Harrods Business Report: Types of Organizations and Functions

This report provides a comprehensive analysis of Harrods, a major department store, examining its business environment, organizational structure, and key functions. The report begins by defining the business environment and exploring different types of organizations, including private, public, and voluntary sectors, with a focus on Harrods as a private sector entity. It details the growth of the international business environment and the implications for organizations like Harrods. The report then delves into the interrelationship of various business functions, such as production, research and development, marketing, finance, and human resource management, highlighting their advantages and disadvantages. Furthermore, it utilizes PESTLE and SWOT analyses to identify macro environmental factors and internal strengths and weaknesses, respectively, and discusses how these factors influence decision-making. The report concludes with a critical reflection on the key findings and their impact on Harrods' strategic approach. The report covers topics such as the legal structure of the company, key stakeholders, vision and mission, and business objectives.

UNIT 1: BUSINESS AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1. Different types of organisation and growth of International Business Environment.......3
P2. Explanation of different types of organisation in detail...................................................5
LO 2.................................................................................................................................................7
P3. Different functions and their interrelationship with advantages and disadvantages........7
LO 3.................................................................................................................................................9
P4. PESTLE analysis to identify macro environmental factors and its positive and negative
impacts....................................................................................................................................9
LO 4...............................................................................................................................................12
P5. Internal and external analysis for identifying key strengths and weaknesses................12
P6. Strengths and Weaknesses interrelate with external macro factors...............................14
Critical reflection on the key findings and its influences on decision-making process.......14
CONCLUSIONS............................................................................................................................15
REFERENCES..............................................................................................................................16

INTRODUCTION
Business environment refers to the surroundings in which any enterprise operates its daily
routine functions. Every business organisation gets affected with various factors present in its
environment. Different factors affecting business are classified as internal and external
environmental factors that brings impact on working of the business. Harrods is the largest
departmental store in Europe and is situated in London. It deals in designer clothing, fashion
accessories, quality and luxury gifts. In the following report, different types of organisation with
details about their mission, vision, legal structure, information about key stakeholders, size and
scope are explained. Key functions of an organisation are also explained and their
interrelationship. PESTLE and SWOT analysis is done to identify various internal and external
factors that affect the working of organisation.
LO 1
P1. Different types of organisation and growth of International Business Environment
Organisation aims at managing and organising its various activities and operations
effectively so that it can bring better outcomes and achieve overall goals and objectives.
Organisation focuses on properly analysing the internal and external factors in order to
developing effective business strategies (Lucas, 2015). Today's competitive business
environment makes every business organisation to develop effective strategies in order to sustain
their position and profits.
Growth of International Business Environment:
Business organisation are focusing to develop their business in international and global
markets, which leads to bring various affecting factors. International Business Environment
refers to factors that brings affects to the working on business and includes cultural differences,
political risks, issues regarding legal and regulatory frameworks, fluctuation rate risk,
technological developments, etc.
Different types of organisation:
Private Sectors
Company owned privately having at-least 50000 euros of share capital are known as
private sectors businesses. The intention of private sector is to make profits and develop its
business. Private sector business is profit oriented. It is not compulsion for private sector

companies to offer their shares to public and listing them on stock exchange. The owners are the
shareholders of company and liable for profits and losses of the business. Various companies
operating their business under private sectors are McDonald's, Apple, Disney, Harrods and
PepsiCo.
Legal structure of private company
Private limited company must be registered and incorporated at Companies Act and also
needs to file its annual accounts. The private company needs to have at-least one member and
one director. Private sector organisation needs to follow various legal regulations provided under
Companies Act, Employment Act, etc. The private company gets its finance through loans,
retained profits and shareholders.
Public Sector
Public sector companies are governed by various rules and regulations provided by
Companies Act, 1980. Organisation operating as public sector business are generally customer
oriented. Public sector organisations need to offer their shares to public and must trade their
shares on stock exchange.
Legal structure of public limited company
It is governed by government as 51% shares are owned by central, local or state
government (López-Gamero and Molina-Azorín, 2016). List of public limited companies are
Rolls-Royce holdings Ltd., British Petroleum and Burberry Group Plc.
Voluntary Sector
Organisation operating under voluntary sectors aims at providing services to public rather
than making profits. There is not much intervention of government and its rules and regulations.
Voluntary sector businesses get its funding from charities, donation from various community
groups and trust. The main aim of voluntary sector organisation is to provide welfare services
and some examples of this sector are Oxfam, Red Cross and Wellcome Trust.
Legal structure of Voluntary sector organisation
The voluntary sector organisation's rules and regulations are set out in constitution and
precise form that depends on the legal structure adopted by the company. Trust, unincorporated
association and a company limited by guarantee are three types of legal structure for voluntary
sector organisation.

P2. Explanation of different types of organisation in detail
Basis of
comparison
Public sector
organisation
(British Petroleum)
Private sector
organisation
(Harrods)
Voluntary sector
organisation
(Red cross)
Background
details
British Petroleum is a
public limited company
which was started in the
year 1870 and is
multinational oil and gas
company. This was
founded by William Knox
D'arcy.
Harrods is a retail private
company. It was founded
in the year 1849 by
Charles Henry. It
provides employment to
around 12000 people.
Red Cross provides
support to public and
provides humanitarian
aid services.
Products and
services
It deals in products like
oil, gas, aviations fuels,
motor fuels and
petrochemicals.
Wide range of products
and services offered by
Harrods are clothing,
sporting gear, jewellery,
toys, beauty items,
packaged gifts,
housewares, home
appliances, food and
beverages and many
more.
Red Cross provides
services and help to
society and public in
form of food, shelter,
healthcare and mental
health services (López-
Gamero and Molina-
Azorín, 2016).
Size Minimum 7 members are
required to for a public
limited company and
there is no maximum
limit.
BP is large multinational
organisation by its size as
it generates net income of
Minimum 2 members are
required to form a private
company and maximum
limit is 200 and it needs
to be registered under
Companies Act.
Harrods is large company
by its organisational size.
Registered charitable
trust or organisation,
sports club, community
groups, socially focused
organisation and
housing associates can
form voluntary sector
organisation.

9.58 Billion dollars and
provides employment to
approx 74000 people.
The company provides
employment to approx
12000 employees and
generates net income of
233.2 million Euros.
Red cross is large
organisation by its size
and it is humanitarian
organisation.
Scope Public sector business
organisation have limited
scope as they are public
oriented business.
Scope of BP is
transnational and it is
limited in national
boundaries.
Scope of private sector
business is wide and
large, it aims at
developing its business in
international and global
markets.
Scope of Harrods is
international and global
organisation as it is large
business organisation as
per the size of business.
Scope of voluntary
sector business is to
provide its services in
national boundaries as it
is not profit-motive
business.
Scope of Red Cross
organisation is
international as it is
large business
organisation.
Vision and
Mission
The vision and mission
statement of British
Petroleum is to be
accessible, diverse and to
have the best financial
performance with also
providing support and
contribution for human
progress (Deasy and et.al.,
2016).
The mission and vision
statement of Harrods is to
be the best departmental
store in worldwide
having luxury and
branded merchandise. It
also includes maintaining
standards of retail
businesses with expertise
and increased
profitability.
Its mission and vision
statement states that
organisation is neutral,
independent and
impartial that aims at
protecting dignity and
lives of victims of
armed conflicts or
violence.
Business
Objectives
Business objective of
British Petroleum is
Business objective of
Harrods is to come up
Business objectives of
Red Cross is to help

generating low carbon
power and also to produce
secured energy at
affordable prices without
affecting environment.
The size of BP ensures
that it can easily and
effectively achieve the
purpose and objectives of
business.
with innovation and
creation and provide
customers with
unforgettable experience
and develop its business
in international markets.
The size of Harrods
organisation ensures that
it can achieve overall
goals and purpose of
business.
people without
discriminating them. It
aims at preventing life
and health of people.
Red Cross can achieve
the business purpose
and objectives through
its organisational size
and scope.
Organisational
Structure
British Petroleum follows
administrative structure as
it suitable for large
organisation and allows
smooth flow different
functions of organisation
(What are the 4 Types of
Organizational
Structures, 2018).
Harrods follows a
functional organisation
structure that allows
interrelationship between
different functions and
leads to quick decision-
making (Bae and Lee,
2015).
Red Cross is a
charitable trust that
follows typical charity
structure including
trustees who gives
strategic directions and
handles management
and administration.
Key
Stakeholders
Key stakeholder of British
Petroleum are employees,
suppliers, customers,
government bodies and
authorities, research
agency, environmental
groups, etc.
Key stakeholder of
Harrods are its
employees, customers,
different luxury and
quality brands, etc.
Key stakeholder of Red
Cross are local public
and society, members,
volunteers, investors,
community groups,
beneficiaries and local
voluntary organisations.

LO 2
P3. Different functions and their interrelationship with advantages and disadvantages
Business organisation follows various steps and procedures for converting raw materials
into finished goods and transferring or selling it to final customers. This requires various
functions to be interlinked effectively and it results in achievement of overall goals and
objectives of the organisation (Budge, Chin and Minero, 2017).
Organisation chart refers that structure being followed in company and relationship
between various levels of management. Harrods follows functional organisational structure that
allows quick decision-making as employees from different functional departments interconnects
and share important information. Functional structure gets benefits of improved operations as
people interlinks and learn from each other. Following is given the functional organisational
structure of Harrods:
Harrods makes sure that its different functions and departments interlinks and brings
effective results and outcomes. Following are given different functions and their
interrelationship:
Production: Harrods aims at producing quality and luxury products so that it can effectively
meet needs and wants of customers and also satisfy them. Production function aims at
controlling inventory and maintaining proper equipments. Close interrelationship needs to be
maintained with R&D. The research and development department of organisation aims at
obtaining knowledge which can be used for creating new products, systems or technology.
Interrelationship needs to be maintained with finance and accounting regarding availability of
monitory funds, purchasing new equipment’s and technological up gradation. Production
interlinks with HRM regarding implications of job design and requirements of staff or to
improve staff motivation.
Research And Development: This department focus on obtaining the knowledge for bringing
improvement in system, products or services that can help in bringing better results and
outcomes. It aims at identifying needs of customers and coordinates with various other functions
and meet overall objectives of Harrods. R&D department communicates with production
function in order to provide information about the obtained knowledge and information
regarding improvements or development.

Marketing And Sales: The marketing function focuses on delivering the final products to final
customers using effective methods and techniques of marketing. Marketing function of Harrods
aims at using the 7p's of marketing mix so that it provides effective results and outcomes.
Interrelationship is made with finance and accounting department in order to know about the
budget of marketing. Marketing also interlinks with R&D to communicate about different
cultures and trends being followed in markets so that it can accordingly select marketing mix.
Human Resource Management: This is the most important function of Harrods and every
business organisation. HRM aims at recruiting and selecting the best employees for organisation
and also provides them with training and development programs. HRM interrelates with
production department regarding requirement of employees, or need of training and development
sessions. HRM also communicates with marketing function regarding need of motivation or
training to sales employees to effectively meet targeted objectives.
Advantages
 Effective interrelationship between different functions ensures proper working and
completion of task and activities (Bush, 2017).
 Proper communication allows transfer of important information between all functions.
 Every function has understanding of their responsibility and duties to be performed.
 Open communication happens between different functions which allows entry of new
ideas and leads to innovation and creation in business activities.
 It creates synergy in employees within Harrods organisation and ensures achievement of
goals.
Disadvantages
 This may lead to create interdependence of different functional departments.
 Complexities may also increase in different functional departments.
 Interrelationship leads to slow down the business process and operations (Deasy and
et.al., 2016).

LO 3
P4. PESTLE analysis to identify macro environmental factors and its positive and negative
impacts
Harrods deals in retail markets that have large competition and have various affecting
factors that impacts its operations and decision-making within the organisation. Harrods uses
PESTLE analysis to identify macro environmental factors, which is explained as follows:
Political Factors: Every business organisation needs to follow various rules provided by the
government. Various influencing political factors include government agencies, laws, legislation
and regulations that brings influences operations of Harrods.
Example: Marketing related decisions are greatly influenced by changes in political factors.
Trade agreements like NAFTA brings effective results for US brands for doing business in
member nation countries.
Positive Impact: Regulations regarding environment protection, safety regulations, entry
in new markets, etc. is effectively followed by Harrods that bring positive impacts in form of
increased brand image and reputation of the company.
Negative Impact: Some countries provides strict regulation for new companies entering
in markets, this leads to bring negative impact and pressure for Harrods while developing its
business.
Economic Factors: This factor includes purchasing power of consumers, spending pattern,
education rate, real growth rate, economic situation of a country, import and export duties, etc.
Example: The improved economic condition of country can improve and develop the business
of Harrods in that country's market.
Positive Impact: If a country's economic situation is favourable and spending power of
consumers is high then Harrods can develop its business and bring positive outcomes (Erasmus,
Strydom and Rudansky-Kloppers, 2016).
Negative Impact: Country facing recession situation can bring negative impacts for
Harrods. High labour rate also affects Harrods as it has to spend more and cost of production will
increase.
Social Factors: This is also known as socio-culture factors and includes factors like trends,
culture, choice and preferences of society, behaviour of consumer. Business organisation needs
to properly identify these factors as it brings great influence on the business operations.

Example: Changing taste and preferences of target customers can lead to bring changes in
driving sales high or low.
Positive Impact: Harrods aims at satisfying customers’ needs and wants and develop its
products accordingly with various cultures and trends followed in target markets. This brings
positive impacts for Harrods in form of increased productivity, sales and profits.
Negative Impact: If organisation fails to understand the culture and behaviour of people
in foreign markets, this may greatly affect the image and reputation of organisation.
Technological Factors: Today's competitive business environment leads to bring up gradation
in various techniques, tools and technology. The changes in technological factors also brings
changes in working of Harrods.
Example: Technological up-gradation like online customer services, online payment and
shopping, etc. can bring effective results and outcomes for company.
Positive Impact: Various technological advancements and up-gradation leads to bring
innovation and creation in the business activities and Harrods gets benefits of effectiveness of
operations.
Negative Impact: Up-gradation in techniques and technologies requires training and
development needs for employees in order to gain benefits which leads to increase the cost of
production, which may bring impacts on the sales and profits as well (Fozer and et.al., 2017).
Legal Factors: There are various laws and legal requirements that affects the working of
business organisation, which includes health and safety regulations, equal opportunities,
standards of advertising, consumer’s rights, laws relating to product labelling, etc.
Example: Favourable legal environmental factors of country, company can operate its business
in profitable and safe manner.
Positive Impact: Harrods aims at providing health and safety to its employees and
maintains safe working environment that brings effective changes as employees feel motivated
and put their best efforts.
Negative Impact: Various changes in legal regulations brings great impact on the
operations and activities of Harrods. Properly following legal compliances leads to increase
operational cost of Harrods.

Environmental Factors: This factors are considered very important and needs to be focused on
by every business organisation. Environmental factors include sustainability of environment,
corporate social responsibility, etc.
Example: Organisation offering environmental friendly products can gain large customer base
and improved brand image.
Positive Impact: Harrods aims at sustaining natural environment and uses renewable
energy resources that brings positive impacts in form of increased reputation of the company
(Laudon and Traver, 2016).
Negative Impact: If Harrods fails to maintain environment sustainability, this will lead
to bring negative impacts in form of legal issues and customers will also not demand such
products.
LO 4
P5. Internal and external analysis for identifying key strengths and weaknesses
Internal and external analysis is done to identify various affecting and influencing factors.
Harrods aims at identifying its strength and weakness using SWOT analysis. The strength and
weakness of a company interlinks with various external macro factors as shown in following
way:
 Harrods aims at satisfying needs and wants of customers by considering taste and
preferences of target customers and this is strength of organisation which brings effective
benefits for overall organisation.
 Unfavourable political conditions acts as a weakness for organisation as it cannot develop
its business in that region.
 Government provides various rules and regulations for maintaining health and safety of
employees and Harrods aims at following various provided regulations and ensures
proper safety of employees. This makes employees satisfied and motivated and leads to
effective accomplishment of goals (López-Gamero and Molina-Azorín, 2016).
 Technological advancements like online shopping acts as a strength for all business
organisation to increase their target markets and productivity.
Following is given the SWOT analysis and also comparison with another organisation from same
industry.