Merrill Lynch and United Biscuits: Business Environment Report

This report provides a detailed analysis of the business environment, focusing on Merrill Lynch and United Biscuits. It begins with an introduction to the business environment, including macro and micro factors. The report then explores different types of organizations, such as sole traders, partnerships, and limited companies, and examines their size and scope. The analysis delves into the relationship between organizational functions (finance, research & development) and business objectives, including discussions on divisional and matrix structures. The report uses frameworks like PESTLE and SWOT to analyze the companies, linking these analyses to the achievement of organizational goals. Furthermore, it describes the size, structure, and scope of various organizational types and their connection to business objectives. The report concludes with a comprehensive overview of the selected companies and their operational strategies.

Business and business
environment

INTRODUCTION
Business environment refers to all the internal as well as external factors that may
influence an enterprise. It includes both macro and micro environmental attributes which
contribute to the development of a business. These are affected by a number of other factors
including global, technological, social, political, demographic, competitive etc. For the following
report, Merrill Lynch investment company has been selected which is one of the leading and
respected firms in UK. The company provides variety of services ranging from commercial,
investment banking, financial products etc. Also, a private enterprise has been chosen i.e. United
Biscuits whose headquarters are in London, UK and was founded in 1948 which is a prospect
client of Merrill Lynch. It deals in manufacturing of sweet and salty biscuits (Bennett, 2014).
This report highlights on different types of organisations like sole trader, partnership etc.
and covers micro & macro environmental factors like PESTLE, SWOT in order to achieve
organisational goals and objectives. Also various sectors like primary, secondary, tertiary are
also included under the following report.
TASK 1
P1 Different types and purpose of organisations:
An organisation is a legal structure which comprise of different people that are
categorised under top, middle, bottom level management. Generally, it is a place where group of
individuals come for a common goal to meet organisational objectives. This can be formed
according to the need of partners, for example, sole trader, partnership, private limited company,
co-operative society etc.
The purpose of an organisation is to help the employees understand the direction of activities
performed and to serve and satisfy the customers. An organisation can be divided into different
sectors which include primary, secondary & tertiary (Botha, Kourie and Snyman, 2014).
Sole trader: A sole proprietor or trader is an individual or entrepreneur which is owned
and run by a single person. All the activities are performed by the individual and is responsible
for any gain or loss which may arise during business operations. One of the advantage of this
structure is that the sole trader has full control over decision-making, strategy implication or any
expenditure incurred. However, the drawback is that in case of huge losses, the proprietor is
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liable for any debts incurred in the business. For example, Oaks Auditors and Tax Advisors is a
single entrepreneurship business set up in UK (Pounder, 2015).
No legal organisational structure is followed by the company as it is a sole proprietorship
firm. The main objective of Oaks Auditors and Tax Advisors is to provide reliable services to the
customers and generate high profit margins for the business.
Partnership: It is an agreement where two or more individuals form a company and
share all the profit & losses, responsibilities etc. Every person involved is fully liable for any
debts built up during the course of action. One of the major advantage for this structure is that all
the risk & rewards are shared equally according to the capital invested by partners. The
disadvantage is that each individual is liable for the decisions made by another. For example,
John Lewis is a partnership firm which offers different products & services to the users and is set
up in London, UK (Sekaran and Bougie, 2016).
The company is a partnership firm which follows a team-based organisational structure
where people work towards a common goal or objective for the welfare of the organisation
(Organisational structure of John Lewis Partnership, 2018). The major objective of John Lewis
is to work together towards a common goal or target which is to be achieved during the business
process.
Limited company (Private organisation): It is a company where obligation of each
individual involved is restricted to the capital invested in the organisation (Cairncross, 2014).
They may be limited by shares or guarantee and comprises of a structure including both public
and private limited firms. The legal responsibility of directors in a limited company is to submit
annual reports every year with detailed statements like balance sheet, P&L, CFS etc. The major
advantage of this structure is its own legal identity unlike a sole trader and drawback is that it
becomes more challenging to raise capital and acquire loans. For example, United Biscuits is a
limited company which operates in UK.
The company follows a divisional structure where each functional unit has its own
division in which business activities are performed. The main objective of United Biscuits is to
offer different types of biscuits to the users by charging a low price in order to achieve high
profit margin (Shenkar, Luo and Chi, 2014).
Public limited company (Private organisation): It is a company whose shares can be
freely sold and traded among the market participants. It must have at least two shareholders,
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three directors and should be registered under the Companies Act. Its legal structure includes a
set of rules & regulations that the company needs to comply with (Hair and et.al., 2015). The
advantage of this structure is that capital can be raised in the form of shares which gives more
growth & expansion opportunities. Its drawback is that they have to abide by regulatory
requirement set under the law. For example, Tesco is a public limited company situated in UK
which offers basic necessity products to the user.
The company follows a line organisational structure whose authority flows from top to
bottom (Organisational structure of Tesco, 2019). The objective of Tesco is to make sure that all
the basic necessity products are available to the user at a single store.
Government (Public organisation): It is a type of organisation where at least 51% of
the paid-up share capital is held completely or partly by central & state government and should
be registered under the Indian Companies Act. The purpose of government or a charitable
institution is majorly to fulfil the needs of customers and maintain a balance with economies of
scale. For example, National Health Service (NHS) is a welfare organisation established in UK.
NHS follows a hierarchical structure where employees are grouped with other staff
having one clear supervisor (Organisational structure of National Health Service, 2013). The
major objective of the organisation is to address the needs of the users by fulfilling their
demands.
Voluntary organisation: It is a charitable institution or a non-profit organisation whose
primary motive is to provide social well-being to the people. This can be in any form ranging
from educational, animal, children, NGO, elder people etc. The purpose of a voluntary
organisation is majorly to consider the needs of people and work towards that with no aim to ear
profit margins. For example, Family and Childcare Trust is a charitable organisation based in
UK.
The company follows matrix structure where people with similar skills and interests are
merged together to perform various tasks or projects (Organisational structure of Family and
Childcare Trust. 2018). The main objective of Family and Childcare Trust is to assess the needs
of children and provide them with the best facilities including routine health check-ups.
Conclusion: It can be concluded that an organisation has a vast structure to operate in
like sole trader, partnership, government, public limited company etc. Every firm has different
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roles & responsibilities and can be categorised into primary, secondary and tertiary sectors
(Hillary, 2017).
P2 Size and scope of different types of organisations:
Following discussed is the size and scope of different forms of organisations.
Types of
organisations
Size Scope
Sole trader
(Oaks Auditors and
Tax Advisors)
Oaks Auditors and Tax Advisors
is a small chartered accountancy
firm comprising of a single
owner (Bennett, 2014).
The scope of Oaks Auditors and Tax
Advisors is to provide reliable advice
and services to the client like
bookkeeping, payrolls etc.
Partnership
(John Lewis)
John Lewis is a large retail firm
which has 85500 employees
working at the departmental store
(Employees working at John
Lewis, 2018).
The scope of John Lewis is to attract
potential projects related to retail,
grocery etc. as it deals within the
similar department.
Limited liability
company
(United Biscuits)
United Biscuits is a medium-
sized company which has 7000
employees as of 2017 (United
Biscuits, 2019).
The scope of United Biscuits is to
offer the customer with different type
of biscuits ranging from salt to sweet.
Public limited
company
(Tesco)
Tesco is a large retailing
company with around 6800
stores around the world as of
2019.
The scope of Tesco is to adapt through
potential projects related to the sector
to generate higher revenue margins
(Botha, Kourie and Snyman, 2014).
Government
(National Health
Service)
National Health Service is a large
firm with around 1.5 million
people employed across the
country.
The scope of National Health Service
is to work for the welfare of the
society and provide security measures
to the public.
Voluntary
organisation
Family and Childcare Trust is a
small charitable institution in UK
The scope of Family and Childcare
Trust is to take care of people and
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(Family and
Childcare Trust)
(Cairncross, 2014). assess their needs by providing them
with various facilities like health &
check-up.
M1 Analysis of how size, structure and scope of different organisations link to business
objectives:
The size, scope and structure of an organisation has a direct relationship towards
achieving business objectives. These factors link with a firm's goal in a way that it affects the
profitability of a company. Usually organisations set their size, structure and scope in such a
manner that it helps them to achieve organisational objectives. For example, United Biscuits is a
medium-sized entity which follows a divisional structure and offers variety of biscuits, cookies.
This helps the company to attain its targeted objective by charging a low price for products so
that high profit margin can be achieved.
TASK 2
P3 Relationship between different organisational functions and their linkage with business
objectives and structure:
Organisational structure: It refers to a structure which tells how certain activities are
performed within an organisation in order to achieve desired goals and objectives.
Divisional structure: It is a type of structure where each functional unit in the
organisation has its own separate division which contains necessary resources and functions
needed to support product line (Kopnina and Blewitt, 2018).
Matrix structure: It is a structure where people with similar skills and interests are
pooled together to work for a common objective.
United Biscuits follows divisional structure where each department is allotted with an
individual store manager or supervisor who checks how effectively the members are working
towards achievement of organisational goals and objectives (Sodeyfi, 2016). The company also
follows certain organisational functions which are mentioned below:
 Finance: It is a department which ensures that appropriate funds are available for
different operational activities performed by management. For this purpose, whenever
United Biscuits introduces a new variant of biscuits in the market, it requires funds for
manufacturing and producing the product (Laudon and Traver, 2016). The finance
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function linked with the organisation in terms of meeting objectives by offering goods at
a low price to the market participants in order to attain high profit margins. United
Biscuits follows divisional structure wherein the firm allocates a supervisor for each
functional division made by mangers.
 Research & development: It is a department, which does a proper investigation
regarding the products offered by the company, and competitors, which can be done by
interpreting customer ratings. Whenever United Biscuits launches a new product in the
market, a proper research is done so if any defects are identified, they can be developed
accordingly. The R&D department assist the structure of company in meeting objectives
by doing a thorough research regarding any complexities in previous products. United
Biscuits follow divisional structure where the firm appoints well-equipped personnel who
can provide the company with a deep analysis of the goods (Stacey, 2016).
 Marketing: It is a function, which ensures accurate marketing is done for the product in
order to reach a wide number of people. United Biscuits advertises its existing as well as
new biscuits & cookies by modifying their packaging and posting them on official site,
newspapers, magazines etc. In order to achieve organisational objectives, the marketing
function helps the company in promoting its products by putting hoardings and issuing
pamphlets. United Biscuits follow divisional structure so in order to comply with it, the
firm appoints different teams for projects who are good at a specialised area (Linder and
Williander, 2017).
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(Source: organisational structure of United Biscuits, 2010)
M2 Advantages and disadvantages of interrelationships between different organisational
structure:
The advantages of different organisational functions generally relate to specialization,
speed in which the company adapts to the technological changes, operational clarity regarding
organisational goals and objectives etc. These have a positive impact on the structure
implemented by United Biscuits i.e. divisional by offering products to the customers at a low
cost which helps the company in attaining high profit margins. On the other hand, its
disadvantage is that this lacks segregation, co-ordination & communication among various
departments, territorial disputes etc. They negatively impact the divisional structure opted by
United Biscuits by not communicating about new projects undertaken by teams to maintain
secrecy (Storey, 2016).
D1 Critical analysis of different types of business structures and interrelationships of different
organisational functions:
United Biscuits faces a lot of complexities when it comes to complying with
organisational structures. The company follows divisional structure but there are times when it
needs to be changed with the needs and requirements of the business as well as society. In such a
case, the company lacks expertise which negatively impacts the profitability situation. As seen
above, there is an interrelationship among various functions performed by the firm such as when
the company launches a new product in the market, it requires a survey to be done to analyse any
complexities so that they can be updated. In relation to this, there is an immediate requirement of
funds as well to develop the desired changes (Storey, 2016). Also, in order to target a wide
audience, advertisement of biscuits is also necessary which can be done with the help of
marketing function.
TASK 3
P4 Affects of macro environment upon business:
A macro environment is a surrounding that exists in the whole economy and affect the
planning and decision of each and every organization, sector or region. The macro environment
is a wider context in which an establishment perform its mercantile operations (Neelankavil,
2015). It is the baseline guiding element flashing light on the whole market situations. A deep
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analysis of these factors with the help of PESTLE tool may inform the management of the
organization about the positive and negative impacts of the environment in which they are going
to operate their activities.
PESTLE Analysis: Most of the marketers or analysts use PESTLE analysis which is a
tool or framework that monitors and examine the impact of external factors on an organization.
This tool divides the macro environmental elements into most relevant categories which are
presented below:
Political Factors: Political factors are the elements which are related to government
policies and regulations that may affect the revenue and decision making process of an enterprise
in a particular market.
Positive Impact: Government provide subsidy or low rate of taxation of retailer business
then it impacts positively on the marketing decisions for United Biscuits to execute operations
effectively.
Negative Impact: Diverse political forces include possibility of continuously election
that affect the operations in terms of managing the sectional order of organisation.
Economic Factors: These factors cover the aspects that affect the performance and
profitability of an organization in a particular economy. Foreign exchange rate, interest rate,
employment scenario, cost of raw material are few examples of economic factors (Paul, Yeates
and Cadle, eds., 2014).
Positive Impact: A decrease in interest rate and foreign exchange rate ultimately
increase the revenue of United Biscuits.
Negative Impact: High cost of raw material, increase in exchange rate, high employment
rate increase losses and adversely affect the revenue. This may impact the strategic planning
process.
Social Factors: Analysis of social factors discuss about the cultural environment and
emerging trends in a specific economy. The factors that can be covered in this section are
culture, attitude, education level, family structure, lifestyle of the population in the particular
economy.
Positive Impact: High education level and lifestyle of the population invites the luxury
and the firm the increase the profit with organic and developed products.
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Negative Impact: Traditional culture and attitude of refusing the changes may be big
reason for the company to sale the high-class products. This impact the production activity of
business.
Technological Factors: These factors are related to the development and innovation in
technology which is capable to affect an organization or industry. Technological factors include
changes in mobile or digital technology, research and development, automation.
Positive Impact: New manufacturing technology increase the productivity and efficiency
as well as sales volume and customer satisfaction for United Biscuits.
Negative Impact: Implementation of new technology and automation costs very much to
the company and it is a huge reason of decreasing profit.
Legal Factors: Legal factors are similar to political factors but these elements include
more specification of laws. These factors are concerned whether the company is legally
complying with labour laws, consumer protection laws, health and safety laws, discrimination
laws, copyright and patent laws and so on (Pounder, 2015).
Positive Impact: Compliance with law and legislations helps in avoiding legal conflicts
and create friendly working environment for the employees.
Negative Impact: In order to comply with all the laws, the organization have to bare lot
of funds on unproductive activities which is a burden on the funds of the firm.
Environmental Factors: Environmental elements are also known as ecological factors
and related to natural and environmental traits such as climate change, weather, renewable and
non-renewable energy resources, environmental offsets, agriculture, etc.
Positive Impact: Availability of natural and ecological resources helps in conducting
corporate social activities without any difficulty.
Negative Impact: Seasonal and climate changes affect the agricultural activities of
specific economy which can affect the availability of raw material. This can affect the production
process of business in major terms.
M3 Detailed analysis of PESTEL tool:
PESTLE analysis is a tool that is helpful in analysing positive and negative impact of
macro environmental factors on the objectives and decision making power of the organization.
All the external factors analysed under this framework, have their own favourable as well as
adverse influence over the organization. Management of the United Biscuits is able to examine
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the effects of these elements before entering into new economy or introducing new products in to
the market. They can analyse the expected benefits or problems which may derive from the
specific business activity. Strategies and decisions can be planned accordingly and objectives can
be attained successfully.
TASK 4
P5 Identification of strengths and weaknesses through external and internal analysis:
In order to identify the strengths and weaknesses of an organization, it is essential to
analyse the impact of micro and macro environmental factors which provides a clear view of
market position of the organization. SWOT analysis is the most popular tool to examine the
compatibility, competency and capability of the organization which helps to derive overall
competitive condition.
SWOT Analysis: This analysis is a framework that recognize and examine the internal as
well as external factors that can have an impact on any project, place, person or product. As its
name suggests, it defines the strengths (S), weaknesses (W), opportunities (O) and threats (T) of
a particular establishment or project after analysis of effective factors (Sekaran and Bougie,
2016). A SWOT analysis of United Biscuits is presented as under:
Strengths Weaknesses
 The company provides a wide variety
of food products to its customers which
attracts potential consumers.
 The establishment has acquired some
well known brands such as Mcvitie,
Carr's of Carlisle, Ross young's, etc.
 United Biscuits has a strong parenting
company name (Pladis) for its backing.
 The company is enjoying a strong
financial performance with a net
financial profit of £ 232 million.
 The firm is also capable to retain 7000
plus loyal and professional employees
 The organization pays a lesser attention
toward research and development
process.
 Company's advertising policies are dull
and it also do not use internet
marketing.
 The company is not concentrating on
spreading its business globally and
focusing just on already developed
economies.
 The support provided by acquired
enterprises is fragmented.
 The products provided by the company
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