Management Report: Aardhman Animation Business and Environment

This report provides a comprehensive analysis of Aardhman Animation, a British animation studio. The first section differentiates between profit, non-profit, and public sector organizations, discussing their purposes and characteristics. It then explores the distinctions between micro, small, medium, and large enterprises, considering their market share, profit share, growth, and sustainability. The report also examines organizational structures, including functional, projected, and matrix structures, and discusses the complexities of transitional, international, and global organizational structures. The second section focuses on macro-environmental factors affecting Aardhman Animation, including a PESTEL analysis, SWOT analysis, and Porter's Five Forces analysis to understand the external factors impacting the company's operations and strategic decisions. The report aims to provide a thorough understanding of the business environment and its effects on the animation industry.

Running Head: Management
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Aardhmna Animation Company
Business and Business environment
7/28/2019

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Contents
Section 1......................................................................................................................................................2
Difference between profits, nonprofit and public sector organization.........................................................2
Purpose of the organization.........................................................................................................................2
Difference between micro, small, medium sized and large enterprises........................................................3
Market share, profit share, growth and sustainability..................................................................................4
Objectives of the micro, small and medium enterprises..............................................................................4
Organizational structure and functions........................................................................................................4
Complexities of transitional international and global organizational structures...........................................6
Section 2......................................................................................................................................................7
PESTEL Analysis........................................................................................................................................7
SWOT Analysis...........................................................................................................................................9
Porter’s Five Forces...................................................................................................................................10
References.................................................................................................................................................12

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Section 1
There are various types of the organization which is established for the different purposes
and have their different size and nature of the business. Some organization is prepared for the
profit purpose and some are prepared to provide the social services to the society. There are three
types of the organization which is profit, nonprofit and public sector organizations. Each
organization is incorporated for different purposes and provides a different kind of services
(Cosh, et al., 2012).
Difference between profits, nonprofit and public sector organization
A profit organization is that organization which is made for earning the profit. Their
major aim is to make the money and they are concerned with their own interest. A non-profit
organization is that organization which main aim is to help the community and they are
concerned with the money. The profit earned by the company is distributed to the owners in the
profit organization but in the nonprofit organization, if they earn the profit then it will be
recycled back to the corporation and used for the public activities and the benefit mission (Ford
and Randolph, 2015). Based on their net income, the profit organization has to pay the taxes
whereas in terms of the nonprofit organization they are exempted from paying the income tax.
Another important organization is the public sector organization which is operated and
owned by the government. All the public services and entities and enterprises are included in the
public sector enterprises. The main aim of the public organization is to provide the services to
the general public and they also work to the department budget. The taxpayer owned the public
sector enterprises and the national and the local government manage the work on behalf of the
public (Horwitz, 2015).
Purpose of the organization
The major purpose of the profit organization is to maximize the profit whereas the
purpose of the nonprofit organization is to fulfill the need of the society and community. The
main purpose of the public sector organization is to not earn the profit but to provide the services
to their citizens. There are many companies which are considered as the profit organization such

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as real estate companies, insurance companies, retail stores, restaurants, etc. (Zhou, 2016). The
nonprofit organization also working for the benefits of the community and helps in serving social
services such as TLG, The Brillian Club, Fair Ways, etc. Examples of the public sector
organization are electricity, fire services, public transport, postal services, etc.
The advantage of the profit organization is that they maximize the profit by fulfilling
their goals and objectives whereas the nonprofit organization focuses more on the need of the
society and community. Disadvantage of the profit organization is that they have to pay many
taxes to the government whereas the nonprofit organization do not earn more profit so they do
not extend their social services.
Difference between micro, small, medium sized and large enterprises
There are majorly four types of enterprises micro, small, medium and large. Every
enterprise is made for some different size and scope. The micro-enterprises are those enterprises
which have the employees fewer than the10 and the annual turnover of the enterprises does not
exceed 2 million Euros (Wang, 2016). The micro-enterprises generally deal with the local market
as they have microfinance. In the UK, 99.3% of the market is covered with small and medium-
sized businesses. In small-medium enterprises, the employees are generally fewer than the 250
and the turnover of the company does not exceed from the Euro 50 million and the balance sheet
of the total does not exceed with the Euro 43 million (Rizos, et al., 2016). They have the
authority to access a particular area with moderate funds. Large enterprises in the UK are
generally the private companies which have the employees more than the 250 and the annual
turnover should be greater than the 105 billion euros and the total of the balance sheet should be
more than the euros 2 billion (Koliba, et al., 2011).
The pros of the micro, small and medium enterprises are that they get the loans from the
banks easily as the country is promoting such kind of the organization. They also get much
relaxation from the taxes. The cones are that they could not expand their market at the large
manner as they have to face the problem of lack of capital. The pros for the large enterprises are
they can deal in the international market to enhance their growth but they have to pay many taxes
and also has to follow many rules of government.

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Market share, profit share, growth and sustainability
The market share of small and medium enterprises is very large in the UK market. The
profit share of the small and medium companies also very high and they are contributing highest
to the GDP of the country. Some large enterprises are earning the profit and some are indulged
with the losses. Large enterprises generally deal with the international market so the growth and
the sustainability of large enterprises are much higher. The growth of the medium enterprises is
low as they do not have the accurate fund to the expansion of the business and they also do not
trade with the international market (Ðurić, 2017).
Objectives of the micro, small and medium enterprises
The mission and the objective of the micro, small and medium enterprises are that the
engagement in the manufacturing and production of the plant and machinery can be enhanced
more. The objective is also to engage in the services and invest in the equipment. The exports to
the international market can be enhanced so that the growth of the country can be done. The
objective is also to improve the technology and make the environment more innovative (Zhou,
2016). If the SMEs start trading to the international market then the competition will be
increased and the growing expansion of the business environment can be seen. The growth in the
country can also be seen with the MSMs as they contributing to the GDP and are also giving
their contribution to the export, production and increasing the employment. Large enterprises
have a massive scale so they deal with the international market and enhance marketing in the
global environment. The supply chain management with the international market is very large
and also provides the perspective of the overall business in the international market (Koliba, et
al., 2011).
Organizational structure and functions
Each organizational and the business enterprises have some organizational structure so
that they can achieve their goals. In the organizational structure, the task is allocated to the
person by assigning their roles and responsibilities and the coordination is maintained at the
different level of the organization. There are three types of the organizational structure which are
functional, projected and matrix. The most common form of the organizational structure is the
functional organizational structure in which the information is transformed through the head of

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the department. In a functional organization, people are grouped as per their skills and
knowledge and as per the size, these groups are managed by the directors of the companies. In
these types of organizational structure, the project and the operational work has to do by the team
member at the same time (Soto-Acosta, et al., 2016).
There are some pros of the organizational structure such as the task is allocated to the
person by assigning their roles and responsibilities and the coordination is maintained at the
different level of the organization. The disadvantage of the organizational structure is that there
is the lack of understanding at the different level of the departments. In the functional
organizational structure the communication process is very rigid.
Source: edrawsoft.com
The projected organization is the organization which is organized by the projects and the
project manager has to control over them (Horwitz, 2015). In these types of organizational
structure, there is no department so the resources are also not associated with that. The
employees or the staffs have to report to the project manager only as there is no head. When the
projects get completed the employees have to search for the new job as the projects get
completed. The matrix organizational structure is the merit of both functional and the projected
organizational structure. In this organizational structure, the team members have to report to the
functional manager or the project manager. There are two types of matrix organization strong

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and the weak. In the strong matrix organization, the power resides to the project manager
whereas in the weak matrix organization the power resides to the functional manager.
Complexities of transitional international and global organizational structures
Organizational structure has certain functions such as it creates the good flow of the
communication which also helps in making the coordination among the different departments of
the company. The hierarchy is maintained in the organizational structure which helps in flowing
the information. In the transitional organizational structure, the complexities have been seen in
the operations and the trading. Transitional is the mixture of the multinational and the
international companies which have the decentralized organizational structure (Soto-Acosta, et
al., 2016). The major complexities in the organizational structure are facing in the internal
manpower issues, etc.
International companies also face many complexities in the organizational structure such
as they face the issues regarding the legal, customs and regulatory. Every country has different
taste so they also face the issue of the failures in terms of the products. The international
companies do not have any strategy as they are the foreign setup or the branches so the decisions
taken by the company is always from the domestic country. In the global companies, the
organizational structure which is followed is the centralized approach in which the decisions are
taken by the top management of the company. The complexity which has been seen in this
organizational structure is that legal issues are faced (Buse, et al., 2016).
If any business organization has to complete their mission then they have to follow the
decentralized organizational structure as they are responsible for the execution of the objectives.
In the decentralized organizational structure, the decisions are taken with the concern of the
lower employees also. In this organizational structure, more coordination is seen among the
different levels of the activities. So it is evaluated that different organizations are prepared for the
different purposes and each organization follows some structure which helps in achieving the
objectives and goals of the organization (Ahmady, et al., 2016).

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Section 2
Introduction: Aardhman Animation Limited is founded in 1972 by the Peter Lord David
Sproxton. The company has the headquartered in Bristol, England. The company is the British
animation studio which is majorly known for the films and uses the techniques of the animation
and characters to make the film more attractive. The worth of the Aardman films worldwide is
$1 billion (Kim, 2014). In this report, the factors which are affecting the macro environment and
have an impact on the UK retail sector will be explained.
Macro environment analysis of the company Aardhman Animation Limited
PESTEL Analysis
Political factors: The animation industry is growing rapidly and considered as the most
entertaining industry of the market. The government has made many rules and regulations
regarding the industry of the animations as the tax have increased from the previous years. The
company provides entertainment sources to the public so they have to pay many taxes
(Loriguillo-López, 2017). It has been evaluated that 20.04% films are prepared in Europe which
has been made through the animations. In the year 2014 the market animation of the Europe is
20.04%. The government has taken huge taxes from the media and the entertainment sources in
the year 2018 so it has affected the company in paying the taxes.
Source: (Bendazzi, 2015).
Economical: In the field of the animation industry the cost of the labor is very high so it
becomes the economic issues for the company. Animations films include many digital

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animations in which games, creating websites and online communities so the technology needed
for this is very updated which indulges of the high cost (Kenny and Broughton 2011). The
changes in the technology of digital animations negatively affect the company.
Social: There are many social factors which affect the company in a large manner such as
the population of the UK, growth rate, age group, etc. The animation movies were majorly
watched by the small kids so the company earns high revenue from the age of the children’s
only. The social mobility has increased with the animation industry and the attitude of the people
towards things has also changed (Maselli, 2018).
Technological: Technology has a huge impact on the profitability of the company. This
is the major factor which is affecting the external environment of the company. As in the fast-
changing world, technology is also changing rapidly which is impacting the company. In the
animation, high updated technology is required especially in the digital animation so it is the
major factor. The impact of the internet has made the work easy for the animation film industry
(Bendazzi, 2015). For the 2D and 3D animation high technology is required. In the year 2014,
EUR 2.12 M has been received in total with the animated projects. So to earn more profits the
company has to upgrade their technology.
Environmental: There are many environmental factors which affect the animation
company such as the values of the customers, market value, attitudes of the staffs, organizational
culture, etc. The organizational culture of the company is good as whenever any decisions have
to be taken the company takes it by considering every employee. The values of the customers
have also increased as they are providing the digital animation so it was attracting them. The
staff and the management of the company are satisfied with the new policies of the company
(Kenny and Broughton 2011).
Legal: There are certain rules and regulations which is impacting the industry of the
animation such as the current legislation of the government that the tax will be charged higher on
the entertainment things. The company also provides consumer protection to their employees so
that they can feel safe and work with full enthusiasm. As the competition is high in the market so
there are many competitive regulations which are affecting the company.

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SWOT Analysis
Strength: The company Aardhmna animations are famous for the various things such as
clay animation productions, stop motions; featuring the Plasticine duo, etc. the company has the
great employees who know better to do the animations with the computer. The production of the
company has increased as they have several divisions. The company makes the animations for
the films so they have the feature division in that. The major strength of the company is that they
are dealing in the digital animation in which games, creating websites and online communities
are there which makes the commercial TV shorts.
Weakness: The Company follows the tight rules and regulations which is difficult to
adopt for any employees. As in the film's animations, no phones are allowed and no one is
getting permission to make any kind of the video. The cost involved in the animations is very
high so many film companies do make animations from this company (Adrian, 2018). The
company also has a lack of cooperation which results in declining productivity. The company
also gets influenced by many political issues.
Opportunity: The ‘company is doing the animation through digital marketing and also
makes the innovative animations so they have the opportunity in emerging the market at a large
scale. The company also has to use the animation of the different brands as they have a strategic
partnership with them so it enhances the sales of the company. The company has covered the
five major areas of England and the UK and providing their services in the large number. The
service quality of the animation is of the high quality which is the major opportunity for the
company.
Threat: In the UK, the market of the animation is emerging which is increasing the
competitive pressure for the company. As Aardhmna animations are the oldest company so
people are demanding more from their premium animations so the high demand of the film
animation is also the major threat for the company. The requirement of the distribution of
animations are very higher in the market as they have the good competition with the Walt Disney
company.

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Porter’s Five Forces
Competitive rivalry: The competitive rivalry of the company is strong as there are much
animation and the Disney companies which are giving a strong competition. The strong
competition is the external factor which is affecting the market. If the competition in the market
is higher than the high quality of the animations are prepared by the Aardhmna Company
(Adrian, 2018). The major competitor of the company is the Walt Disney Company which is
working in the same field of the animation. This company is giving the good competition to the
Aardhmna Company.
Bargaining power of the customer: The bargaining power of the customers is also high
as their prices charged by the companies for the animation of the films are higher so customers
generally do the bargaining of the prices. The company has started charging lower prices to the
customers who are regular to them so they do not switch to any other competitor company
(Alharbi and Baines, 2015). The chances of substitutes of the price in the market are moderate so
company Aardhmna has high bargaining power.
Bargaining power of the supplier: Bargaining power of the supplier is weak in the
Aardhmna Company as they have a large number of the suppliers. The company is the oldest
animation company so many suppliers have major contact with the company. The supply chain
constants have maintained by the company which results in the many suppliers to available for
the company (Maselli, 2018).
The threat of substitutes: The threat of the substitutes is moderate in the market. As
there are moderate substitutes so it is putting the pressure on the company in terms of the
revenues and the prices (Roe, 2011). The animation company of Aardhmna is in the pressure as
there are many potential substitutes. The global environment of the company is getting affected
by this and the satisfaction to the customers also lead moderately.
The threat of new entrants: The Company does not have much threat of the firms to
enter In the new market as the company of the animation involves many costs (Spicer, 2017).
The success of the company gets disrupted when the new entrants come in the market as it starts
affecting the profitability of the company. The international market also gets affected by the new
entrants which also has a great impact on the market.