Business and Business Environment Report: Structure and Environment

This report delves into the business environment of Metro Bank, a retail bank operating in the United Kingdom. It begins by defining business and its environment, then explores different types of business organizations, including private, public, and voluntary organizations, with a focus on Metro Bank, NHS, and Oxfam respectively. The report examines their legal structures, scopes, and objectives. Task 2 analyzes the inter-relation of various business functions like marketing, production, human resources, and sales, highlighting their impact on organizational structure. The report also applies PESTEL analysis to assess the macro-environment factors affecting Metro Bank, including political, economic, social, technological, legal, and environmental factors, and their potential positive and negative impacts. The analysis provides insights into how these factors influence the bank's operations and strategic decisions.

Business and Business
Environment

Table of Content

INTRODUCTION
Business refers to all those undertaking which is done by an individual in regard of
taking support from employees in selling goods or services to achieve objective in a specified
time. Business environment refers to those forces which are exterior and interior that affects the
activities of business. This report will be based on Metro bank plc which is a retail bank
operating in the United Kingdom. This was established by Anthony Thomson and Vernon Hill in
2010. This bank is listed on the London stock exchange and is a constituent of the FTSE 250
Index. This study explains various forms of business with their size and scope and elaborating
inter relation of the various function and stating affirmative and destructive causing on macro
environment and determining affect of internal and external strengths of specific business on
external macro factors (Tahernejad, Khalokakaie and Ataei 2013)
TASK 1
P1
All those type of business is present within marketplace who performs different types of
activities to achieve their specified objective . The brief explanation of organisation and legal
structure are as follows-
Private Organisation- This form of business is closely-held and function by individual
person or group of persons. The main objective to run a private organisation is to grab market
share and earn more profit from it. The chosen organisation is Metro bank who is retail bank
operating in United Kingdom has following legal (structure-Babu 2012).
Legal Structure-
 Sole trader- These are the form of business which is operated and closely-held by an
respective as the amount of investment is required is very low.
 Partnership- These are the forms of business which is closely- held and operated by two
or more individual who are obliged to share profit and loss equally or in ration of the
capital invested depends upon the agreed ratio.
 Small and Medium enterprise- This type of organisation is operated at small level with
the lower investment limit.
Legal obligations of private organisation- The private organisation has to follow rules
and regulation of the law in which they are registered. For example, partnership firm is registered
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into Partnership Act and if any modifications are done in then partners have to provide report so
that changes can be applied legally(Peng and et. al., 2013).
Public Organisation- This form of business is closely-held and function by government.
When the 51% share of an organisation is owned by government will be considered as public
organisation. The chosen organisation is NHS which is owned controlled by government of U.K
with the purpose of providing better health services at minimum charge.
Legal Structure of Public organisation- The Local government maintains rules and
regulation of small area where state government has responsibilities to maintain compliance of
rules and regulation in a boundary of state. The central government formulates rules and policies
of the particular country.
NHS is a public health care who perform duties and follow rules mentioned in Health and
Social care Act, 2012. It is the duty of the NHS to furnish better health services to the subject of
nation and to remove par from the health service.
Voluntary Organisation- These are the forms of business which is hold and run by
group of individual to perform activities to achieve specified Objective. The selected Governing
body is Oxfam which was established in 1942 with the goal of removing impoverishment(Çelik,
Metin and Çelik 2012).
Legal Structure of Voluntary Organisation- Trust is categorised into three part which
are Donor, trustee and beneficiaries and all are important to form a trust. Association refers to
group of person who are performing activities to achieve a objective.
Oxfam is required to proceeds entering from the governing under a specified act. This
type of firm are not allowed to make profit otherwise they will be dissolved and their capital and
assets would be taken by any other voluntary( Organisation.Nickel and Eikenberry 2016).
P2
Voluntary Organisation- Oxfam
The purpose of Oxfam is to raise standard of living by eliminating poverty from the
country. They provide all the services to met and fulfil the demand of every needy individual.
They has 20 trust which helps them to providing services in many countries and has huge scope
of the company. These firms are work on the basis of non-profit and they always follow the rules
which are applied on trust. They fulfil the need of every needy individual through raising fund
from citizens.
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Public organisation- National Health Services
The purpose of NHS is trying to eliminating infectious disease by providing them various
health facilities. The company provides free eye test, mental healthcare and heart surgery
services to the citizens of nation. The company has employed huge amount of staff to provide
free health services. The company has highest number of staff in public firms which is around
1300000 which defines it has huge scope. They have to follow all the rules and regulations
which are applied on the public organisation(Coyle 2018).
Private organisation- Metro Bank
Metro bank is established by Vernon Hill and provides banking services to the all
customers of their bank. This bank is authorised with the Prudential Regulation authority and
regulated by Financial conduct Authority. The bank is situated in 67 places with employed staff
of 2831 who are working to achieve the specified objective which is to earn profit by providing
more and more services. This bank provide safe deposit boxes to store the valuables and
important document and protect the money by FSCS. As this bank is conducting their activities
in private sector so they have to follow all the rules and regulations which is applied on the
privae sectors.
M1
The structure and scope of every organisation are different which influences the
operations of business as voluntary organisation are non-profit so they will provide services
according to that and the company having huge scope will provide services with another
objectives and all activities are performed to attain the goal of each organisations which are
different.
D1
The different organisations has different structures and sometimes it makes operation of
activities complex as it involve the different laws followed by the company for their different
structures as private organisation follow laws which are applicable to private organisation. As
metro bank will follow the rules which are applicable on private banks.
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TASK 2
P3
The company has several type of functions which are performed to achieve the
organisation objective and they are necessary to interlink with each other.
 Marketing and Production- These are the two essential functions of firm and their inter
relation is very essential as without marketing production is not possible. Production
department produces goods and services for the consumer and it is the responsibility of
marketing department to promote the produced goods and services. Marketing is the
activity of promotion of goods by attracting various customers. Marketing also identifies
the needs and wants of the consumer and provide this information to the production
department so that goods which fulfil the demands are only produced which will benefit
the organisation in achieving the objectives. Marketing department of metro bank
properly coordinates with operation department to maintain smooth operations and to
achieve objective(Hassan 2012).
 Human Resource with Sales- These are the two inter related department as the sales
department require number of human bodies who can perform the activities of sale. This
is the responsibility of human resource to select the candidates who have required amount
of experience and knowledge in particular field. The sales department of Metro bank are
required to provide report to human resource department of Metro bank regarding
qualification, experience required to perform the task of sales person. Human resource
are required to evaluate all the candidates according to that particular report. If the
candidate selected to perform the activities of sales department is experienced and
knowledgeable then the sales department will work more effectively and they will able to
provide great satisfaction to their consumer which helps them to achieve their
organisations objectives (Mazaheri 2013).
Impact of Inter-relation on Organisation structure-
Organisation structure is a defined system or hierarchy that is developed for smooth
functioning of activities to achieve specified objective of organisation. This structure define the
way of communication of the organisation which means giving direction in a particular hierarchy
The structure of organisation affect the formation of relationship between departments as
organisation structure determines the way of communication. The communication is important in
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inter-relation of the departments otherwise they will not be able to share their ideas or opinions.
The metro bank uses line and staff organisation structure as the staff are allowed to
communicate with their superiors(Häuberer and et. al.,2014).
M2
Advantages- There are some benefits which is attained through this inter-relation of
functions which are as follows-
 This inter-relation result in achievement of organisation goal in limited time period due to
coordination of organisation functions.
 This inter-relation helps bank to work effectively and efficiently to achieve the objectives
of functional areas.
Disadvantage-This is the drawback received by an organisation through the inter-relation
of organisation function as follow.
 This inter-relation do not allow organisation function work freely or do not allow them
to take decision as per the requirement of functional area.
P4
Illustration 1: Scanning the Environment: PESTEL Analysis
Source: Scanning the Environment: PESTEL Analysis. 2016
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Pestle analysis will help Metro Bank in analysing all the factors of macro-environment that
are influencing it ,it will also allow them to examine the opportunities and threats from political ,
economical, social, technological, legal and environmental forces.
Political : These are the factors which may impact the profitability or chances of survival
of the company . These political risks occurs due to the sudden changes in political norms , rules
and regulation , different policies by the government . It has two impacts-
Positive impact – Government intervention has all protected the companies intellectual
property , and low minimum wage would also leads to higher profit margin of the Metro bank
and will help them in longer survival .
Negative impact – High taxation rate would demotivate Metro bank from earning
higher profits .
Economical : The macro environment factor such has inflation rate , growth rate, foreign
exchange rate would affect the aggregate demand and aggregate investment of the economy .
Metro banks can also use these forces in determining the growth rate of banks, consumer
spending etc. It also have two sides -
Positive impact – If there is increase in the GDP growth rate of the economy it would
indirectly leads to the growth of metro bank in the future.
Negative - Too much changes in monetary and fiscal policy would also have great impact
on the efficiency of metro banks.
Social : This would show the direct reflection of the society in which metro bank
operates. It have both positive as well as negative affect .
Positive – Social factors have emerge to increase the lending from banks as compared to
past data this has also increase the rate of profitability of metro banks.
Negative- As it is seen that the illiterate people hesitate to do transaction from bank
which has negatively affect the performance of the metro bank (Oreski 2012).
Technological : This shows the internal control mechanism as well as services that the
Metro bank offers to its customers. It has two impacts-
Positive - The changes has leads to faster and secured services by the banks . This has
also increased the use of ATM and internet banking.
Negative- Constant changes has increase the costs rate of Metro banks and has lead to
decrease in the profit margin of the banks.
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Legal : These involves government institutions and framework which have impact on the
working of metro bank . Both positive and negative impact are as follows-
Positive – Discrimination laws which have been placed by the government to treat their
customers fairly will leads to increase in goodwill of Metro banks.
Negative- Not implementing a proper law may leads to decrease in public relations.
Environmental : Different markets have different environmental standards which may
have great impact on banking sector . Which involves both positive and negative aspects.
Positive – This would help in waste management in financial sector of the metro banks .
Negative – The drastic change may also leads to render some product useless and will
relatively lower the performance rate of Metro banks.
M3
The metro bank uses PESTLE model to survive in the external environment. The study of
political factor benefits organisation by protecting against prevailing laws and economical factor
impacts bank to estimate the GDP growth rate and according to that policies of bank are formed.
The reflection of society is clearly visible and study of internal control mechanism helps banks in
marinating the internal environment of the bank.
P5
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Source: SWOT Analysis, 2017
SWOT analysis is a approach used to determine internal and external capabilities which
will help a organisation in achieving the objectives. The Metro bank uses SWOT analysis which
are as follows-
STRENGTHS WEAKNESSES
 The metro bank has increased its range
of account holder which results in
higher growth rate.
 The bank has less risk of liquidity as
the bank possess high amount of
deposit which is four times equal to the
average American branch.
 The bank includes different types of
traditional services such as coin
counting machines and pet friendly
policy.
 This bank has recently opened their
venture recently and consumer are not
sure about investing in the bank.
 The bank is suffering from huge
amount of losses which are recorded in
PBT and in three year it has incurred
huge amount of loss.
 The bank is facing difficulty in raising
fund from their potential investor.
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Illustration 2: SWOT Analysis

OPPORTUNITIES THREATS
 The bank is taking benefit of its unique
positions for being the high street bank.
 The bank can grow through the
development of flared internet
penetration.
 The bank is facing threat from their
increasing activity of competitors.
 The bank has threat from unsteady
economical scenario and unfavorable
banking environment.
P6
The interrelationship of capability and weaknesses with external factors are explained
which benefits the Metro bank in following ways-
 Political- The political factor are related with government stability or policies made by
government. The strengths of Metro bank is that they are providing services in countries
where the customer holder of the bank is higher then their competitor. Whereas, the bank
is facing the problem of less coordination among management which results in non-
achievement of objective (Hjorth, Holt and Steyaert, 2015).
 Economical- The company is facing labour turnover issues which is a weakness of the
bank and to remove for that analysis of economic factor such as interest rate, growth rate
and exchange rate is required which will help in taking strategic decisions regarding the
salaries of labour which allow them to sustain in the bank. This will result in strength of
the bank as they will possess stable employees.
 Social- The bank is providing additional services to their account holders which allows
the company to fulfil the social needs of customer and it will attract the customers which
is a strength. Whereas, The company is facing higher competition and incurring huge
amount of loss in order to provide additional services which result in a weakness for the
bank(Magomya and et. al., 2014)
 Technological- The bank has technology transfer and licensing issue as in financial
sector companies are reluctant to transfer technologies in fear of competition. The
advanced technology lower the cost of operations. The flexible structure of supply chain
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of the bank meets both customer needs and cost structure. Metro bank is coping up with
the speed changes which is 5g and its potential which result in a strengths of this bank.
M4
From the above table it can be concluded that, bank can analyse their strengths and
weakness and can take decision regarding to add value in strengths and remove weakness. The
bank can grab the opportunities through this analysis. The opportunities are the important factor
for maintaining growth of the bank and threat is considered to protect the bank in future (Li and
et. al.,2013).
D2
The micro and macro factors analysis is important for an organisation to formulate
accurate policies of bank as the knowledge of influence of these factors on bank provides criteria
to set policies and form decision regarding formation of strategies which are based on the
achievement of organisation objective.
CONCLUSION
It can be concluded from above report that there are various factor in business
environment that affect business growth and stability. There are various type of organisation
such as public, private etc. has different legal structure and organisation structure. The
interrelation contribution of department is necessary to achieve goals. PESTLE and SWOT
analysis helps in determining organisation capability and negative or positive impact of external
factor on the organisation and how both internal and external factor and strengths or weaknesses
can interrelate and help in achieving organisation objective.
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