Business and Business Environment: Skoda Case Study and Analysis

This report provides a comprehensive analysis of the business environment, focusing on different types of organizations (public, private, and voluntary) and their purposes. It examines the size and scope of various firms, using Skoda and the NHS as examples. The report explores the interrelationships between organizational functions such as HR, finance, production, research, and sales/marketing, and how these relationships impact business objectives. Furthermore, it delves into macro factors affecting business operations and conducts a SWOT and PESTLE analysis of Skoda, highlighting the interplay between internal strengths/weaknesses and external environmental factors. The report also discusses the complexities of different business structures and their interrelationships, along with the advantages and disadvantages of these interrelationships, ultimately evaluating the impact of environmental factors on decision-making within a business context.

BUSINESS
AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purpose of organisations....................................................................1
P2 Size and scope of different range of firms........................................................................2
P3 Relationship between different organisational functions..................................................3
M1 Structure, size and scope affects the business objectives................................................4
D1 Complexities of different kind of business structures and their interrelationships..........5
M2 Advantages and disadvantages of interrelationships.......................................................5
TASK 2............................................................................................................................................6
P4 Various macro factors that impacts on the business operations........................................6
P5 SWOT analysis of Skoda for determining internal and external environement...............8
P6 Strength and weaknesses interrelation with external macro factors.................................9
M3 PESTLE model for Skoda Auto.....................................................................................10
M4 Internal and external analysis of Skoda.........................................................................11
D2 Impact that environmental factors have on decision making.........................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Business is considered as the association of people that is set as an legal entity and shares
a common purpose and have united with their skills and resources so that they can achieve their
set goals. On the other hand business environment is considered as the atmosphere that is
existing around the business entity (Boons and et al., 2013). This can be internal as well as
external environment. It is comprised of several factors that shapes the condition of the
environment. It is important fro the organisations to manage these factors so as to have
sustainable development of the firm. Skoda is one of the biggest auto mobile company of the
world. It is Czech manufacturer which was founded back in the year 1895. This report highlights
the types, size and scope of the companies all around the world. It also highlights the
environment in which Skoda is working. The interrelationship between different organisational
entities has been illustrated in this report.
TASK 1
P1 Different types and purpose of organisations
There are several kinds of organisations that are present all around the world. But
basically there are three types of organisations tat are most common namely public, private and
voluntary. It works in three sectors primary, secondary and tertiary.
Public sector companies are those that are operational with the motive or purpose of
sharing their profits with the masses. There main objective is to provide essential public services
while ensuring profit for the organisation. These companies are generally monitored or
administered by the governments or any other authoritative bodies. There are many decision
makers for such kinds of company and generally they take decisions with greater responsibilities
towards people welfare (Bryman and Bell, 2015). Hence decision making process is slower.
NHS is one such type of organisation in UK that is in the business of providing health services to
general public. Legal structure of it comprises of more than two people which are necessary for
setting up of such kinds of organisations.
On the other hand private company operate their business with the move that they have to
earn more and more profit from the business activities. There are several kinds of private sector
companies like franchises, companies, partnership and sole traders. There are only few people
that are responsible for taking decisions. There decision making process is faster since there
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responsibilities are only associated with the few stake holders. Some of the operate nationally
and some operate multinationally. Skoda is one such company that is of private sector and deals
in the business of manufacturing auto mobile vehicles. Legal structure of the private companies
differs from company to company and generally depends on the jurisdiction in which they have
their legal domicile.
There one another type of organisation that is operational in UK which is known as
voluntary firms. They are operating with the purpose of serving for any community, group,
language or ethnicity (Cavalcante, Kesting and Ulhøi, 2011). Apart from serving for people they
provide help to animals. They are not generally owned by any particular people but some of
them are responsible for making decisions for the firm. Red cross society is one such firm that
comes under this category. They get some kind of tax leverages as well as exemptions that is
given to this kind of company and differs from nation to nation. They are funded by external
parties and still they do not have share in the company.
There legal structures generally involves several people at the top of the decision making body
and they are only responsible for monitoring the whole working activities.
P2 Size and scope of different range of firms.
Every organisation is having different sizes and scope which differs from company to
company that too according to the environment they are working in. There are some companies
that are multinational, national and some are operational in few parts of the country. Size refers
to as the quantity of resources they have, number of suppliers, existing and potential consumers
as well as the brand value of the company and the number of stake holders that are associated
with the firm. On the other hand scope refers to as the chances of expansion a company has
(Chavis, Klapper and Love, 2011). There scope is generally dependent on the factors such as the
size of the company and the amount of resources it has with it. In order to understand these two
term examples of Skoda and NHS has been demonstrated below:
Skoda is one such company that comes under the category of private firms. It was
founded back in 1895. It was previously state owned company tiil the days of communist
government. But after the year 1991 it was privatised and it became wholly owned subsidiary of
Volkswagen Group. Its total global sale is approx 1.13 million cars in 2016 which is an rise of
around 6.8 percent. Its products generally auto mobiles. Its operating incomes is around 25.163
billion CZK with a total revenue of 347.987 billion CZK. There are approx 28,373 workers that
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are employed by this company. It is an multinational company and having 12% market share in
the global car market. Since the car market is increasing at faster rate hence it is easy for the
company to expand its business in many other regions of the world. It has higher scope in the
developing countries of South Asia pacific as the per capita income is also increasing at faster
rate.
On the other hand National Health Services is a public organisation having its operations
in UK (England, Wales and Scotland). They provide medical services to millions of people in
this region. Its national health care budget is around 140 billion pounds. There are approx 1.6
million employees associated with it as per 2015-16 report. The organisation is monitored by the
UK parliament. Approx 98.8% funding is done from general taxation and national insurance
contribution (Cho and Lee, 2011). While talking about the scope of the organisation it is to be
noticed that it is operational under the guidance of UK government. Hence it does not have
higher scope outside UK. But once the Brexit will be implemented then it can plan to expand its
business outside the nation.
P3 Relationship between different organisational functions.
In any organisation there are several functional units performing several activities. It is
important for the organisation to have clear picture about the line of control they share. It can
only be achieved if there is proper relationship among them and they are knowing that what are
their role and responsibilities. Each unit is individually responsible for achieving objectives set
by the organisation.
Human resource is one such unit which is important for all the organisation irrespective
of the size and kind or operations. In any organisation they are the drivers for every activities.
They work with other departments so as to ensure that they have adequate work force that too
with the skills that are best for conducting operations (Chow and et al., 2011). HRD have role of
selecting, training and recruiting employees as per the requirement of different functional units.
In Companies such as Skoda it is important to maintain the quality of staffs so that they can add
maximum value to the products of the company.
Finance is another such functional unit that has the operation of maintaining the cash flows for
different organisational units. They work with other organisational units so as to maintain there
transaction and monetary operations records. It is important for the firm to manage its finance
with the collaboration of its functional units so as to estimate its profit margins.
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Production unit has relationship with every other functional units as they maintain the
demand and supply chain. It is the base of the organisational structure. Business objectives
cannot be accomplished without the successful operations of production department. Scope of
expansion also depends on the potential of the production unit. Research department helps it in
understanding the procedures that it will apply so as to generate the product that can meet the
expectation of the customers.
Research department works with the production department so as to make product as per
the demand of the market (Commander and Svejnar, 2011). Sales and marketing department
helps the research unit to gather the information regarding the demands or expectation from the
company's products. It is important for the growth of the company.
Sales department works with other department to sale their products in a better way. It works
with IT departments so as to increase the profits of the company. It works with marketing
department to collect gather data and make distribution channel so powerful that demands of the
company's product can be maintained. They also collect feedbacks from the clients which is
essential for the future decision making of the company.
Marketing unit is one of the essential units that is having the most important role in
increasing the pre sale of the company products. They work with all other departments so as to
ensure that company can make benefits out of its business activities and produced products.
M1 Structure, size and scope affects the business objectives.
The size of the company provides the idea about whether a firm has capabilities about
achieving the business objectives or not. If the company is of larger size then it can help
company in achieving its objectives even after some hiccups. In company such as Skoda there is
huge amount of resources which it can utilise so as to accomplish objectives.
Structure of the organisation helps to take decisions in a particular manner. Since in the
company such as Skoda there is limited amount of members that are responsible for taking
decisions hence the whole process gets faster and they can take effective decisions so that they
can tackle any situation and attain targets that it has set for itself (Cuervo‐Cazurra, 2011).
Scope helps to understand the horizons of the possibilities in which company can
accomplish its set objectives. Company set its specific objectives as per the scope it has which is
necessary for achieving it. The objectives beyond the scope of the company can lead to failures
in the market.
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D1 Complexities of different kind of business structures and their interrelationships.
As per the views of Aterido, Hallward-Driemeier and Pagés, (2011) private firms are
designed to make profits out of their business activities. If the complexities are simple then the
decision making is faster. It can be checked within the Skoda operations. Since the public sector
companies have higher responsibilities towards the welfare of the people hence there
complexities are bigger. It also slows down the speed at which decisions are taken at an
organisation.
On the contrary Auzair, (2011) feels that interrelationships among al the organisational
units helps company in achieving its objectives efficiently as well as on time. If they work with
hand in hand then company can ensure that they can produce products that have higher value
according to the people. Clear line of responsibilities helps company in solving issue that may
effect the overall performance of the company.
M2 Advantages and disadvantages of interrelationships
There are several advantages and disadvantages that are associated with the relationship
that different organisational unit has:
Advantages
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source 1: Factors that impacts environment, 2017

 It is helpful for achieving the business objectives in a set time frame.
 It is helpful for defining the clear line of roles and responsibility for each functional
units.
 It is helpful for solving the conflicts that may arise in the business activities (Craig and
Campbell, 2012).
Disadvantages
 It sometime takes the autonomy of the functional units.
 Decision making process related to the work within each functional unit has to be based
on what other departments agree with.
TASK 2
P4 Various macro factors that impacts on the business operations.
Business operations are impacted by various macro factors as they decide the external
environment of the company. Macro factors have severe influence on the strategic decision
making for tackling various arisen situations. Ever factor has positive as well as negative impact
the business of the company. Here the factors and its positive and negative impact has been
highlighted.
 Political factor: Political factor is having greater impact on the business of the firms as
the policies and rules made by the governments effect their working.
Positive impact:
 If the government lowers down the fuel prices then the sale of auto mobiles will rise
significantly (Dima, Grabara and Modrak, 2014).
 If the government decreases the rate of tax slab then there is chance that company
conduct its whole operations at lower prices and hence can make more profits from its
sales.
Negative impact
 Government throughout the world is changing the laws related to the operations of the
company and hence are affecting the overall performance of the firm.
 Bad political relationships between two countries makes the trade more difficult. Economical factor: They are the sole of the business operations.
Positive impact
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 Stronger the base of the economy, better is the chance of growth for the company.
 If the per capita income of the country is on the higher side then it becomes easier for
the firms like Skoda to sell its products.
Negative impact
 Weaker economy is always a threat to the business.
 Falling economic conditions of many nations all around the globe has negative impact on
the company business (Drucker, 2017). Social: It is also effecting the business operations in certain ways.
Positive impact
 The demand for the world class cars have increased in the society enhances the sale
of the cars.
 There has been demand in the society for having luxurious cars.
Negative impact
 Increasing unemployment is a serious matter of concern for Skoda.
 Society is going for cost effective cars which has effected the profit margins of the
company.
 Technological: Today cars have become computer on wheels hence this factor has a
serious impact on the business.
Positive impact
 It has made the production cost low, hence more margins of profits can be ensured.
 It has made possible for Skoda to diagnose the problems related to cars with the use
of software.
Negative impact
 Use of technology has increased the treat to data privacy.
 Since technological advancements are faster and hence the cost of implementation and up
dation is higher.
 Legal: There have been many legal changes that are taking place in the world (Herbst
and Merz, 2011).
Positive impact It safeguards the interest of stake holders associated with the company.
Negative impact
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 It has increased the complexities of operations of the firm.
 Legalities has compelled organisations to work under many restrictions. Environmental: There have continuous demand from the governments to become eco-
friendly.
Positive impact
 It helps company in making its brand image.
 It helps in the CSR activities which is beneficial for the society.
Negative impact
 Alternative methods of business demands lot of capital which may lead to lower revenue
generated (Kolk, 2016).
P5 SWOT analysis of Skoda for determining internal and external environement.
There are both kinds of environments that is present in the Skoda namely internal and
external
Strengths
 Skoda is having large variety of cars that is available in both petrol and diesel variants.
 It is famous for designing cars with spacious interiors for both rear and front legrooms as
well as head-space.
 It includes technological innovations like EBS, telescopic power steering, MSR, anti skid
braking (SWOT analysis of skoda. 2017).
 In the markets of UK and America it has higher brand recall in the market.
 High production output of over 850,000 cars per annum.
 High performance cars in global racing market (Mahmood and Hanafi, 2013).
 Higher brand name.
 Company has received many of the awards in various segments globally.
Weaknesses
 Limited markets share means the growth of the market is slow.
 It is still trying to establish itself in the growing economies.
 It lacks strong appeal.
 The quality and design of cars have always been issue.
 High cost is needed for maintenance.
Opportunities
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 There car have been loved by the owners and hence has opportunity to sell more products
in the market (Nicolaidis and Katsaros, 2011).
 It can produce cars as per the expectations and experience of the customers.
 It has a lot of opportunities in the developing markets especially in the market of Asia
pacific.
Threats
 There is rapid change in the technology that is being implemented in the cars.
 New hybrid and fuel efficient cars by competitors.
 There are many new competitors that are coming like Google which has a highly
advanced technology. It is bigger threat for the company.
 Recent slowdown in the American economy and instability in the European market can
result in some poor sales performance.
P6 Strength and weaknesses interrelation with external macro factors.
Every external factors results in certain strength and weaknesses for the company. Skoda
has big brand name and hence these factors affect the company's profile in larger way. The future
plans of the company is made according to the strength and weaknesses that Skoda has. It is also
the fact that making of business plans entirely depends on the the environment it is working in.
Hence the strength and weaknesses are related with the external macro factors. Political policies
are highly influential when it comes to achieving business objectives (Onetti and et al., 2012).
Favourable political policies results in the strength of the company while the unfavourable ones
results in weakness. For example if the tax slab is on the lower side then company can make
higher profits and vice versa is also true.
Good economic condition of the both market in which it is operational as well as the
financial condition of the company results in the strengths. On the other hand if the economic
condition is unstable then it may result in the loses for the company which can become the
weakness of the company.
Society is changing so is its needs hence it has become important for companies to make
use of its strengths so as to produce products as per the demand of the market. Negative brand
image for the company can result in weakness for the company hence it has to make sure that it
has updated its products as per the demand of the society.
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