Business and Business Environment Report: Unit 1 HND Assignment - DGHE

This report delves into the intricacies of the business environment, using GlaxoSmithKline (GSK) as a case study. It begins by defining and categorizing different types of organizations, including private, public, and voluntary sectors, and their legal structures. The report then explores the size and scope of these organizations, followed by an examination of the interrelation between organizational functions, such as finance and marketing, and their links to organizational objectives and structure. A significant portion of the report is dedicated to analyzing the positive and negative impacts of the macro environment on business operations, utilizing PESTLE analysis to evaluate political, economic, socio-cultural, technological, legal, and environmental factors. Furthermore, the report conducts internal and external analyses of GSK to identify its strengths and weaknesses, correlating these with the external macro factors. The report concludes with a summary of the key findings and recommendations, providing a comprehensive understanding of the business environment and its impact on organizational performance.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explanation of different types and purposes of organisations and their legal structures.......1
P2 Explanation of size and scope of different types of organisations.........................................2
TASK 2............................................................................................................................................3
P3 The relationship between different organisational functions and their links to organisational
objectives and structure...............................................................................................................3
TASK 3............................................................................................................................................5
P4 The positive and negative impacts of macro environment on business operations................5
TASK 4............................................................................................................................................7
P5 Internal and external analysis of specific organisations in order to identify strengths and
weaknesses of company...............................................................................................................7
P6 Interrelation of strengths and weakness with external macro factors.....................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business environment comprises of two words which can define its meaning were
business stands for doing something by which motive of earning profits can be accomplished.
While the environment is the surrounding from which sources to run business can acquired
(Aithal, 2017). The organisation selected for this project report is GlaxoSmithKline (GSK) which
is a multinational pharmaceutical company which provides its services all over the world. The
report focuses on different types of organisations which include their size and scope,
demonstrates interrelation of various functions within company and their link with organisational
structure. Apart from this the positive and negative impact of macro environment on business
operation and strengths and weaknesses of specific business and their interrelation is also major
concern of report.
TASK 1
P1 Explanation of different types and purposes of organisations and their legal structures.
An organisation can be defined as collection of people working together in coordination
and structured way to achieve its goals and objectives for long run. The working of organisations
are different from each others, the following are different categories in which it can be classified:
Private sector organisations- The companies that are not controlled by government
bodies and earn profits out of sale of the projects which are made by its employees to raise their
income are private sector companies (Antonescu, 2018). For example GlaxoSmithKline is a
private organisation which deals in pharmaceuticals that is headquartered in England.
 Purpose- The company aims at bringing differentiated, high-quality and needed
healthcare products to as much as people they can make it possible with help of scientific
and technical know-how and talented people.
 Legal structure- GSK falls in legal structure of public limited company which is one
type of limited private sector organisations.
Vision: GSK conduct its business operations with a vision to serve customers with
ethical business practices.
Mission: GSK primary mission is to serve customers by maintaining dignity and respect.
Public sector organisations- These type of companies are owned by taxpayer and
managed or controlled by local or national government of the sake of public. Making profits is
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not important aim of such organisations as they need to work on department budget bases. For
example National Health Service (NHS) is a publicly funded healthcare system of UK.
 Purpose- It aspires highest standards of excellence and professionalism by providing
high quality care that is safe, effective and focused on experience of patient.
 Legal structure- It is umbrella body that oversees healthcare as it is an independent body
which states that Department for Health cannot interfere in decisions of NHS.
Vision: NHS operates their business activities with a vision to serve maximum number of
customers in affordable price range with dignity.
Mission: NHS have most important mission in which they aim towards serving customers in
strong ethical practices.
Voluntary sector organisations- The companies which focus on work for benefits and
help the general public without thinking about making profits as the voluntary sector
organisations (Bertram and Chi, 2018). For example Mencap is a charity based company in UK
which works for people with learning disability.
 Purpose- Mencap runs for purpose of transforming society's attitude for learning
disabilities and improve life quality of people with learning disabilities and their families.
◦ Legal structure- The views for legal structure of company is clear by its work it is
charitable trust which works for learning disabilities.
Vision: Mencap is having vision to perform their operations in order to provide proper
support and care to individuals while improving their quality of life
Mission: Main mission of Mencap is to treat individuals with best services and transform
society's attitude towards disability.
P2 Explanation of size and scope of different types of organisations.
Basis GlaxoSmithKline NHS Mencap
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Size The company has
employed on approx
59,000 people from
whom 13,400 are in
UK, operates 76
companies and 50
manufacturing
facilities all over
globe.
NHS is one of the
largest public
employers in UK with
estimation of 1.3
million staff which
comprised over 112
thousand doctors,
approx 289.8 thousand
nursing staff and
around 326 thousand
supporting staff.
The company has
employee's in range of
5,000-10,000
employee's apart from
this it has people who
work on voluntary
bases.
Scope With innovative
medicines, vaccines
and consumer products
scope of GSK enables
to reach out millions
of people do more,
feel better and live
longer (Bocken, Boons
and Baldassarre,
2019).
NHS works on
providing quality
services which can be
care of people
suspected with
congenital heart
diseases along with
care and support for
families suffering with
poor outcomes from
surgeries.
Mancap work on
providing practical
information and
emotional support
when people need it
most and campaign
relentlessly for
creating fair society.
Objective GSK works with aim
to be one of world’s
innovative, best
performing and high
trusted healthcare
company. Its strategy
is to bring high-
quality, differentiated
It aims for continuous
improvement in health
care qualities, help in
creating safety for
people and respect
their dignity with
compassed delivery of
services (Golicic, Flint
Mencap has objective
of transforming
society's attitudes for
learning disabilities
and providing better
life to people with
learning disabilities.
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healthcare products to
as many people it can.
and Signori, 2017).
Product or Service The pharmaceutical
company, GSK has
marquee brands like
Calpol, Augmentin,
Zinetac, Eltraxin and
Celin.
NHS services include
primary care services,
mental health, social
care and different
hospitality services.
The services provided
by Mancap ranges
from round clock care
to help someone join
in the local leisure
activities, providing
advice and details on
things like education
and employment.
TASK 2
P3 The relationship between different organisational functions and their links to organisational
objectives and structure.
GlaxoSmithKline being science-led global healthcare company effectively works on the
objective to help people to more things they are doing, feel better about their healths and live
long life. With this aim it mainly values the patients focus, maintains transparency, respect
people and their integrity.
Organisational structure- The design and interconnection of business units defines the
structure of organisation. The structure of company can be centralised, decentralised or network.
This involves implication of legal and accounting models. Some of organisational structures are:
 Functional structure- It can be defined as system in which functional departments are
created by companies which deals with problems of business at various levels (Jerman,
Erenda and Bertoncelj, 2019). Functional authorities remain confined of functional
guidance to different departments. In such organisations in-depth knowledge and skills
are developed amongst employees to achieve the goals of company.
 Divisional structure- Such structure is usually followed by big companies which
manufacture more than one product or has operations in wide geographical areas. Such
companies are classified into different autonomous units and managers create series of
business units to produce specific kind of product for specific kind of customers.
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GlaxoSmithKline has divisional structure in company as it is multinational
pharmaceutical company with primary listing on London Stock Exchange and gives ability to
company to segregate large sections of company's activities into semi-autonomous groups.
Organisational function- The core process or set of activities which are carried out
within any department or areas of company are known as organisational functions. On that base
organisations arrange resources into different business functions from which two are discussed
below. This also includes interrelation of such functions with the organisational structure and
objective of company:
 Finance function- This function is most important part of every enterprise as through
this function the manager’s record money which is received and paid by company. The
role of this function in GlaxoSmithKline is to check the availability of funds which can
be distributed equally to all departments (Koyagialo, 2016). It interrelates with other
functions as it is necessary to coordinate activities with them to carry on smooth working
in company. Finance department supports the strategies planned by marketing department
as the funds are allocated to carry on the planned activities. While the interrelation of
finance function with divisional structure complicates situations of company as the
monetary resources are transferred to top authorities and they are one who decide the
allocation of funds. In addition to this function allocates funds to all departments in
correct manner provides quality products in market to achieve the objectives of
GlaxoSmithKline.
 Marketing function- Company cannot sustain in market only be manufacturing products
for customer, the manager need to carry on marketing activities for which marketing
division play its part. The interrelation of this function with finance department helps in
knowing the amount of investments which would be required for growth of company
(Leischnig, Woelfl and Ivens, 2016). The marketing function relation with divisional
structure of organisation many depend upon situation which can be faced by company
with demand and supply of products depending upon consumers. In GlaxoSmithKline
marketing function achieves objective of company by formulation of correct techniques
of promoting and attracting large customers in market.
Advantages of interrelation between functions- Good interrelation between different
organisational functions speeds up the operations of company and this can only happen when
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senior person handles the problems then the person who has less experience. This also helps the
employees to be specialize themselves in the work and be effective for company.
Disadvantages of interrelation between functions- The functioning of different divisions
may lack high level of efficiency and cause difficulties between departments (Nwaiwu, 2018).
However with such this the employee's may feel demotivated and the work of company may be
hampered.
TASK 3
P4 The positive and negative impacts of macro environment on business operations.
Macro environment is combination of all factors which have capabilities to influence the
operations of company in both positive and negative manner. For analysis of external factors
GlaxoSmithKlinecan implement Pestle analysis which may show the positive and negative
impacts as well:
Pestle Analysis is a methodology which is used by marketers for analysing and
monitoring macro-environmental factors which impacts the organisation. The following is the
pestle analysis of GlaxoSmithKline with its positive and negative impact of business of
company:
Political Factors- This factor identifies the intervene of government in economy. It
involves tax policy, environmental laws, labour laws and all such things which are implemented
by government (Ratten, Ferreira and Fernandes, 2017). The impacts of such factors on
GlaxoSmithKlineare:
 The positive impact on the company is that the local market has very laws so company is
not much impacted.
 While negative impact of such factor is operation in other countries is difficult due to
high exchange rates.
Economical Factors- It involves the exchange rate, interest rates, inflation rates and
other rates which impact the economy which influences conditions in General Motors. The
impacts of such factors on company are:
 The positive impact is due to high economic growth rate in UK, GlaxoSmithKlinehas
expanded its market very well and sales have also increased in recent times.
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 The increase in inflation rates of some countries has negatively impacted sales of
company as the buying power of consumers has been reduces and market has been
affected negatively.
Socio-cultural Factors- The aspects of culture like health consciousness, age
distribution, population growth and safety measure of GlaxoSmithKlineare the aspects which are
involved in such factors (Rohn, Sabari and Leshem, 2016). The impacts of socio-cultural factors
on business of company are:
 It impacts positively for company as now day’s people
 While the negative impact is that some people do not find auto mobiles of company are
safe enough and making them understand is difficult for company.
Technological Factors- Aspects like automation, R&D activities, technological
incentives fall under this factor of company. The impact over GlaxoSmithKlineare:
 As the company believes in providing innovative process of manufacturing its products,
technological up gradations positively impacts the working of company and makes
brand to compete in market.
 The negative impact of technology is seen in company as it requires skilled manpower
and huge amount of funds.
Legal Factors- Legal factors are somewhat same as political factors of company but
legal factors are prescribed in nature such as the consumer laws, consumer rights and so on
(Saebi, Lien and Foss, 2017).
 This factor positively impacts the company as it can supply its products according to the
standards stated by the laws of such country in which the products are supplied.
 Whereas negative impact of legal factors may hammer the reputation of company in its
competitive market and make the brand image in risk.
Environmental Factors- Such factors indicates the responsibilities which have to be
taken by the company for the surroundings where the production process of organisation is
carried on. It is necessary for every company to focus on the environment as a whole and protect
it as much as it can.
 The positive impact on the company is brand recognition in market can be increased by
doing such activities which shows good side of company.
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 Well as some things do have positives and negatives, the negative impact of this factor
is that not every time company can focus on such things, it has to carry on its activities to
gain profits.
TASK 4
P5 Internal and external analysis of specific organisations in order to identify strengths and
weaknesses of company.
Every organisation analysis its internal and external environment to evaluate the
surroundings which are inside and outside company. GlaxoSmithKlineare implements
SWOT analysis for the same. With such analysis the organisation can get better
understanding over the strategies which can be formulated according to the changing state
of marketing (Sallos, Yoruk and García-Pérez, 2017). The following is SWOT analysis of
company:
Strengths Weakness
 As the company is focused towards
development of strong R&D, it has
made boosted up respiratory, HIV
and cardiovascular medicines (Zhao,
Pan and Chen, 2018).
 GSK has strong sales and
distribution network all across globe
which ensures availability of
products as soon as possible.
 The allegations which are fraud
affects the brand image of GSK
which is unlawfully promoted
prescription drugs, false pricing
charges and many more.
 Unlink every company, GSK needs
to face losses which can be
controlled at some level but still it is
weak point for company for which it
work more hardly.
Opportunities Threats
 The strategic expansions through
collaborations and acquisitions can
help GSK in expanding its portfolio
inorganically in recent time
(Shengelia, 2017).
 Working on the awareness and
 Pricing controls over drugs by laws
in many countries is major threat for
company.
 Intense competition in the industry
threats GSK as it deals in customer
care as well as pharmaceutical
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promotion of quality healthcare can
help GSK in improving its bottom-
line as well as top-line.
products.
P6 Interrelation of strengths and weakness with external macro factors.
Management of company comprises of strengths with prevailing macro environmental
factors like economic, political and many more (Venkatesh, Mathew and Singhal, 2019). The
change in environmental factors affects the strategies taken by management of GSK. The
interrelation of macro environment factors and organisations strength and weakness are as under:
Political: Government regulations as well as policies of political parties have major influence
upon business operations in the provinces of United Kingdom. However as to take advantage
from these factors is important for GSK can undertake efficient strategies as well as measures.
Strengths:
GSK conduct their business operations and pharmaceutical industry and have positive
relationship with political parties. Along with this by abiding all the political laws company
assures their long-term growth as well as long term sustainability in respective industry.
Weaknesses:
Due to increase in political disparity and scenario of brexit there is a major threat
prevailed upon business operations of GSK that can further affect their profitability in number of
ways.
Economic factors- The change in interest rate, inflation rates will not be affected on the
pricing and marketing strategies of GSK as it has sufficient financial resources. With such
changes the organisation would be always ready to face the challenges which would be arise due
economic factors. Due to the outbreak of coronavirus every nation around the world is facing
economic issues as well as destruction. Thus, it is important for GSK to develop strategies in
order to conductor business in the situation. This company is dealing in pharmaceutical thus,
company is required to conduct their business operations according to the government standards
in order to ensure sustainable growth.
Strengths:
Economical stability of United Kingdom provides significant opportunities for GSK
through which they can conduct their business activities while generating stable profitability.
Weaknesses:
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Covid-19 or Corona virus outbreaks lead organisation to face has a economic losses.
However, GSK deals in pharmaceutical industry but somehow they can face economic losses
due to unstable and unsystematic business operations such as lack of labour forces.
Social: Individuals are having different perceptions, believes, culture, values and behavioural
conduct. In this it is essential for organisation to have proper analysis of target market in order to
provide services to individuals accordingly.
Strengths:
GSK provide trustable facilities and services to customers that assure its long-term
sustainability of organisation. Along with this organisation conduct ethical business practices
that enhances their business growth opportunities.
Weaknesses:
Constant change in income level of customers can have a negative impact on business
operation of GSK in number of ways.
Technological: There are dynamic changes prevailing in technical world, in order to ensure long
term growth and remain in market competitive it is important for company to adopt latest
software and technical tools and technologies.
Strengths: By taking advantage of advanced pharmaceutical equipments and other technical
tools GSK assures more competitiveness as compared to other rivals in industry.
Weaknesses: In order to implement technology GSK is requires to invest heavy capital
investment that can affect the overall financial budget.
Environmental factors- The change in such factors affects GSK in negative manner as
these factors are cannot be controlled by the company (Vitari and Raguseo, 2020). Instead for
such factors company needs to pay focus over the strategies of the production process so that it
can minimize the risks and save itself from the losses.
CONCLUSION
The above project report concludes that business environment is sum of all internal and
external factors like employees, customer needs and desires, supply and demand of products and
many more. There are various types of organisations majorly divided as public, private and
voluntary sector organisations with different size, scope and objectives. The organisational
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