Business Environment, Organizational Structure and Function Analysis

This report provides a comprehensive analysis of business environments, organizational structures, and functions. It begins by exploring different types, sizes, and scopes of organizations, including their legal structures and purposes, and examines the link between organizational structures, size, ...Read More

Executive Summary
The performance of the business largely depends on the business environment where a positive business
environment enables the firm to operate effectively and profitably along with achieving competitive edges.
In this assignment, different types, sizes and scope of organizations will be discussed along with the
various types and purposes of organizations and their legal structures. Besides, size and scope of a range of
different types of organizations will also be discussed properly along with the critical analysis of the
complexities of different types of business structure and the interrelationships of the different
organizational functions. Moreover, interrelationship of the various functions within an organization and
how they link to organizational structure will be analysed in the later phase. Positive and negative
influence/impact the macro environment on the business operation shall be demonstrated properly. That
business environment affects the various decisions regarding the sizes, types and scope of the business
organizations. An effective manager must be effective in linking the types, sizes and scopes with the
products and services. Besides, businesses must understand the relationships between the organizational
functions and structure along with the pros and cons
of interrelations between the various organizational functions and structures. Moreover, macro environment
al analysis is very significant and should be used carefully which should address the firm’s internal and
external factors, which poses positive and negative influences over the business operation.

Table of Contents
Introduction ............................................................................................................................................................................... 4L
O1: Explaining different types, size and scope of organizations .......................................................................
41.1 Different types and purposes of organizations and
their legal structures (P1) ......................... 41.2 Size and scope of a range of different types of organizations
(P2).................................................. 51.3 Link between the structures, size and scope of different organizations
and businessobjectives along with the products and services offered
(M1) ....................................................................... 61.4 Critical analysis of the complexities of
different types of business structure and theinterrelationships of the different organizational
functions (D1) ................................................................. 6LO2: Interrelationship of the various functions within
an organization and how they link
toorganizational structure ....................................................................................................................................................... 72.
1 Relationship between different organizational functions and their links with theorganizational
objectives and structure (P3) .........................................................................................................
72.2 Advantages and disadvantages of interrelations between organizational functions and theimpacts
that can have upon organizational structure (M2) ............................................................................. 8LO3:
Demonstrating both the positive and negative influence/impact the macro environment has
onbusiness operations ................................................................................................................................................................ 83.
1 Positive and negative impact of macro environment upon business operations of UnileverPlc (P4) .........
........................................................................................................................................................................... 83.2 Applications of t
he PESTEL model to support a detailed analysis of the macro environmentwithin an organization (M3) ...
.......................................................................................................................................
93.3 Critically evaluating the impacts of the macro and micro factors upon business objectivesand decisi
on making of Unilever Plc (D2) .............................................................................................................. 10LO4: Internal
strengths and weaknesses of specific businesses along with their interrelationship
withexternal macro factors.........................................................................................................................................................
114.1 Internal and external analysis of Unilever Plc in order to identify strengths and weaknesses(P5)
114.2 Interrelations between the strengths and weaknesses of Unilever Plc and the externalmacro factor
s (P6) ............................................................................................................................................................ 124.3 TOWS
analysis of the firm and their impacts on the decision making in
Unilever Plc (M4) 12Conclusion .....................................................................................................................................................
........................... 12References ...............................................................................................................................................................
................. 14
Introduction

The performance of the business largely depends on the business environment where a positive business
environment enables the firm to operate effectively and profitably along with achieving competitive edges
(Baron, 2012). In this assignment, different types, sizes and scope of organizations will be discussed along
with the various types and purposes of organizations and their legal structures. Besides, size and scope of a
range of different types of organizations will also be discussed properly along with the critical analysis of the
complexities of different types of business structure and the interrelationships of the different
organizational functions. Moreover, interrelationship of the various functions within an organization and how
they link to organizational structure will be analysed in the later phase. Positive and negative influence/impact
the macro environment on the business operation shall be demonstrated properly. Lastly, internal strengths and
weaknesses of specific businesses along with their interrelationship with external macro factors shall be
discussed to understand the factors influencing the business and their decisions and performances.
LO1: Explaining different types, size and scope of organizations
Different types of organizations and their legal structures
Business organizations differ in terms of types, sizes and scopes that have distinctive set of legal structure
along with the objectives. Various organizations formed through different legal structure as differing goals and
objectives in the industry, which have different consequences in the business operations and performances
(Begg, 2013). Public firm or organizations are owned and controlled by the government, which has general
purpose of supplying desired goods and services to the general people. The management and control of the
firm is done by the government or governmental agencies, which does not have the purpose of profit
maximization but the greater benefit and value creation for the community’s people. Public limited company
structure is commonly followed for this type of organizations where required finances are delivered by the
governments along with the owners or stockholders (Daniels et al, 2012). Besides, public organizations can
also be formed through governmental act or regulations. For example, BBC is the public organization, which
is controlled by the British government.
Private organization has the general purpose of profit and wealth maximization where the firms are controlled
by the stockholders. A set of stockholders delivers finances to the firms who are the owners and take
fundamental decisions of the company. The owners get the dividend along with other benefits periodically.
The company structure is followed for this type of organizations where company act 2006 is strictly followed
(Palmer and Hartley, 2011). For example, Virgin is the private organization,
which has the purpose of profit maximization and controlled by the stockholders. A voluntary organization has
the common purpose of supporting and helping the people of the community for the higher standard of
living. The support may include assistance to the animal, endangered groups of the community, children etc.
National trust is the example of voluntary organization, which is formed by the charity structure where
companies tries to breakeven instead of profit maximization.
1.2
Size and scope of a range of different types of organizations
Organizations may differ based on various sizes and scopes, which is very significant in
the business perspectives. There are more or less four basic types of organizations if one considers size aspect
such as micro business, SME business, transnational business and global business which have different scopes
in their own set of industry environment (Mullins, 2014). Micro businesses are the type of business unit, which
is very small in sizes. These types of businesses have the lowest number of employees and turnover compared
to the rest. For example, sole trader is the type of micro business because it has less than 10 staffs with smaller
scope of revenues and customers base. Small and Medium Enterprises are the businesses which are moderate
in sizes which has medium percentage of revenues and customers. The number of employees varies from 200

to 300 here who focus moderate level of customers for the value creation and profit maximization.
Transnational business is the entity, which has international operations in more than one country (Brown,
2013). This type of firm has higher level of employees for the enhanced international operation. AstraZeneca
is the example of transnational firm, which realizes higher level of revenues from various markets in world.
Global business has extensive operations in almost all countries of the world, which possesses the highest level
of employees and revenues along with the profitability and customer base.
1.3
Link between the structures, size and scope of different organizations and business objectives along with
the products and services offered (M1)
The size, scope and structures of various organizations in the market has clear implications over the business
purposes and products and services. The relationships among them is clear which helps the managers to take
effective decisions regarding this issue which can enhance the business efficiencies (Burnes, 2014). A public
limited firm has large size with enhanced scope in the market. It has large customer base to serve that have
clear implications over the products and services offered along with the business objectives. A large firm like
Virgin which is a private sector business has really
huge and dynamic business objectives which drives the firm forward in the future. Besides, the large size and
scope of the firm can enable the business to develop and market large number of products and services.
Besides, organizations with larger sizes and scope enjoys economies of scale, learning benefit and other
competitive edges through which cost can be reduced, benefits can be enhanced and values can be created for
the customers (Fritz, 2013). On the other side, a sole trader business for example, has a smaller size and scope,
which deters it to offer extensive and improved products and services. Besides, their objectives are created
based on the short term period, which serves the firm poorly in terms of long term period.
1.4
Critical analysis of the complexities of different types of business structure and the interrelationships of
the different organizational functions (D1)
Business structures are the ways through which different types of organizations are formed. Various functions
are conducted in every types of firm with different structures. But the nature of those structures and their
interrelations are different from one another which makes their business and operational implications
significant. Micro firm has most simple business structure because of the simple nature of the business scope,
sizes, staffs and objectives. Those firms has
various business functions but are performed easily and collectively (Pugh and Hickson, 2011). For example, a
small coffee shop produce coffee and sell it right way to the customers where distribution, customer service
are ensured. So, the interrelations among the functions of
the micro business is more direct and simple in nature which simplifies the business model and overall
operations and performance. Besides, the complexities of the SME business structure is moderate where it is
formed as company or partnership business. The functions of those firms are little bit separate and distinctive
where organizational efficiency can be enhanced through ensuring more interrelations among the functions. In
the transnational business, the business structure is complex enough which maintains various separate
functions of the firm. For example, AstraZeneca directly participate the decision-making related to the
production, marketing and R&D in various countries directly where the interrelations among the various
functions must be ensured (Palmer and Hartley, 2011). Global business has the most complex business
structure where decisions are taken by the regional operations. The business functions must be standardised
and interrelated for the greater performance. Virgin for example, takes decisions globally to form better
interrelations among the various business functions such as marketing, production, finance, services etc.
LO2: Interrelationship of the various functions within an organization and how they link to
organizational structure2.1

Relationship between different organizational functions and their links with the organizational
objectives and structure (P3)
There is a close interrelation among the organizational functions, objectives and structure. The organizational
functions are based and operated based on the organizational objectives and structures. On the other hand,
organizational structures influence the overall nature and span of the organizational functions (Slack et al,
2010). Organizational functions do not work alone rather they work collectively and generate superior values
and perform better within the firm. A well-organized organizational function works better hence better
operational efficiency, revenues and performances which benefits the stakeholders. For example, Virgin is the
firm which has rich organizational structure that allows the firm to maintain an effective set of organizational
functions that can generate the higher values for the target customers (Starr, 2013). Moreover, this firm
follows its vast objectives and transform it into the business through its effective functions. All of the
functions of the firm are dependent on the other such as production is dependent on the demand perceived by
the sales functions. Sales function takes decisions based on R&D and finance and distribution functions.
2.2
Advantages and disadvantages of interrelations between organizational functions and the impacts that
can have upon organizational structure (M2)
Interrelations among the organizational function is obvious within the various types of firms which make it
possible to deliver the products and services to the customers. This aspect clarifies that itis not enough to have
all the functions within the firm but proper interrelation among them along with better control and leadership
in those functions can serve a large portion of the customers and avail competitive edges (Stevenson, 2011).
There are various forms of advantages of these interrelations among the organizational functions along with
various disadvantages. Better interrelation among the business functions can satisfy business objectives more
effectively than any other business strategy. Besides, organizational functions’ cumulative efforts can create
enhanced values along with synergy effects that creates extra values and competitive ground for the firm.
Effective interrelation among the functions can communicate necessary data, which can be used for the
decision making purposes. Besides, corporate culture can be enhanced through ensuring better interrelation
among the business function. Virgin’s better corporate culture comes from one of the sources that is better
interrelation of the business functions. In some case, those interrelations create some disadvantages for the
firm (Summers, 2010). The firm will be less effective if there is a close interrelation among the sales and
production functions where production function is poor because there is a possibility to reduce the
effectiveness of sales function. The advantages of this interrelation can positively affect the business structure
and enhance its effectiveness and vice versa.
LO3: Demonstrating both the positive and negative influence/impact the macro environment as on
business operations3.1
Positive and negative impact of macro environment upon business operations of Unilever Plc
Macro environment of the business consists of various environmental factors, which puts positive or negative
impacts on the business operations. Unilever is affected by the factors of the macro environment (Waters,
2012). Emergence of the global growth opportunities powered by the higher market creation and demand can
enhance the business operation. Besides, enhancement of the social technology within the business operation
results higher efficiency in business functions and overall performances. The digital revolution of the
consumption along with the higher productions creating better opportunities for the firm. Development of the
information and communication technology make it possible for the firm to develop higher utility and quality
products and services which make the business operation effective (Drucker and Maciariello, 2009). Global
shift of the economic and social power is actually creating more demand for the
firm’s products in

underdeveloped part of the world which benefits the business operation. Pressure from the ethicaland
sustainable growth along with the cyberspace security are creating risks and uncertainties forthe business
operations of Unilever.
3.2
Applications of the PESTEL model to support a detailed analysis of the macro environment within an
organization
A detailed PESTEL analysis can be conducted in the following for Unilever which will assess the external
environmental aspects that have impacts over the firm’s operation.
a)Political factors:
Political stability along with the favourable rules and regulations relatedto the international trade and taxations
are very positive for Unilever which benefits thefirm in its operation (Drucker, 2012).
b)Economic factors:
Unilever is benefitted by the lower interest rate which promote investment. Besides, low inflation rate, high
GDP, savings, higher economic stability ensures steady demands for the products of the firm.
c)Social factors:
The community where the firm operates generally has higher income followed by the higher employment rate,
literacy arte and standard of living. Besides, positive religious and ethnic scenario benefits the operations
(Ansoff, 2010).
d) Technical factors:
Overall operations are promoted by the advanced communications and information system along with the
effective innovation and development. Company product cost can be substantially minimized with the
assistance of technical factors.
e) Environmental factors: Physical environmental conditions such as precipitation, temperature, natural
disaster etc. are in favour of the firm’s operation. Those factors actually benefits the firm’s operation (Dess
and Miller, 2010).
f)Legal factors:
Environmental legislation, employment regulations along with the issues of contractual liabilities can create
several challenges within the operations of Unilever.
3.3 Critically evaluating the impacts of the macro and micro factors upon business objectives and
decision making of Unilever Plc
Various macro and micro environmental factors has direct impacts upon business objectives and decision
making in all stages (Hitt et al, 2010). Managers take crucial decisions based on the situations of the macro
and micro factors. In the case of favourable macro and micro factors, managers take extensive growth
objectives in the future. For example, if the economic factors like interest rate is lower, managers can take set
the objectives of higher growth and take growth strategy which will enhance the volume of the firm in new
areas. On the other side, if the political instability or higher trade barriers exists, a restrictive expansion policy
along with the more growth within the domestic market can be taken (Hunger and Wheelen, 2011). So, the
macro and micro environmental factors affects the business operations along with purposes and decision
making both positive and negative ways. Besides, emergence of thee growth markets and advancement of the
technical aspects of the business allows the managers of Unilever to take growth strategy where business
objective is defined newly (Starr, 2013).

LO4: Internal strengths and weaknesses of specific businesses along with their interrelationship with
external macro factors
Internal and external analysis of Unilever Plc in order to identify strengths and weaknesses (P5)
SWOT analysis is the internal and external analysis tool, which is used to assess the business’s strengths and
weaknesses. It is the widely used strategic management tool, which assist the managers to take strategic
decisions (Stevenson, 2011). Those decisions can be taken after the effective assessment of the firm’s
strengths, weakness, opportunities and threats. The SWOT analysis can be done in the following table.
Strengths Opportunities
 Strong brands
 Strong global market presence
 Broad line of product mix
 Economies of scale
 Effective value chain
 Advanced information system
 International growth opportunity
 Higher business diversification
 Market development
 Opportunity of product innovation forthe
health purposes
 Sustainable business enhancement
Weaknesses Threats
 Limited business diversification
 Imitable products and services
 Over dependence on the retailers
 Over acquisition in the market
 Higher innovation time cycle
 Fierce competitive rivalry in the industries
 Emergence of the tough domestic competitors
and their popularity
 High imitation of the production
 Threats of the global economic recession
Table - 1: SWOT analysis framework of Unilever Plc. Source: (Summers, 2010)
Interrelations between the strengths and weaknesses of Unilever Plc and the external macro factors (P6)
The internal and external factors of the strategic environment of the business is very significant to be
discussed. There is a strong interrelations among the internal factors of the business’s operations
such as strengths and weaknesses and the external macro factors of Unilever (Waters, 2012). Both the factors
affects each other and influence the decision making of the business operation of the firm. Positive presence of
the strengths allows the firm to utilize the opportunities of the firm for the better competitive edges. Besides,
those strengths reduces the negative impacts of the macro factors such as threats. On the other side,
weaknesses within Unilever such as limited diversification, imitable and failed acquisition reduces the
effectiveness of the business opportunity of the macro environment such as growth opportunity (Drucker and
Maciariello,2009). The presence of the weaknesses within Unilever intensify the threats of economic recession
and increased level of competition.
This reduces the firm’s capability to endure the threats from the market that can be harmful for the firm’s
operation.
4.3

TOWS analysis of the firm and their impacts on the decision making in Unilever Plc (M4)
TOWS analysis is the analysis of firm’s threats, opportunities, weaknesses and strengths to take strategic
decisions. Unilever has various threats, which mainly comes from the firm’s external macro environment such
as higher competition, economic recession, which may drastically alter the business performance in a bad day.
Besides, various opportunities can positively affect the firm and enhance the firm’s volume such as high
growth opportunities, higher diversification, cost differentiation, market development and higher innovation
(Drucker, 2012). Unilever takes decisions based on that external macro environment, which affect the firm’s
operations positively. On the other hand, firm have several weaknesses such as imitable products and limited
diversification, which makes the decision making even tougher. Besides, strengths like stronger brands, higher
economies of scale, broad line of product and higher market presence help the firm to take effective decision-
making.
Conclusion
Business environment is the set of internal and external factors which collectively influence the overall
business operations and functions. That business environment affects the various decisions regarding the sizes,
types and scope of the business organizations. An effective manager must be effective in linking the types,
sizes and scopes with the products and services. Besides, businesses must understand the relationships
between the organizational functions and structure along with the pros and cons of interrelations between the
various organizational functions and structures (David, 2010). Moreover, macro environmental analysis is very
significant and should
be used carefully which should address the firm’s internal and external factors which poses positive
and negative influences over the business operation. Managers must also assess internal and external factors of
the firm to understand the strengths and weaknesses which benefit the decision making, strategy selection and
implementation of the firm along with accomplishment of the set objectives.
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