Report: Business and Business Environment at Merrill Lynch

This report provides a comprehensive analysis of Merrill Lynch's business environment. It begins with an introduction to the business environment and its key factors, followed by an overview of Merrill Lynch as a leading investment company. The report then delves into the different types, sizes, and scopes of organizations, including sole traders, partnerships, public, private, and voluntary organizations, along with their advantages and disadvantages. It explores the organizational structure of Merrill Lynch, focusing on hierarchical and divisional structures. The report also examines the interrelationship between organizational functions and their role in achieving organizational objectives. Furthermore, it analyzes the impact of the macro environment on the company's operations using PESTEL analysis and conducts a SWOT analysis to determine the company's strengths, weaknesses, opportunities, and threats. The interrelationship between external and internal factors is also discussed, culminating in a conclusion and references.

BUSINESS
AND
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Explaining the different types, size and scope of organisation..............................................1
TASK 2............................................................................................................................................5
Types of organizational structures..........................................................................................5
Relationship between different organizational functions for achieving organizational
objectives................................................................................................................................7
TASK 3............................................................................................................................................9
The impact of macro environment on the operations of organisation....................................9
TASK 4..........................................................................................................................................11
SWOT analysis of the company...........................................................................................11
Interrelationship between external factors and internal factors............................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment is the collection and sum of all internal and external factors such as
employees and customers needs and expectations, supply and demand, suppliers, innovation in
technology, social trends, market trends, economic changes, government activities and
management (Beatty, Samuelson and Abril, 2018). Present study will base on the Merrill Lynch
Investment company. This had around 4400 offices worldwide and is one of the UK leading
investment company. The company is also providing an intensive range of financial services
such as commercial banking, investment banking, market personal financial services. Study lays
emphasis on the different types, size and scope of organisation and also highlighted the
advantage and disadvantage of organisation. Report will discuss about the interrelationship of the
various functions within organisation and link with organisational structure. Study will identify
those factors which influence business in negative and positive ways for that report will cover by
PESTEL analysis. It will also determine the strength and weakness of business and explaining
their interrelationship with external macro factors with SWOT and TOWS analysis.
TASK 1
Explaining the different types, size and scope of organisation.
There are different types, size and scope of organisation are underneath:
Sole trader’s organisation
The sole trader business is owned by one person. Most of the sole trader businesses
operate in the services sector like restaurant, hairdressers etc. For example: Forest Side, Cumbria
is a sole trader restaurant in the UK. Advantages and disadvantages of sole trader organisation
are as follows:
Advantages
 This kind of business has advantage which maintain full control of
their business.
 Sole traders business retain all the profit for their business.
Disadvantage
 Disadvantage of sole trade business is unlimited liability for debts
as there's not have any legal distinction between the private and
assets of business (Erasmus, Strydom and Rudansky-Kloppers,
2016).
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 Business often find it difficult to build finance for their business.
They will struggle for expansion in the future.
Partnership organisation
A partnership is business, there are two or more owners of the business and enterprise. In
this kind of business partners sets deed of partnership. Partnership deed includes roles profit
sharing ratio, mission and vision statement etc. For example: John Lewis partnership firm.
Advantages and disadvantages of partnership firm are as follows:
Advantages
 The advantage of partnership firm is a suitable type of organisation
because in that not require legal formalities.
 Other, this business has large resources like person are available for
business.
Disadvantages
 Having more people in the business, it can be complicate for
decision-making process and also decrease profits.
 Disagreement between profit sharing ratio partners, it is one biggest
reasons that companies are dissolve.
Public organisation
Public organisation is generally operating and owned by government and exist to provide
services for its citizens (Hillary, 2017). For example: Tesco is public company is public
company at UK. Advantages and disadvantages of public company are as follows:
Advantages
 The public company is provide the best services in whole country.
 Public company is generally provide lower rate education, medical
treatments to public.
Disadvantages
 It is very difficult to manage public company.
 Public company, most of the time suffers a financial loss, the
government will provide subsidies to covers this loss.
Private organisation
Private organisation is refers to any person, partnership, corporation and agency
which is not cover in public body that is operates for profit. For example: Merrill Lynch
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Investment is private company. Advantages and disadvantages of private company are
underneath:
Advantages
 The main advantages of a private company are limited liability of its
shareholders.
 Restricted trade of shares is other advantage because shareholder
cannot sells shares to outside buyer.
Disadvantages
 Private company has a very longer period and registration process.
 Compliance formalities is other disadvantage of private company
because it requires a range of compliance post incorporation.
Voluntary organisation
The voluntary organisation refers organisations that have primary purpose is to create
social impact rather than profit (Laudon and Traver, 2016). For example: British Heart
Foundation is voluntary sector firm. Advantages and disadvantages of voluntary organisations
are as follows:
Advantages
 The main advantage of this kind of business is employees are not
liable for the debts of the non-profit organisation.
 Voluntary organisations do not pay taxes, as per that all earnings can
be re-cycled back into the organisation in order to improve it.
Disadvantages
 Voluntary firms generally require more time and money to start
business.
 Small and medium sized voluntary organisation typically have very
tight budgets and handful for employees.
Difference between those organisation as per size, scope, legal structure and objectives are
underneath:
Basis Sole trader
organisation
Partnership
organisation
Public
organisation
Private
organisation
Voluntary
organisation
Size One individual
person start
More than two
and less than
Public
company
Private
organisation
This kind of
business
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this kind of
business.
10 person are
required for
starting this
business.
requires more
than 250
employees for
running a
business.
requires more
than 200
employees for
running a
business.
requires more
than 50
employees in
order to run
business.
Scope Scope of this
business is
very limited
because of
limited
product and
investment
like restaurant
manager
selling only
food.
Scope of this
kind of
business is
high because
all partners
handle
problem in
company and
its result is
best.
Scope of
public
company is
high because
government
bears all
losses which
are generated
from business
(Teece,
2018).
Private
organisation
has great
scope because
business have
ample number
of products
and services in
order to satisfy
business.
Voluntary
organisation
has limited
scope in
market.
Legal
structure
Sole trader
organisation
follows
hierarchy
organisational
structure for
running a
business.
Partnership
firm generally
follows the
functional
organisational
structure
(Organisation
al structure,
2019).
Public
organisation
follows the
divisional
organisational
structure in
order to
complete their
work.
Legal structure
of private
company is
hierarchical
organisation
structure.
This kind of
organisation
generally
follows
hierarchical
organisational
structure.
Objective Is to create
self-
employment
and earn
profit. This
Is to bring
together the
skills and
resources of
multiple
Objective of
public
company to
prevent
property of
The main
objective of
business is to
make profit as
much as
Objective of
voluntary
business is to
provide best
services or
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falls under
secondary.
business to
generate better
profit margin.
This falls
under
territory.
economy
power and
growth of
private
monopolies.
This falls
under
territory.
possible. This
falls under
territory.
other form
directly
support to
customers this
kind of
company is
falls into
hospitality
sector because
this provide
the services.
TASK 2
Types of organizational structures
It is essential for Merrill Lynch to determine appropriate organizational structure for its
appropriate divisions in investments section which are majorly Merrill Guided Investment and
Merrill Lynch Wealth Management in order to achieve desired objectives of the organization.
Organizational structure can be defined as a structure that provides guidance to all the employees
of the company through laying out the official reporting relationship which governs the
workflow of the company. A systematic outline of a company's structure helps in adding new
positions in a company more easily with providing a flexible and ready means of growth. The
organizational structure which can be used by Merrill Lynch is hierarchical structure or
divisional structure.
Hierarchical Organizational Structure
Merrill Guided Investment division of Merrill Lynch Investment is using Hierarchical
structure in order to achieve its targeted objectives. It is one of the most popular organizational
structure type which also derived few models. This structure consist of a supervisor provided
with employees that are grouped with every employee, this grouping is being done by
considering several factors which includes function, geography and product. Merrill Guided
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Investment utilizes this structure in order to improve its efficiencies as it have several
advantages. In this structure, employees recognizes defined level of leadership within the
organization where authority and levels of responsibilities arises. It also provides several
opportunities for the promotion which motivates employees to perform well.
Hierarchical structure helps the employees of Merrill Guided Investment in developing
themself as specialist as this structure narrows the focus of employees which help them to
become expert in s specific field. This helps the organization by creating loyalty of employees
towards department of the company and looks out for the best interest in their field. There are
several drawbacks of the structure which needs to be considered by Merrill Guided Investment
while implementing this structure in the organization. There is a chance of rivalry between
different departments which may inflame each department which encourages them to make
decision that benefits their own interest rather than the organization's as a whole (Maduenyi and
et.al., 2015).
Illustration 1: Hierarchical Organizational Chart
Source: Hierarchical Organizational Chart, 2019
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Divisional Structure
Merrill Lynch Wealth Management is one of the most successful division in Merrill
Lynch investment as it uses divisional organizational structure in order to perform its operations.
Divisional organizational structure can be determined as type of organizational structure that
groups all functions of an organization into a division according to product or geographies. A
product division can be organized by various activities related to the product or a service by
providing it a separate department which is led by a supervisor. Merrill Lynch Wealth
Management had undertaken this process by creating several divisions for its products and
manage its operations in a more significant manner. Geographic departmentalization includes
grouping of activities based on geography that can be according to country, state, city or locality.
It is an essential aspect if tastes and brands differs across regions because it allows flexibility in
product offerings and marketing strategies. There are several advantages and benefits for the
structure which helped Merrill Lynch Wealth Management in achieving its desired objectives by
implementing this organizational structure. Another advantage of using this structure is the
failure of one division doesn't effect the other divisions (Auschra, 2018).
There are several drawbacks of the structure which are being considered by Merrill
Lynch Wealth Management in order to prevent any loss. Multi-divisional structure can include
increased accounting and tax implications. It can create a mess if two different department of
started comparing their performance which can lead to their personal interest instead of
organization's as a whole.
Relationship between different organizational functions for achieving organizational objectives
Merrill Guided Investment and Merrill Lynch Wealth management are two major
divisions of Merrill Lynch investment with various departments which made essential for the
company to generate communication between different departments in order to achieve
organizational objectives as it helps in building trusts between teams, improving customer
service, increasing efficiency of communication and many more. The most essential relationship
required in Merrill Guided Investment includes relationship between human resource
management and operations department, and Merrill Lynch Wealth management includes sales
and marketing department, and lastly research & development and production department.
Human resource management and Operations department
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These are the most essential departments of the Merrill Guided Investment which have to
work in a significant manner in order to achieve objectives of the organization. These
departments are being created as per hierarchical organizational structure in which these have
their specific supervisors which guides them and keeps them coordinate for an effective
operation. Human resource management works on recruiting and selecting employees for the
purpose of controlling and operating functions of the organization. Operations department
includes the monitoring of other departments which helps them to ensure that all the operations
are being performed in a significant manner. This makes essential for both the departments to
coordinate with each other which can help in selecting and recruiting all those candidates which
can work effectively with the organization which can result in achieving desired organizational
objectives that is increasing productivity by improving customer satisfaction (Maduenyi and
et.al., 2015).
Sales and Marketing department
These are majorly two departments which are being brought together by Merrill Lynch
Wealth Management in order to implement all the processes in a significant manner. As the
company is using divisional structure, the organization is having two different divisions in order
to specify their tasks and this helped them in performing their tasks in a more significant manner,
but at the time of mismanagement in one division, the other division might also affected through
it because these both are dependent on each other. Sales team can coordinate marketing team in
such a way that marketing team can help the sales team to target that customers who are being
targeted while marketing. This can help in effective selling of products by targeting all those
consumers who were influenced by the marketing team. By approaching maximum number of
consumer, company can achieve its objectives in a much easier way (Valero and et.al., 2016).
Research & development and production department
Production department of Merrill Lynch Wealth Management play a major role in
achieving objectives of the company by implementing hierarchical structure, as less production
cost increases the profit margins which increases productivity of the company. Research and
development department works for developing the processes in the organizations to reduce costs
and increases profitability. So, these both departments of Merrill Lynch Wealth Management
must consider that these departments have a significant relationship which can result in
improving production process with the help of proper research and development department, this
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will vitally lead in attaining desired targets of the organization by working with as a team and
discussion for the innovation can lead to bring creativity which will attract more number of
customers that may lead increase in productivity of Merrill Lynch Wealth Management
(Sarvaiya, Eweje and Arrowsmith, 2018).
TASK 3
The impact of macro environment on the operations of organisation.
Macro environment-
It is defined as the environment that exists outside the business. It is also known as
general environment that affects the operations of all the firms. It influences the decision-
making, strategies and performance of the company.
PESTLE analysis-
It refers to the tool that assist the firm to identify and determine the impact of factors that
are existing in external environment of the organisation. Evaluation of external environment
factors helps the business to take better decisions and also help to gain competitive advantage
over other companies (Koshesh and Jafari, 2019). Merrill Lynch Investment will use PESTLE
analysis for evaluating the impact of external factors on the performance of the firm.
Political :
Political environment involves various factors that may affect the profitability and
sustainability of the business. Such as level of stability in political environment, government
laws, trade barriers, rate of taxation etc. There are various laws formed by Government of the
country like contract law etc. Noncompliance of the laws will negatively impact the operations
of Merrill Lynch. Further, government has developed various schemes for public that will help
Merrill Lynch to gain confidence of customers. Moreover, new regulatory rules of government
regarding capital like charging 8% surcharge on profit of banking firm etc. This will negatively
affect the profitability of Merrill Lynch Investment company (Bohari, Hin and Fuad, 2017).
Economical:
Economic factors can be described as those factors that are related with the economy of
the country. It includes factors such as rate of inflation, gross domestic product, foreign
exchange rate etc. that may impact operations of the organization. For example- Currently, rate
of interest of borrowing funds ranges from 5 to 20% for loan term of 3-5 years. This will help
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Merrill Lynch to attract more and more customer's. Further, the foreign exchange rate of the
country will negatively impact profitability of Merrill Lynch Investment company. Moreover,
disposable income of people living in the country is high. Therefore, large number of people will
deposit funds. This will positively affect the performance of Merrill Lynch Investment company.
Social :
Social environment involves different factors such as social mobility, lifestyle, labour,
changes in demographic factors like income, age of the people. Merrill Lynch Investment firm
should be aware of health standards, claims of employee's regarding harassment etc. There may
exist difference in educational background between target market and marketing manager of the
organisation. Merrill Lynch should focus on priorities and interest of clients while promoting its
products or services. In the country 18% of total population is above age of 65 (Widya Yudha,
Tjahjono and Kolios, 2018). It means mostly there is ageing population. This will provide an
opportunity to Merrill Lynch Investment company because old age people will have more
disposable and pension income. If, majority of people belongs to lower class, in that case it will
negatively affect the ability of Merrill Lynch to promote premium product in the market.
Technological :
Technology is an important factor because it has power to destroy pricing structure and
competition in the industry. Therefore, it has become essential to continue innovate new products
and services to improve profitability and to compete with other firms. Merrill Lynch has
introduced the solution that combines advice with digital capabilities. The technology helps to
provide clients the experience of 'do it yourself' and service of taking help from an advisor.
Further, it has also introduced a new feature that helps customers to adjust their personal targets
and goals like retirement etc. (Widya Yudha, Tjahjono and Kolios, 2018). This will help Merrill
Lynch Investment firm to attract and retain new as well as existing clients. Advance technology
will help to reduce cost, risk of fraud in the company etc.
Legal :
Legal environment involves legal laws and regulations of the government that are
necessary to be followed by companies. Such as law related with Intellectual Property Rights,
employment laws like law related with discrimination, wages etc. Further, government also form
laws to ensure the quality of products and services etc. Nearly 40 employees have filed
arbitration claims that claims that they have suffered losses due to shares of company during
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