Business and Business Environment: A Comprehensive Report

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Business and Business Environment

TABLE OF CONTENTS
Introduction......................................................................................................................................1
LO 1.................................................................................................................................................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 organisations.............................4
M1 Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organisation................................................6
LO2..................................................................................................................................................7
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure........................................................................................7
M2 Analyse the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have upon organisational structure........................................9
LO3................................................................................................................................................10
P4, M3 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples..............................................................................10
LO 4...............................................................................................................................................12
P5, M4 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................12
P6, M4 Explain how strengths and weaknesses interrelate with external macro factors..........13
Conclusion.....................................................................................................................................14
References......................................................................................................................................15

LIST OF FIGURES
Figure 1: Legal structure of private business...................................................................................3
Figure 2: Organisational structure...................................................................................................8

Introduction
Business environment consist of different types of ventures that have different size, scope and
concerned business operations. The environment consists of the internal and external factors that
influence on operations of the business. The report gives detail explanation of different types of
ventures and its suitable legal structure. Along with this report highlights the interrelationship of
suitable functions of the organisation with the concerned structure. In addition, business is being
affected by different factors that are identified with the help of Pestle and SWOT model. At last,
report would show how such factors mainly affect the decision making of the organisation.
Report will provide clear understanding of business types and impact of environmental factor on
the operations of the business.
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LO 1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures.
Organisation refers to the organised group of people with a particular purpose such as the
business or the government department. On the basis of legal structure there are different types
of organisations that differentiate on the basis of ownership, scope, size, purpose, etc. However,
three of the organisation and their legal structure are explained below:
Public sector organisation: It is defined as the business where the ownership and membership
is open in the public. This includes generally the part of economy and composed of both public
services and public enterprises (Titi Amayah, 2013). Objective of such organisation is based on
offering public services rather than making profits. Asda is the leading supermarket that operates
on the international level with providing grocery, general merchandise, etc (Clarke et.al. 2012).
Legally the business has no upper limit and it can issue as many stocks as public.
Private sector organisation: This is the private organisation with having private shares. Legally
organisation is operated by private individuals or group of individuals. Business main purpose is
to make profits by offering products and services to the customers (Hvidman and Andersen,
2013.). Suitable example of private organisation mainly include Poundland that is the British
variety chain store that is selling items at the single prices of £1 including clearance items and
proprietary brands. The main products of Poundland mainly include Groceries, consumer goods,
DIY, electrical, etc. It can mainly operate business with the excellence of owners and directors
(Shieber, 2013).
Thus, legal structure of private sector is being divided into different organisations that include:
Sole Trader: This is the business that is mainly operated and owned by the individual or single
owner. The objective of business is based on taking sole risk and making sole profits. In this the
liability of the owner is very high as decision making depends on the individual itself (Tadelis,
2012). Suitable example of such business includes local barbers, stationers, barber shops, etc and
it generally operated on the local level.
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Partnerships: It is the business entity of individuals that is owned and operated by two or more
individual under the well defined agreement. The liabilities of the partnership might be limited or
unlimited depending on the terms and conditions (Haufler, 2013). Grapevine is the concerned
example of partnership in UK that is engaged in operating stores containing 5 members and has
the objective of making profits.
Limited organisations: In this organisation the liability of members is generally limited based on
the investment made by the owner. This might be limited by shares and this is generally divided
in terms of shares that include both public and private limited.
Cooperatives: It is the kind of organisation that is formed by same minded individuals that
mainly operate for the financial benefits. This organisation is generally jointly owned or
democratically controlled enterprise. It generally has the mutual assistance in working towards
the common goal. Cooperative Press is the oldest form of cooperatives that operate for the
betterment of its members.
Figure 1: Legal structure of private business
(Source: Author, 2018)
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Voluntary: It is the organisation that is handled by the group of individuals for the purpose of
attaining a common purpose. The organisation objective is based on bringing socio economic
development mainly the rural sections and mainly in arts and culture. The organisation promotes
social welfare rather than making profits (Cunningham, 2012). Cancer Research UK is one of the
voluntary organisations that aim to reduce awareness about cancer and reduce the number of
deaths from the cancer in UK. It conducts research into prevention, diagnosis and treatment of
the cancer.
Legal structure of Voluntary sector also includes non profit and non-governmental
organisations. Non profit organisation generally supports raising standard of living of families
and the individuals with keeping profits aside. Nongovernmental organisation generally does not
have involvement of the government but the member’s supports organisation to raise awareness
about health, education, etc (Milbourne, 2013). These organisations are generally exempted from
tax but it faces difficulty in terms of managing time, money and is not able to raise accurate
funds.
P2 Explain the size and scope of a range of different types of organisations.
Types of
organisation
Scope and objective Size Key stakeholders
Public The organisation has the
objective of offering public
services and its scope is
extended to gain market
share. Asda is public
organisation whose objective
is to offer extended level of
customer satisfaction.
Asda has 633 stores with
annual revenue of £ 21 million
and with an operating income
of £ 791 million. For the
purpose of operating with
competitive advantage, Asda
has generally appointed
165,000 employees for the
objective of delivering best
products to the customers
(About Asda, 2018).
Generally it is publicly
traded and
stakeholders of the
business generally
include the
shareholders,
suppliers, union and
the community
members from which
the business draw its
resources.
Private Generally objective of
private business mainly is
based on making profits and
Poundland is the leading
retailers that have around 896
stores and is operating with the
Key stakeholders of
the business generally
includes CEO,
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have the scope of business
expansion and achieve the
growth in expanding the
current customer base. The
organisation is generally
privately owned such as
Poundland is handled by
private involvement of the
owners
annual revenue of £ 1.31 billion
and for its effective operation it
offers employment to around
18,000 employees with the
main purpose of maximising
profits and revenues. It
generally have an estimate of 7
million customers and the scale
is increasing as directive efforts
are being made towards
marketing of products and
increasing sales of single prices
items (About Poundland, 2018).
founders, current
owners, employees,
customers, suppliers,
etc.
Voluntary
organisation
The business has scope of
improving the social
conditions and working
towards the welfare of the
society. Generally objective
of business is based on
taking actions towards
bringing improvement in the
parts of rural areas and
promotion of media, arts and
culture.
It is the world’s largest
independent charity that is
responsible for reducing the
number of deaths that is
happening due to cancer. It has
involvement of around 3900
employees and 40,000
volunteers with an annual
funding are received around
£634 million that is treated as
the part of Revenue About
(Cancer research UK, 2018). It
is mainly located in the part of
London but raise awareness
about cancer in different parts
of the world
Key stakeholders of
the business include
CEO, chief clinics,
donors, employees,
volunteers, patients
that are being suffering
from cancer.
On the basis of size, organisation can also be divided into micro, small, medium and large scale
organisation.
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Micro: It is the business that operates on very small scale that generally have not more than 10
employees and annual turnover does not exceed above $2 million. In UK, generally business
account up to 82.3% and overall employment also includes 19.2%. The organisation generally
includes the business that is formed in the form of sole proprietorship (Hillary, 2017).
Small and Medium (SME): Small business generally includes independent organisation that
includes employing not more than 50 employees and medium business exceeds the employees up
to 250. Almost 99.9% business in UK is comprised of small and medium based with offering
employment 25% (Ward and Rhodes, 2014).
Large: Generally the business does not have the upper limit for offering employment to the
people but it generally it exceeds above 250 employees. Generally large business in UK accounts
up to 0.5% but offers maximum employment around 48% in UK (Wilson et.al. 2012).
M1 Analyse how the structure, size and scope of different organisations link to the business
objectives and product and services offered by the organisation.
On the basis of the analysed scale, size and scope of different business, it can be evaluated that
public sector scope of offering public services and operating on high level is linked to achieving
objective of offering best possible products for customer satisfaction. For example, Asda that is
being treated publicly has gained lot of brand awareness in the market that has made Asda one of
the market leaders in the parts of UK (Titi Amayah, 2013).
On the other hand, Poundland is operating privately with the scope of business expansion in
different countries. This enables Poundland to cover huge customer base that leads business to
achieve profits and revenues. Scope of business expansion leads Poundland to cover huge market
share and also achieve objectives in the form of business profits. With this, Poundland
accordingly offers promotion of product, single priced items and also discounts and offers to
maximise profits (Shieber, 2013).
Also Cancer Research UK has the limited scope of reducing the number of deaths due to cancer.
With this, services are limited to conduct research regarding cancer and raising awareness among
people. Thus, it link to achieving objective of social welfare rather than making profits
(Milbourne, 2013).
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LO2
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
According to the below organisational chart, there are different departments that includes human
resource, finance, public relation, sales and customer relations. For example, Asda is one of the
multinational that have different departments. For example, Asda has the market its products and
services that want to make sales and profits. Also Asda has to take care of employees that make
the business running. Along with this it needs to also handle day to day operations to maximise
sales and for this management has to make sure that resources are made available to the business
to use the resources effectively and efficiently (Grunig and Grunig, 2013). For handling the
business operations, it requires business to manage resources in the form of finance with
allocation and disbursement of the funds.
Asda have the objective to offer cheap and affordable products to the public. Mainly Asda seems
to maximise the customer satisfaction. For example, Asda wants to expand in the new market of
bringing development in the product. It requires support of marketing department that will
conduct market research and decide the appropriate promotion strategy (Pettigrew, 2014). For
the strategy of expanding promotion, it is necessary to employ people for increasing business
productivity. In this case, human resource will support to employ people that are skilled and
qualified for increasing business sales.
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Figure 2: Organisational structure
For example, if Asda need to increase sales and supply of products in the market. It requires
more financial resources to manage the level of inventory for the satisfaction of customers.
Moreover, the business will require support of production department to increase the supply and
manage day to day operations. In addition, customer service department would be effective to
give information to the marketing team about the customers. On the other hand, human resource
will decide incentives for achieving targets that will help in increasing efforts of the personnel to
increase business sales about communicating effective information about the products
(Christopher et.al. 2013).
As per this analysis, it can evaluate that different departments are interrelated with each other for
the purpose of achieving business objectives. Department coordination with each other will lead
to achieve business productivity and combines efforts of departments will lead to achieve
productive growth in the market.
8

M2 Analyse the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have upon organisational structure.
Advantages
Interrelationship between different functions of the organisation will help Asda to develop
positive culture and will lead to achieve productive growth. Asda will be able to have optimum
utilisation of resources and transparency can be maintained within the organisation regarding
achieving the objectives. Moreover, interrelationship between organisational functions will lead
to maintain the proper follow of chain of command and accurate functioning of the role positions
that will lead to achieve overall fair working of the organisation (Pettigrew, 2014).
Disadvantages
Interrelationship between departments can be challenging as it might lead to raise the conflicts
between the employees if they maintain communication regularly. Employees of the organisation
might start reacting in the informal manner that will disturb the follow of chain of command.
Excessive transparency can lead to leak the material information of the organisation that might
harm the reputation of the organisation in near future.
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