Business and the Business Environment Analysis Report - Module 1

This report provides a comprehensive analysis of the business environment, encompassing the types, purposes, and legal structures of organizations, with examples from Virgin Atlantic Airways, the BBC, and the National Council for Voluntary Organizations (NCVO). It delves into the size, scope, vision, and mission of these organizations, examining their stakeholders and the growth of the international business environment. The report explores organizational functions and their interrelationships, highlighting the link between customer service, marketing, research and development, finance, sales, and distribution. It further investigates the positive and negative impacts of the macro environment, including technological, political, and economic factors. An internal analysis of the organizations is conducted, identifying strengths and weaknesses in relation to macro environmental factors, and the report concludes with a summary of key findings and references.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

Table of Contents
TASK 1 ...........................................................................................................................................4
P1. Types, Purposes and Legal Structure of Organisation..........................................................4
P2. Size, Scope, Vision and Mission of the organisation ...........................................................6
TASK 2............................................................................................................................................8
P3. Organisational functions linked to organisational structure.................................................8
TASK 3..........................................................................................................................................10
P4. Positive and Negative impact of Macro Environment .......................................................10
TASK 4..........................................................................................................................................11
P5. Internal Analysis of the organisation..................................................................................11
P6. Strength and Weaknesses interrelated with macro factors.................................................13
CONCLUSION .............................................................................................................................14
REFERNCES.................................................................................................................................15

INTRODUCTION
An organisation is a group of people who come together to achieve a particular goal
which can be profit making, for societal benefit or both. There can be different type of
organisation based upon their motive. Business environment is a set of activities or elements
which involve business activities. Moreover, it is divided into two environment micro and macro,
micro represents the internal factors such as employees, resources, organisational culture and
many and macro environment include investors, technological changes, political changes and
many more. Every organisation has a management structure which depends upon the complexity
of the organisation. Once the goal of the organisation is decided then this structure determines
the activities, roles, responsibilities and authority of the members in the organisation. All the
organisations are influenced by the environmental factors in which they exist and have direct
impact on the decision making but these organisation also have positive and negative impact on
environment. This report helps in creating an understanding of organisation legal structure, their
different types, vision, mission, sizes and scope and the impact of various external and internal
factors that affects their performance. It also focuses on growth of international business
environment.
TASK 1
P1. Types, Purposes and Legal Structure of Organisation
Organisation are legal entity which are designed to earn profit or social welfare, that
describes their ultimate goal. There are different types of organisation with different objectives:
Private Organisation: It is that sector of an organisation which is owned, operated and
controlled by an individual. This sector contribute in the big part of the economy and have more
state control over the economies. Private organisation are those corporations, partnerships which
are financed and managed by one individual or by a group of people with an intension to earn
profit. Their structure for management are supported by law & restriction are also imposed by
law (Bah, and Fang, 2015) For e.g. Virgin Atlantic Airways is a UK based private organisation.
Purpose: The main purpose of these organisations is to earn profit and create value of
the company by improving market share. Also these companies tries to attain monopoly which
can maximises their profitability.
Legal Structure of private companies:

 Sole Proprietorship: In this, a sole person is responsible to arrange funds and bear the
risks associated with business. They do not have to share profits but have unlimited
liability. Partnership: It is two or more persons enter into contract to carry on business and
decides to share profits and losses in a predetermined ratio. They mutually decide the
terms & conditions and prepares a partnership deed.
 Limited companies: A limited company can be private limited or public limited and this
differentiation is created by restriction of issuing shares in public, minimum and
maximum number of shareholders, amount of capital invested etc. Regulations are
imposed to protect the interest of the shareholder.
Virgin Atlantic Airways is a limited company which is governed by UK companies act
2006. They have to pay corporation tax on profit made during the year and have to file statutory
accounts to head office which should be presented before shareholders in the meeting (Yeh, Lee
and Pai, 2015).
Public Organisation: This sector comprises the both public services and enterprises and include
public goods and governmental services. It is a state run organisation whose primary motive is
not only to earn profit but social welfare also, funded by the taxes collected from public and
revenue generated by them. They can outsource activities to private entities to improve their
productivity. For e.g. BBC is a public organisation in UK.
Purpose: The main motive of these organisation is to take care of the issues raised by the
public and to earn profits. They ensure high productivity & standards as they are transparent.
Legal Structure of public organisation: Central: It is apex body that manages economy by bifurcating it in different departments.
It is extension of government and comprises of civil servants, other government officials.
They manage the departments from the funds allocated and revenue generated by the
department. State: They manages a particular territory on the basis of powers granted to them by the
centre. Also they have control over specific issue or department.
 Local: Legal look over the community/locality for which they are held responsible. It
operates and resolves problem of their locality.

BBC is a public organisation which has to obtain license of broadcasting from Home
Secretary, regulated by Ofcom which provide operating framework. It is funded by television
licence fee.
Voluntary Organisation: These organisations are not for profit motive and governed by the
unpaid board & trustees are funded by philanthropy (Beatty, Samuelson, and Abril, 2018). For
e.g. National Council for Voluntary Organizations.
Purpose: These organisation are not-for-profit and work for the welfare of the society.
They provide voluntary community services for the common issue.
Legal Structure of voluntary organisation Trust: They manages the land, property and money received for the particular purpose
for betterment of society.
 Unincorporated Association: Motive is to protect any facility or particular issue which
involves a lesser number of people with short term objectives.
Growth of International Business Environment
Growth in International Business Environment is because of availability of opportunities
in international market, cheap labour, change in taste and preferences of the people as more
communication platforms are accessible.
P2. Size, Scope, Vision and Mission of the organisation
Virgin Atlantic Airways: It is a UK based airline started in 1984 owned by virgin group and
delta group. Music label and Record Stores are parent brand of virgin group which they used for
marketing their company. They own planes and aircraft of Airbus & Boeing and have three
different classes on their planes : Economy, Economy Premium and Upper class. Vision: The Vision of the airlines is to be the most loved travel company by providing
better and high quality luxurious services at affordable prices and to be a green leader in
the industry by reducing environmental impact. Mission: To hire happy people to be the cabin crew and to come up with innovative
products and services to make journey delightful, also flights to almost all desirable
destinations. Size and Scope: Organisation has 46 aircraft, number of employees is 7629, 5.4 Millions
passengers flown, 2.8 billion (in pounds) earned by the organisation. It flies to 31 cities
of Africa, Asia, Europe, US, Caribbean and Australia.

 Stakeholders: 51% of the shareholding of the airline is with Virgin Group and 49% is
with Delta Airlines. The key stakeholders of the airlines are shareholders, customers,
employees, vendors, government agencies, NGOs and society. Customers are provided
quality services, employees are provided good diversity and training to be efficient to
adapt new technology, they focus on reducing carbon footprints and effect of fuel on the
environment (Virgin Atlantic Annual Report, 2019).
British Broadcasting Company (BBC): BBC is a statutory corporation registered under Royal
charter and it is world's oldest national broadcasting organisation which is funded by annual
license fee paid by UK households. They create programmes and content which inform, educate,
create awareness and entertain people across nations in various segments such as news, sports,
weather, BBC sounds, iPlayer etc. BBC provides broadcasting, television, radio and online
services in 40 languages in different countries. Its operations include BBC studios, production
company which earn addition revenue for the organisation. Vision: The vision of the company is to be a creative organisation that will help people to
understand and engage with the world around them. Mission: To act in public interest, providing all the audiences high quality services and
authentic information that educate & entertain them. Size and Scope: BBC is specialised in journalism, content making, new media and
technology where 20,000+ people are employed. In year 2018-19, the group income is in
deficit by 69 million (in pound). They look forward for expansion in developing countries
and where they have not yet started their operations. Stakeholders: BBC has various internal and external stakeholders such as trusts,
customers, media partners etc. whose interest need to be protected (BBC Group Annual
Report and Accounts, 2019.)
National Council for Voluntary Organizations (NCVO): Is an organisation started in 1919 for
voluntary and community sector in UK which supports them to enhance volunteering,
strengthening their organisation etc. They connect to the organisations with partners, resources
and provides them guidance from experts. Also they represent voluntary organisation before
government (Kolk, 2016). Vision: The vision of the organisation is to champion voluntary sector for the betterment
of the society.

 Mission: To be creative, collaborative for better results, be open and honest and do best
for the sector. Size and Scope: This organisation is serving entire England and expanding their business
to other cities to strengthen the voluntary sector. There were around 166,854 voluntary
organisation in UK (HOW MANY VOLUNTARY ORGANISATIONS ARE THERE, 2019).
 Stakeholders: Their stakeholders are government whom they have to be in contact to
take appropriate measures regarding any issue.
TASK 2
P3. Organisational functions linked to organisational structure
Every business consists of some activities which are part of some or the other functions
of organisation. All the functions are linked to each other in some or the other way. Relationship
between different functions are: Customer service and Marketing: Both the department are interrelated to each other as
customer service department will provide the feedback from the customer and marketing
department accordingly prepare marketing plan. Research & development and Marketing: Research department will identify the feature
required in new product or modification in existing product which marketing department
has to comply with. Finance and Production: Production department requires funds for the procurement of
the raw material and machineries for which they will ask finance department to provide
for the same.
 Sales and Distribution: Sales department has to update time to time about the order taken
from the distributors to the distribution department so that the delivery can be made on
time by proper means.
Organisational objective of Virgin Atlantic is to earn profit and keep their shareholders happy so
that they keep investing in the organisation which will help them to expand. This can be done by
improving customer services by reducing delays and introducing more flights to different
destinations etc. The aim and objective can be achieved by establishing co-ordination between
different functions such as customer service and marketing where customer service will tell

about the feedbacks, the requirement of the customers and about their previous experiences
which will help marketing department to design their advertising campaign etc. (Hillary, 2017).
Organisational Structure: It outlines how the activities to be done and decides upon the flow of
information, authority, responsibility in order to achieve the organisational goal. These structure
can vary in different organisation as it depends upon the activities the organisation conduct and
their objectives. Different types of organisational structure are :
 Hierarchical organisational structure: In this type of structure the command flows from
top to bottom and accordingly the roles, responsibility, authority are decided. In this
organisational structure, decision making delays as there is no direct communication
between different levels of management.
(Source : Hierarchial organisational structure, 2019)
 Flat organisational structure : In this type of structure their does not exist any layer of
management. Chain of command is short as they can communicate to each other and
number of employees to be managed is less. Decision making is faster and easy also
lesser bureaucracy exist.
Illustration 1: Hierarchial organisational structure

( Source : Flat organisational Structure, 2019)
Virgin Atlantic follow flat organisational structure. Their view is that it involves every
employee to make them feel integral part of the organisation, also it allows job sharing, flexible
working etc. by creating a balance between pros and cons of the form of structure (Saleem,
2015).
TASK 3
P4. Positive and Negative impact of Macro Environment
PESTLE is a tool to analyse the impact of macroeconomic factors on the individual
organisation which helps to identify the opportunities and threats in the external environment.
This analysis will help to understand opportunities that can be availed by minimising the effect
of threat on the organisation.
PESTLE of Virgin Atlantic Political Environment : It has a direct impact over the operations which can be negative
or positive. The no-deal Brexit has a negative impact on operations of the organisation as
their will be no trade agreement with other EU members due to which airlines will lose
their business in those member countries. But when government approved third runway
at Heathrow airport this has a positive impact on the organisation as it can increase and
improve the affordable capacity which will reduce cost for the airlines. (Jenkins and
Williamson, 2015).
Illustration 2: Flat organisational Structure

 Economic Environment : Brexit will bring negative impact on economy as free tariff-
trade status will no longer be available and this will increase the prices of imports. Thus,
it will increase fuel prices. High unemployment rate reduces purchasing power this
reduces sales of airlines. But their marketing strategies helped them to maintain their
sales volume. The low fuel cost of Brent crude oil fell by 21.8% during the first half of
2016 which put positive impact on company. Social Environment : Due to increase in trend of travelling and opportunities to work
abroad has boosted the sales volume which put positive impact but the threat that arises is
of more airlines choices and demanding customer and it can put negative impact on
company. Technological Environment : Availability of different communication channels and
platforms makes easier for Virgin Atlantic to target customer and create awareness about
their offerings also high innovation and invention, this has positive impact on the sales
volume and operational cost of the organisation but transformation due to technology
change incur huge cost to the airlines. Moreover, the digital technologies change the cost
structure and enable new entrants such as WOW Air, in order to use digital technology as
it disrupt the legacy carries which put negative impact on Virgin Atlantic. Legal Environment : The organisation is regulated by different laws and they complies
with all legal aspects but was negatively affected when they faced pilot union issue
demanding to be recognised as sole union for virgin pilot.
 Ecological Environment : To meet the environmental laws is to use technology which
reduces the affect on environment for which they keep a check upon carbon footprints,
Due to adverse weather conditions their business got affected in UK which is expected to
continue further, this reduces their revenue and put negative impact on company (Storey,
2016). By considering the negative disaster which is arise by airlines it is viewed by
Virgin Atlantic that they use that technology which release less amount of carbon
emission which put positive impact on the sales and environment both.
TASK 4
P5. Internal Analysis of the organisation
SWOT of Virgin Atlantic Airways

Strengths:
 One of the largest British airlines flying to 35 destinations.
 Three category economy, premium, luxury helps them to cater wide range as per their
standard.
 Good advertising and innovative branding by the entrepreneur make it preferred airline.
 Quality services and personalised customer catering then competitors. Best cabin crew as they provide them good ambience to work in.
Weaknesses:
 Perception of the people that it is an expensive airline.
 Dependence for advertising upon single person Richard Branson.
 Lesser cash availability in comparison to USA and gulf countries airlines. Even after good brand image, they are unable to create product differentiation.
Opportunities:
 More focus to comfortability and trend in travelling and exploration due to change in
taste and preference increases the scope.
 To expand in more countries and destinations as they fly to 35 destinations only.
 Government approval for Heathrow airport expansion offers opportunities to increase the
number of flights. Lower fuel prices in 2017 will reduce the operational cost of the organisation.
Threats:
 Due to Brexit, they have threats of loss of business as tariff free trade status will not be
available.
 Competition from USA and gulf countries flights.
 Adverse weather conditions can affect business in peak season.
Therefore, the advertising of Virgin Atlantic should be enhanced by any other celebrity
with Richard Branson which can eliminate the perception of expensive advertisement also it will
help them to fight competition that will help them to grab the scope of expansion. For product
differentiation they can utilise more of their strength of happy cabin crew and personalised
catering this will also help them to enter new market giving strong competition to the local
airlines (Quinlan, 2019).

P6. Strength and Weaknesses interrelated with macro factors
The impact of macro factors on the organisation can be assessed as opportunities or threat
but this is dependent upon the internal strength and weakness of the organisation.
Impact of macro factors on Virgin Atlantic
Political Impact Strength: Approval of third runway at Heathrow airport will help increase number of
passenger by utilising advertising, quality services, personalised customer catering etc. Weaknesses: Brexit will affect operations as tariff free trade status will not available and
it will increase cost of operation.
Economic Impact Strength: High employment rate affect business but their marketing strategies by strong
advertisement, offerings for professional travel etc. Weaknesses: It is perception of people that it is expensive airline. Due to Brexit, the fuel
prices will increase and this will increase air fare. Thus, it can bring drastic fall in number
of passengers.
Social Impact Strength: As they operate in 35 attractive destinations, the number of passenger can be
increased who travel in vacation and for work. Weaknesses: Competition from airlines of USA and gulf countries, demanding customers
is a weakness as they do not have cash as these airlines possess.
Technological Impact Strength: Advertising through various available online platform offers the airlines
opportunities to attract more customers. Weaknesses: Lesser cash availability in comparison to other airlines is a reason for no
product differentiation as it involves huge cost on innovation and transformation.
Legal Impact Strength: Virgin Atlantic follow various legislation act such as employment legislation,
health and safety which is beneficial for their employees and passengers too. Weaknesses: The pilot of Virgin Atlantic decided to take industrial action in a row in
order to want their rights and in this action approximately 900 plus pilots are include.
Environmental Impact

 Strength: Airways of Virgin Atlantic does not produce carbon offsetting in the
environment which helps in reducing the pollution.
 Weaknesses: Due to adverse weather conditions in South east England, thunderstorms
appears and because of this Virgin Atlantic face disruption operations in last year which
led to cancellation of many flights.
CONCLUSION
It is concluded from the above file that different type of organisation is established with
specific objectives which could be profit, social welfare or both and that is dependent upon the
activities the perform. The organisation is influenced by the size, scope, structure of the
organisation. Impact of the macro factors can be studied by the PESTLE whereas SWOT helps to
analyse the internal factors as done for both the organisation in the case. Interrelation between
macro factors with the internal factors helps organisation to identify the opportunities and threats
with strength and weaknesses of the organisation.

REFERNCES
Book and Journal
Bah, E.H. and Fang, L., 2015. Impact of the business environment on output and productivity in
Africa. Journal of Development Economics. 114. pp.159-171.
Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment.
Cengage Learning.
Erasmus, B., Strydom, J.W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Hillary, R., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Jenkins, W. and Williamson, D., 2015. Strategic management and business analysis. Routledge.
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Neelankavil, J.P., 2015. International business research. Routledge.
Quinlan, and ed. al., 2019. Business research methods. South Western Cengage.
Ramanadham, V.V., 2019. Public enterprise: studies in organisational structure. Routledge.
Saleem, M.A., 2017. The impact of socio-economic factors on small business success.
Geografia-Malaysian Journal of society and space. 8(1).
Saleem, S., 2015. BUSINESS ENVIRONMENT, 3/e. Pearson Education India.
Storey, D.J., 2016. Understanding the small business sector. Routledge.
Yeh, C.H., Lee, G.G. and Pai, J.C., 2015. Using a technology-organization-environment
framework to investigate the factors influencing e-business information technology
capabilities. Information Development. 31(5). pp.435-450.
Fabuš, M., 2017. Current development of business environment in Slovakia and Czech Republic.
Deasy, S., Meyer, R., Newell, C., Emil, S.I.T., Wisner, P., Furodet, D., Gyuris, V. and Strudel,
F., VMware Inc, 2016. Controlling use of a business environment on a mobile device.
U.S. Patent 9,247,042.
Online
HOW MANY VOLUNTARY ORGANISATIONS ARE THERE. 2019. [Online] Available through
<https://data.ncvo.org.uk/profile/size-and-scope/>./