Business and the Business Environment: A Report on NLCCE

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Business & the Business Environment
Task 1

Executive summary
A business needs several persons and factors that run the organization and make
sense of profit generation. These persons and factors may be internal or external but
both are necessary. These factors in combination make the complete business
environment. It is useful to study to understand the different types of business
organization and related things. The present study is done on North London Chamber of
Commerce and Enterprise (NLCCE) to make a good understanding of the Business and
the Business Environment.
Table of Contents
1

Introduction...................................................................................................................... 3
LO1: Explain the different types, size and scope of organisations...................................3
P1 Explain different types and purposes of organizations; public, private and voluntary
sectors and legal structures.............................................................................................3
P2, M1 Explain and analysis the size and scope of a range of different types of
organizations....................................................................................................................5
LO2 Demonstrate the interrelationship of the various functions within an organisation
and how they link to organisational structure...................................................................8
P3 Explain the relation between different organizational functions and how they link to
organizational objectives and structure............................................................................8
M3, D2 Critical analysis of advantages and disadvantages of interrelationships between
organizational functions and the impact that can have upon organizational structure.....9
Conclusion..................................................................................................................... 12
References.....................................................................................................................14
2

Introduction
Business is the interaction of different processes to run an organization for the sake of
profit generation. It includes different planning, programs, and combination of people
who work to achieve a certain goal of the organization. But there are other factors also,
such as all individual persons, institutes etc. that are not included within the certain
business, but very important to the organization by various means. These factors play
an important role as the business depends on them on a great extent for the good
performance and sustainability. The present study is done on different types of business
organizations and other related aspects that will develop a clear sense of business
organization for the attendees of business event “Organization types, size and scope
and the interrelationship of the various functions within an organization and link to
organizational structure” which will be held up in July, 2019 by North London Chamber
of Commerce and Enterprise (NLCCE) (Nlcce.co.uk. 2019).
LO1: Explain the different types, size and scope of organisations
P1 Explain different types and purposes of organizations; public, private and
voluntary sectors and legal structures
There are different factors such as Government, customers, suppliers, distributors,
economy, population, demography, use of technology that makes a great impact on the
type of business. Among them human and finance play the most important role.
Therefore based on the profit generation factors there are mainly three types of
business organizations:
1. Private organization
Sole trading organization: These are privately owned companies that work only for
profit generation. The business can be developed without any legal formalities. And the
liability is of proprietor. ASDA is one such example of this (Asda.com. 2019).
Partnership Organization: According to Bajwa et al., (2018), when two or more people
are involved in a private organization, the share the profit and loss of the company and
are called partnership organization. The business may or may not require legal
formalities during formation and the liability is shared’
Limited organization: This is also a type of private organization, which can easily
transfer its ownership and are generally run by a board of directors. The business needs
legal formalities and the liability is shared among board of directors (Zhang, 2018).
2. Public Organization: These organizations are run for the wellbeing of the citizens of
a country and are run by the government. Department for Work and Pensions (DWP) is
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the largest public service department of UK that works for job generation and pension
related things of the employees (GOV.UK. 2019).
3. Voluntary Organization: These organizations are non-governmental and non-profit
organizations. They also work for people's well being in a non profit way to raise the
standard of living of the society. Save the Children is an example of this
(Savethechildren.org.uk. 2019).
Also, based on the size, there are three types of organizations, such as:
Micro, small and medium-sized enterprises (SMEs)
Organization
Type
Business
purpose
objectives Supply of
Goods
Service Example
Micro A very small
business that
serves the
needs of a
small locality.
It is
geographically
restricted
To
generate a
small
economic
profit for a
small
number of
people
They sell
their
products
directly to
the
customers.
Service like
grocery,
coffee shop,
restaurants
are included
Turtle Tots
which is a
swimming
school in
UK
Small A small scale
business
containing not
more than n50
employees.
To
generate a
profit not
more than
£10.2m to
make a
moderate
profit
The
products
generally
does not
require
heavy
machines
or high end
process,
direct
delivery
through
different
outlets is
done
They can give
services that
include
cleaning,
laundry, pet
sitting, baby
sitting,
catering etc.
Moving
Venue is
such a
scattering
company of
UK
Medium Relative larger
company
having
employees not
more than 250
Generating
a great
business
with good
profit that
Direct
service or
third party
service is
done
Waste
management
services,
Telemarketing
agency,
Critchleys
which is a
company of
Chartered
accountants
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makes a
good
impact on
national
economy
Chartered
accountants
service is
done
Table 1: Difference among Micro, small and medium-sized enterprises
Source: (Created by learner)
P2, M1 Explain and analysis the size and scope of a range of different types of
organizations
The difference between large, medium and small scale business are stated below:
Large Medium SME
Objectives &
goals
Ambitious about name
fame & profit
generation, achievable
and clear
Growing business
with an aim to be a
large business
Small scale profit
generation
Market share There are 8000 large
businesses in the UK
35000 businesses
are registered
5660000 Companies
are there
Profit share £ 1,868 billions £ 595billions £ 1994 billions
Growth 0% 1% 99.9%
Sustainability Good and strong Good and growing Good but anytime
changes could be
done
Industrial
Structure
Big and complex Small and pattern
changes over time
Very small and
simple
Competition High Medium Very high
Scarcity and
choice
Sufficient resources,
high scope of choice
Limited resources,
limited scope of
choice
Scarce resources,
approximately no
scope of choice
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Supply and
demand
Very high Moderate Moderate
Income
elasticity
Close watch is done
on market to fluctuate
accordingly
Does not vary much Does not vary much
Example British Petroleum Williams
Performance
Tenders
Matefile
Table 2: Difference among large, medium andSME enterprises
Source: (Created by learner)
Global growth and developments of transitional, international and global organizations:
Type Growth Development
Transitional Response is good in
local markets
Complex and versatile. Investment by FDI
Internationa
l
high Investment done by home country. Export and
import in many countries
Global Very high Done through foreign direct investments. Product
manufactured and sell in global basis
Table 3: Difference among Global growth and developments of transitional,
international and global organizations
Source: (Created by learner)
Differences between Franchising, Joint venture and licensing are described below:
Franchising Joint venture Licensing
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Company permits franchisee to
use the name for a fee under it
Two companies assists
each other
Company sells the
product for money
Registration mandatory Registration not necessary Registration not
necessary
Training is done No training No training
One time transfer is done May be done for once or
may take several years
Assistance required
regularly
Table 4: Differences between Franchising, Joint venture and licensing
Source: (Created by learner)
As opined by McCarthy and Muthuri (2018) stakeholders are people who directly or
indirectly are affected by the organization. Large organizations give employment to
large numbers of people and make different public issues. Medium organizations give
limited employment and make very small or no social issue to be handled. Small
organizations are give benefit to a limited number of people and no social issues are
related with them attracting very small stakeholders’ interest.
LO2 Demonstrate the interrelationship of the various functions within an
organisation and how they link to organisational structure
P3 Explain the relation between different organizational functions and how they
link to organizational objectives and structure
As suggested by Archer and Willcox (2018) there are different departments such as
human resource, marketing and finance and accounts, in a business organization and
their interrelationship makes it easy to achieve the common goal of the organization.
Marketing is the strategy to understand and meet the customers need through various
ways.
The marketing department of ASDA does market research to understand the market
trends and customers demand so that the company can supply products according to
that. They have their own pricing strategy to attract customers to make more profit.
The finance department of ASDA deals with the all expenses and buying selling for the
company and gives a clear idea about the cash inflow, profit generation and therefore
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helps the organization to make future plans of the company, keeping all these important
information in mind.
Human resource department understand the requirement of staff in different
departments of ASDA and therefore recruit skilled people by various methods. They
also give training to the new recruits to make the process understandable for them.
As per the reports of finance department of ASDA, the marketing is done to make better
profit and the HRM department recruits new people to handle the new business
processes.
ASDA aspires to be the best value retailer of Britain which can exceeds the customers
need in regular basis. The general objectives of ASDA are to expand its business while
providing affordable quality products. The good interrelationship of team ASDA thus
helps each other to make this mission successful by producing timely and real time
financial reports, right marketing strategies and employing good and skilled people in
the business.
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M3, D2 Critical analysis of advantages and disadvantages of interrelationships
between organizational functions and the impact that can have upon
organizational structure
There are many advantages and disadvantages of interrelationships between
organizational functions as stated below:
Advantages Disadvantages
Each department is managed by
experienced person, who leads the entire
team in one direction
May create unhealthy competition within
the organization
Sharing of thoughts done Different business strategies makes it
difficult to make a synchronized move in
departments
Good performance leads to promotion of
the employees
Miscommunication occurs leading decrease
in flexibility and innovation
This helps to focus on single subjects
thus making good innovation practice
Poor horizontal communication leads to
mismanagement affecting employee’s
motivation.
Table 5: Differences between advantages and disadvantages of interrelationships
between organizational functions
Source: (Created by learner)
There are different organizational structures that depend on different tasks assigned.
Therefore they may be of many types, such as:
Bureaucratic structure: Large organizations such as ASDA maintain a standard
process of operation involving complex way of dealing problem keeping in mind different
factors. It also need smooth administration structure (Weatherley and Otter, 2014).
Post- bureaucratic structure: They are developed and have different procedures and
standard. It involves several board members to follow a democratic structure.
Employees take an important role while making a decision (Worthington and Britton.
2014).
Parent structure: Parent company holds 100% shares of the stock such as ASDA. The
company is a private company and completely owned by Walmart.
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Strategic business units: This is an autonomous division of a large company which
can work as an individual enterprise and deals with some particular product (McEachern
and Warnaby, 2019). ASDA Mobile is such an enterprise.
Matrix and functional levels: It is a combination of functional organizational structure
and the projectized organizational structure. The commands are given in either vertical
or horizontal way. The employees here may be a part of a functional group. This
structure may be of strong, balanced or week (Audretsch et al., 2018). Strong matrix
structure is run by the project manager. The project manager of balanced structure has
low to moderate authority level. The weak structure is a more functional group and here
the manager has a low authority.
Organizational structure and complexities
Issues Transitional
Organization
International
Organization
Global
organization
Organizational
structure
The structure mixes
global, multinational
and international
structure, making it
complex but versatile.
They are flexible in
nature as they adopt
local cultures and
consumer behaviour.
They have a
decentralized structure
involving local
authorities to make
decision
Exporting and
importing of goods in
foreign countries are
done by these
companies. They
receive their funds
from FDI. As they d
not have any offices
overseas, the
decisions are always
taken from the
domestic country of
the organization.
They operate in at
least 15-20
countries and get
their investment
from FDI from the
countries they
operate. They have
a centralized
structure where
decisions are taken
by the headquarters
of the company.
Complexities Internal manpower
issue and
organizational
problems arise as
different countries
follow different work of
action.
Export and import
needs good
understanding of
legal, customs and
regulatory issues.
Also, the products
may not be successful
in countries as per the
beliefs and tastes of
the local residents,
creating a scope of
failure.
As funds come from
many countries, it
creates a complex
legal process to
understand the
operations. The
uniformity of the
product looses local
touch of the
operating country
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Table 6: Differences between Organizational structure and complexities
Source: (Created by learner)
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