Business and Business Environment: An Analysis of Burberry Group PLC

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Running Head: BUSINESS AND BUSINESS ENVIRONMENT
BUSINESS AND BUSINESS ENVIRONMENT

BUSINESS AND BUSINESS ENVIRONMENT
Table of Contents
Introduction................................................................................................................................... 4
Overview of the organisation.........................................................................................................4
LO1 – Different types, size and scope of organisations.................................................................4
Different types and purposes of organisations along with their legal structures [P1].................4
Size and scope of it a range of different types of organisations [P2]...........................................5
Analysis the link of structure, size and scope of different organisations with their business
objectives and products and services offered by them [M1].......................................................6
LO2 – Demonstrating the interrelationship of various functions within an organisation and their
linked with the organizational structure.........................................................................................7
Relationship between different organizational functions and how they link to the structure and
objectives of the organisation [P3]...............................................................................................7
Analysis of the advantages and disadvantages of relationships between organizational
functions and the impact that it can have upon the organizational structure [P4].......................8
Critical analysis of the complexities of different types of business structures and the
interrelationships of the different organizational functions [D1].................................................9
LO3 – Demonstrating both the positive and negative influence of macro environment on
business operations with contemporary examples.......................................................................10
Identification of the positive and negative impacts of macro environment on business
operations supported by some specific examples [P4]..............................................................10
Analysis of the Macro environment within an organisation using the PESTLE Model [M3]...10
Critical evaluation of the impacts of both macro and micro factors on business objectives and
decision making [D2].................................................................................................................11
LO4 – Determine the internal strengths and weaknesses of specific businesses along with their
relationship with external macro factors......................................................................................12
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BUSINESS AND BUSINESS ENVIRONMENT
Internal and external analysis of a specific organisation to identify the strengths and
weaknesses [P5].........................................................................................................................12
Interrelationship of strengths and weaknesses with the Macro environmental factors for an
organisation [P6]........................................................................................................................13
Application of SWOT of analysis the impact of different strengths and weaknesses along with
opportunities and threats on the decision making of the company management [M4].............13
Conclusion................................................................................................................................... 14
Reference List..............................................................................................................................15
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Introduction
Every organisation belonging to different category contributes a significant portion to the growth
and development of the economy of a country. There are many organisations belonging to the
public, private, and voluntary sectors in a country that operate under different set of rules and
structures depending on the business requirements and their objectives. The decision making
activities of these organisations are influenced by many internal and external as well as micro
and macro factors. The functioning of the company departments also depend significantly on the
variation of their sizes, domain of operations, and primary objectives of the company. The
following report has describe the structure and functioning of different organisations after
categorizing them on the basis of their size, types, and scope of operation. The interrelationships
of different organisation with the functions have been highlighted explicitly supported by some
examples. The study of macro and micro environmental factors has been conducted with the help
of different analysis models like PESTLE and SWOT analysis.
Overview of the organisation
The following report has chosen Burberry group PLC as an organisation based on which the
entire report has been formulated as per the necessary details. The Burberry group PLC is a
leading fashion industry brand in United Kingdom with its headquarters located at Basingstoke,
England. The company is functioning since the year 1856 and is capable of generating revenue
of over £2.5 billion every year. There are approximately 10,000 employees working at different
Burberry outlets located in 58 countries all around the world. Dr Gerry Murphy is the chairman
of the organisation and the chief executive officer of the company is Mr Marco Gobetti. The
operations and finances of this organisation are handled by the chief operating and financial
officer Julie Brown.
LO1 – Different types, size and scope of organisations
Different types and purposes of organisations along with their legal structures [P1]
There are four major different types of organisations that function in United Kingdom. The type
is the private organisation which is usually owned by a single owner or by a group of flowers
who have invested their own money in that organisation. These people are the direct stakeholders
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of a private company that might operate in a single or few domains. The second type of
organisation is public organisation which is also established by one or multiple stakeholders but
majority of the shares are held by public. The person or organisation that has the maximum
number of shares becomes the prime decision maker and owner of the public company. The third
type of organisation is government sector organisation that is owned by the government of the
country. This includes the organisations that serve the country man and run through the taxes
collected from different other organisations. The fourth type of organisation is voluntary sector
organisation that generally includes the organisation established with the prime objective of
serving the people with their social works. These organisations consist of the NGOs that operate
in various cities and receive their funding through charity and donation from different sources
(Westerman and Bonnet, 2015).
Considering the legal structures of all the above mentioned types of organisation, the private
sector company that operates in a single domain has a linear hierarchical structure with the
owner holding the top position and workers holding the base positions. The public sector
organisations are usually large scale companies that also have a divisional structure with owner
at the top and multiple divisions split at the next stage followed by similar hierarchy tell the
bottom line. The governmental bodies usually have a functional structure which is quite similar
to the hierarchical structure having different types of sub functions running the government
owned company. The NGOs or voluntary sector organisations usually have an Administrative
structure with a simple hierarchy because of the presence of low workforce (Ohkita, 2017).
Size and scope of it a range of different types of organisations [P2]
The organisations can also be divided into 4 different categories depending on their sizes in
terms of work force and revenue generated every year. The first type is micro scale organisations
that consists of a small business owned by a single person or a group of people and operates in a
specific domain. These organisations usually have less than 10 employees. The second type is
the small scale business organisation that consists of less than 50 employees and also corporate
in a particular domain. The small scale organisations operating for a long time and expanding
regularly usually take the shape of a medium scale organisation. This is the third category and
consists of approximately 150 employees maximum. Any organisation that consists of employee
strength above 150 falls under the category of large scale organisations (Bohne, 2017).
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The primary aim of private and public sector organisations is to make profit for their survival and
sustain in the competitive market. On the other hand, the primary objective of voluntary sector
organisations is to serve the people in terms of quality of products without caring too much about
the profit margin. The Burberry group PLC is a public sector organisation because majority of
the shares are distributed among the public according to the London stock exchange market.
Hence, the company has to earn a significant amount of profit in order to survive in the market.
The government sector organisations also have an aim to carry out their services towards the
public as their responsibilities towards the nation. The profit margin is not highly valued to be
earned by the government sector organisations as they are not very much associated with
business (Eisenberg, 2019).
Analysis the link of structure, size and scope of different organisations with their
business objectives and products and services offered by them [M1]
The administrative structure is generally followed in government sector organisations because
the objectives are to serve the people in return of the taxes they are paying. The voluntary sector
organisations usually follow the functional structure where a particular hierarchy controls the
entire operational module. The large scale private and public sector organisations usually have
their operations in multiple domains. Hence, it is important to have a divisional or Matrix
structure. The divisional structure is followed in the Burberry group PLC because there are
several departments working within the operational domain of the company. This includes the
Human Resource Department, acquisition department, Marketing department, Research and
Development Department, sales department, Customer Service Department, and several other
similar departments. This is because the Burberry group PLC usually operates in the closing
department where it produces clothing accessories of different varieties. However, any
organisation like the supermarket companies that operate in multiple directions like clothing,
Supermarket stores, groceries, electronic appliances, and other variable domains need to follow a
matrix structure where all the operational departments need to work for or each domain of sales
operation (Armitage and Roberts, 2016).
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LO2 – Demonstrating the interrelationship of various functions within an
organisation and their linked with the organizational structure
Relationship between different organizational functions and how they link to the
structure and objectives of the organisation [P3]
It is very important to form the right structure within an organisation depending on the objectives
that the company has to meet. The most effective and popular structure is the Divisional structure
for any large scale organisation that operates in a single domain of work. The Burberry group
PLC is about spelling clothing items and accessories of superior quality to its customers. The
organisation has established an outstanding brand name for its products and services. Hence, it is
very important that all the services are carried out in the most appropriate way so that the
customers can retain their faith in the products and services provided by the Burberry group
PLC. The structure of the organisation is a divisional structure with the chairman occupying the
topmost position (Roberts and Piller, 2016). The chairman holds the position along with other
Board members who make the necessary decisions of the company after discussing various
aspects regarding the organizational operation. The Board members receive reports from four
different departments named the nomination committee, remuneration committee, audit
committee, and the chief executive officer. Chief executive officer further leads the entire
operations of the organisation along with the senior leadership team and risk committee. The risk
committee also reports to the audit committee once in a year during that time when audits are
conducted. The risk committee controls the operations of Global Health and safety along with
Global ethics which further have their own respective committees. The senior leadership team
that works under the direct guidance of chief executive officer further controls the operations of
other departments like human resources, Material Management, Logistics, marketing, research
and development, sales, Customer services, and mainstream operations of selling the clothing
items and accessories (Roberts and Armitage, 2017).
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Figure 1: Organizational Structure of Burberry Group PLC
(Source: Burberryplc.com, 2019)
Analysis of the advantages and disadvantages of relationships between
organizational functions and the impact that it can have upon the organizational
structure [P4]
The structure for operations of the Burberry group PLC has described about the different
departments that operate under the senior most leadership. There are several advantages and
disadvantages of the Divisional structure that is followed for conducting operations of Burberry
PLC group. The most prominent advantage is that the work is divided among the different
departments with a specific set of responsibilities and roles to be played. As a result of this,
every individual employee is aware of his responsibilities and therefore can perform the same in
the most appropriate way. Another major advantage of following the Divisional structure is that
the organisation can easily monitor all its activities and carry out the record keeping work. The
activities are also very easy to manage in an organisation established as per the Divisional
structure norms. The board members also have to be careful about a smaller domain of
operations making it easier to take necessary decisions about the existing functions and future
operations are expansions of the company (Schluep, 2017).
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There are several disadvantages of following the Divisional structure if compared with other
structures like the Matrix structure. The divisional structure being associated with a single
domain of operational activities is more likely to receive a huge level of competition. Moreover,
these organisations are also vulnerable to the competitiveness factor in the market because of the
presence of mainstream operations in a single domain. Hence, the managers have to be careful
about delivering best quality work because any compromise in the quality might lead to the
depreciation in sales. Apart from that, the company is not likely to have a second source of
income and therefore the operations regarding the existing source hold a large level of
significance. The company that operates using Divisional structure also has less experience in
other sectors that can result into negative consequences in the future (Zozulya et al. 2015).
Critical analysis of the complexities of different types of business structures and the
interrelationships of the different organizational functions [D1]
Every different type of business structure has its own set of complexities. Considering the case of
Divisional structure, it is in capable of handling multiple types of businesses and therefore
should be used only for the companies that are likely to operate in a single domain. In addition to
this, this structure cannot provide a workforce capable of handling the pressure of multiple
different domains impacting together. The Matrix structure of business is known for handling
multiple types of operations efficiently and simultaneously. However, it cannot operate as
effectively as the Divisional structure if a single operational domain is considered. Moreover, the
overall operational cost required to make the company to operate efficiently is very high. Hence,
an organisation must have a huge amount of reserves in its funds if the company is planning to
form its work operations as per the matrix structure. The simple hierarchical or Administrative
structure is too simple to operate any Complex business that needs efficient marketing and
effective production line along with huge quantity of sales values. This is because the variety of
operations as per the Administrative structure is very low (Sovbetov, 2015).
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LO3 – Demonstrating both the positive and negative influence of macro
environment on business operations with contemporary examples
Identification of the positive and negative impacts of macro environment on
business operations supported by some specific examples [P4]
The micro environmental factors are likely to be different at different locations and therefore
they can influence the operations conducted by the organisation. The Burberry group PLC that
majorly deals with clothing and other similar accessories needs to adjust its production and
marketing techniques according to the major macro environmental factors. The most prominent
positive impact of macro environment factors of any particular location can be the trending
fashion and personal preferences of the people in terms of clothing. The organisation has
established its business locations and outlets in many European countries and few countries
outside the European continent. The positive impact of demographic or socio cultural factor is
that people living in the European and other Western countries preferred the dresses that are
manufactured by Burberry group PLC. However, it can also cause a negative impact because the
people living in different South Asian countries might prefer cultural and ethnic dresses over
westernized dresses. Therefore, the business operations of Burberry group PLC need to be
adjusted according to the preferences of the people which might lead to a higher value of initial
investment in the countries western dresses are not preferred. The economic conditions of people
living in many of the African countries are not as good as the same in other countries (Bayer et
al. 2018). Therefore, the economic factor of the Macro environment of Africa can potentially
have a negative impact on the Burberry PLC group operations.
Analysis of the Macro environment within an organisation using the PESTLE
Model [M3]
Following are the Macro environmental factors that are likely to impact the operations and
decision making activities of Burberry group PLC.
Political The political condition in most of the countries having Burberry
outlets is stable without any major influence on business. Hence, this
factor is likely to go in favour of the company.
Economic The economic condition of target population is good in European and
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Asian market but not very good in African market. Hence, there will
be a mixed influence of this factor on Burberry.
Social The social condition of people in European Markets and western
countries like USA and Canada is aligned with UK but the scenario is
different in Asian countries.
Technological The Burberry group PLC has a highly advanced research and
development facility along with modern methods of marketing and
therefore this factor is in favour of the company.
Legal The company has followed every legal constraint including acts about
minimum wages and maximum working hours for workers. Hence,
the company holds a strong legal ground.
Ecological There have been some issues with the production of clothes and
processing of raw materials from the environmental perspective.
Hence, Burberry needs to improve on this parameter.
Table 1: PESTLE Analysis for Burberry
(Source: Created by the learner)
Critical evaluation of the impacts of both macro and micro factors on business
objectives and decision making [D2]
The primary objective of Burberry group PLC is to provide best quality clothing and other
fashion accessories to its customers in lowest possible price. Hence, the overall macro and micro
environmental factors are likely to influence the decision making activities of senior
management. The micro environmental factors like people, employees, and internal resources are
in favour of the company. This is because the people have a positive reputation about the
company and the employees are highly skilled in their respective field operations. Moreover, the
internal resources are adequate for Burberry group PLC to undertake any expansion. The macro
environmental factors like economic and political conditions of its target population are also in
favour of the company considering the cases of majority of the countries where Burberry has its
outlets (Stevenson and Cole, 2018).
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LO4 – Determine the internal strengths and weaknesses of specific businesses
along with their relationship with external macro factors
Internal and external analysis of a specific organisation to identify the strengths and
weaknesses [P5]
Considering the existing performance of Burberry group PLC, it can be said that the operations
are going significantly well in the clothing industry search the last few decades. Although the
company has received in high level competition from its rivalries, it has been able to sustain the
effectiveness of its operations on the customers. Moreover, the company reputation has also gone
very high in the last few years along with its financial profit. Following are the major aspects that
the company needs to consider in order to carry out its operations in the future with its existing
infrastructure as well as in case of any expansion.
Strengths Weaknesses
 Experience of over 100 years
 Highly skilled workforce in clothing
sector
 Presence of a reliable infrastructure
 Huge fund reservoir
 Lack of experience in business sectors
other than clothing and accessories
 High employee turnover in the last few
years
 Absence of multiple scopes of
expansion
 Limited product options available for
production and commercialization
Opportunities Threats
 Newly emerging trends of clothing and
accessories
 Traditional clothing fashion in
developing countries market
 Use of CNC machines to design and
develop clothing accessories
 Implementing online platforms for
marketing of the company products
 Huge competition in the market from
retail companies
 High level challenge to keep the cost at
the lowest possible limit
 Challenge to retain the trend for longer
duration in the market
 Traditional clothes manufacturer using
traditional ways given preference by
the customers
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