Business Environment Analysis: Organizations and Strategies

This report provides an in-depth analysis of the business environment, focusing on different types of organizations, their purposes, and legal structures. It explores public, private, and voluntary companies, using examples like the National Health Service (NHS), McDonald's, and Oxfam to illustrate key concepts. The report delves into the background, products, services, size, scope, vision, mission, and objectives of these organizations. Furthermore, it utilizes PESTEL analysis to identify macro factors affecting the business environment and conducts a SWOT analysis of McDonald's to determine its strengths, weaknesses, opportunities, and threats. The report concludes with an internal and external analysis of key findings and their influence on the decision-making process, offering valuable insights into business strategy and environmental impact.

Business and the Business
Environment

INTRODUCTION...........................................................................................................................1
PROJECT 1......................................................................................................................................1
1 Different types of organisation their purposes and legal structure of company..................1
2 Explanation of different types of organisation that involves background, product and
services, size and scope, vision, mission and objectives........................................................3
3 Function and Interrelation among their department ...........................................................6
PROJECT 2......................................................................................................................................7
1 By using PESTEL analysis identify the macro factors which affect the business environment
in positive and negative way..................................................................................................7
2 SWOT analysis of McDonald's company which help the organisation to identify their key
strength and weakness............................................................................................................9
3 Internal and external analysis of key findings and how they influence the decision making
process..................................................................................................................................12
CONCLUSION..............................................................................................................................18
REFERENCE ................................................................................................................................19

INTRODUCTION
Business environment is the combination of internal as well as external factors which
influence the organisation. Business environment include internal as well as external factor
which influence the business together. These factors effect the behaviour of an individual which
further impacts the performance and productivity of the business (Bar-Isaac and Shapiro, 2013).
McDonald's is the American based company which deals in fast food and it was founded in 1940
by Richard and Maurice. In this report, topic is going to be covered such as overview or different
type of organisation and it's growth in the international business market. It will also include the
functions of business and it's positive or negative impact of macro environment and strength as
well as weakness of the organisation will also be identified.
PROJECT 1
1 Different types of organisation their purposes and legal structure of company
A company is an entity or association that engages in any business in order to make
profit. Organisation can be structured in different ways such as public company, private
company, voluntary company, sole proprietorship, a partnership, or a corporation.
An organisation is a corporate body or an incorporated business enterprises which is
registered under the companies Act. Companies can be a public or private, limited or an
unlimited, having share capital or limited by guarantee. In addition, a business enterprises which
acts as an artificial legal person, legally formed by person or group of legal person to pursue or
carry on industrial enterprises. The growth of the company is depend on geography,social
culture and economic condition of business that is discussed as below-
Public company: An enterprises ,organisation or company whose shares or securities can
be traded independently on a stock exchange is known as public company. It is public funded
company that arrange its funds from public by issuing securities. This includes initial public
offer (IPO) that means companies can raise equity funds through an IPO by issuing new
securities to the general public (Besley, 2015). According to U.S. Securities and Exchange
commission(SEC), an organisation that has more than $10 million in assets or wealth and more
than 500 shareholders would require to get registered with Securities and Exchange commission
(SEC). Its aim is to raise capital by issuing of shares in publicly. To understand the concept of
public company (National health services)NHS has taken. National health services is a UK based
public funded company. It is the world's biggest company that play an important role in
healthcare system. It is founded in London, UK on 5 July 1948 by Aneurin Bevan. It provides
urgent and emergency care services, dentist and sexual health services.
Growth in international business environment: This includes management of business
in foreign country that requires to deal with a great variety of society or culture. NHS contains
growth factor such as geographical area, social and culture factors, political and legal factors and
economic condition of public company. Basically NHS is public funded company that provides
different types of health services and it focuses on to give health benefits to consumer without
profit intention.
Private company: This means an organisation or enterprise held by single ownership
and raising its capital by own sources instead of issuing of securities in general public is known
as private company. A private entity can not raise funds by issuing of shares and securities in
publicly, it arrange its capital by issuing of shares to their shareholders or privately. Its shares are
not traded on stock exchange counter. In order to understand the concept of private company
McDonald's's has been taken (Boons and et. al., 2013). It is world's largest multinational
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American fast food company that dealing in different types of fast food, founded in 1940 by
Richard and Maurice McDonald's. It provides various types of fast food such chicken
sandwiches, French fries, burger, soft drinks, breakfast item etc.
Growth in international business environment: McDonald's is one of the greatest food
chain supplier company all over the world that create a high profile and brand image because its
quality. Its growth depends on geographical area and increasing in number of sale. In other
words, McDonald's is a international branded company that focuses on providing services, fulfil
customer demand and to earn maximum profits.
Voluntary company: A voluntary is an union or group of people that works together in
an organisation for completing common interest. Moreover, it is a group of people who enter in
to an agreement or contract to form an enterprises structure to fulfil a purpose. These types of
enterprise works collectively remembering over all growth of organisation and providing a
benefits to others. To understand the concept of Voluntary company Oxfam has taken. It is one
of the largest independent charitable or non profitable company, founded in 1942 by Cecil
Jackson cole. It provides relief to public, protect and rebuild lives of customer.
Growth in international business environment: Oxfam is an international company
that helps to reduce poverty and increase living standard of people. Growth of Oxfam includes
economic development and growing tackle level in foreign country. It also involves wider
geographical area that focuses on work together to eliminate the poverty (Dahles and Susilowati,
2015).
2 Explanation of different types of organisation that involves background, product and services,
size and scope, vision, mission and objectives
Every company is required to be a successful business and need to arrange funds to run
the enterprises. For beginning a new business or growing a existing industry, there is need to get
information about its background, size and scope, vision and mission, objectives, product and
services that they supply, stakeholders and legal structure of the organisation that is given below-
Public company: National health services (NHS) is a public funded company that
arrange its capital by issuing of securities publicly. It is one of the greatest social reform
structure company that
Background: NHS established in London, UK on 5 July 1948 by Aneurin Bevan. Its
motive was good healthcare should be provided to all person rather than assets.
Size and scope: This is a large size of company who provides their health service in al
over the world and its scope is to be provide more services to their patients or staff by using new
technology.
Product and services: NHS provide health services such as urgent and emergency
services, dentist services, sexual health services (Hallward-Driemeier and Pritchett, 2015).
Vision and mission: Its mission is to provide quality of take care services to each and
every person on daily basis and to overarching statement of intent that defined achievement
goals. Its vision is to deliver better health, values and best care.
Objectives: The main objective of National health services(NHS) is to enhance or
expand its services all over the world, improvement in environment for unhealthy patient and
employees, providing welfare benefits to patients and staff and provide health education and
safety reasons to public.
Stakeholders: Healthcare system includes major share holder such as patients,
employers, staff, insurance companies, pharmaceutical firms, physicians and government sectors.
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Organisational structure: NHS follows matrix organisational structure that helps to
reporting relationship as a grid or matrix form.
Legal structure:
State government: This contains federal government that is reserved for state and it
consist three branches such as judicial, legislative, executive.
Central government: It holds independent supremacy over a unitary state that is
responsible for to sustainable economic development and health and safety of public.
NHS follows limited liability company structure in the form of legal structure.
Private company: McDonald's is an American fast food private company that arrange its
funds from own sources. There is no interference of government sector for raising funds or
capital.
Background: McDonald's was established in Chicago and united states on 15 April 1955
by San Bernardino, California and it has more than 500 restaurants across the globe. Its motive
was to provide delicious and supreme quality of fast food in order to make profitable
organisation (Forsgren and Johanson, 2014).
Size and scope: McDonald's is wider in size that make available its product and services
at every place. Its scope is to provide consumer satisfaction, to become world's largest food chain
supplier and to be sustain in perfect competition market.
Product and services: It offers different types of product such as salads, variety of
burger, vegetarian fast food, non- vegetarian food, wraps, Mc puff, French fries, soft drinks,
chicken Mc Nuggets and variety of sandwiches etc.
Vision and mission: McDonald's mission is to be customer favourite choice place,
focuses on customer as well as business while maintaining quality of products and its vision is to
be world's best quick service, provide outstanding quality, cleanliness and create a value.
Objectives: Its main objectives is to provide customer satisfaction, to become world's
largest profitable organisation, create a global strategy to maintain in order to achieve
organisation's goals.
Stakeholders: It includes various stakeholders such as employees, communities,
investors, employers and customers (Holcombe and Ipate, 2012).
Legal structure:
Sole trader/ proprietorship: This includes single ownership to run their business who
have all the responsibilities to manage and control its business activities. In sole trader business
there is no need to require more capital and owner would be accountable and responsible for all
loss as well profits of the enterprises.
Limited liability: Limited liability means in private enterprises owners have limited
liability so they bear risk according to it. It has separate legal entity that helps to distinct from
member's liability.
Partnership: This means when two or more partner get ready to work together in an
agreement to achieve common goals in order to make profits is known as partnership. In this
type of partnership, each partner is responsible for organisation's profits and losses.
McDonald follows limited liability structure in the form of legal structure.
Voluntary organisation: Oxfam is a voluntary organisation that includes work together
to reduce or eliminate poverty, to stop rising inequality and increase in living standard of people.
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Background: Oxfam was established in United Kingdom, Oxford on 1942 by Winnie
Byanyima. Its motive was to provide safety and security to people against inequality, protect
customers and reduce poverty (Huang and Wilkinson, 2013).
Size and scope: It is a large size non-profit organisation that serves different types of
services and scope includes union of 20 independent charitable industry that focuses on
elimination of poverty.
Product and services: It provides trade justice, debt and aid services, and increase in
living standard of people, removing inequality and reducing poverty.
Vision and mission: Oxfam's vision and mission is to create a value of people that helps
to give a solution against injustice of poorness, to make independent people and self-confident.
Objectives: Its main objective is to tackle the root reasons of poverty and find out a
lasting solution of problems.
Stakeholders: Government, employees, members and trustees are included in
stakeholders. Oxfam follows divisional structure in the form of organisational structure.
Legal structure:
Trust: In this type of structure trustees handle the enterprise and would be responsible
for all statements.
Association: This structure includes work for people or social welfare without making
any profits.
Oxfam follows partnership legal structure in their organisation for the effective work.
3 Function and Interrelation among their department
Any organisation includes different types of business in order to make profits and create a value
of their business. Organisational structure is a system that contains number of employees who
are working in an organisation to accomplish goals (Klapper, Love and Randall, 2014). It has
different types such as functional structure and divisional structure that is discussed as below-
Functional structure: It is a type of organisational structure that involves undertakings
such as management, supervision, direction and allocation of responsibilities.
Divisional structure: This includes organize the business activities all over the
geographical area and product and services groups. This also includes work division according to
employees qualification or experience.
McDonald's adopt divisional structure out of both structure that helps to divide the work
of staff as according to their work experience and provide them training to achieve the
organisation's goals.
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(source: organisational chart, 2017)
Different types of functions and their interrelations with department-
HR and marketing: This means recruitment of employees and selling of products and
services as per business requirement. HR function and marketing department both are
interrelated to each other department such as, if McDonald's want to increase its sales or increase
in number of customer then HR department has to recruit more candidate that helps in
advertisement and will provide better services. Manager of the company follow these practices
for for the effective work in the organisation. By using various leadership practices.
(Palo and Tähtinen, 2013).
Finance and operation: Finance and operational activity is the priority of the company.
Operation and finance department both are interrelated such as McDonald's is an international
business that maintains day to day operations functions and keep records of all transaction that
helps managers in finance department in order to raise funds.
Finance department use to allocate funds in meaningful manner that help the marketing
manager and sales person to easily promote and make their product popular in market. they make
sure that fund must be used in more reliable manner to increase profit for McDonald.
Marketing and Finance: These functions are also interrelated with each other
department like as McDonald's is planning to launch a new product in market, for this it need to
have sufficient finance and should be consider with finance department for advertisement of
product that helps to decide the reasonable cost of product.
Divisional structure follow the company to enhance their work in respect of maximising
profitability.
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PROJECT 2
1 By using PESTEL analysis identify the macro factors which affect the business environment in
positive and negative way
With the help of PESTEL analysis, McDonald's company identify those macro factors
that directly affect the business and its environment. It will further effect the individual
performance and productivity.
Political factor: Political factor affect the business and their environment in various term
such as political stability, foreign trade policy, tax policy and trade restriction. Political factor
affect the McDonald's company in positive as well in negative way. Every organisation have to
pay tax and need to follow these policies and rules. These policies include some guidance which
help the company to perform well in the market.
 Positive: - McDonald's company have longest food chain which positively affect the
business. Number of food chain is the positive factor which increase the McDonald's
profit.

 Negative: - McDonald's company not follow the Public Health policy which provide the
negative impact of the organisation. Because of this company have to bear lots of penalty.
Economic factor: Economic changes affect the business and it's environment it can
direct or indirect. These factors affect the business environment as well as business growth. It
includes exchange rate, inflation, disposable income or unemployment rate. These factors affect
the McDonald's company in positive or negative way.
 Positive: - Stable growth of developed country is provide positive impact on McDonald's
company and the rapid growth of developing company is also positive factor for the
organisation.

 Negative: - Slowdown growth of Chinese economy plays negative impact on McDonald's
company (Percy and Shortland, 2013).
Social factor: This factor affect the organisation at the time of making strategies because
every country have different social values such as culture, beliefs, norms and living style.
 Positive: - Increment in the disposable income is the positive factor for the McDonald's
company which increase the profitability of the company.
 Negative: - Cultural diversity and healthy lifestyle is the negative factor for the
McDonald's company which influence the organisation and affect the profit margin also.
Technological factor: Change in the technology by using equipment at the time of
preparing food. Provide online facilities for the consumers so they can order it online.
 Positive: - Collect customer's feedback through digital platform is the positive factor
which help the McDonald's company to improve their services.

 Negative: - Continuous change in the technology will create the confusion between the
consumers. It will create negative impact on McDonald's company that further effect the
sale of company's product.
Environmental factor: it include the pressure from NGO to work according to the law
and in respect of save the natural resources.
 Positive: - Being active in corporate environmental program is the positive factor for the
McDonald's company.

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 Negative: - Company face the lots of issues because of the environmental law and climate
condition changed in some region have negative impact on McDonald's company (Singh,
2012).
Legal factor: In this factor, it includes various laws such as minimum wage,
discrimination act, consumer protection and health & safety law. These factors affect the
McDonald's company.
 Positive: - Animal welfare regulation factor have positive impact on McDonald's compay
because they attract those customers who are interested in animal welfare.
 Negative: - Health regulation and minimum wages act are the negative factor which
influence the McDonald's company and have impact on their printability margin.
2 SWOT analysis of McDonald's company which help the organisation to identify their key
strength and weakness
SWOT analysis is an assessment tool that helps in identifying the strengths, weaknesses,
opportunities and threats of a company. It measures the company’s ability to deal with the
business environment. Firstly, It is important to discuss the company's core strengths and
weaknesses and then move forward to defining the opportunities and threats. Often times, it can
be used as an overall business-strategy sessions for a specific segment like marketing, production
or sales. The four main elements of swot analysis for McDonald's are as follows:-
Strengths: - McDonald's strengths is its potential and ability. The west size of
McDonald's is one its strengths. It also enjoys economies of scale as it provides good quality of
food at much cheaper prize. The areas where McDonald's excels at and how it differs from its
competitors is its market power over suppliers and competitors. It is one of the reputed brand in
the market.
Weakness: - McDonald's disability or the fault that lies within the company is its lack of
PR strategy. It has been highly criticized for promoting unhealthy eating habits. High
employment turnover caused a hindrance in the performance of the McDonald's.
Opportunities: - These are mostly depend on the external factors. Identification of
opportunities at appropriate time is crucial, like McDonald's has stepped into beverage industry
with the introduction of McCafe. New items such as artisan chicken sirloin burgers has also been
introduced to its menu. This will work in favour of company's growth.
Threats: - It is the last element of swot analysis module that identifies the potential
problems that can occur in future and is a threat to company existence and growth. McDonald's
is facing an economical threat fluctuation in foreign trade and recession may affect the
company's sales.
PESTEL analysis identify the factor, which influence the business environment as well as
individual performance. These factors have impact on the decision making process taken by the
manager of McDonald's. It also provide help to the organisation to identify their strength and
weakness that is further require by the manager at the time of taking any decision.
Political factor: Political factors include the various policies which is mandatory to
follow by the organisation if they want to run their business in effective way. It includes tax
policy, government policy regarding foreign trade and stability in the political environment.
Strength: Political stability help the organisation to expand their business and have
opportunity to maximise their profit. It will also provide the employment in the different
countries that is beneficial for that company also.
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Weakness: Every country have different trade and taxation policy that can create the
problem for the organisation. It will directly affect the profitability of the business so these
political factors influence the decision making process (Paul, Yeates and Cadle eds., 2014).
Economic factor: In this factor exchange rate plays important role because McDonald's
purchase raw material from other countries. Therefore, currency value changed according to the
economic condition. Economic factors include income, buying power, inflation, exchange rate
etc.
Strength: Economic stability is the opportunity for McDonald's company because
regular changes in the policies will affect the business as well as its growth. These economic
factors affect the decision making process so the manager need to analyse these factor and build
strategies according to it. Rapid growth of developing county is the biggest opportunity for the
McDonald's company for the expansion of their business.
Weakness: Economic policies changes according to time and the rate of interest,
exchange rate or inflation rate will affect the McDonald's business very well as growth of the
organisation.
Social factor: Social factors affect the business of McDonald's at the time of taking any
decision. It include the culture, value, life style and norms that affect the operational function of
the business. McDonald's have huge supply chain of their restaurant and every country have their
unique culture. Therefore, manager of McDonald's company need to build strategies according to
it and then take decision on the basis of these social factors. These social factors affect the
decision making process of the business.
Strength: McDonald's focus on food quality and try to improve their quality regarding
health safety of the consumers because in the food business, quality is the most important
element.
Weakness: McDonald's get the lots of complain from the consumers because they use
inorganic items for the preparation of their food. Company also fire lots of people at every five
years that increase the employees’ turnover (Yoon, 2012).
Technological factor: McDonald's use the T.V advertisement and billboard for the
promotion of their brand and they mainly focus on children by introducing various toys in their
food box. So manager of the company identify the demand or requirement of the market and
customer and then make strategies. Technological factor affect the manager's decision-making
process.
Strength: Company timely adopt new technology which help the organisation to increase
their efficiency and the productivity. It will further help the business to generate more profit.
Weakness: McDonald's have to provide training to their workers because of the change
in the technology so it will take enough amount of investment the time of training program.
Environmental factor: These factors include the change in the climate, environmental
law and follow the rule regarding natural resources. McDonald's company try to avoid
dependency on natural resources. They use eco friendly disposable for the packaging of their
product. These factors influence the company as well as affect the decision making process.
Strength: McDonald's use the environment friendly packaging which further recycle by
for the next use it also reduce the dependency of natural resources.
Weakness: Company pay the enough tax on their products just to sell in other countries
which impact the rage of food.
Legal factor: Legal factor define that how business affect by these legislation. It include
rules which followed by the organisation if the want to expand their business on a particular
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region. These factors includes labour, employment, health and safety law it is important to
follow by the McDonald's business (Werbach and Hunter, 2012).
Strength: Because of the government legal policies many of the firm not able to think in
this sector. Therefore, it is the biggest strength of the McDonald's company.
Weakness: Company increase their product price because of the competitors’ price
policy and it will reduce the revenue of the organisation.
3 Internal and external analysis of key findings and how they influence the decision making
process
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CONCLUSION
From above report, it has been concluded that there are different types of organisation
such as public, private and voluntary that has different size and scope, objectives, vision and
mission and background. It also includes stakeholders details and legal structure of organisations.
Along with this macro economic factor affect the organisational as well as individual behaviour
because of this manager need to analyse these factors and take decision according to it. SWOT
analysis helps to show the strength and weakness of any organisation and business.
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Online
SWOT and PESTEL analysis of McDonald's's. 2019. [Online]. Available
through:<https://toughnickel.com/industries/SWOT-and-PEST-Analysis-of-
McDonalds>.
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