Comprehensive Report: Business Environment, Functions, and Analysis

This report provides a comprehensive analysis of the business environment, focusing on different organizational types, their structures, and functions. It examines private, public, and voluntary sectors, using LEGO, the Bank of England, and UNICEF as case studies. The report explores the relationships between business functions, organizational objectives, and the impact of macro-environmental factors. It includes internal and external analyses to identify strengths, weaknesses, opportunities, and threats (SWOT). The analysis covers legal structures, operational sizes, and the interplay of various departments such as HR and finance. The report concludes with an overview of the impact of these factors on business performance and strategic decision-making.

Business and business
environment

TABLE OF CONTENTS
INTRODUCTION.......................................................................................................................3
TASK 1 .......................................................................................................................................3
P1 Different types, purpose and legal structure of organisation........................................3
P2. Explaining the size and scope of a range of different types of organizations. ...........5
TASK 2........................................................................................................................................6
P3. Analyzing the relationship between different business functions and exploring the way
they are link to organizational objectives...........................................................................6
P4. Identification of positive and negative effect of macro environmental factor on
business..............................................................................................................................9
TASK 4......................................................................................................................................11
P5. Conducting the internal as well as external analysis of an organization in order to
identify strength and weaknesses. ...................................................................................11
P6. Analysing the way strength and weakness interrelate with external macro
environmental variables. .................................................................................................13
CONCLUSION .........................................................................................................................15
REFERENCES..........................................................................................................................17

INTRODUCTION
Business environment can be defined as sum of total internal as well as external factors
which directly effects the business. Changes in both internal and external factors have direct
influence on business operations. It also has effect on the business plans, policies and
strategies. Developing the understanding about the business environment is very much
essential in order to identify those factors which can effect business. Market analysis is the
technique which can be adopted by manager in an organisation for determining the factors as
it will assist them in development of an appropriate plan for providing an appropriate response
to changes which is taking place internally or externally. Study of business environment is
also very much essential in context of identifying strength, weakness, opportunities and
threats. The different external factors which can affect the business are political, economic,
social, technological, legal and environmental.
The report has focus on identifying the different types of organisation ad purpose of
the same. Study will emphasize on analysing the relationship between different organisational
functions and the way they are related to business objectives or structures in context of lego. It
is basically a privately owned organisation based in Denmark. The positive and negative
effect of changes in external environmental factors will be highlighted in the report.
TASK 1
P1 Different types, purpose and legal structure of organisation
There are mainly three types of organization such as private sector, public and
voluntary sector organization which may be sole proprietorship, Partnership and corporation.
A sole proprietorship is the type of organization which is owned by only one person.
Partnership is an association of 2 or more than 2 people as a partner. (Chaskin and Greenberg,
2015). A corporation is an organization of group of people that is authorized to act as a single
entity & recognize as such in law.
LEGO: LEGO is a private sector company which produce Lego brand toys.
Headquarter of this company is in Billund, Denmark and founded by Ole Krik Christiansen on
10 August 1932 (Andersen and Ross, 2016).
Bank of England: Bank of England is the central bank of UK. It was established on
27 July 1694 in order to act as the English Governor Bankers for the Government of the UK.
This public organization was wholly owned by Treasury Solicitor. It charges 0.75% as bank

rate. Headquarter of this organization is in the city of London on Thread needle street (Allen,
2019).
UNICEF: This fund and voluntary organization was created on 11 December 1946 by
the United nations general assembly. In 1950, this fund was extended to identify and address
the mandatory and long term needs of women and children in developing countries
(Šadauskas, 2018).
Basis Lego Bank of England UNICEF
Type Private Public Voluntary or fund
Purpose The Lego group is a
Danish toy
manufacturer private
company. The main
purpose of this private
sector company is to
develop & inspire
children to think
creatively and invent
the future of play.
This bank became
public organization in
1998. The main
purpose and objective
of this public
organization is to
financial and
monetary stability in
order to meet the
government's inflation
target.
It is a United nations
children's emergency
fund whose main aim
is to provide
healthcare and
emergency food to
mothers and children
and also protect their
rights.
Legal structure This company consist
of an executive
leadership team which
is made up of 12
members and a board
of director. They have
the responsibility to
set their company's
strategy.
It has the court of
director which consist
of 5 executive
members. The board
is responsible for
setting the
organization's strategy
and also for taking the
decisions.
This emergency fund
is governed by an
executive board which
consist 36 members.
These members are
being elected to terms
of 3 years by the
United nation's social
& economic council.

P2. Explaining the size and scope of a range of different types of organizations.
The size and scope of different types of organizations are:
Private limited organizations: It is basically a firm which are operating business at
small scale. These type of organization generally consist of minimum fifty shareholders. As
per the company law, private enterprise need to employ two or maximum two humored
employees. Such types of enterprises are owned as well as managed by single person. For
instance, Lego is private limited company which is located in Denmark. Plastic toy is the main
product which is offered by organization. Business entity is among one of world largest toy
company in context of revenue. In addition to this, Lego consist of 19000 employees working
at different location for an organization. Business entity has more than 42 offices (Selden and
Sowa, 2015). Lego products are produced in large amounts and are shipped at large scale. An
average operating revenue of an organization is approx. 12.4 billion Kr. In addition to this,
firm has generated the net revenue of approx. 37.9 billion. kr during the year 2016 (Chaskin
and Greenberg, 2015). According to the company law, private limited firms cannot issue their
shares to public. It has the net worth of $5.9 billion as it is the world's largest toy company in
terms of revenue whose sales was $2.1 billion. In the size and scope this group sold more than
75 billion parts & 3,700 shapes and also launched 335 new sets in 2018.
Public limited organization: The scope as well as size of public limited organization
can easily determine by identifying the services offered by an enterprise. It is also based on the
vision of state in which firm is operating business. Public limited organization are required to
employ minimum seven employees according to the company law. An enterprise can employ
maximum number of workers. But as per the legislation, it is very much important for public
limited companies to appoint at least two directors. Public limited enterprises can issue their
shares to public. In addition to this, public limited enterprise is funded by government. The
size of the public organization is big. These type of firms generally provide varieties of
services to customers. Public limited organization generally have large number of business
operations. For instance, Bank of England is a public sector organizational. It is basically a
central bank of United Kingdom. Bank of England is among the one of the oldest bank in the
world. An enterprise is completely owned by government. An organization is given authority
to issue bank notes in England and wales. In addition to this, firm is provided with authority to

regulates the issuance of bank notes by commercial banks in Northern Ireland and Scotland.
Bank of England has reserve of approx. £403,000,000,000 (Hamilton and Webster, 2018).
There are approx. 1.4 billion employees are working at different locations fort Bank of
England. The government is responsible for managing all the business operations of an
organization.
Voluntary organization: It is the type of firm which usually have turnover in billions.
Voluntary organizations have large number of business operations. For instance, Unicef is a
voluntary organization. UNICEF is also recognized as United nation children funds. There
are approx. 36 national committees which is based industrialized countries (Selden and Sowa,
2015.). UNICEF is charitable organization working with government for making sure that the
children born in big country get the best start in their life. It is the voluntary organization
which has been established by Anthony lake with the motive of providing assistance to
children and their mothers. UNICEF provide number of services to children and mothers. An
enterprise is funded by government as well as other persons. UNICEF has its branches in
more than 190 countries. In addition to this, approx. 7000 people are working with UNICEF.
In context of UNICEF, executive board is mainly responsible for managing the business
operations of an organization. Its total income was $5,009,557,471. Its 92% of revenue is
distributed tom program services (Selden and Sowa, 2015).
TASK 2
P3. Analysing the relationship between different business functions and exploring the way
they are link to organizational objectives
The organizational structure of three types of organizations are:
Lego: It is basically a private limited organization which consists of complex business
structure. This enterprise consists of 13974 workers performing the different business
functions at international level. Lego company has flat organizational structure with high
horizontal differentiation which provide management an ease in making quick business
decisions. The different business functions are segmented into independent groups, all the
members or employees in each functional divisional is responsible for providing the
performance report to top management in their respective department. An enterprise consists
of 21 functional units. The low vertical hierarchy consists of four layers. Due to the flat

organization structure there is an effective coordination between different department which
has assisted Lego in accomplishing desired business objectives. It has helped business entity
in providing quick as well as quality services to customers which is firm main objective.
UNICEF: Executive board is the top most authority in organizational structure of
UNICEF. The executive board in UNICFEF consist of 36 members which is directly elected
by the United Nations economic as well as social council. Employees of UNICEF are working
in more than 150 countries. There are mainly seven regional offices of UNICEF which guides
the work of other field offices, and they also provide technical assistance to them. All the
business operational performed by the field offices are managed by the main office of
UNICEF located in New York. In simple words, UNICEF has formal business structure. It is
the formal as well as hierarchical business structure which has helped in managing the
business operation in systematic manner and helped an enterprise in accomplishing desired
business objectives.
Bank of England: In context of bank of England, an organization have functional
organizational structure. As per the functional organizational structured employees in
organization are grouped based on their skills as well as knowledge. It is basically a vertical
structure where each functional division is responsible for performing specific role.
Organizational structure and size and scope of company are interrelate with objective
and goals of organization. This plays an important role for achieve goals of each organization.
This structure is highly focused on all activities which are happens in organization. With the
help of structure employees do their work by following proper process of work, when work
done in proper manner then outcome is good and effective. By this organizational structure is
link with objective and goals of firm. Other hand, size and scope is also related to the business
objectives because manager is sets their business objectives and goals as per business ideas.
In context of Lego company, there are different functional division which are
interrelated with each other these are:
Human resource department: It is the human resource department work closely with
the accounts as well as finance department. Human resource manager analyses the financial
report provided by the accounts' department in order to analyses the scope of providing the
monetary incentive to workers for making their significant contribution in accomplishment of
business objectives. Human resource manager also works closely works with finance

department in order to measure the performance of company. In context of Lego, an
organization has functional structure where the human resource manager is mainly responsible
for managing people at work place. Lego business objective is to improve customer service,
therefore human resource management in an organization will motivate people to enhance the
quality of work. Human resource manager will provide training to employees so that firm can
able to improve the quality of services.
Marketing department: Marketing department works closely with operational
department. It is the marketing department which provide all the information related to the
needs of customers to operational department and assist them in development of products.
Both operation and marketing department works together in order to help an enterprise in the
providing the high level of satisfaction which is ultimate business objective of Lego.
Marketing functional unit also work closely with sales department in order to assist company
in accomplishing desired marketing objectives. In context of lego, both sales and marketing
team coordinates with each other in order to help business entity in improving the
performance as well as position in the market. In context of lego, an organization has
functional structure where marketing team is responsible for promoting brand. For instance,
objective of firm is to develop strong relationship with customers, in such case marketing team
will conduct market research and provide the same information to company which will be
helpful in meeting the demands of customers. And an organization by fulfilling the demand of
customer will able to develop strong relationship with them.
Finance department: It is the main department Lego which prepares the budget for all
other functional units in an organization. In context of lego company, both accounts and
finance division works closely work with each other in order to support business entity in
maintaining the cash flow. Accounts division in Lego Company records all the business
transaction and assist finance department in analysis the way funds are spent. In addition to
this, report prepared by accounts department also assist finance department in identification of
the business activities which are consuming high costs. Both finance and accounts department
works together in order to aid firm in reducing the cost of operations. Finance department
arranges the funds in order to help an enterprise in fulfilling the basic need of business
operations (Calabrese, Iandolo and Sarno, 2018). Accounts division in Lego Company records
all the business transaction and assist finance department in analysis the way funds are spent.

In addition to this, report prepared by accounts department also assist finance department in
identification of the business activities which are consuming high costs. In context of Lego,
objective of an organization is to improve financial performance, in such case finance
department will help business entity in identifying the additional source of revenue generation.
P4. Identification of positive and negative effect of macro environmental factor on business
PESTLE is one of the best technique which can be utilized for addressing the factors in
external environment which could affect have effect on the business operations. The different
factors which can have significant influence on the business operations of different types of
organizations are:
Political factors: These factors include the rules and regulations formed by political
parties, political conditions in the nations etc. Political factors have direct as well as
significant effect on business operations of all types of organizations such as private, public
and Voluntary organization. For instance, the changes in the regulations by the political parties
related to the toy manufacturing industry can have great effect on the operational decisions by
the managers in Lego company. In addition to this, political instability in the country might
restricts legal company from delivering the products or services to customers. In addition to
this, as Lego company import raw material in order to manufacture plastic toy, due to the
political instability firm might face difficulty in importing raw material which might lead to
delay in productions.
In context of Lego, the favorable policies created by the political parties in the nations
has supported an organization in expansion of business.
Economic factors: These macro environmental factors include increase or decrease in
tax as well as exchange rate, inflation, rise in income of an individual, economic conditions of
nations etc. Changes in the economic factors have significant effect on the financial
performance of organization. In context of Bank of England, changes in the economic factor
has direct effect on the profitability of an enterprise. Economic crises in the country have
adverse effect on the Liquidity of bank of England. In addition to this, fluctuation in the
external value of currency has direct as well as great effect on the Bank of England. Changes
in external value of currency has great effect on the policies created by bank. Decrease in the

exchange rate helps bank of England in increasing profitability (Beatty, Samuelson and Abril,
2018).
Social factors: It is the macro environmental variable which includes changes in the
trends, taste as well as preferences of customers. In context of UNICEF, increase in poverty
encourages firm to expand business operations. On the other hand, changes in trends inspire
an organization to find unique ways of providing more services to the customers. Due to lack
of sufficient resources and increase in level of poverty UNICEF is facing difficulty in
providing services to people. In addition to this, increase in unique demands by people an
enterprise is facing issues in maintaining the balance between demand and supply. For
instance, New trends in the consumer behavior can open up new market for the Lego. It
provides a great opportunity for the organization to build new revenue streams and diversify
into new product categories too (Kopnina and Blewitt, 2018.).
Technological factors: These macro environmental factors include advancement in
technology which has direct effect on the business operations of the companies. In context of
Lego, the advancement in technology has provided firm with an opportunity to increase its
operational efficiency as well as productivity. It has helped an enterprise in reducing the costs
of operational. Technological advancement has enabled business entity to provide more
services to its customers. It has helped Lego in bringing improvement in the quality of
products or services.
Legal factors: These macro environmental variables include changes in the norms
made by the government in the nation. In context of Lego, it is very much essential for an
enterprise to comply with all industry related norm, as if an enterprise fails to comply with
norm, such instance can have adverse effect on its business sustainability. In addition to this,
if a company fails to follow the law then it might have to bear legal consequences that can
have adverse effect on its image in the market. For instance, in context of Lego, changes in
the employment law such as wages act might force firm to increase the salaries of workers that
might further lead to the increase in costs which could have adverse effect on the profitability
of an organization.
Environmental factors: It is the macro environmental variables which includes
amendments in environmental legislation. These external macro environmental variables also

include intensity of competition in an industry (Yu, Ramanathan, Wang and Yang, 2018). In
context of Lego, an organization is operating business industry where there is intense
competition in the market. Due to high level of competition in industry, an enterprise is facing
the difficulty in maintaining its concentration on the core business functions.
Illustration 1: PESTLE ANALYSIS
Source: (Scanning the Environment: PESTLE Analysis, 2016)
TASK 4
P5. Conducting the internal as well as external analysis of an organization in order to identify
strength and weaknesses.
One of the best technique which can be utilized by manager in Lego company for
analyzing the internal strength and weakness of organization is SWOT. It is the analytical
technique which will assist manager in development of strategic plan. In context of Lego, it is
basically a leading organization in manufacturing industry (Bertram and Chi, 2018.). Business
entity maintain its position in the market by through analyzing as well as reviewing the SWOT
analysis. It the interactive procedure which requires an effective coordination between
different functional units in an organization (Wrigley and Wood, 2018). SWOT analysis is the
analytical technique which allows an enterprise to identify internal strategic factors. In
context of lego, business entity has number of strength which has assisted an organization in

achieving success in the market. It has also provided business entity an ease in entering into
new market. The strength, weakness, opportunities, and threats of Lego are:
Strength:
 Lego has team of highly skilled as
well as talented workforce.
 Strong dealer community: Lego has
developed Strong relationship with
dealers which has assisted firm an
ease in promoting its business.
 Lego has been successful in
establishing good brand image in the
market.
 Business entity has wide product
portfolio.
 An organization has diversified its
product line. Now an enterprise is also
offering video games, TV etc.
 Super good performance in new
market- Lego has gained experience in
context of entering into new market.
The business expansion strategies
have assisted Lego in developing a
new revenue streams.
 High level of customer satisfaction:
Lego is highly committed as well as
dedicated to customer relationship
management which has assisted an
enterprise in delivering high level of
satisfaction to customers.
 Digital development has supported
Weakness:
 Imitation of product as well as brand
name is a concern.
 Loss of market share.
 This enterprise is still using the
traditional technology for
manufacturing toys.
 Different business operations of Lego
have adverse effect on the
environment.
 Lego has adopted the premium
pricing strategy as compared to other
firms in an industry.
 Lego has incompatible organizational
structure which has restricted
expansion in adjacent product
segment.
 Ineffective financial planning because
of which lego has to face loses which
further had negative effect on
financial performance of company.
 Lego makes less capital investment
on research and development.