Business and Business Environment: Comprehensive Analysis Report

This report provides a comprehensive analysis of the business environment, starting with an overview of different organizational types, including public, private, and voluntary sectors, and their respective structures and objectives. It then delves into the organizational functions within a company li...Read More

BUSINESS AND BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types of organisations........................................................................................3
P2 Size and scope of a range of different organisations.........................................................3
P3 Organisational functions and structure objectives..........................................................15
TASK 2 .........................................................................................................................................16
P4 Various macro environmental factors that impact on the business operations...............16
P5 SWOT analysis of H&M.................................................................................................18
P6 Interrelation of strengths and weaknesses with external macro factors..........................19
CONCLUSION..............................................................................................................................20
REFRENCES.................................................................................................................................21

INTRODUCTION
The following report is prepared in order to provide user a complete knowledge about
different types of organisation that how they work and what are the difference between each one
of them. The report will give the complete understanding about structure of each and their
stakeholders and what are different functions performed by them. Thereafter in the report a detail
knowledge of how a company is affected by different macro factors and their influence on the
decision making is also given in the following report (Teece, 2010). Learner will also enhance
his knowledge about the connection of different functions with their structure and its objective
that how they shape the given business. H&M is a private company having complex structure
and variety of its functions are discussed in the report below supported with the swot analysis of
the same which gives clear idea about the companies different strengths and weaknesses.
TASK 1
P1 Different types of organisations
The various kind of administration and how they work and what are the difference between each
one of them are given below
Public sector organisation
 It is that sector which is controlled by the government
 Their main aim is to develop various sectors in order to bring development.
Private sector organisation
 Controlled by the private individuals.
 Sole proprietorship, partnership, franchisees etc.
Voluntary sector organisations
 There is no individual owner of these organisations.
 Provide help to the person who is in need.
 Help those who are not cable of helping themselves.
 Charity grants or gifts are different sources of their income.
It shows that the public sector works for the development of society as they invest in the areas
which need to be raised and without government intervention required status cannot be achieved.
Than the private sector whose prime goal is wealth maximisation carry out their business to earn

more profit. Investment is done in those sectors which can offer greater market to the
organisation.
P2Size and scope of a range of different organisations
Public sector
 Investments are made in big amounts as user of their services are in great number.
 Education, health and transport are the major parts allocation of resources is done
VOLUNTARY SECTOR
 The save the children fund is one of the biggest NGO which was established in 1919.
 It has its branches in more than hundred countries across the world.
PRIVATE SECTOR
 Multinational company
 Good position in the retail market
 Investment varies with the scale of operations.

P3 Organisational functions and structure objectives
H&M is a part of fashion industry and there are variety of functions which are performed
by it in order to achieve organisational objectives. This is a very big organisation which is doing
good business from last many years and contributing much in the total economy of UK. The total
GDP has increased with the contribution of the cited examples. This was possible when
investment by the company was raised to a good amount in order to increase the total revenue.
Though now the expense in advertising is reduced to a good level as the brand name has
achieved goodwill which is enough to promote the total sales. It has created employment to a
great number as it is doing its operation on a very large scale (Cantwell, Dunning and Lundan,
2010). This way the company also contributed in removing unemployment from the country as
this industry demand mix labour. Non-technical labours can also be appointed by the company as
it has wide scope of job opportunists for them too. The organisational structure of the cited
company is given below:
Different functions are performed by the distinctive head of department. Some are
responsible for the sales, other for the distribution, and some keeps check on the total quality of
the product. Together they all work towards achieving the goal of the company which is profit
maximisation. If any one of the above department given in the organisation chart dose not
perform their duty effectively than the business entity cannot achieve the set goals. By dividing
the whole organisation into different department H&M is capable in doing excel in each
activities. The division of work into different department also helps in setting the accountability
for each departments which assist in keeping an effective control over each unit. Budget can be
given to each department which also help in controlling the cost of the business. Functions
performed by different department are given below:
Administration – This is the operating body which takes care of whole management that every
work is carried out effectively. It is very necessary that all the required resources are provided to
the various operating departments so that they can ensure continuity in office.
Sales department – It is that unit which is responsible for the total sales of the department. It
takes care of all those decisions which are required to be taken in order to meet the targets set
against each financial year.

Research and development – This is another section which is responsible to provide new and
innovative ideas to the business enterprise so that it can come with new products in the market.
Purchase department – Various resources are needed to carry out the daily operations therefore,
it is very important that procurement is done in a way that it does not lead to the wastage of
resources. Excess or deficit of any material may have adverse effect on the profitability of
business.
Each different department work in order to achieve the objective of the organisation. They set
targets for their subordinates and ensure that they achieve the same. This way they get to know
about the strength and weaknesses of their employees and work accordingly. Apart from this
goals are also achieved by them by maintaining co-ordination among them which is very
necessary to get the work done in business enterprise.
TASK 2
P4 Various macro environmental factors that impact on the business operations
In order to understand the various macro factors which affect the cited company PESTEL
analysis need to be done which is as follows:
Political – H&M has opened new stores in Israel which were opposed by the national
community as they say that as this country does not respect the laws no stores should be opened
there. The cited company was under this pressures as by opening store there the officials stated
that H&M is assisting them in to found peace in that region. Another political force on the
company is that as it takes its raw material and labour from Bangladesh due to cheap availability
of these factors there it is opposed by many. Reason being people in Bangladesh are not socially
responsible, they do not take care of the safety rules. This made pressure on the company to use
the different factors from the place where safety is a prime concern in order to protect the society
as many labours were killed while working in the factories of Bangladesh due to fire cases
(Carroll and Shabana, 2010). In order to continue business smoothly it is necessary that the
political factors are favourable to the organization as it has major effect on the total sales.
Economic – Due to efficient management system and bulk buying habits of H&M it is capable
of providing the customers products at reduce price. Still after maintaining the effective price the
cited company faces the competition from the expansion that take place in different parts of the
country. Change in the interest rate, inflation deflation in the market also gives the company core

challenge of maintaining the same price (Carroll and Buchholtz, 2014). Any change in the
present economic conditions may have adverse effect on the total business as even if the cited
organisation is taking good efforts to increase the sales if the external economic conditions are
not good, customers can not enjoy the services.
Social factors(S) – H&M has provided maximum employment to the females in comparison to
males. This way the company has given a good platform to women where they can show their
talent. Apart from this the cited company has also joined hands with the labour organisations and
given good working condition to the employees working there at equal wage rates. The company
has the taken various step towards being socially responsible like using the organic cotton which
do not harm the environment. Apart from this it has also worked towards increasing the
efficiency so that the can be saved to a good level.
Technical factors(T) – H&M is dealing in the fashion industry which experiences maximum
change in every season therefore change in the application has major effect on the company. It
has to remain updated with the latest trends in the application so that the competition could be
faced effectively. The company has the pressure to provide the customer to what is demanded by
them in the latest season and also with this they have to do the research for the next season too so
that products are made available on time (Cavusgil, 2014). To manufacture the products of
different and latest designs company has to make sure that it keeps on updating itself with the
change in the technology market.
Environmental factors (E) – As H&M is a big multinational company any wrong action taken
by it comes in the notice of all very easily. Therefore it becomes important for the cited company
to be very careful before taking any action (Boons and Lüdeke, 2013). It has to make sure that
the operations of its team are not harming the environment in any way. Its operations should be
environmental friendly like proper dumping of waste, no harm to water resource etc. As
mentioned above it is using the organic cotton it is successful in protecting the environment to a
great extent.
Legal factors (L) – This factor has major effect on the functioning of the cited company. It has
to follow the laws of the country and in case it is observed that any law is violated government
can take action against it. Companies are not allowed to use child labour in the manufacturing
sites as this is bad for their health. It is important that all the safety measures like fire exit,
implementation of the equipments required at the time of emergencies is necessary (Elliot,

2011). Employees should be given good working conditions, no contract should be created
forcefully, and also equal wage rate law should be maintained. No employee can be hired having
criminal record and also it should give equal opportunity to all the employees (Kramer and
Porter, 2011).
P5 SWOT analysis of H&M
Swot analysis of any company helps in identifying the various strengths and weaknesses
which are faced by it. This way company through doing its internal audit can take the various
precautions in advance which may help in overcoming the threats and also contribute in the
growth of the cited company through discovering the various opportunities. In order to know the
different threats and opportunities of H&M swot analysis is done which is as follows:
1.Strength – The major capability of the cited company is the expansion done by it in
developing the online shopping facilities. It has provided a variety of options to the customers
which has made it one of the most leading companies in its field. The products of H&M are very
popular and trendy that it is demanded most (Zikmund, 2013). The online stores offers variety of
options to the customers in all the sizes which has encouraged the buyer to buy online too as
more options are available online than in stores. This helped the cited company in reducing the
total cost of incorporation. After this the other strength of H&M is that it use famous celebrities
to endorse its products like Lady Gaga. This helps in making the products more famous among
the public. Also the management of H&M take the help of run way shows which they do and
record to post on the social sites in order to attract more customers (Wheelen and Hunger, 2011).
It has many followers on you tube and twitter for whom the company keep updating the profile
with the latest fashion products. Although social media is utilised by many other companies also
but H&M is doing it in the most prominent manner.
2.Weakness – As the cited company is using the social media as an effective medium of
communication it sometimes become a negative point too. Customers are updated with every
change that take place in the company and also with the latest product they launch in the market.
This way the customers respond to the information provided by the company on the social
media. In case of appreciation it is good but when they criticise the same than it affects the
goodwill of the company. Comments are posted on the social sites which are shared by all. This
way other customers also get affected by the negative comments which in turn affects the brand
value, for ex. customers criticising the runway shows conducted by the company in order to

promote the products. After this the other weakness of the cited company is that it does delay in
delivering the products to customers which shows that the company has great volume of stock
with them which is not a right sign for the development (Bryman and Bell, 2015). If the stock is
not cleared in time than the company will have to sell the products at low price which will be a
situation of loss.
3.Opportunists – H&M is one of the biggest purchaser of organic cotton. This way if they
continue to be effective they can become top in the field of companies which are maintaining the
animal welfare and using less chemicals in the clothes (Wirtz, Schilke and Ullrich, 2010). The
company can use their policy of not harming to animals as a mode of promoting their brand and
making it in the knowledge of all. They can join hands with the organisations who also support
animal protection as this way they can encourage more customers who also support the same
cause.
4.Threats – As the company is dealing in product which are manufactured by many other also,
competition becomes the biggest threat to H&M. The main customers of this brand are the young
generation which keeps on fluctuating their demand due to the availability of variety of products,
it becomes challenging for the company to maintain the interest of customers. Other
establishment also provide good quality at affordable prices for public which gives tough
competition to H&M. After this another threat to the cited company is that customers’
expectations increases with the increased rivalry and becomes difficult to provide exactly same
to what is expected out of it and that too at reduced prices (Crane and Matten, 2016).
P6 Interrelation of strengths and weaknesses with external macro factors
In this report both SWOT and PESTEL analysis of H&M is given which gives the clear
idea of how the strength and weakness of cited company is related with the external macro
environment. As the outside factors are not under the control of the business they have to do
changes as per the change in the environment as resources for H&M are made available from the
external environment only (David, 2011). Therefore these factors contribute in providing
opportunities to the business. If there is a change in the rate of labour take place in the economy
than the cited company has the advantage of getting cheap labour and vice- versa. Also H&M
will be providing its ultimate product to the customers which are part of the macro environment
has influence on the total strength of the company (Bughin, Chui and Manyika, 2010). If the
customers change their preference this will affect the total sales and profit of the business.

Company has to face the threats of the external environment by making the internal team
stronger and more efficient as only the inside factors of the business can be moulded as per the
situation and need of the business.
CONCLUSION
From the above report it can be concluded that there are different types of organisations
which operate with entirely different objectives. Private sector operating with the motive of
profit earning, public sector aim of providing equal services to all and in last the voluntary sector
which operates with the prime objective of giving services to the needy person. The above
reports shows how each of the different organisation has different structures, stakeholders and
functions. The detail of the different functions performed in the fashion industry is given that are
done at different levels by various managers and how these has direct impact on the objectives
and goals of the H&M. The swot analysis of the cited company shows there are various
opportunities available with them against some threats which are faced by the same. After that
the PESTEL of the same company shows the effect of various macro factors on the functioning
of the business which cannot be controlled by the individual.

REFRENCES