Business and Business Environment: Types, Functions, and Case Study

This report provides a comprehensive analysis of the business environment, focusing on different types of organizations, their purposes, sizes, and scopes. It examines the relationships between organizational functions and structures, highlighting the impacts of the macro environment on business operations. A detailed case study of Tesco is presented, including a PESTLE and SWOT analysis, to illustrate the internal and external factors affecting the company. The report also explores the linkages between internal strengths and weaknesses with external macro attributes, providing valuable insights into organizational dynamics and strategic decision-making within the global business framework. Desklib offers this assignment solution and many more resources for students.

Running head: BUSINESS AND BUSINESS ENVIRONMENT
Business and Business Environment
Name of the Student
Name of the University
Author Note

1BUSINESS AND BUSINESS ENVIRONMENT
Table of Contents
Introduction................................................................................................................................2
Different types of Organizations................................................................................................3
Purposes of different types of business organizations...............................................................9
Size and Scopes of different types of organizations................................................................10
Relationships between different organizational functions.......................................................12
Linkages between organizational functions and organizational structures..............................14
Impacts of the macro environment on the business operations................................................14
Case study of Tesco: PESTLE Analysis..............................................................................16
Internal and External analysis of Organizations: Case Study of Tesco...................................17
SWOT Analysis of Tesco.....................................................................................................17
Relationship between the strength and weaknesses and external macro attributes.................19
Conclusion................................................................................................................................19
References................................................................................................................................20

2BUSINESS AND BUSINESS ENVIRONMENT
Introduction
The term “Organization” refers to the group of people who unite and work for
different purposes, which can be personal, government related or business. The term, over the
years, has gained immense importance, especially in the global business framework (Conrad
& Poole, 2012). With time and with the occurrence of events of international significance like
industrial revolutions, technological and infrastructural innovations as well as Globalisation
and Liberalisation of different economies across the globe, the global business environment
has become more integrated, inclusive, interconnected as well as complex.
With the increase in the global connectivity and integration of the global business
environment and with more and more businesses going global, the nature, types, scopes as
well as purposes of the organizations have also diversified hugely, especially in the
international commercial framework. According to the market where these organizations
venture, the people whom they deal with, the objectives of the organizations, their goals as
well as their individual operational framework, their nature and purpose varies. The
organizational functions also vary hugely and have direct linkages with the objectives of the
concerned organizations and their structures (Cavusgil, Ghauri & Akcal, 2012).
Keeping these aspects of organizations in the global commercial framework in
consideration, the concerned report tries to discuss about the different types of organizations
according to their size, ownership and nature as well the scope and purpose of such
organizations in the generalised global framework, thereby analysing the interrelationships
between their functional activities with that of their organizational structures and objectives.
The report also tries to highlight the aspects of macro environment of business on these
organizations (both positive as well as negative) using real world examples. The report
conducts internal and external analysis of the renowned company, Tesco, as an example,

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thereby discussing the linkages between the internal strengths as well as weaknesses with that
of the macro business environment factors, present in the general as well as company specific
framework.
Different types of Organizations
As discussed above, with the increase in the complexity and activities of the global
business environment and with the expansion of the operations of different businesses in
different regions across the globe, different types of business organizations have also
developed in the global domain according to the activities performed by them, the market
they venture and also their personal goals and objectives (Follett, 2013). The different types
of business organizations, in a general framework, can be shown with the help of the
following figure:
Types of Business Organizations
Sole
Proprietorship
===p
Partnership
Organizations
Corporations
Co-operative
Organizations
Franchises
Non-profit
Organizations/
Public
Organizations
Public Corporations Private Corporations

4BUSINESS AND BUSINESS ENVIRONMENT
a. Sole Proprietorship
One of the most common form of business organizations which can be found across
all parts of the world is that of Sole Trading or Sole Proprietorship. This type of business is
owned by one person but can have more than one employees working under the concerned
single owner. The owner can also solely run the company by himself/herself depending upon
the size of the same and its operational magnitude. Usually this type of business
organizations is highly common and also mostly successful due to the fact that they are
usually small in size, operating in a particular region (local places of the organizations
usually), thereby catering to the needs of the local population and offering special services
according to the needs of the local customers.
The advantages of these types of organizations is that the owner has total control over
his or her business, which in turn helps in abrupt decision making and cheaper operational
framework, which in turn makes it easier to set up sole proprietorship firms. The sole owners
also enjoy close connections and inter-personal level of communications with their
customers, which in turn helps them to customize their service accordingly (Foss & Knudsen,
2013). However, on the negative side, this type of organization has unlimited liability and it
becomes difficult for such businesses to raise finances. The organizations become highly
owner dep0endent and thus, inherit the risk of continuity problems after the owner retires or
dies.
Example: Plumbing, Electric works, etc.
b. Partnership Organizations
This type of organization usually has number of partners ranging from two to twenty,
although under the Partnership Act, 2002, more number of members (even up to 100) can be

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present in big companies. In this type of organizations, the partnership regulations are
determined by the Agreement formed for the concerned companies, which again is designed
and implemented through mutual discussion and consent of the partners forming the
company. In general, the Partnership Agreements of this type of companies include aspects
like:
 The contributions of each of the partners
 Distribution of risks, profits and losses among the partners
 Voting and decision-making systems regulation
 Rules regarding operational responsibilities of each partners
 Rules for taking in new partners
The primary advantage which this type of companies or organizations usually enjoy is
that of a higher capital and resource as well as talent pool due to the presence of different
partners with different skills and experiences. The presence of diverse personalities also helps
in bringing in new and innovative ideas in the operational framework. These organizations,
due to the presence of multiple partners, also enjoy higher clientele as well as robust chain of
suppliers and it becomes easy for this type of organizations to expand their business domains
(O'shaughnessy, 2013). However, in the partnership organizations, the role and control of
each of the individual partners is less and also there may arise problems regarding the
decision-making process of the business as well as the in profit and risk distribution aspects.
Example: Accountancy firms and other service sector firms
c. Corporations
These types of organizations are those legal entities which operate distinct from their
owners. The companies usually operate as separate entities, enjoying those rights and
responsibilities which an individual businessperson usually does. This includes the right to

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enter in contracts, raise funds, hire people, pay taxes and also owing assets and capital
resources. Thus, the corporations can be defined as a separate legal body with its own right to
exist and operate. Usually these corporations are run by the Directors and have limited
liabilities. There are usually two types of corporations, which are as follows:
Private Corporations
The private sector companies or corporations are those under private ownerships and
may have shareholders and stocks but these companies do not trade their shares in the public
exchanges. The shareholders being the owners of such corporations usually, employ directors
and other employees and the directors remain responsible to the shareholders (Foss &
Loasby, 2013). The primary advantages of these types of corporations is that due to their
usual goals of personal profit and welfare maximization, these organizations operate in an
efficient environment and allocate and utilize their resources more effectively, which is
necessary for them to survive in the competitive environment which they usually experience.
However, the risks endured by both the corporations as well as their employees are higher in
case of private sectors and often in achieving efficiency parameters, these companies
overlook the aspects of social welfare.
Example: Family owned businesses, private banks, etc.
Public Corporations
The ownership of these types of organizations are usually dispersed among the public.
The shares or stocks of these corporations are traded on stock exchanges and this is the
primary difference existing between the public and the private sector corporations. However,
the public companies enjoy the ease of raising more money and investments for their
operations due to the higher level of securities they enjoy. However, these high security
levels compromise their efficiencies in the production framework and there always remains

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the threats of takeover. These companies are also cumbersome when it comes to the aspects
of cost of setting up and running the same. The decision-making processes are also more
complex as more information are required to made public and the opinions of all the
stakeholders are needed to be taken into account (Argyris, 2017).
Example: Any public listed company in any part of the globe
d. Co-operative Organizations
The base of this type of organizations lie in the notion of voluntary participation of a
group of people, that is “Co-operation”. A co-operative company usually refers to the
association formed by volunteering group of people, coming together for achievement of
specific economic goals under a democratic framework. In these types of business
organizations each member contributes equitably and enjoy fair share of benefits or risks
depending on their contributions. In these organizations the primary advantage is that each of
the patron members have considerable say and they share the burden as well as benefits
efficiently. Goodwill plays a considerably important part in the operational frameworks of
such organizations (Chaddad, 2012). However, the democratic framework often creates
problems in the aspects of decision-making and trade-offs between equity and efficiency.
These types of businesses are usually less competitive and less flexible as profit is not only
the sole moto of these companies.
Example: Producer cooperatives, consumer cooperatives, etc.
e. Franchises
Franchising is one of the most common form of business organizational procedures,
especially in the contemporary periods, where a continuing relationship is set up between a
franchisor and a franchisee. In this case, a franchisor is that business which provide the
licenced privilege of carrying out their operations to other business which is known as

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franchise, in exchange of monetary benefits. The franchisors usually run their own businesses
but they also let other companies run their business in different places.
The primary benefits of these types of organizational frameworks are that of easy expansion
of business operation, capital accumulation as well as increase in the clientele. However, on
part of the franchisees, they need to pay a part of their revenues to the franchisors and there
also remains lack of flexibility as the franchisees need to operate in the regulatory framework
of the franchisors.
Example: Subway, Pizza Hut, etc.
f. Non-Profit Organizations
The non-profit organizations, both private as well as public, are generally those work
on public welfare sectors like scientific, educational, public safety, health and charitable
aspects. These organizations have both paid employees as well as volunteers who work for
free and these types of organizations usually generate public benefits and concentrate on
societal welfare maximizations (Jeston, 2014).
Example: National Charities, NGOs, Hospitals, Schools, etc.
g. Public Sector Organizations
These are categorically those business organizations which are owned by the
government or state and usually operates for providing goods and services at local or national
government levels. These companies generally provide those commodities or services which
are not usually provided by the private sectors but are essential for the welfare of the
population of the region in general (Anheier, 2014). However, profit earning is not the
ultimate goal of these companies and they concentrate in equity aspects.
Example: Post Offices, Fire Service companies, Infrastructural facilities, etc.

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Purposes of different types of business organizations
Depending upon the differences in the nature of the business organizations the purposes of
the organizations also vary, which can be shown as follows:
a. Sole traders:
 Making highest profit
 Minimise risk
 Maintaining customer relations
 Catering to the needs of the specialised customers
b. Partnership firms:
 Maximizing profits for all the partners
 Appropriate usage of the assets
 Minimizing risks for all the partners
 Maintaining harmony in decision-making process among the partners (Boons &
Lüdeke-Freund, 2013)
c. Private companies
 Highest profit
 Highest possible growth of businesses
 Maximization of sales
 Gaining long term competitive edge over their rivals
 Acquiring highest market share
 Cost minimization
d. Public companies
 Serving the needs of general population

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 Catering to public interest
 Welfare maximization of all the stakeholders involved
 Surviving and growing
 Profit making (Drucker, 2012)
e. Non-Profit Organizations
 Maximize societal welfare
 Helping those in need
 Collecting funds for the same
 Using the profit for benevolent activities
Size and Scopes of different types of organizations
The size, range of legal structures as well as the scopes of different business
organizations also vary widely according to their nature and categories in which they belong,
which is discussed as follows:
a. Sole Proprietors
These organizations are usually small ones created for self-employment of individuals
and they usually cater to households as well as bigger business organizations. The owner and
the business are not legally separable. All the profits generated are enjoyed by the owner who
also needs to take all the risks. There is unlimited accountability on part of the owners
regarding any debts or losses and though they can employ people, the responsibilities are
solely borne by the owners. These organizations are easy to set up due to small investments
and set up costs and also due to lesser overhead costs. However, in the absence of profit
creation that can be exclusively hurting to the owners completely.

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b. Partnership Organizations
In these kind of business organizations, involving more than one-member partners,
the partnership deed determines the relationship between the different partners as well as the
distribution of responsibilities, profits as well as risks and losses (Rouhani, Asgari &
Mirhosseini, 2012). However, like that of the former type of organizations, there remains
unlimited liability for the partners, however that is not essential in partnership businesses.
Limited liabilities can be seen in case of law firms, doctors and similar ones.
c. Limited Corporations
The limited corporations are those which are separate legal entities than their owners,
having their own legal status and are treated as “Legal Persons” in many countries like that of
the United Kingdom. These types of companies can own assets in their own name and can
also sue or be sued by others. Usually they are run by Directors and are limited by guarantee
or by shares. In case of the former types, people who own the same are called “guarantors”
and their liability is constricted to “guarantee” which is a fixed sum of money which needs to
be paid in case the company fails to repay debts. These companies are set up for profit
generations. There can be a number of shareholders in this type of business organizations.
These companies can be private limited companies or public limited ones:
Private limited companies
These primarily small ones have their liability limited by the shares and these
businesses being mainly small have limitations in the number of shareholders in different
countries (like 50 shareholders in the United Kingdom) (Mazzucato, 2015). There usually
remains no minimum capital requirements for setting up these kinds of business organizations
and they do not trade their shares in public exchange. Often these organizations have many
small and medium enterprises working under their domain.