Analyzing Organizational Structures and Objectives

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Business and Business
Environment

TABLE OF CONTENTS
Introduction......................................................................................................................................1
LO1..................................................................................................................................................2
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures......................................................................................................................2
P2 Explain the size and scope of a range of different types of organizations.............................3
M1 Analyze how the structure, size and scope of different organizations link to the business
objectives and product and services offered by the organization................................................4
LO2..................................................................................................................................................5
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure.......................................................................................5
M2 Analyze the advantages and disadvantages of interrelationships between organizational
functions and the impact that can have upon organizational structure........................................7
LO3..................................................................................................................................................8
P4, M3 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................8
LO4................................................................................................................................................10
P5 Conduct internal and external analysis of specific organizations in order to identify
strengths and weaknesses..........................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors..................11
M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision-
making.......................................................................................................................................11
Conclusion.....................................................................................................................................13
References......................................................................................................................................14

LIST OF FIGURES
Figure 1: Organizational Structure of Hotel Hilton.........................................................................5
Figure 2: Organizational chart of Not for profit organizations........................................................6

Introduction
Business environment can be defined as the combination of various institutions, individuals as
well as other factors that are not controlled by the business organization however business relies
majorly on such type of factors as it affects overall performance as well as its sustainability. The
current report elaborates the business environment of Metro Bank that operates as a retail bank in
UK. The report will therefore explain various types of organizations that will approach to the
bank for the loan. Organizational structure of different organizations will also be discussed on
the report along with the interrelationship of various functions. Impact of both internal and
external factors on business operations along with their interdependency will also be elaborated
in the report.
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LO1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures.
Business organizations are classified on the basis of their types and purposes and that includes
public, private and voluntary. These organizations are further categorized based on their legal
structures.
Sole trader: This type of business is owned and operated by individual person. The owner is the
only responsible person for sharing of loss and profit. Liability under such type of business is
very high. Example of well known sole trader is Elixir that is known for selling customized
software. The business makes high profit.
Partnerships: This type of business involves number of individuals who are engaged in business
operations while following some agreement or deed. Liabilities of partnership might be limited
or unlimited (Ross, 2016). Grapevine is the example of partnership business within UK and it
operates as a superstore. The organization is run and managed by 15 members and is subjected
for making profit.
Private Limited Company: The organization exists with limited liability and private shares. This
type of business organization restricts the liability of owner with the number of shares. The
organization also limits the shareholders to 50. Private Limited Company experience advantage
is related to limited liability. Financial liability of the shareholders is restricted to the shares.
Restricted trading of share is an advantage however it requires wider range of compliances with
labour laws and tax. For an example, Bestway is owned and managed by 30 members and is
main is to make profit. The organization provides various activities such as development of new
product for earning profit. In addition to this, Metro Bank in UK is also an example of Private
limited Company.
Public Limited Company: This is the business where membership in terms of ownership in
available to public (Roness, 2017). For an example, Asda operates as a public limited company
that aims at serving customers by providing larger products at reasonable and affordable prices.
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Such organization are being funded by the governing authorities and do not have only aim of
earning profit.
Voluntary: Voluntary organizations are also known as non profit organizations that aim at
serving people for their betterment. Its legal structure is highly different from private or public
sector organizations. It also support creating awareness related to education, health, cleanliness,
etc. Such organizations gain advantage in terms of tax exemption, along with protection from
various personal liabilities. Its criticality in gaining funds is one of its major disadvantages.
World Wide Fund is an example of voluntary organizations.
P2 Explain the size and scope of a range of different types of organizations.
Sole proprietorship: Elixir is well known for providing software services to its customers and its
capital amount is identified to be 1million GBP and annual revenue is 25 million. As per the
statistical data of 2018, there exist 20 numbers of employees. It scope is very high and therefore
there is greater need of taking quick decisions such that profitability can be maintained. Such
type of business can be established by moving into partnership. This will help the business to
gain benefits of skills of experts (Marandi et.al.2015).
Partnership Business: There are 15 business owners who are responsible for sharing of profit
and loss. Its capital amount is 20 million GBP along with annual revenue of 50 million GBP. It
currently owns 40 employees that contribute towards successful business operations. Scope of
the business ore many such as it can successfully add more number of partners so that business
capital can be increased. Experience of individuals can be utilised for improving efficiency of the
business. Complexities of the business can be resolved with the experience of partners.
Private Limited Company: Bestway Group operates as a private limited company and currently
has 30 owners. It has 3.4 billion GBP and 4 billion of GBP at annual basis. This is a large scale
organization and therefore it has 33, 000 employees. Being private limited company, the business
has certain restrictions however business gain profitability with the help of skill and experience
of all the owners within the organization. Such type of organizations has wider range of
opportunities to expand their business in other sectors (Anell, 2015). Metro Bank also operates
with similar scope. These come under primary, secondary and tertiary sector as they have been
evolved in manufacturing, and also provide services.
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Public Limited Company: Asda operates at approximately 630 locations in UK and its current
operating income is £ 1billion with 180,000 employees. Public limited organizations can also
grab number of opportunities while expanding their business or by investing into new
government or other projects. The organization can gain funds by issuing shares to the public.
Managers are responsible for management of entire business operations. Asda operates in tertiary
sector as it does not manufacture good rather it buys it from the wholesalers and sell it to the
public.
Voluntary organizations: These include both not for profit and charitable organizations and
therefore it major stakeholders are public, government, volunteers, etc (Liket and Maas, 2015).
World Wide Fund operates with 5 million of supporters across the world and it has invested
around $1 billion. It has revenue of € 654 million. The organization has limited scope of
preserving wildness so that negative impact on human and environment can be minimised. Such
type of organizations fall under the category of tertiary sector as it aims at providing services.
M1 Analyze how the structure, size and scope of different organizations link to the business
objectives and product and services offered by the organization.
Structure, size and scope of various organizations are highly interrelated with the business
objectives as well as to the products and services that are being provided by the business
organization. Business can set targets with the help of good organizational structure. For an
example, sole traders such as Elixir have less people in the organization however their roles and
responsibilities are specifically allocated and therefore business is able to deliver appropriate
products and services to their customers and has successfully attained objectives in terms of
profitability. In addition to this, size and scope of business is also interrelated with their
objectives. For an example, organizations like Metro bank or Bestway group with larger size and
scope can set bigger targets and can successfully expand their business in different sectors.
Organizations can successfully set business objectives by identifying the business scope
(Mendoza-Abarca and Gras, 2019). For an example, scope of voluntary or charitable
organizations is to serve national customers while helping them in various aspects, then their
business objective will differ from private limited organizations as they will provide products
and services to customers with an aim of gaining profit.
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LO2
P3 Explain the relationship between different organizational functions and how they link to
organizational objectives and structure
Metro bank serve its business clients from various sectors such as health care, hospitality and
leisure, property owners, as well as charitable and not for profit organizations.
Organizational chart of hotel
Figure 1: Organizational Structure of Hotel Hilton
(Source: Hotel organizational Chart, 2019)
The hotel follows divisional organizational structure where business is divided into various
divisions. The organizations divide tasks and specify job and responsibilities for each and every
department. As per the divisional organizational structure there are mainly finance, human
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resource, sales, marketing and logistics. Each of the department is headed or managed by
respective managers however the decision making is discussed and informed with higher
authorities of the organization (Hotel organizational Chart, 2019).
Main objective of the hotel industry is to attain maximum level of profitability by providing high
level of customer satisfaction. In this context, financial department as per the organizational
chart is crucial for maintaining the financial transactions for the entire department such that
profitability can be accounted. Human resource department supports all the other by undertaking
adequate processes of training, recruitment and selection, performance management, etc as per
their requirement. For an example, HRM plays an important role in enhancing customer
satisfaction. Further Sales manager is responsible for making reservation for customers and it
directly associated with business profitability.
Organizational chart of non-profit organization
Figure 2: Organizational chart of Not for profit organizations
(Source: Nancy, 2018)
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Not for profit organizations majorly follows hierarchical structure. Non profit organizations are
not driven by profit and all the operations are headed by Board of Directors. Roles and
responsibilities are allocated as per the hierarchy and position within the organizational chart.
All the functions such as finance, operations, marketing and human resource are responsible for
discussing the growth issues with Executive director of the organization (Nancy, 2018).
The main objective of such type of organizations is to serve society towards better living as well
as to spread awareness about certain specific areas. In this context finance department is
responsible for raising and managing funds that can be utilised for attaining business objectives.
In addition to this, marketing department co ordinates with higher authorities as per the
organizational structure so that decisions related to marketing and awareness campaigns can be
undertaken. Human resource department will co ordinate with all the departments to identify
need of human resources and recruitment process will be therefore accordingly.
M2 Analyze the advantages and disadvantages of interrelationships between organizational
functions and the impact that can have upon organizational structure.
Interrelationship between various organizational functions will support maintaining employee
relationship in both the type of organizational structure. Increasing co ordination of employees
within various departments is directly proportional to the performance of the business. For an
example, co ordination between marketing and finance department will help the marketing
function to identify the budget for developing the marketing plan. This will increase the
efficiency of both the departments. This further contributes towards business profitability.
On the other hand, there is certain information that is not to be disclosed to other departments
however the interrelationship between various departments is not always advantageous for the
business organization (Grzegorczyk, 2015). It also increases inter functional competition and
chances of getting rewards decreases.
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LO3
P4, M3 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
Banking sector is based on various procedures and are highly different in nature. Banks
contribute largely to the well being of society and business by providing them with financial
services such as loans. However the industry is influenced in both positive and negative manner
by macro environment factors.
Political: It includes factors such as stability of government, regulatory framework, financial
policies, etc. Political interference has both positive and negative impact over business
operations (Sayed, 2018). Several political restrictions in the banking industry support business
organizations to support new investment with the help of government. Regulations within the
banking industry help the banks to maintain equality in tax and interest rates. On the other hand,
political interference along with regulations leads to financial crisis that in turn has affected the
business operations.
Economic Factors: Economical factors that affect the growth of banking industry that includes
labor cost, unemployment rate, inflation and interest rate, income distribution and likewise.
Consumers now days are more inclined towards banking services and therefore business of the
bank are increasing day by days. This has put positive impact over providing employment
opportunities. Globalization has helped the banks to open their branches in foreign market. On
the hand economic crisis such as inflation or recession affects the level of income of people and
in such situations people are unable to pay higher interest amount for loans and this affects the
business sales and profitability.
Social Factors: Such type of factors includes population growth, behaviour of consumer, as well
as other socio cultural changes. Behaviour of consumer largely affects the business operations.
For an example, consumers now days desire to have number of facilities at one place and
therefore banks aims to provide various services such as loan, account handling, etc and this has
helped to gain growth in the market (Thimann, 2016). In addition to this, UK is experiencing
increasing growth of population and therefore business is gaining more opportunities to grow.
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On the other hand, increasing expectation of consumers is not always possible for all the banks
to fulfil and some of the banks growth is being affected in negative manner.
Technological Factors: Emerging technologies such as internet, communication technology;
remote working, as well as rate of technological change contribute towards technological factors
that influence the banking sector. For an example, online banking services have helped the
banking business to gain higher level of customer satisfaction. In addition to his, faster
withdrawal and deposit of cash with the help of debit card or ATM machines has made
transaction facilities easier for consumers and therefore advancement of technology put positive
impact over business operations. Increasing use of technology on the other hand is causing an
issue of fraud and scams and that affects the reputation of banks.
Environmental: It includes climatic and weather changes, use of green products, as well as
environmental laws and policies. There is less however impact of environmental factors on
business operations. It is essential for banking organizations to comply its business activities
with environmental laws (Louhichi and Boujelbene, 2016). For an example, Environmental laws
in UK have restricted the business to make less use of paper while undertaking the business
operations. This has put pressure on business organizations to take care of such aspects. On the
other hand this will build positive brand image among consumers in terms of responsible
behaviour of environment.
Legal Factors: Legal factors include impact of legislations such as employment law, consumer
laws, safety and healthy laws, etc. For an example, employment laws have forced the business
organization to set minimum pay scale for employees at specific position irrespective of their
skills and abilities. This has increased the operational cost of business without gaining much
profitability. On the other hand, consumer laws have created awareness about banking products
and services and this has helped them to understand the need of product to fulfil their
requirement.
All the above discussed macro environmental factors need to be considered while developing
strategies so that business objectives in terms of business profitability can be fulfilled.
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