Business Report: Organizational Structure, Porter's 5 Forces Model

This report provides a comprehensive analysis of business organizations, focusing on the partnership model with a case study of FraPas Frozen Yoghurt Shop. It explores the importance of legal agreements in partnerships, detailing profit sharing, loss management, and liability handling. The report employs Porter's 5 Forces to assess market competition, the threat of new entrants and substitutes, and the bargaining power of customers and suppliers. Furthermore, it examines the impact of macro environmental factors, including political, economic, and social influences, on business operations. The study concludes by emphasizing the significance of strategic planning, market monitoring, and quality control for enhancing business profitability and reputation. Desklib offers a range of solved assignments and past papers for students seeking additional resources.

Business 1
Business organization
Name
Affiliation
Instructor
Date

Business 2
Table of Contents
Executive Summary..........................................................................................................................3
Introduction.....................................................................................................................................4
1.Partnership as a business..............................................................................................................5
2. Porters 5 Forces............................................................................................................................6
3Macro environmental factors ……………………………………………………………………………………………………. 7
Conclusion........................................................................................................................................8
References........................................................................................................................................9

Business 3
Business organization
Executive Summary
Establishing a business is a tricky venture. Frank Jones and Paddy Jacksons have established a Fra-
Pas Frozen Yoghurt Shop and it is essential for them to enter into a legitimate partnership. The
agreements signed will guide them on how to manage the business apart from setting guidelines on
how profits, losses and liabilities will be handled. On the other hand, it is prudent to have a better
understanding of the market and business environment in terms of competition, threats and
opportunities with the help of the Porters 5 Force Model. Lastly, this study presents factors in the
macro environment which influence how a business is run amidst these factors.

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Introduction
The business organization is a group of people or an individual who work together
with the aim of pursuing commercial interests. This is mainly in businesses that have the
main aim of getting products through the sale of services and products. There are different
kinds of business organizations with the main emphasis being the manner in which they are
structured. They include Partnerships, Sole proprietorships, limited liability companies, and
corporations.
Sole proprietorships are owned by individuals. They handle all tasks embedded in a
business such as acquiring and managing assets as well as bearing the losses or enjoying the
profits alone. Any debts and liabilities that the business faces are held by the sole
proprietors. Partnerships are also under business organizations. Here, two people or more
share ownership of the existing single business. There is no clear distinction between the
owners and the business according to law. In partnerships, legal agreements are used
because they set guidelines on how profits are shared, decisions are made, solving of
disputes how to admit more partners, how to buy out partners and the procedure in which
the partnership will be dissolved, (Charan, 2012). In addition, the use of time and capital
invested by each partner should be clearly laid out. Lastly, corporations are business
organizations that are mainly chartered by a country or state. The owners and the business
are two different entities that have been separated by law. As such, corporations can be
independently sued, taxed, and can also be part of contractual agreements. The people
owning the entity are the shareholders who elect directors to manage the business. In case

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of changes in its ownership, corporations continue to exist hence being seen as an entity
with its own life.
1. Partnership as a business type
Partnerships are formed by two or more similar-minded business individuals. Frank Jones
and Paddy Jackson have set up a business because they have similar interests and work in
the hospitality industry. Their education and professional backgrounds are good grounds for
them to enter into a business partnership. Frank and Patty have to understand that a legal
agreement has to exist between them so that there is a clear stipulation of how profits,
losses, and liabilities will be shared. In a situation where liabilities occur, both the individuals
and the business are held responsible. Also, the partnership pays the partnership income
tax. The partnership is essential because more funds can be raised easily. Employees are
easily attracted to the business especially when an opportunity to become a future partner
is presented. Since the two have complementary skills, the business benefits a lot especially
from their expertise by Frank being a chef and Paddy having the experience of being a
hospitality manager. Having noted that their previous employments were redundant, the
desire to become successful made them contribute £30,000 equally so that they could lease
a shop and get working capital.
Different forms of partnerships have to be considered too. Frank and Paddy can decide to
form a general partnership, joint venture, limited partnership or a partnership that has
limited liability. General partnerships entail the division of responsibilities between partners
especially in management and sharing of liabilities. Internal agreements also guide on the
sharing of profits and losses. Partners are also required to have equal shares although this is
subject to written agreements that may also state different terms, (Mhlanga, 2018). A

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limited partnership is the second option which gives limited liability to some partners and
inputs when it comes to management decisions. The last is joint ventures where
partnerships are formed only for a single project or for a short period. In case the partners
continue with their activities, this becomes an ongoing partnership hence the need for
proper agreements which will guide the dissolution process. It is therefore essential for
Frank and Paddy to form a general partnership because this allows them to have an equal
division of responsibilities, sharing of losses or profits and also any liability that they may
face.
2. Porters 5 Forces
Porters 5 forces comprise of the threat from new entrants, threats from substitutes,
customers’ bargaining power, suppliers’ bargaining power as well as competitive rivalry. To
start with, new entrants pose a lot of threats to existing businesses. This may be as a result
of profitability in the type of business thus a rise in competitors. In relation to the Fra-Pas
Frozen Yoghurt Shop, the ice-cream parlor style business is a venture that is easily pursued
by many startups. This is influenced by many millennials adapting a lifestyle that is mainly
influenced by social life, as such, the customer platform is huge, mainly emanating from
youths and children. New entrants may also lead to a reduction in profitability because of
the shared customers. To avoid this, the partners should diversify hence the recent decision
to diversify their product range, (Combe, 2014). The threat from substitutes also exists. For
instance, many customers may prefer cold juices and sodas as opposed to yogurts and ice
creams. However, the current trends towards a healthy eating lifestyle will reduce the
threat of substitutes thus the increased sale of yogurts by the partners. Customers are

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essential for a business. In many cases, they determine the final price of a commodity
because of its quality and presence of competitors. In this case, the partners are able to
reduce the bargaining power because there are no competitors and the quality of their
products is high. The other aspect is the supplier’s bargaining power. They handle the supply
of raw materials hence having the ability to set any price. Currently, the partners have an
advantage since they have the opportunity of reducing costs by buying the raw materials at
subsidized prices. Getting fresh and organic ingredients will depend on the supplier’s price
thus affecting the final product’s price too, (Ebert, 2013). The last aspect is a competitive
rivalry. The intensity in which competitors compete is a measure of how competitive the
industry is. For a product to be placed in a market, one has to study the competitors and
their strategies. This aspect directly applies to the current partners who are trying to
diversify their product lines.
For the partners to achieve competitive advantage, they should first source their raw
materials and fresh produce from diligent suppliers. This helps in the creation of quality
products. Secondly, they should advertise more and also have different products which will
appeal their customers and potential customers. By applying for a loan, enough capital will
be raised for advertisement in social media using banners and also print media. There is also
the need to satisfy the different need of customers by providing all flavors and a range wider
of products.
3. Macro environmental factors
Business entities are affected positively or negatively by factors such as economic, social and
also political factors. In terms of political factors, businesses can be affected by

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interventions or regulations that are set by the government. This includes tax policies,
environmental law, labor law, tariffs, and trade restrictions, (Kotler, 2012). Political stability
is also a factor that has to be considered. Tax policies affect the production of raw materials
hence the final price of products. Similarly, trade restrictions can be imposed on businesses
that operate in certain regions. Health is a major factor for the government. In relation to
this business, the government is concernment about the health hand eating habits of its
citizens, (Needle, 2012). This can be a positive factor for the business since it sells products
that are advocated for consumption by the government.
Business is also affected by economic factors such as high or low bank interest rates,
economic growth, inflation rates, and exchange rates. Positive economic growth leads to
growth in the business sector due to high consumer spending and a good business
environment that leads to profits, (Rugman, 2012). This is also boosted by favorable interest
rates imposed on loans and low inflation. High costs of production lead to increased
commodity prices thus an impediment to the making of sales and profits.
The last aspect of social factors has been a boost to businesses such as Paddy Jackson’s Fra-
Pas Frozen Yoghurt Shop. In comparison to coffee shops and fast food restaurants, many
youths, children and the elderly tend to align themselves with fancy places. In this case,
customers hand out and enjoy the moments thus creating a good culture, (Ryan, 2014).
Health consciousness is also a good culture that is being adopted by many consumers.
Consumers are also picky about health standards and quality of products. By adhering to
these factors, Fra-Pas Frozen Yoghurt Shop will be able to get more profits, earn a good
reputation and also meet the demands of consumers.
Conclusion

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In a nutshell, Frank and Patty should form a general partnership for their business. It is
important for an agreement to exist between them because it lays out procedures and
responsibilities in the business. An agreement will also stipulate how losses and profits will
be shared. In terms of liability, both the partners and the business are equally responsible. A
good agreement and registration of the business will make it easy to get a loan and also
bring more members on board. In the attempt of expanding the range of products, the
market trends and competitors have to be monitored. Profitability will also be enhanced by
bulk purchase of raw materials which are available at discounted prices. Lastly, more focus
should be emphasis on creating new products at affordable prices, with good quality too so
that the business becomes profitable and reputable.
References
Charan, R., 2017. How High Potential Leaders Can Master The Macro Environment‐ . Leader
to Leader, 2017(85), pp.31-36.

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Mhlanga, O., 2018. Impacts of the macro environment on airline performances in southern
Africa: Management perspectives. Tourism and Hospitality Research, p.1467358418771442.
Combe, C. 2014 Introduction to Management. Oxford: Oxford University Press
Ebert, R. and Griffin, R. 2013 Business Essentials, Global Edition 9th ed. London: Pearson
Kotler, P. and Armstrong, G. 2012 Principles of Marketing, global edition. 14th ed. London:
Pearson
Needle, D. 2012 Business in context: an introduction to business and its environment, 5th ed.
Andover: South-Western Cengage Learning
Rugman, A. M and Collinson, S. 2012. International business, 6th ed. Harlow: Pearson
Ryan, D. (2014) Understanding digital marketing: marketing strategies for engaging the
digital generation. 3rd ed. London: Kogan Page

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