Business Analysis: Types, Functions, and Environment - Icon College

This case study provides an analysis of different types of business organizations, including line, functional, and matrix organizations. It explains the size and scope of each type, detailing their structure, key stakeholders, and legal aspects. The study demonstrates the interrelationship of various functions within an organization and how they link to the organizational structure, emphasizing the importance of aligning business processes with organizational structure for effective strategy implementation. Furthermore, it uses contemporary examples to illustrate the positive and negative influences of the macro environment on business operations. The analysis also determines the internal strengths and weaknesses of specific businesses and explains their interrelationship with external macro factors, providing a comprehensive overview of organizational dynamics and their environment.

1
TNA 67 Pearson BTEC HND in Business
Unit Number 1
Unit Type Core
Name of Course Moderator: Prof. Zakir Hussein
Icon College of Technology and Management
Case Study Questions 1 to 4
Name of Student
Student ID
Submission Date
Word Count: 3500

2
Table of Contents
Introduction.................................................................................................................................3
LO1: Explain the different types of organizations, including their size and scope Explain.......3
LO2: Demonstrate the interrelationship of the various functions within an organization and
how they link to organizational structure....................................................................................8
LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations......................................11
LO4: Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors...........................................................................13
Conclusion................................................................................................................................15
References.................................................................................................................................16

3
Introduction
I have recently been employed with a UK based company as a Business Analyst. My
first project is to carry out an analysis of the different types of business organizations that
exist and the basic size of each type of business. The differences between them will also be
discussed. The businesses will be studied from the point of the key stakeholders that are
present in all types of businesses, the structure and the scope of the business type. One
business type will be discussed and the types of functions that are specific to the business type
will be discussed, including the legal structure.
LO1: Explain the different types of organizations, including their size and scope Explain
The 3 types of organizations that have been selected from the 8 different types of
Organization are:
 Line organization
 Functional Organization
 Matrix Organization
An organization is a collection of people who work together with a management
heading the collection of people within a legal structure in order to do business whether it is
production, trade, healthcare, industries of different types of governmental and non-
governmental organizations. The organizational competence depends on the quality of the
employees and the management that manages the organization. The size of different
organization and the s scale of organizations are different for different types of organizations.
They can be small, medium or large corporations in size. (Morgan,2018).
Line Organization
A line organization is the conventional form of organization, where each department
of the organization runs a specific business unit which involves processes that have to run
parallel to the business processes of other units for the business to function. Every single

4
business unit is self contained and independent. Different people look after the difernet
business units and have full authority y over the business unit.
The executives give orders to the junior orders and the subordinates are responsible for
reporting to their supervisor. This type of organizations is used in defense and policing forces
as it is used in the business organizations. The authority in a line organizations flow from top
to bottom and the reporting lines are from bottom to top. The line of relationships are vertical
as mentioned above the authority flows from the top to the bottom and the heads of the
business units have independent charge of the entire business units. The reporting lines are
clearly defined and the reporting relationship between a supervisor and an employee is a
documented relationship.
Line organizations have specific characteristics that are different from the other
organizations. The seniors have authority to control the subordinates, operating and working
under a line organization is easy the reporting relationships as mentioned earlier are direct.
The main advantages of such an organization is that it is simples structure, action and
decisions can be taken quickly, the communication among the employees and their
supervisors is direct, the level of coordination is higher than in some types of organizations
and there is discipline in the organization because of clear reporting lines.
There are some disadvantages in the line organization such as favoritism can exist,
people can be over loaded with work, the administrative action is a unified process, the
communication between the business units is minimum as each unit considers their unit the
only important business unit for the business. (Education Observe,2012)
Functional Organization
This is the type of organization such a proprietorship where a single individual is in
charge of the entire business. Every single aspect of a functional organization is managed by
the single person which make it difficult for quality work to be done consistently. Here there
are specialists for business functions but there is only one set of employees who have to take
instructions of tasks from the entire specialist and the individual of the business who manages
the business. The employees are generally skilled in different aspects of the business and they

5
multi –task to complete the daily work load and the strategies of the functional organization.
Functional organizations are used because the modern organizations are complex and
technology support is available which makes operations simple. Using technology many of
the tasks for specialists are needed can be done using computers and the work loads of
employees and Manages of different business units can be lowered.
In functional organization the training expenses are lower because the training is
provided on the job, specialists are hired so the employees of not have to trained to complete
the t tasks of all the specialists, the specialist do the work that is common to all the department
and the employees under the instructions of the specialists complete the related tasks of
different specialists. (Gleeson,2018)
Some of the characteristics that have been highlighted in the course of the study of
functional organizations, the wok is divided into the required functions at the head of which is
a specialist. The specialist is authorized to manage the work load as he or she thinks fit, they
can give instructions on specific functions of the business and the specialist has the authority
the authority to give instructions to complete his functional responsibilities.
Matrix Organization
A matrix organization is an organization where there are multiple reporting managers.
In such an organization the employees have multiple bosses from whom they have to take
instructions. The structure is slightly complex but such an organization has been seen to
provide a higher level of productivity for the organization and from the employees. A matrix
organization is best suited for organization that a wide range of products and services. The
employees assigned to different departments work together to meet the objectives of a single
product or service. Multiple skills set are used by all the employees who are provided
different types of training for career growth.
The matrix structures have a solution to large-scale issues that affect the organization,
the functional structures are permanent and the only changes are modifications of processes.
The functional structure remains the same and a temporary structure is superimposed

6
temporarily for the purpose of the project. The reporting lines remain the same of the project
team and their report their tasks to the functional managers. (Economic Times,2012)
Advantages
Some of the advantages of the matrix structure are that large scale creative actions can
be taken quickly, the functional and the project objectives can be combined, the internal
resources can be used for such projects, the information flows quickly through the project
team members, experts can be retained throughout the life cycle of the project, since the
project is over the team members can return from the project to their functional
responsibilities. Once the project is complete the team members return to the functional
responsibilities of the organization without any disruptions or interferences.
Disadvantages
One of issues in such organizations is that the project team members have to report to
2 supervisors one of the project team and the second of the functional team. There is a
requirement for a high level of coordination and project management. Chances of a project
conflict and team friction are higher. Establishing common priorities takes time there could be
a structural collapse and the overhead expenses of the management increase with this type of
structure.(Casey,2017)

7
Illustration (1) Line Organization Chart, Source: Panchal et al,2008
Illustration (2) Functional Organization Chart, Source: Dr Ucol-Ganiron, 2010

8
Illustration (3) Matrix Organization Structure, Source: eDraw,2018
LO2: Demonstrate the interrelationship of the various functions within an organization
and how they link to organizational structure
The organization functions are not used in isolation and every single business
functions have to attach to the other functions in order for the entire business also to be
completed at the end of the product lifecycle.
There is an inter- relationship that exists between the production and the business
functions which allow for the entire functions and the processes of the different departments
to be linked to each other in order to complete the required tasks of the business.
They are linked to the organizational structure as it is necessary for the functions to be
performed by people of different level. The strategy for the business is prepared by the top
level managers of the organizations, the implementation strategy is developed by the business
managers, the implementation is done by the mid level managers and the execution of the
strategies is done by the work force or the junior employees of an organization if the
organizational structure is not linked to the business activity of an organization it is not
possible to decide which level will perform what tasks and there will be no communication

9
and integration between the various functions of the organization which will lead to the
failure of strategies and business failure eventually. It is therefore necessary for the business
processes to be interlinked and this is in turn linked to the organizational structure of the
organization.(Griffin,2017)
The organizational structure shows the interaction between the businesses. It shows a
command chain without with it is not possible to empower people to take decisions regarding
the business activities that need to be performed on a daily basis. The functions that have to
be performed in a business are in line with the organizational structure to give the Managers
the authority to implement the strategies and take decisions for the business. There are 3 types
of structure involved in the interrelationship.
 The business structure
 The functional structure
 The divisional structure
In the interlinking of the organizational structure and the functional requirements of an
organization the business structure is used.
The required business functions are segregated to the different departments and the
employees who perform the task report to their Department Managers. This type of structure
helps the employees to perform their tasks report it and have a clear understanding of the
command chain within the department and the organizations. Each department tends to
function as an independent unit and the communication tends to be minimum between the
departments.
Another structure that is used for interlinking is the divisional structure. Different
products lines are linked to marketing, sales research and development departments to meet
the objectives of the business. The main advantage is each division that interacts regarding a
particular product has the manpower to manage the tasks that need to be performed. At times
it can be seen that there is a duplication of similar tasks in all the departments which is why
the shared file system is used when the divisional structure of interlinking is used.

10
The third type of interlinking structure that is used is the matrix structure for
combining the functional and the organizational structure for optimum utilization of resources
and manpower. The functions are segregated in the department and projects can be assigned
to any department. The project and people in the project am from different departments. The
business functions are adapted to the organizational structure. Due to the various levels of
employees in the chain of command there is every possibility that there could be friction
between the different levels of employees that are assigned to the sample project. At times to
avoid conflicts the entire interlinked structure that is being proposed can be turned into
diagrams and or charts to provide a visual view of the command chain in the project, the
reporting lines in the project and the departmental divisions. (Mcvay,2018)
Illustration (4) interrelationship of the various functions Source: Ahoora,2016
LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations
The macro environment decides whether a business organization will do business in a
particular location or not. This is because the business environment is determined by the
macro factors of a location. The location could be an entire geographical region or a country.

11
The major macro environmental factors are the political, economic, social, technological,
economic and the legal aspects of doing an organization.
The political factors the stability of the region or the country, the regulations in the
region or the country to do business and whether the government in charge of the country is
interested in the business investments in a particular sector. The purpose is to ensure that
when large sums are invested in a business then the political conditions that affect the location
are stable and will not change or fluctuate to have a negative impact on the business.
The economic factors at the macro level that have an impact on a business are the
regulations for money transfers, the amount of taxes that have to be paid, the type of exports
volumes that they will be allowed to send out of the location, the countries and regions where
they can sent the export orders, the inflow of foreign currency earned from overseas sales, the
level of taxation that need to be paid for customers, sales tax etc. and the support that a
business can expect from the political conditions of a location.
The social conditions are the population’s culture and social psychology which will
decide of the products wills ales successfully over a long term period for the business. It also
involved understanding if a community will accept their presence to do business and
contribute to the sustainability of the environment. The products need to be suitable for the
cultural background of a population and social acceptance for the products have first to be
affirmed before the segmentation of the target customers can be done. A business has to be
ready to involve themselves in corporate social responsibility, community needs and the
betterment of the community though sponsorship, employment and environmental changes
that will improve the lifestyles of a community.
In today’s global business culture technology plays an important part in providing
instant communication which is need to take quick decisions that will provide a market
advantage for a business. Technology at the macro level involves knowing the types of
technology required for the business and the types of business tasks that can be performed by
technology in an automated environment to avoid the need to employ overheads. It also
involves understanding the level of security that is required to complete the business
processes in a secure environment and for the storage of data as it is the data that will provide

12
the information for the tasks to be completed. Technology at a macro level also decides the
connectivity with the supply chain and the business logistics to improve the efficiency of the
business processes and the profitability of the business.
The economic viability of a business has to be ascertained to see if the economy of the
country is able enough to generate sales and production. The levels of employment have to be
ascertained and the types of wages that have to be paid to employees and the work force have
to be within the budget of a business. The product has to be saleable and the population has to
have the sending power to spend in the market. A proper economic viability for a business
needs to be done before a business is developed in a location or an existing business changes
internal policies and processes to meet a fluctuating economy. The business also needs to
ascertain whether the economy is slow or fast paced or it has reached a plateau to decide
whether parts of the business should be shifted elsewhere where economic growth has been
recorded.
The legal aspects of the location will help a business to understand the laws that
govern the industry, the manner in which the business will be allowed to operated, the
regulations and the compliance measures that have to be initiated within the business.
The positive impact is the macro environment conditions will help a business to decide
whether to relocate or make changes and operate from the same location. The negative impact
is that if the macro environment for business changes there will be fluctuations in the market,
regulations can change which may be beneficial for a business or detrimental for a business. If
the impact is negative then, there will be losses in revenue, losses in sales and a higher level
of business expenditure will need to be made to make the business efficient. (Locus
Management,2018)
LO4: Determine the internal strengths and weaknesses of specific businesses and explain
their interrelationship with external macro factors.