in providing its services to a
large number of people in UK so that their convenience to travel to different locations can be
increased. The size of the company is huge enough to reach a large number of people as the
network of the company is widely spread and the company links various locations making the
transport easy. The company is funded by the central government which helps the company in
getting huge funds that are required for maintenance and repair services. This helps the company
in achieving its goals and objectives. This helps the company in providing the travellers with
efficient services so that they can reach to a large number of locations and make the transport of
people easy and cost efficient.
Cancer Research UK Vision : To reduce the deaths of cancer patients by developing advanced therapies and
techniques. Mission : To spread awareness of how people can reduce their risk of developing cancer,
reduce smoking rates and improve early detection of the disease. Size and scope : Cancer Research UK UK is the world's largest independent cancer
charity dedicated to saving lives of people. As the number of cancer patients are

increasing the scope for this institute to carry out research on curing cancer patients is
also increasing. Business objectives : Provide voluntary services for public welfare by identifying causes
and developing strategies to prevent and cure cancer. Products or services : Anti-cancer vaccines, radio therapy, chemotherapy etc. Legal structure : Funded by Central government.
 Stakeholders : Government, cancer patients, volunteers, communities, suppliers etc.
The size, legal structure and scope of the company helps it in achieving its company
objectives as the large size of the company helps it in reaching to a large number of citizens so
that welfare services related to cancer treatment can be given to them. The company is funded by
the central government which will help it in getting heavy funds for the research and
development in the sector related to cancer so that diagnosis and search for new medicines can
be efficiently done and many cancer patients can be treated efficiently. The size of the company
and its scope also helps it in achieving its objectives.
TASK 2
P3 Organisational functions and their interrelationships with each other
An organisation is able to successfully function and exist in the environment through all
the departments that are present in their structure and their work interrelate and link with each
other so that the common goals and objectives of the organisation can be achieved. Interrelationship between marketing and sales department : Marketing helps in
attracting customers and building strong and long-term relations with them so that sales
increase for the sales department. Sales department on the other hand increases sales
which generates revenue for the company so that appropriate funds are available for
marketing department for market research (Johnson, 2015). Interrelationship between sales and finance department : Sales department increases
sales and generates revenue for company so that finance department can prepare financial
reports and manage funds. Finance department can allocate appropriate funds for sales
department so that they can use various techniques to increase sales.
 Interrelationship between Production and R&D department : Production department
produces goods and services depending on the customer specifications which are

collected by R&D department. R&D department helps in detailing the production
department about the quality, quantity etc. about the products that are required by the
customers.
Advantage and disadvantages of interrelationships of organisational functions
All the functions of an organisation depend on each other so that the common goals and
objectives of the organisation can be achieved. These functions need to integrate and coordinate
with each other so that the information needed by one department to complete its task can be
provided by setting a link between them however, it also possess disadvantage as if one
department is lagging behind in time to complete a task, then other department that depends on it
for the required information also lags behind in time and the organisational objectives cannot be
achieved within specified time period (Kallio, Kallio and Blomberg, 2015).
Organisational structures of public and private organisations Hierarchical organisational structure : In this structure people are organised in
hierarchy of departments and the authority travels from top to bottom. Network rail
follows this structure where the information and instructions pass through hierarchy
structure.
Source : Hierarchical organisational structure .2019
 Matrix organisational structure : In this structure there are more than one bosses due to
diversified operations. Syngenta follows this structure and it is also called as project team
Illustration 1: Hierarchical organisational
structure .2019

structure. The company uses expert advise to link all the functional operations of the
company.
Complexities of different types of business structures
Different types of business structures creates various types of complexities in the
functioning of the business as the information needs to flow in the set format of structure that is
adopted by the organisation. This hampers the decision-making process in the areas where quick
decisions are required. Due to many stages through which the information needs to pass, the
quality and meaning of the information changes and the correct interpretation becomes
impossible that affects the decisions of managers.
TASK 3
P4 Identify the positive and negative impacts of macro environment.
The company Hennes & Mauritz uses macro environmental factors to study the external
elements and their effects on internal management. It can be considered as follows: Political factors: There are several factors which effects company at a great extent due to
the changes in political instabilities, parties and country's government. As a global brand
operated various number of stores across the world, monitoring the political risk in
important for H&M. Also, high taxation rates leads towards the company demotivation
form maximising their profits. Economic factor: The UK government shows the recovery criteria after the recession
period and the company experience the high growth rate according to the economic
factor. Despite the negative impact that Brixit has brought for currencies across Europe.
Hennes & Mauritz report that its June 2017 sales rose by 7% on a local currency as
compared to June 2016 and grow 10% when converted into Swedish currency (Kim and
et. al., 2015). Social factor: It includes the several factors such as demographics, age, income, culture,
occupation and languages etc. in external environment. UK people are highly educated
that are beneficial for expands businesses but differences in their educational background
creates difficulty to relate and design in the target market efficiency. Also, differences in
cultures, religions, and languages increase the cost of news broadcasting because it is
done in different languages.

 Technological factor: This includes the technological advancement, adoption of new and
latest technology, innovation, research and development etc. factors which effect the
company's performance. Easily internet accessibility in UK are considered as a positive
aspects to spread the services and information as well as several digital platforms also
presents in the market for smoothly access. In addition technologies become more
advanced so it impacts negatively because of the large competition in the marketplace. Environmental factor: H&M needs to emphasised on the environmental elements and
works for the social welfare along with the organizational objectives. The company's aim
to be 100% circular and renewable by 2030 which means that all products will be created
from old materials of the company and that only recycled and durable substantial will be
used for products. Whereas, frequently climate changes results in complexity in working
due to environmental conditions.
 Legal factor: This includes the laws related to the employment, discrimination,
intellectual property right, health and safety etc. for which Hennes & Mauritz is legally
bounded to fulfil. H&M has been caught up in several legal disputes regarding
infringement by clothing retailers. The company now operates tight risk management
system to avoid disputes which reduce the firm's reputation.
Porter's five forces model
This model helps the company in analysing the external factors that affect the company and also
the position of the company in market can be identified which helps it in making efficient
strategic improvements so that competitive advantage can be gained. Buyers power : It is the bargaining power of buyer which influences the business like the
change in taste and preference of customers, use of different products etc. H&M face
high competition in the market because customer preference change frequently related to
clothing. Supplier power : It is the power of suppliers to bargain about the prices of raw materials
they provide to the company which influences the prices of the company products. Competitive rivalry : These are the existing competitors that are present in the market and
affect the policies and strategies of H&M and also affect the competitiveness of the
company.

 Threat of new entrants : It is the competition that might increase in the market with new
companies dealing in the same kind of products enter the market which affects the
company strategies.
 Threat of substitutes :It is the threat of customers choosing something similar which are
available in the market at lower prices that helps in attracting the customers.
Advantages : This model helps the company in analysing the external factors that affect the
company policies and strategies. Also the company can deal with the customers and suppliers of
the company efficiently.
Disadvantages : The model focuses only on five factors that affect the business and does not
consider other factors like tax rates, trade tariffs etc.
VRIO framework
This model helps the company in analysing the factors that help it in achieving a competitive
advantage in the market. This model evaluates the following four factors of the company : Value : These are the valuable resources that are present with the company. H&M has
very skilled workforce which is valuable for the company and helps it in achieving its
goals and objectives. But the cost of the skilled labour force is increasing which leads to
the commonalty weakness. Rare : The company has a rare kind of manufacturing process and employees so that the
goods manufactured by the company are of desired quality. But as the rare kind of
machines are installed by the company to manufacture unique products the company cost
also increases. Imitable : As the company has a unique manufacturing process and a skilled base of
labour force the imitation cost of the products of the company is high. The trending
technological advancements can however lead the company technology to get easily
imitated and also it might become obsolete with time.
 Organisation : The company has a strong organisational structure which helps the
company employees to work together in harmony so that the company objectives can be
efficiently achieved. But as the number of employees are increasing the conflicts among
them is increasing and the organisational structure is also unable to meet the company
requirements efficiently.
Resources Valuable Rare Imitable Organisation

Supply chain Yes - - -
Products Yes Yes - -
Manufacturing
process
Yes Yes Yes -
Employees Yes Yes Yes Yes
Value chain analysis : This model helps the company to identify the costs that are
associated with all the activities that are carrion out in the business in generating final products.
H&M needs to identify all the primary and supportive activities which helps the company in
improving its processes so that the costs can be saved. The company needs to identify its primary
activities like logistics, marketing and sales processes etc. so that the loopholes can be identified
in these processes. This helps the company in reducing its costs by making improvement in these
processes so that profits can be increased. Also the supportive activities needs to be be identified
by the company like human resources, technologies used, stores etc. which helps in carrying out
the business of the company efficiently. There activities include costs which can be reduced by
improving their efficiency so that the overall cost of the company products can be reduced.
TASK 4
P5 Conduct internal and external analysis of organisation by analysing strength and weaknesses.
SWOT of H&M:
Strengths:
 The company have strong global presence with the good brand value or image.
 Customers are highly satisfied from the company's products and prices which gives
strengths (Zelenkov, 2015).
 Financial performance of Hennes & Mauritz are strong enough to perform the financial
activities.
Weaknesses:

 Competitors of H&M can easily replicate and use fake labels regarding their design,
market and styles.
 Supply chain management is not effective and they do not able to response timely on
changing consumer needs and market trends. The company is popular for making affordable clothing but that sometimes affect the
products quality.
Opportunities:
 Online stores and digital presence are increasingly more as well as highly popular in the
market.
 The company should expands their business operations in global market which are more
in emerging trends. Lifestyle an buying power of people are improving across the world and they become
more brand conscious, it provides an opportunity (Preuss, 2017).
Threats:
 Rapidly changes in market trends needs continuous innovative improvements create
threats for the company.
 Increasing competition is also treated as a threat for H&M.
 A risk of foreign exchange fluctuations which reflect the company's profitability.
SWOT of Cancer Research UK:
Strengths:
 World class research along with the researcher team strong aids in more awareness of
cancer to public by reducing it in early stage (Zelenkov, 2015)(Hierarchical
organisational structure .2019). The informative and interactive website is a strength of Cancer Research UK where all
things are revealed and made one of the most trustable Cancer Research UK organisation.
Weaknesses:
 Fund collected by different means will be sort of research because of is a lengthy
procedure. Staff retention is more in Cancer Research UK which directly leads to high cost and
reduce productivity.

Opportunities:
 With the helps of Cancer Research UK UK, chances of getting new drugs in the market
that are Cancer preventing drugs (Ramli and Twaha, 2015). Funding can be reduced in future to grow because students, doctors, scientist will be
work in an organization.
Threats:
 Funding is treated as a threat because its totally depends on public funding. If funds is not
sufficient for research activity then process chain has to stop.
 Experienced scientist and doctors of other countries may not work with Cancer Research
UK for a long time.
P6 Explain how strength and weaknesses interrelated with external factors.
Hennes & Mauritz Political: Due to the political factor a company have strengthen in their rules and
regulations but change resistance is not done timely this effect the company's operational
functions and activities. Economic: The company experience high growth ratio due to the economical factor and
helps in growing 10% sales at a high potentiality when currency converted into Swedish. Social: Rapidly change in the market trends and customers expectations requires
continuous improvements through innovative concepts so a company are unable to fulfil
the needs and wants of customers on time. Technological: Due to changes and advancement in technologies a company is lacking in
digital presence as well as online stores so H&M have an opportunity to use
technological advancement in effective manner (Sarsby, 2016). Environmental: The company management emphasised on conservation and sustainable
development of company at a same time and companies take care of that they are not
harming external environment. So a company should aim to be circular and renewable by
2030 that means products will be created from old materials.
 Legal: Every company requires to follow legal rules and regulations which helps in
gaining customer trust and results in more satisfaction. Through this Hennes & Mauritz
involves in legal disputes regarding infringement but now a company operates through
risk management system and focus on building company's image.

Cancer Research UK Political: Political factor includes the involvement of political parties which effect the
company's operations. This is a strength for Cancer Research UK that the company have
strong political networking to conduct research in appropriate manner. Economic: Assailable to economic changes or fluctuations may creates some difficulties
and treated as a weakness for the Cancer Research UK. Also, it changes or impacts on the
funding procedure of company (Zahari and Romli, 2019). Social: Non-profit marketing needs to take account on the basis of believe in particular
society. There will be different cultures of people with shared values influence the work
culture of Cancer Research UK. Technological: In the technological advancement era Cancer Research UK are advanced
in digital presence and expertise in this field. Environmental: Minimum wastages of natural resources helps in becoming the effective
research company and reduce employees turnover ratio.
 Legal: Data protection legislation regulatory authorities timely change legal laws which
affects company in a way that they also have to do effective and corrective research.
Justify the SWOT analysis to influence decision-making
SWOT analysis allows businesses to identify the factors which determine the actions,
strategies which are used as a support of taking business critical decisions. This is to enhance
strengths that are identified, overcome from weaknesses, capitalised on the opportunities and
converting threats into opportunities as well as weaknesses into strengths. This is also beneficial
for the companies because it helps in deciding whether or not the organisational objectives are
obtainable and enables to take strategic decisions through effective planning and solve the
compliances of workplace (Wang and Li, 2016).
Critically evaluate the micro and macro factors upon business objectives and decision-making
Business environment includes the both factors in which micro environmental forces
includes competitors, suppliers, investors, customers and so on as well as macro factors include
political, economical, social, technological, legal etc. These factors are impacts on the
organizations decision-making policies and procedures which have significant impact upon the
business success factor at a great extent. Business analysis tools such as PEST and SWOT that

should be carried out by the strategy maker of an organization which effect the objectives and
decisions.
TOWS matrix : This matrix helps the companies in analysing, comparing and
developing a suitable strategy for doing their business. This matrix is different from the SWOT
analysis as it helps the company to formulate strategy.
TWOS helps the company to analyse the effect of external factors in relation with the
internal organisational factors. An analysis for H&M using this matrix is given below : Strength/Opportunity : The government of UK promotes entrepreneurship which helps
the company to grow in the market and offer variety of products in the market. Weakness/Opportunity : massive increase in unsold inventory has increased the storage
cots but the company can increase promotions online to sold them by giving offers and
discounts. Strength/Threat : The products offered by the company are affordable and have value for
customers but the changing needs of customers is a threat.
 Weakness/Threat : The company's mall strategy failed in some countries which increased
its losses and also increasing competition is a threat for the company.
CONCLUSION
It has been concluded from the above report that every organization has to be followed
legal rules and compliances which dominate in country's operations. Coordination among all

departments as well as internal and external environment assists in accomplishing the long term
goals and objectives. Internal factors are in control of a business and changes takes place
accordingly. Whereas, external factors impacts positively and negatively on the business
performances and functions. The company hierarchical structure helps in smooth options that
helps in to maximising the company's profitability as well as increase market shares.

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