Organizational Structures and Business Environment of Merrill Lynch

This report provides a comprehensive analysis of the business environment surrounding Merrill Lynch Investment, a prominent UK-based company dealing in commercial banking, wealth management, and investment banking. It defines key business concepts and explores various organizational sectors, including public, private, and voluntary companies, outlining their advantages and disadvantages. The report delves into the organizational structures of Merrill Lynch's clients, such as the BBC (hierarchical structure) and JP Morgan Chase (geographical, functional, and matrix structures). Furthermore, it examines the interrelationships between different departments within Merrill Lynch, including finance, marketing, and human resources, emphasizing their crucial roles in the company's success. The report concludes by highlighting the importance of understanding these organizational structures and the interconnectedness of departments for overall business performance.

Business and Business
environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Different types of organizational sectors and their advantages and disadvantages................1
TASK 2............................................................................................................................................3
Analysis of organizations structures that Merrill Lynch Investment's business clients follow
and the relationship between different departments of the company.....................................3
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
A business can be defined as any economic activity done with the purpose of earning
profits and business environment is the environment in which a business operates. It is basically
the sum total of all internal and external factors affecting business. External factors are those
factors that are beyond the scope of individuals and business whereas internal factors are those
factors that take place within the organization and can be controlled by proper planning (Sloman,
Hinde and Garrett, 2013). External factors comprises political, economic, social, technological,
legal and environmental. Internal factors include customers, competitors, suppliers and
employees. Merrill Lynch Investment is UK's one of the most reputed company and it mainly
deals in commercial banking, wealth management and investment banking. The company has
over 4400 offices worldwide. The current report will focus on defining different types of
organisational structures, types of companies and the business environment they operate in.
TASK 1
Different types of organizational sectors and their advantages and disadvantages.
Public company: A public company is a company that has its securities listed in any one of the
stock exchange. A public company issues a prospectus and invites public to subscribe to its
shares. The shareholders who subscribe to company's shares become its members.
The main purpose for any company to go public is that they want to secure additional funds in
order to grow as a company. The growth prospects increase continuously because the companies
generate continuous revenue through selling their shares. The public companies in the United
Kingdom are governed by Companies act, 2006 (Worthington and Britton, 2014).
Advantages of public company-
 The major advantage of a public company is that by selling its future equity stakes, it can
get access to debt markets.
 Going public enhances the image of the company and increases their goodwill in the
market.
 Liquidity is very important for a company and the public limited companies have a huge
advantage when it comes to liquidity because these companies sell their shares on regular
basis and retains more liquid cash into the business.
Disadvantages of public company-
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 It is an expensive job to set up a public company. It requires a lot of time and efforts for
issuing prospectus and other printing expenses (Hall and Lieberman, 2012).
 The founders and key people lose the majority of control that they used to have. Decision
making and profit division get divided.
 All the financial affairs of the company are open to public. This can be dangerous at
times and can invite some legal as well as illegal tensions.
Private company: A private company is a company that restricts the right to issue shares to the
public. A private company's shares are not listed in any stock exchange. Sole proprietorship and
partnership are examples of private company. (Mankiw, 2012).
 Sole proprietorship: A sole proprietor is a person who owns and manages a business
single handedly. They are solely responsible for making business decisions and are also
sole participant of the entire profit.
 Partnership: Partnership, as the name suggests involves two or more people working
together for one common interest of earning profits. Partnership involves participation of
all partners in decision making, profit division and risk taking. All partners are governed
by legal rules and regulations as per their partnership deed and also by the partnership
act, 1890 (Potocan, Mulej and Nedelko, 2013)).
Advantages of private company
 It is very easy to form a private company. The business can be started immediately and
they do not need any certificate of commencement.
 In private company the individuals are sole responsible for taking decision, risks and are
solely entitled to profit.
 It has a separate legal identity and can be distinguished differently from its owners.
Disadvantages of private company
 The growth prospects are very difficult mainly due to lack of availability of funds.
 The private companies have restricted access to capital market and they end up being a
medium scale firm only.
 The private limited companies do not have the right to issue shares to general public
which is a big problem for firms having huge potential. (Join CSR Europe's Events,
2019).
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Basis Public Private Voluntary
Size Minimum members 7
and maximum
unlimited
Minimum 2 and
maximum 50
Minimum 1 and
maximum no limit.
Scope Public companies have
wider scope because
they have huge
potential to grow
internationally.
Private companies
have narrow scope
comparatively because
they have limited
access to capital and it
reduces their potential
to grow.
Broad scope to grow
locally as well as
internationally to
perform social
activities.
Legal structure A public limited
company must have at
least 2 share holders
and have issued shares
for minimum 50000
pounds.
The legal structure of
private company is
that each shareholder
of the company must
be a part and parcel of
the company.
A voluntary company's
main legal structures
are that it should be
legally structured as a
trust or a company
limited by guarantee.
Objectives The objective of
public company is to
maximize the wealth
of its shareholders.
The main objective of
private company is to
maximize their profit
and the growth of the
company (Release
calendar, 2019).
The main objective of
voluntary company is
to provide maximum
social welfare to the
public.
TASK 2
Analysis of organizations structures that Merrill Lynch Investment's business clients follow and
the relationship between different departments of the company.
Merrill Lynch being an investment company has clients from all over the world. Two of its
biggest clients are British Broadcasting channel (BBC) and JP Morgan.
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BBC follows hierarchical organizational structure and it is said to be the most common
and efficient organizational structure. In this structure the company Follows a hierarchy chain
where the employees at lower level management takes orders from their supervises who are
further instructed by top level management. In this type of organizational structure it becomes
difficult for the lower level employees to make decisions because they need to take permission of
higher authority before finalizing anything. Hierarchical structure can be of great help in case
the company needs to control product's quality and design but the downside is that sometimes the
flow of information gets slow especially in the case of emergency. (The economist, 2019).
JP Morgan Chase is an American investment bank and a client of Merrill Lynch. The
company follows different types of organizational structures like geographical structure because
it has its departments located all around the world.
It also follows functional structure within the organization where employees are grouped on the
basis of their departments like Human Resource department, finance and Marketing.
In some offices JP Morgan chase also has matrix organizational structure where people with
similar skills are grouped together and they have to report to more than one manager or
supervisor. (US-China trade Tension hit global market, 2019).
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Illustration 1: Hierarchical structure
(Source: Functional structure, 2016)

Inter relation between different departments of Merrill Lynch
Relationship between finance and Marketing department: Finance and marketing both are
equally important not only for growth but for survival of an organization. They act as pillars of
the organization and if the company fails at any one department then it will collapse. Finance
department of Merrill Lynch is concerned with preparation of final accounts, predicting future
growth, analysing the profits and cost feasibility. On the other hand marketing department deals
with sales growth, target achievement, advertisement and promotion. The profit and future
growth are all dependent on its marketing activities, better the marketing, better the sales. If there
are no sales then there is no need of finance department. (govt.uk, 2019).
Relationship between marketing and Human resource department: Human resource is the
life blood of every company and it plays a major role in its success. The marketing and finance
department cannot operate without human resource. If right people are not appointed in the
organization then the marketing of the company will fail. This can be seen by a significant
decrease in their sales and growth rate. Both are inter related and equally important for success
of the organization.
Relationship between Human resource and finance department: Human resource department
and finance department both work for achieving the common goal of success of the organisation.
While both have different ideologies like HR department gives importance to people and finance
department gives importance to money, their end goal remains the same. HR department depends
on finance department to provide proper training and development techniques to employees so
that their efficiency improves while finance department depends on Human Resource department
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Illustration 2: Matrix structure
(Source: Matrix structure, 2016)

to select right type of people with right knowledge at right job. This will help not only help them
to increase the profitability of the Merrill Lynch but also help in reducing their costs. Thus, they
both play a very pivotal role in the success of the company. (Potocan, Mulej and Nedelko,
2013)).
CONCLUSION
From the above study it can be concluded that the report focused on Merrill Lynch company
and its business environment. The report also emphasises on different types of company, be it
public, private or voluntary company. Both private and public company have their fair share of
advantages and disadvantages but if the company wants to grow incessantly then it should list
itself in a recognised stock exchange. On the other hand, lies voluntary companies that function
as not for profit companies and their main objective is maximum social welfare. The Merrill
Lynch had various clients but its two most important clients are BBC and JP Morgan. BBC
follows hierarchical channel of organizational structure while Morgan follows a combination of
hierarchical and matrix organizational structure. It has also been proved that all the three
departments are inter linked to each other in one way or the another and failure of any one
department would lead to downfall of the entire company. At the end, it can be stated that there
exists different type of organisations like public, private and voluntary and if an individual
believes that his company has the potential to take risks and can achieve huge success in the long
run then he must go public and issue a prospectus inviting general public to subscribe to its
shares and if he thinks that he should have the utmost power and control in his business then he
must operate it as it is.
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REFERENCES
Books and Journals
Sloman, J., Hinde, K., & Garrett, D. (2013). Economics for Business (6th ed.). Harlow: Pearson
Education.
Worthington, I., & Britton, C. (2014). The Business Environment (7th ed.). Harlow: Pearson
Education.
Hall, R.E., & Lieberman, M. (2012). Macroeconomics Principal & Application (6th ed.). USA:
South-Western, Cengage Learning.
Mankiw, N.G. (2012), Principle of Microeconomics. USA: South-Western, Cengage Learning.
Potocan, V., Mulej, M., & Nedelko, Z., (2013). The Influences of Employees' Ethical behaviour
on Enterprises' Social Responsibility. EBSCO host Research Databases, 26(6), p497-
511. 15p. Doi: 10.1007/s11213-013-9299-3
Online
Join CSR Europe's Events. 2019. [Online]. Available Through: <https://www.csreurope.org/>.
Release calendar. 2019. [Online] Available through:
<https://www.gov.uk/government/statistics/announcements>./
The economist. 2019. [Online] Available through: <https://www.economist.com/>./
US-China trade Tension hit global market. 2019. [Online] Available through:
<https://www.ft.com/>./
govt.uk. 2019. [Online] Available through: <http://www.businesslink.govt.uk/>./
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