Business and Business Environments: An Organisational Analysis

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BUSINESS AND BUSINESS ENVIRONMENTS
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Table of Contents
Introduction......................................................................................................................................3
LO1 Explain the different types, size and scope of organisations...................................................4
LO2: Demonstrate the inter-relationship of the various functions within an organisation and how
they link to organisational structure................................................................................................9
LO3 Use contemporary examples to demonstrate both the positive and negative influence/impact
the macro environment has on business operations.......................................................................11
LO4: Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors................................................................................14
Conclusion.....................................................................................................................................17
Reference.......................................................................................................................................18
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Introduction
Every Business organisation aims at being the leader in the market amongst all its rival
companies. To achieve this goal, an organisation must follow some basic rules. The organisation
must know about the different factors affecting the marketing procedures and about the basic
structure of the organisation. The different functions and their inter-relationships also play an
important role in the growth rate of a business. This study yields a detailed representation of
different types of organisations and defines different types of organisation based on their sizes
and their scope in the market. Different functions in the organisation and their inter-relations.
The project also has an analysis of the company’s internal and external factors.
Marks and Spencer, British high-quality clothes and foods manufacturing private company, is an
example for understanding of the topic. Michael Marks and Thomas Spencer founded the
company in 1884 in Leeds. The net turnover of the company as recorded on 31st March 2018 was
£10,698.2 M and made a profit of £29.1 M. Marks and Spencer is a largely based international
private corporation in the United Kingdom, which will be useful for the statistical analysis.
( Marksandspencer.com, 2019)
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LO1 Explain the different types, size and scope of organisations
P1: Explain different types and purposes of organisations: public, private, and voluntary
sectors and legal structures.
Different types of organisations:
Public organisations:
The government operates and funds these types of organisations. The services from these types
of sector target towards the public. In the United Kingdom, public taxation, fees, and financial
interchanges from other governments generate funding for these organisations.
Purposes: The public sectors exist to serve the general people of the country. The government
and the public taxations fund these sectors. Generally, these sectors organise relief camps during
natural calamities, provide free medications, and rescue people from daily emergencies like fire
breakouts (Kuipers, 2014). Different types of public sectors include Healthcare, Armed forces,
emergency services, city council. They all target to serve and guard the people. The National
Health Service, founded in 1946, serves all the healthcare issues in the United Kingdom
(Confederation, 2016). It aims to provide free of cost treatment to the citizens. The UK transfers
8.6% of the gross domestic product to NHS.
Legal structures: The public sectors mainly follow the P-P-P legal structure. The P-P-P
structure are partnerships between the public and the private sectors. This legal structure serves
the contracts of both the private company and the government, which leads to the satisfaction of
both the economic needs and the legal reforms. It may also follow PLC or Public Limited
Company legal structure (Lehavi, 2014). It is a type of joint stock Company, where one can buy
shares of the company.
Private organisations:
A private organisation is an organisation that represents a person, a committee, corporations,
private heads, and agencies that do not represent the public body. The sole target of an
organisation of this kind is to gain profit and advancement of the organisations.
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Purposes: The basic purpose of a private organisation is to attain leadership. The main target of
this sector is down the pricing of items and delivering the customers their desired products at the
best rates (Rahman, 2016). The private sectors highly influence the growth domestic product
(GDP) of a country. Generally, the United Kingdom has seen more growth in private sectors than
in public sectors in recent years (Mazzucato, 2015). The private sectors also target at delivering
the common people of their organisation with ample jobs. These jobs can be in-laws firms,
private corporations, financial services, and hospitality. Some of the leading private sectors in the
UK are JCB, Marks and Spencer, and Tesco.
Legal structures: Private sectors follow sole proprietorship, partnerships, and private limited
company legal structures. For sole proprietorship, the head of the company is solely responsible
for all the accounting of the company. On the other hand, the partner companies have more than
one heads, and the responsibility divides among the individual heads (Van der Voort, 2014). The
partnership can be between two individuals, two companies or between the government and
private company and the liability divides fixedly. Now, the Private limited company, which is
directly achievable by the public through offerings and stock market trades.
Voluntary organisation:
These types of organisation rely heavily on their regular volunteers for their working. The
employees are generally unpaid (Butler, 2015). The characteristics of a voluntary organisation
are self-governance, aids, and donations from philanthropy, no hierarchy of leadership, and a
non-profit approach.
Purposes: The main target of a voluntary organisation is to benefit the poor, poverty-stricken,
needful. These organisations have been a resisting force towards the development of a country.
They come out for support when there is any natural calamity or distress situation. These non-
paid services have the ultimate goal of organisational development. They also are concerned
about public health and conditions. The sole aim is to raise and upgrade the quality of society for
the general public.
In the UK, Welcome Trust is one of the largest voluntary organisations. The organisation has
helped establish several medicinal initiatives in the UK and helped many distressed homeless
people by forming different regional charities.
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Legal structure: There are primarily three legal structures, namely:-
 Trust: A voluntary organisation divides into three parts, i.e., the donor of the funds or
money, the trustees, and the people who will benefit from the money. The work of the
trust is to establish a proper connection between three of these (Haigh, 2015). The trust is
a non-membership structure, which manages the money for different purposes.
 Unincorporated Association: This is more suitable for small organisations that do not
consist of big donations. The primary donation is private funding. The legal issues cease
to exist in these situations.
 Limited companies: This ensures that it has a separate legal identity form the other
group of members. Each group of members has to direct its ground, like funding, land,
and property.
P2: Explain the size and scope of a range of different types of organisations.
Compa
ny Size
Products
and services
Size
(employe
e
strength
and
yearly
turnover
)
Mission /
Business
Objectives
Legal
structure
Stakeholde
rs
Scope of
the
organisatio
ns
Large
size
enterpris
es
(for
example
Marks
and
Spencer)
The
production
rate and
scale are
large. These
companies
own huge
factories for
their product
In 2018,
the
average
turnover
of large-
sized
companie
s in the
UK had
The mission
of this
company is
to provide
high-end
quality
products to
its
customer, to
Exhibits
characteristi
cs of private
and
partnership
business
legal
structures.
All the
The general
stakeholder
s are their
customers
and a few
private
companies.
The general
scope of this
organisation
is to open
more outlets
international
ly (Anheier,
2014, which
would lead
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manufacturi
ng. The
services are
achievable
to a large
number of
people.
been
£1,868
billion.
Also, the
large-
sized
companie
s have
led the
way to an
average
of 10,743
employee
s.
maintain
quality in its
products.
The other
objective is
to expand
its business
international
ly and be
the leaders
in the
market.
Another
objective is
to ensure
more and
more
employees
to reduce
the work per
person.
major
investors
are
responsible
for all the
occurrences
in the
company
and share
liabilities
equally.
to a better
growth rate
of the
company.
The other
scope of the
company is
its
technologic
al
advancemen
t in the field
of
marketing
and online
shopping.
All these
features
would
expand their
business.
Middle-
sized
enterpris
e
(example
: John
Good
Shipping
)
This type of
companies is
smaller than
the large
industries
and operates
in region
basis
(Hörisch,
2015). These
In the
UK, the
average
medium-
sized
companie
s have 50
to 249
employee
s, and the
The main
objective is
to grow its
business
across the
world and
provide
high-quality
products,
limited
These
companies
may exhibit
a sole
proprietorsh
ip legal
structure.
There is
only one
owner, and
There are
no or
limited
stakeholder
s in the
company.
This works
totally
under the
funding and
These
companies
mainly aim
towards
their growth
in the
market. The
key target is
customer
satisfaction.
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have
relatively
fewer
employees
and yearly
turnover.
These can
have
classification
s like small
to midsize
business and
midsize
industry.
They are
SMB(small
to medium-
sized
business)
and
SME(Small
to Medium-
sized
Enterprises)
yearly
average
turnover
is £1185
Billion.
customers.
To achieve
the weight
age as a
prime leader
is the
company’s
key target.
These also
serve as an
associate
company to
large
industries.
no
stakeholder
s are there
in the
company.
The owner
is solely
responsible
for all the
decisions
taken in the
company.
Now, these
types of
companies
may also
follow a
Limited
Liability
company.
An LLC is
a hybrid
structure
that allows
owners,
partners, or
shareholder
s to limit
their
liabilities
and enjoy
leadership
of the sole
or the
limited
owners.
If they
succeed,
then they
can get
stakeholders
and even
more
employees,
which
would
expand their
business.
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the tax and
flexibility
benefits of
the
partnership.
Small
sized
enterpris
e:
(example
, Dixon
Schwabl)
These
operate in
small
margins;
generally,
the start-up
companies
are the
small-sized
organisation
(Marcelino-
Sádaba,
2014). In the
last few
years, the
UK has seen
a
considerable
large
increase in
the small-
sized
organisation.
The
small-
sized
companie
s consist
of 10 to
49
employee
s on an
average.
The
yearly
income is
£808
billion.
The main
objective of
these types
of company
is to satisfy
their
customers
and hard
work so that
they can
achieve
profit. The
small-sized
organisation
s have made
way to
considerable
employment
, but they
need
consistent
profit to
keep their
organisation
active.
This is a
small
organisation
. These do
not have a
fixed leader
among
themselves
and no
hierarchical
positions in
the
company.
Every
employee is
equal. It has
large
opportunitie
s for
innovation.
There are
no
stakeholder
s. The
funding
comes
through the
own
employees.
The main
target is to
have a fixed
increase in
the growth
rate; if
successful,
then the
company
will find
profits from
the market.
This will
eventually
lead to more
employees
and
enlargement
of the
company.
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Table 1: Comparison between different sizes of business
LO2: Demonstrate the inter-relationship of the various functions within an organisation
and how they link to organisational structure.
P3: Explain the relationship between different organisational functions and how they link
to organisational objectives and structure.
Different organisational functions about Marks and Spencer:
 Production of the clothes and foods: This department is concerned with the activity that the
organisation undertakes for its various products and services directed towards their customers.
 Research and development: This function deals with the manufacturing of new products and
process keeping in mind their traditions and limitations towards the production of their clothes
and various food products (Ashnai, 2016).
 Purchasing the raw materials: This function works for obtaining the services and products
required for the production of the clothing and food products in the company.
 Marketing: This department helps in identifying the object’s market values and sets its right
price (Baker, 2016). This is one of the most important functions. The market trends and the
market rates have to be in mind before setting a suitable price for clothing and food products.
 Human Resources Management: This deals with employee management in the organisation
(Noe et al., 2017).
 Accounting and Finance: This department deals the financial outflows and inflows in an
organisation. This affects the functions in a large margin (Loughran, 2016).
The relationship between different functions in Marks and Spencer:
Relationship of finance with other functions:
The operational department of Marks and Spencer sets financial limits to the operations that take
place in the organisation like purchasing the raw materials (Gitman, 2015). On the other hand,
Human resources depend upon finance to allow performance rewards. The marketing department
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gives overall information about the financial status of the company to the finance, which further
helps the latter to decide on company investments.
Relationship of operations with other functions:
The finance of the Company sets the budget for the operations to take place. The human
resource, on the other hand, makes sure that they recruit employees with innovative and proper
efficient operatives. This is important for the finest production of the clothes and the food
materials. The marketing function affects operations in the most efficient manner. The marketing
gives statistics of the market value of goods and profits, which further affect the raw materials
consumed for the production. It also affects the consumption of raw material from the supplier.
Relationship of human resource with the other functions:
The finance feeds the financial condition of the company to the human resource. They further set
the salaries of the employees and incentives based on financial statistics. Also, new employee
appointment in the company takes place based on this factor. Now, marketing gives information
about the quality of the product in the market, and if the quality needs to be changed, then human
resource comes in to act for new selection (Noe, 2017). The operations give information about
the requirement of individuals in a project and hence relating to human resources.
Relationship of marketing with other functions:
Finance gives financial data to the company related to marketing, as it has to shape in with the
statistics. Human resource, in turn, has to select employees that are favourable for marketing; the
employees should have the correct mindset (Cacciolatti and S.H., 2016). Also, the operation has
to vary their productions based on the marketing trends provided by the marketing function.
With ever-increasing competition in the market of clothes and food products, Marks and Spencer
need to ensure that, they provide the finest products to their customers. To deliver this, they need
to make sure that all their functions are working in a fine relationship. An accurate organisational
structure enables the proper purchasing of all the raw materials for the clothes and foods in the
right quantities and their flawless projection for the manufacturing of the clothes. With the help
of this function, the company can focus on their products and appoint the correct employees that
will benefit them in return.
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LO3 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations.
P4: Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
Macro environment: These uncontrollable factors affect and control a business organisation
externally.
Positive and Negative impact of the macro environment on Marks and Spencer:
 Political:
Positive impact: The political factors help the company to follow the policies of the government
implemented in the United Kingdom. This ensures that the company does not involve any illegal
issues (Zheng, 2015). It also helps a company with all the business code of conducts that consists
of the standards and products of the business.
Negative impact: The major problem is decision making. The political laws limits the
functioning of the company on a large scale. In the UK, the cabinet forms the laws and morality
of all the members is questionable. Loosely made political reforms affect the company policies
directly.
 Economic:
Positive impact: The economic factors help the organisation to understand the economic
conditions of the country and the market. The environment provides information about the UK’s
gross domestic product rate (McCombie and Thirlwall, 2016). It helps the company to allocate
funds for its raw materials. Thus, the economic factor provides an understanding of the financial
transaction of the different departments in the company.
Negative impact: The negative impact that this factor poses is if there is a downfall in the
growth rate or employment rate in the UK, then the company gets directly affected. In a period
of an economic downpour, Marks and Spencer might face increased prices for raw materials and
will directly affect its product costing.
 Social:
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