Unit 1 - Business and the Business Environment

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Business and the Business
Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
Different types, size and scope of organisations....................................................................3
LO 2.................................................................................................................................................7
Interrelationships of various functions within organisation and link to organisational structure
................................................................................................................................................7
LO 3.................................................................................................................................................9
Positive and negative influence/impact of macro environment on business operations........9
LO 4...............................................................................................................................................12
Internal strengths and weaknesses of business and their interrelationships with external macro
factors...................................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15
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INTRODUCTION
Business is referred as enterprise or organisation which is engaged in industrial, commercial
and professional activities (Alotaibi, 2016). On other hand, business environment is defined as
aggregation of both internal as well as external factors that helps in contribution of development
of organisation and enhancement of employees, technological innovation, meeting need and
demand of consumers and others. It is very important for organisation to consider each and every
factors of environment in order to run business activities and operations in effective manner.
Such factors impact business for attainment of optimum results. The organisation selected for
given assignment is Next Plc which was established in 1864 at United Kingdom. It is
multinational business dealing in retail sector and serving worldwide. This is private organisation
having 700 stores across UK market. According to scenario given in report, public as well as
voluntary organisations are chosen names as NHS and Oxfam respectively. The main aim of
report is to discuss about different types, purpose, legal structure and mission, objectives of all
three private, public and voluntary organisation. It has covered various functions of organisation
and their interrelationship in order to attain set goal and objectives. For evaluation of
environmental factors, PESTLE analysis has been conducted to find relation with both micro as
well as macro aspects.
LO 1
Different types, size and scope of organisations
It is very important to identify types, sizes and scope of all three forms of organisation. They
are described below:
Private Sector
It is defined as form of partnership, person, corporation and agency which is not operated
through public or profit body (Bah and Fang, 2015). This consists of those businesses which has
motive of earning profits that are not operated as well as owned by government. Next Plc is
private organisation that is running their activities and operations for motive of profits.
Mission
The mission statement of Next Plc is to become natural choice of retail segment at UK by
providing fashion wear for men as well as women who are expecting high quality, style and
distinction in clothing.
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Vision
The vision statement is to make commitment to offer beautifully designed, excellent
quality of clothing, exciting and home products which are functional, made, safe, outstanding,
sourced for meeting expectation of consumers.
Objectives
Main objective of Next Plc is delivering long returns to shareholders with collection of
sustainable growth in order to earn per share as well as paying cash dividends.
Purpose
The main purpose of Next Plc is to supply premium quality of products to consumers in
order to provide them satisfactions so that they are attached towards business and brand along
with rise in profit margins and sustainability (Calabrese and et. al., 2018).
Legal structure
Private organisation legal structure is divided into three categories such as:
Sole Proprietorship- It is defined as single person business that is liable to run, operate
and manage. Such types of enterprise require small investment and resources for business
activities and operations. This includes market traders, hairdressing and newsagent.
Partnership- This is defined as association of people including two to twenty partners.
All working partners are responsible for equal proportion of sharing of risk, liabilities and others.
It is formed by making an agreement among partners which includes all legal rules and
regulations.
Private Limited Company- It is defined as joint stock business which has separate legal
identity from their owners (Chládková, 2015). Such organisation is small in size that is run by
families who are owned by shareholders. In this shareholders are part of business where they are
not liable to sold shares to general public.
Size
There are more than 50,000 numbers of employees working in an organisation. Size of
respective business is approx 3500 square feet as well as small stores which are 500 square feet
following concept of large departmental store. Moreover, activities are divided into two different
complementary named as catalogue as well as retail store across Ireland and England.
Scope
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Next Plc is operating their activities and functions to local, national and global level. The
scope is enlargement of business in proper way through controlling as well as directing activities
for consumers. Respective organisation is already operating at UK market which has an aim to
come up with fresh goods and services in home and clothing segments.
Public Sector
It is defined as organisation that is coordinated as well as controlled by government in
order to serve citizens of country in effective way (Clarke, Li and Xu, 2016). The main motive is
to provide services to people so that they get benefits. In this report, NHS is chosen for public
sector to provide social as well as health care services in Northern Ireland market.
Mission
The mission statement is to focus on improving wellbeing as well as health of patients
and providing them with positive experience and valuing professionalism & excellence to make
life better.
Vision
Vision is building network in order to reach huge number of individual as well as
organisation through creation of sophisticate atmosphere which assist in bringing innovation and
change for people.
Objectives
Main objective is improving service quality through elimination of errors from overall
procedure and supporting employees in order to provide them with best services.
Purpose
The purpose is to provide services to people with motive of treating them well rather than
earning any profits margins.
Legal structure
The legal structure of public sector organisation is divided into three forms such as:
Departmental Organisation- This organisation is run by government department which
is independent in nature and forming part of it. These enterprises are allocated budget which is
prepared by legislature and revenue is goes to Treasury of country. This includes posts,
telegraphs and others.
Public/Statutory Organisation- Such types of business comes into existence through act
of parliament which define functions, rules, power, responsibilities, regulation of corporation.
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Each and every aspect is decided by act of parliament having financial control over commercial
activity.
Government Organisation- These types of organisation are incorporated under act and
formed for commercial concerns as well as business reasons. In this composition of government
such as local, state and central own 51% of company and shares. This includes state banks,
railways and so on.
Size
The size of NHS is vast as it consider number of employees working in an organisation
that includes 106430 doctors, 285893 nurse as well as health visitors. They are provided training
in specific service areas like transportation that considers emergency as well as accidents,
dentists, mental health services, optician and many more.
Scope
NHS is highly recognised which is known for their services at United Kingdom in field
of social care and health to large number of people. In addition to this, they focus on providing
services in one roof for gaining large market shares.
Voluntary Organisation
This is defined as businesses where there are volunteer to conduct business activities and
operations on regular basis (Erasmus, Strydom and Rudansky-Kloppers, 2016). These volunteer
are unpaid because they perform work as per their own choice and wish. They are established to
work for welfare of people. Such are considered through autonomy from state, non-for-profit
orientation and others. Here, voluntary organisation selected for report is Oxfam that focus on
eliminating poverty from nations.
Mission
Mission statement of NHS is adopting different methods as well as way in order to
eliminate poverty from world. They are regarded as symbol of change to global nations through
empowering individual for their bright futures.
Vision
Vision is building world free from poverty where they envisage nation in that individual
can easily influence decisions which is affecting lives, enjoying rights and responsibilities. They
want to create world where everyone is treated as well as valued equally.
Objectives
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Objectives of Oxfam is using collecting of sustainable development programs, fair trade,
advocacy, public education, campaign, humanitarian assistance in conflict as well as disaster.
They want to remover poverty at community, household, local, national, regional and
international level in context of rights based development.
Purpose
Oxfam has purpose to work for their people in order to remove poverty from market and
improve their living standard of consumers.
Legal structure
Voluntary organisation has following legal structures which are described below:
Associations- It is the common type of unincorporated structure for both community and
voluntary organisation and favoured through small as well as new groups. Such type of
association exists where group of individual band collectively in order to perform agreed work.
This is flexible and cheap in nature for setting up and running activities and operations.
Trusts- This is defined as traditional structure for older and charities. It is governed by
trust deed that set out objects, name of trustees and administration. Such type of structure does
not require membership and power is held in hand of authority.
Size
The respective organisation has spend approx 1.27 billion dollars in order to reach 22.2
million individual for providing of them with best services to rise their standard of living in an
effective and efficient manner.
Scope
Oxfam is existing in market with motive of eliminating poverty at mass level through
putting vulnerable efforts so that they can be equal treatment to each and every individual. The
main work of Oxfam is to perform on fair trade, debt services, justice, providing of education,
gender equality so that standard of people rise in positive way.
LO 2
Interrelationships of various functions within organisation and link to organisational structure
It is very important for organisation to coordinate with each and every department so that
all functions as well as activities can be carried out in most effective manner. There are several
divisions which are working in business for attainment of goal and objectives. Each of them has
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positive relationship among each others. Some of the interrelationships of different functions
within organisation are described below:
Marketing with Human Resources
These both marketing and human resource departments have to work collectively in an
organisation for attainment of positive outcomes (Eruemegbe, 2015). Marketing department of
Next Plc assist in creation of brand value and goodwill at marketplace whereas human resources
has to hire skilled and capable employees for better work performance. They both perform all
activities and operations collectively so that their desired results are accomplished. In order to
achieve objectives of Next Plc, both required proper coordination among each other to know
what things are going in their division. They work together by conducting meetings and
feedbacks on regulars so that improvement can be made. Marketing as well as Human resources
should make decisions in their own division as they are expertise in specified field. As Next Plc
is following hierarchical organisational structure where roles as well as responsibilities are
passed through proper path to attain set results with help of all members in decision making
process. For example, marketing department of Next Plc requires marketing executive in this
context they approach to Human resources who post vacancy by considering requirement of
marketing head and accordingly hire most suitable and capable candidate for work performance.
On other hand, human resource has to make regular plans and policies for their employees who
are working in respective organisation by considering criteria of all departments and divisions so
that they can highly skilled and capable employees.
Research & Development with Human Resource
Human Resources and R&D department has to work collectively for better results. There
should be proper understanding among each other so that they can work as plans and policies of
business (Gavurova and et. al., 2017). In every organisation, R&D plays an important role
because overall business lies on such divisions. In context of Next Plc, both are required to
perform their own roles and responsibility to know about each other. For attainment of
organisational objectives, HR is liable to appoint skilled and expertise R&D manager so that
proper research is performed for retail industry at market, understanding of competitors and so
on. R&D has to work with HR to implement new methods and techniques for market analysis,
product development, training and development. These both are required to make proper
decisions which provide them long terms benefits so that better results are attained. Respective
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organisation is following hierarchical organisational structure so they need to conduct R&D for
each and every department from up to down and accordingly providing information to HR for
selecting any new or additional employees in particular field. For example, if R&D functions
have adopted new technology of manufacturing in their business then in this context, HR is liable
to provide training and development to their employees so that they can apply all those machines
and equipment effectively at workplace without facing any problems or difficulty.
Therefore, apart from these above functions there are other divisions also such as legal,
production, manufacturing, finance, operations and so on which work together for attainment of
business goal as well as objectives. All of them have to coordinate with each other for knowing
about their working style and implement in business to accomplish set goal as well as objectives.
It is also important for business to consider need and demand of all departments so that they can
fulfils their need and demand in effective manner.
LO 3
Positive and negative influence/impact of macro environment on business operations
Business operations are defined as activities which are carried by enterprise on daily basis
to enhance value of firm as well as earn high profits (Grigore and Drăgan, 2015). Such activities
should be optimised in order to earn more revenues for covering expenses and earning profit for
business owner. In this case, employees assist to achieve goal and objectives of business through
performing different functions like manufacturing, marketing, accounting and so on. The
business operations are different in all industry due to nature and size.
In context of Next Plc, it is retail industry, so business operations have different meaning.
Here, main goal is to stock goods which consumers are looking for as well as prices that they are
willing to pay. It is important for retail sector to maintain inventory system to know about at
what time which stock is required to reduce instances of dead-stock. The dead-stock is defined as
those goods which is possessed by business but does not have high demand. Also consumers
should be provided with credit options so that they can buy products and services.
The other business operation in service industry is to divide front as well as back end side
of firm. Management has to ensure about both divisions are running in efficient manner in order
to prevent laxity on one side that hinder achievement of organisation’s goal and objective
(Business Operations, 2020). In front end, business has to focus on streamlining service delivery to
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people so that their satisfaction level rises. Also they have to take feedback as well as complaints
from consumers for knowing their expectation and improving service delivery. On other hand,
back end, management need to hire right person for each division. Business operations are
improved through measuring performance, keeping with latest trends and streamline process.
Macro environmental factor are defined as those which influence business activities as well
as operations in direct manner. For this, it is important to build plans, policies and strategies to
gain competitive advantages at marketplace. Macro or external factors can be evaluated through
help of PESTLE analysis which is described below:
PESTLE Analysis
This is defined as framework or tool which is applied to monitor external aspects that
have impact on performance of organisation (Groşanu and et. al., 2015). It is used when new
venture is started or entry into foreign market. There are six elements of PESTLE which are
described in respect of Next Plc. They are as follows:
Political Factors- This is defined as various activities that is related to politics in terms
of government rules, regulations and so on. In context of Next Plc, it is operating in different
nations so changes taken in that place effect decision making of business. Brexit has impact on
profitability of business by rising prices of products in negative way.
 Positive Impact- Adoption of new plans and policies assist business to enhance their
profit margins in effective manner.
 Negative Impact- Brexit has reduce income of people in negative manner which leads to
decline their purchasing power and impact profits of business
Economic Factors- Such factor includes interest rates, tax pay and so on which impact
economic condition of nations. Inflation leads to rise in prices of products which have impacted
organisational activities. Positive Impact- This helps in gaining sustainability as well as productivity for meeting
need and demand of consumers.
 Negative Impact- The rise in price of products decline buying capabilities that impact
business in negative manner.
Social Factors- These factors are related with demography, age, gender and so on. The
need and demand of consumers keeps on changing which impact business and their profit
margins in positive as well as negative manner (Huang-Horowitz, 2015). Respective organisation
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has to analyse market need and demand on regular basis so that they are aware about their
consumer requirements. Positive Impact- This impact leads to change in taste as well as preference of consumers
in positive manner as it rise in competition which compel business to make changes in
order to gain profitability and sustainability at marketplace.
 Negative Impact- It is not possible to make frequent changes in products and services
provided by business due to incurred of large cost and time that impact in negative
manner.
Technological Factors- This is defined as that factors which requires innovation,
research and development, adoption of new methods, tools and so on (Khan and Quaddus, 2015).
Such factors provide long term benefits to business. In context of Next Plc, it has to perform
research and development for competing with competitors. Positive Impact- This factor impact in positive way by improving experience of
consumers in better manner in order to enhance productivity level.
 Negative Impact- Technological factors impact business in negative manner because it is
expensive for organisation to adopt new technology along with it requires providing
training and development programmes for employees.
Legal Factors- This factor consists of regulations, laws, legislations which affect
functions of business to achieve positive outcomes (Moroni, Arruda and Araujo, 2015).
Respective organisation has to implement all legal laws such as health and safety, consumer
protection and so on. Positive Impact- If respective organisation follows all legal laws in their business then it
helps to raise brand value and goodwill in mind of consumer and raise satisfaction level
of all work forces in effective manner.
 Negative Impact- In case of failure to adopt legal laws, business has to fine penalty and
fine also decline brand value and goodwill in minds of consumers.
Environmental Factors- This factor includes different types of regulations, CSR
activities and ecological conditions which impact business and their operations. It is significant
for retail industry to follow all environmental laws for running firm in successful manner.
Respective organisation focus mainly on reduction of wastage.
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 Positive Impact- Such element leads to bring loyalty in minds of consumers which assist
in creation of sense of belongingness among them.
 Negative Impact- The excessive use of chemical while manufacturing products by Next
Plc lead to impact environment in negative manner.
LO 4
Internal strengths and weaknesses of business and their interrelationships with external macro
factors
The organisation has to identify internal as well as external strength and weakness of
business with help of SWOT analysis (Park and et. al., 2017). This is the tool that is used for
analysis of strong and weak point of business and creating opportunities along with removing
threat. It has also interrelationship with external macro factors of firm. The SWOT analyses of
two different organisations are as follows:
SWOT Analysis of Next Plc
Strengths- Next Plc is regarded as top brand at mass market which provides high quality
product, unique style and value for money (Prajogo, 2016). Success of respective organisation
depends on designing of their own products and selling under own level. It is also available at
online channels to reach to large number of consumers at their own place. In context of fashion
industry, it is also moving itself in such speed to meet competitors.
Weaknesses- The large property of Next Plc is owned by organisation is rented that leads
them to pay high amount of rents on monthly basis. Sometimes, regular consumers buy products
from competitors due to non-availability of products during their purchase. This lead those to
conduct survey on regular basis so that consumer expectations are meet on time basis. The time
taken for decision making is more which reduce innovation at organisation.
Opportunities- The respective organisation has an opportunity to expand their brand at
online site with help of internet to overcome traditional methods (Saleem, 2017). With rise in
large number of population at current scenario, Next Plc has opportunity to target all those
increased consumers which also leads to rise in growth of tourism sector. The identification of
new market as well as selling goods in that leads to create fresh opportunities. Manufacturing of
new products which is beneficial for health of consumers leads to provide advantage to
respective organisation.
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Threats- The decline in number of suppliers’ leads to rise in bargaining power of people
over time period. There is creation of economic as well as unstable financial environment
because of fluctuation in rate of interest. It is very difficult for organisation to manufacture
product which matches preference of consumers. Also business is facing consumption threat of
existing goods in order to decrease with substitute goods at marketplace.
SWOT Analysis of NHS
Strengths- There is no competitors of NHS as it focuses on providing emergency as well
as accident services to people (Shehu and Mahmood, 2015). Staff working in respective
organisation is highly skilled, capable, experienced to provide treatment to patient and raise their
confidence for better recovery.
Weaknesses- Respective organisation is unable to meet with need and demand of people
due to rise in population and nurses are limited to attend each and every patient in an appropriate
manner.
Opportunities- They have an opportunity to form volunteer committee which is already
to arrange as well as plan scheme, events and programs for people.
Threats- NHS focus on providing activities as well as operations on contract basis which
hinders self interest of people to gain competitive advantages.
The interrelationship of macro environmental factors on strengths and weaknesses are as
follows:
Political factors Strength- Such factors assist in building best strategies as well as tactics for
gaining positive results.
Weaknesses- In organisation, political factor creates tax regime as well as
chaos that lead to hinder self interest of business.
Economic
factors
Strength- Brexit assist organisation to gain potential advantages in order to
enhance business boundaries.
Weaknesses- Brexit has impacted prices of products in negative manner.
Social factors Strength- The changes in consumer preferences as well as taste leads to
bring advanced techniques and tools that rise in competency level.
Weaknesses- Change in taste and preferences it is difficult for organisation
to meet need and demand of consumers.
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Technological
factors
Strength- Adaptation of new tools as well as technology provides positive
outcomes to business.
Weaknesses- It is difficult to meet or handle new types of machines by
business in positive way.
Legal factors Strength- There is enhancement of legal regulations at work place as well as
organisation.
Weaknesses- This effect on working style of organisation due to change in
law and regulations.
CONCLUSION
The report concluded that business environment plays an effective role in attainment of goal
and objectives in effective manner. It is important for organisation to identify size, scope,
purpose, mission and vision of business so that they can make plan and strategy and working
accordingly to attain desired goal. There is interrelationship among each and every department
such as legal, HR, finance, marketing so that organisation goal and objectives are achieved.
Macro environment impact business in both positive as well as negative manner. This is also
essential to identify strengths and weaknesses of businesses and link them with macro
environmental factors.
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Online
Business Operations. 2020. [Online]. Available through:
<https://corporatefinanceinstitute.com/resources/knowledge/strategy/business-
operations/>.
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