Business Environment: Types, Objectives, Functions, and Macro Analysis

This report provides a detailed analysis of the business environment, covering various organizational types, their objectives, and legal structures, with specific examples from public, private, and voluntary sectors. It examines the size and scope of different organizations and how these factors link to business objectives and the products/services offered. The report also explores the interrelationships between different organizational functions, highlighting their advantages and disadvantages, and analyzes the impact of the macro environment using the PESTLE model. Furthermore, it conducts both external and internal analysis using SWOT/TOWS to identify strengths and weaknesses and their interrelation with macro factors, ultimately evaluating the impacts of both macro and micro factors on business objectives and decision-making. Desklib offers a range of solved assignments and past papers for students seeking additional resources.

BUSINESS & BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
Introduction......................................................................................................................................1
LO 1.................................................................................................................................................1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures......................................................................................................................1
P2 explain the size and scope of various types of organisations.................................................3
M1 Analyze how the structure, size, and scope of different organisations link to the business
objectives and product and services offered by the organisation................................................4
D1 Provide a critical analysis of the complexities of different types of business structures and
the interrelationships of the different organisational functions...................................................4
LO 2.................................................................................................................................................6
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure........................................................................................6
M2 Analyze the advantages and disadvantages of interrelationships between organisational
functions and the impact that can have on the organisational structure......................................7
LO 3.................................................................................................................................................9
P4 Identify the positive and negative impacts the macro environment has on business
operations, supported by specific examples................................................................................9
M3 Apply appropriately the PESTLE model to support a detailed analysis of the macro
environment within an organization..........................................................................................11
LO 4...............................................................................................................................................13
P5 conduct external and internal analysis of the specific organisation for the identification of
its strengths and weaknesses......................................................................................................13
P6 Explain how strengths and weaknesses interrelate with external macro factors..................13
M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision-
making.......................................................................................................................................14

D2 critically evaluates the impacts that both macro and micro factors have upon business
objectives and decision-making.................................................................................................15
CONCLUSION..............................................................................................................................17
REFERENCES..............................................................................................................................18

LIST OF TABLES
Table 1: Difference between small, medium and large organisation..............................................3
Table 2: Advantages and disadvantages of interrelationships.........................................................7
Table 3: Positive and negative impact of macro environment........................................................9
Table 4: Application of PESTLE on Asda....................................................................................11
Table 5: SWOT of Asda................................................................................................................13
Table 6: Application of SWOT on decision making.....................................................................14
Table 7: Impacts of Micro factors.................................................................................................15
Table 8: Impact of PESTLE analysis on business.........................................................................16

LIST OF FIGURES
Figure 1: Different types of organisation.........................................................................................1
Figure 2: Legal structure of organisation.........................................................................................2
Figure 3: Different functional areas of business..............................................................................6
Figure 4: Pestle analysis framework..............................................................................................11
Figure 5: Interrelationships of SWOT and macro factors.............................................................14
Figure 6: PESTLE impacts............................................................................................................16

Introduction
Organisation works for earning profits and maximising the profits and also for enhancing its
customer loyalty. But these objectives achievement is not so much easy it requires huge efforts
and resources in terms of analysing the environment in which organisation operates. Business
environment has two categories macro environment and micro environment. These two
environments have lots of factors as SWOT and PESTLE these elements are so important to
analyse as they give the right and current position of the organisation. And all the tools which
give proper idea about these elements those tools are also very important to know.
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LO 1
P1 Explain different types and purposes of organisations; public, private and voluntary sectors
and legal structures
There are many types of organizations present according to their ownerships, legal structure here
those are described here.
Figure 1: Different types of organisation
(Source: Author, 2018)
According to ownership;
Public sector – the organizations which are under the control of government are known as public
organizations. The main purpose of this organization is to provide benefits to the general public
through the ventures. A public limited company opens its share to the public and membership is
also open to general public (Hilton and Platt, 2013). The minimum member number is 7 without
any upper limit. DCMS, NHS England, Audit commission and etc. these kinds of organizations
can be divided into further as;
 Central government owned
 States government owned
Private sector firms – the organization which are under control of any individual or group of
individuals privately are known as private companies. These are owned and controlled by the
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private people only. Asda, Tesco, Wal-Mart group and other major groups are there which are
operating in UK, these all are the private sector companies. The main purpose of these
organizations is to earn maximum profit with effective customer loyalty gain.
Voluntary firms – the organization which are serving to people without any benefit just for their
well being are known as community firms or voluntary organizations (Arvidson and Lyon,
2014). These firms can be owned by government or by the individual or by the group of
individual or by the other entity also. Its main purpose is just to serve people.
According to legal structures;
Sole-traders – the business is controlled and owned by the one person and in this kind of legal
structure there is no legal formalities required but once set up they have to pay tax and national
insurance contributions.
Figure 2: Legal structure of organisation
(Source: Author)
Partnership – in this kind of legal structure there are more than one owner shares the control and
responsibilities of the business. There are also no legal formalities because a deal of partnership
can be made upon the contract regarding the division of roles and responsibilities between the
partners. All the active partners in this have unlimited liability.
Private limited company – they have to set out the organisation’s sector and constitutional
procedure in the memorandum of association and the articles of association.
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Franchise – in a franchise business owner pays corporation for utilizing its name and receives
advice and marketing of the business.
Cooperative – it is the structure where all workers have equal pay and make joint business
decisions.
Charity / NPO – these organisations do not work for earning profit but works to promote the
culture, arts, education for well being of general public in order to help or to serve them
(Aldashev et.al. 2015).
NGO – these entities are governed by the group of people or by organisation or by individual just
to serve people such as children welfare, orphan children, old people and so many issues of the
social being.
P2 explain the size and scope of various types of organisations.
According to size and scope there are three kinds of organisations such as;
Table 1: Difference between small, medium and large organisation
Small Medium Large
Equity held by the founder or
family
Equity held by family and
partially held by public
Equity held by public investors
Managed by owner Manage by professionals in key
roles
Managed by professionals
Decision taken by owner Decisions making by owner,
CEO and some key leaders
Decisions are taken according
hierarchy
Short term planning by owner Some long time planning by
owner and key executives
Very long term planning by
dedicated teams
In terms of scope it has less
scope as local market, limited
personal development and
finance managed by owner.
In terms of scope it has larger
scope as market, and individual
development and finance is
limited.
Great scope as national or
international with career
development and wide range of
funding resources (Harangozó
and Zilahy, 2015).
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M1 Analyze how the structure, size, and scope of different organisations link to the business
objectives and product and services offered by the organisation
It is very obvious thing that an organisation always set its objectives and its functions according
to its structure and size with its scope. Size and structure of an organisation decides the number
of employees working in the organisation and according to that objectives are set for every
organisation. For example an organisation with small size with 50-60 employees would have
simple structure without proper reporting authority and functional division so in that case its
objectives would be easy and achievable to earn profit at least according to its efforts (Golini
et.al. 2015).
Whereas a global organisation would have a proper structure such as divisional so every unit
would be clear about their roles and responsibilities so its aim and objectives would be much
higher than the other organisation like its aim would be increasing market share globally. Scope
of any organisation is also determines the objectives for example an NPO would work for
science, art and cultural development so their objectives would be to promote these things with
limited scope so it is very obvious that all the organisations such as global, transnational,
international, small, medium and micro set their objectives according to its structure and scope.
D1 Provide a critical analysis of the complexities of different types of business structures and the
interrelationships of the different organisational functions.
There are so many organizational structures can be seen such as;
 Matrix structure – matrix structure focuses on working as team it is really good as it
enhances the employees’ skills and feeling of team but it can create conflicts and
confusion because of the unclear reporting line apart from that priorities are also cannot
be set (Johnson, 2016).
 Functional structure – functional structure allows decision making authority to the top
management and makes them responsible for all the actions. But on the other hand it
creates the poor communication and frustration between the departments (Harper, 2015).
 Divisional structures – according to this structure the area is set as divisions and the
hierarchy is established according to that under divisional head it helps in smooth and
quick functioning but it can create divisional disputes that can lead the less production.
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In Asda it follows blend of divisional and functional structure because it is a global organization
and set its all objectives accordingly.
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LO 2
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.
Figure 3: Different functional areas of business
(Source: functional areas management, 2018)
Administration – in Asda administration department works for monitoring all the units and also
for controlling the entire functions of all the departments. Administration department is also
responsible for posing mission, vision, strategies and objectives for the Asda and then it is
broken into various functional objectives.
Human resource – in Asda Human Resource department takes strategic decisions such as hiring
employees, compensation, remuneration and after employment service benefits so HR
department receives request from every department or functional units for recruiting the
employees if requirement generates in any department (Bolman and Deal, 2017).
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