Understanding Business Environment: Types, Size, Scope and Functions

This presentation provides a comprehensive overview of the business environment, focusing on different types of organizations including profit, not-for-profit, and non-governmental entities, and differentiating them based on their objectives, legal structures, and social responsibilities. It also discusses the size and scope of organizations, categorizing them as micro, small, medium, and large enterprises, and elaborates on legal structures such as sole proprietorships, partnerships, and private limited companies. Furthermore, the presentation analyzes the differences between franchising, joint ventures, and licensing, and examines industrial structures and competitive analysis using London Marriott Hotel as an example. It highlights the interrelationship between organizational functions like marketing, finance, and HR, and explains different organizational structures including functional and matrix structures. The presentation concludes by emphasizing the impact of the business environment on a firm's operations and provides references for further reading; Desklib offers additional resources and solved assignments for students.

Business and business
environment

Table of content
 Introduction
 Explanations of different types of organizations
 Size and scope of organizations
 Relationship between organizational functions
 Conclusions
 References

Introduction
Business environment is an amalgamation of internal and external factors
affecting an organisation. In this presentation, emphasis will be made on different
types of organisations, their size and scope and interrelationship between
organisational functions.

Explanations of different types of
organizations
There are different types of organisations which can be classified as profit, not-for-
profit and non-governmental. Detailed explanation of all of them has been given as
follows-
 Profit organisations- A profit organisation is the one which aims to
earn maximum profits by providing goods and services.

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 Not-for-profit organisations- These organisations aim to serve the public by
providing them products and services. Their primary aim is not to earn profits but
to provide services to the pub. Example of not-for-profit organisation can be
Bristol Energy which is an energy supply company.lic.
 Non-governmental organisations- These organisations strive to serve
the cause of society and to contribute by adding value to social causes. Example
of it can be Amnesty International which works for human rights.

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Basis Profit organisation Not-for-profit organisation Non-governmental organisation
Meaning These organisations are formed to earn
profits by selling goods and services.
These organisations are formed to provide
products and services to public and not aim
to earn profits.
These organisations are formed to
serve social causes.
Objective Earning and maximising profits. Providing services to people and not
necessarily earning profits.
Fulfilment of social responsibility.
Legal structure Sole trader, partnership or pvt company
structure can be followed by it.
Private ltd. Company. Private ltd. Company.
Differences between types of organizations

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Types of organisations based on their size-
 Micro enterprises- Micro enterprises are those businesses who have less than 10
employees and their turnover doesn't exceeds 2 million pounds. Mantons Cards is an
example of a micro enterprise in U.K.
 Small enterprises- Small enterprises are those businesses who have less than 50
employees and their turnover doesn't exceeds 10 million pounds. Broadsword Event
House is an example of small enterprise.

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 Medium enterprises- Medium enterprises are those organisations who have less
than 250 employees and their turnover doesn't exceeds 50 million pounds.
Captify can be termed as an example of medium enterprise.
 Large enterprises- Large enterprises are those organisations who have more
than 250 employees and their turnover is more than 50 million pounds. London
Marriott Hotel is an example of a large enterprise.

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Legal structure-
 Sole trader- A sole trader is a person solely responsible for the business set up. There is no sharing
of profits and the liability is unlimited. For example- A small bakery managed by a single person.
 Partnership- Partnership involves a business managed by two or more individuals. There is sharing
of profits and the liability of every partner is unlimited. For example- London Business Partnership.
 Private limited companies- Private limited companies are formed by a group of individuals. There
is limited liability of members and it is divided by shares. For example- London Marriott Hotel.

Size and scope of organizations
Business organisations can differentiate according to various sizes such as micro, small,
medium and large. The explanation of differences between organisations according to size
has been explained as below-
Basis Small organisations (Fourex) Medium-sized
organisations(Verdant Leisure)
Large organisations(London
Marriott Hotel)
Objectives and goals To earn a sustainable amount of
profit.
To earn profits by providing products
and services.
To maximise their profits by using
economies of scale model.
Market share Small market share. Average market share. Large market share.
Profit share Low overall profit share due to less
profit margin.
Medium share in profit but less than
large organisations.
Large share in profits due to more
profit earned.
Growth and sustainability Low chances of growth. Average chances of growth. High chances of growth.

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Difference between franchising, joint ventures and licensing-
Basis Franchising Joint Ventures Licensing
Degree of control Higher degree of control. Degree of control divided
between the companies
having a joint venture.
Licensor has control over
the use of intellectual
property.
Risk Lower amount of risk
involved.
Higher-level of risk
involved.
Lower level of risk.
Length and breadth Can last indefinitely. It is for a limited period of
time.
It is applicable only for a
limited period of time.

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Industrial structures- It means the number and size distribution of competitors in a
given industry. The industry of London Marriott Hotel i.e. Hotel Industry has many
competitors present in the market offering tough competition.

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Competitive analysis-
Basis London Marriott Hotel The Ritz London
Price Its price is lower than Ritz London. Its price is comparatively higher.
Facilities provided It offers free Wi-Fi, paid parking,
laundry service to its guests.
It offers In-room game consoles,
complimentary dinner etc. facilities
to its guests.
Goodwill The goodwill of London Marriott
Hotel is more.
It enjoys less goodwill than London
Marriott Hotel.

Relationship between organizational functions
There are different functions present within an organisation such as marketing, finance,HR etc.
which play a major role in the organisation. An analysis of all these functions in the context of
London Marriott Hotel is as follows-
 Marketing- It includes activities related with price,product, place and promotion. London
Marriott Hotel's marketing department plays a major role in its profitability. This function has
a task of maintaining cooperation and coordination with other functions to ensure smooth
functioning of the organisation.

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 Finance- It includes activities related with acquisition and utilisation of funds which are necessary
for functioning of business. London Marriott Hotel's finance department has to maintain strong
relationships with other departments as every department is dependent upon finance for its funding
requirements.
 HR- The Human Resources function is related with acquiring and managing workforce and
solving grievances and issues related to employees of the company. London Marriott Hotel's HR
department has a task of management of its workers. Also, it needs to maintain interrelationships
with other functions as it is responsible for supervision of all the employees working in the
organisation.

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 Organisation structures- An organisation structure can be referred as a system
which is used to define the hierarchy of different roles in an organisation. It also
determines the way an organisation operates in order to achieve its goals.
London Marriott Hotel also follows an organisational structure through which
hierarchy is determined and transfer of authority, responsibility and
accountability takes place.

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Types of organisation structures-
 Functional- It is based on an organisation being divided into smaller
groups with specific tasks and roles for each group.
 Matrix- It is a hybrid organisational structure and is a mixture of functional and
projectized organisational structure.

Conclusions
From the above presentation, it can be concluded that business environment can
affect a firm's operations. Details related to types of organisations, complexities
faced by organisations in following different structures etc. have been covered in
this presentation.

References
 Hachicha, M. and et.al., 2016. Performance assessment architecture for
collaborative business processes in BPM-SOA-based environment. Data &
Knowledge Engineering. 105. pp.73-89.
 Maqueira-Marín, J. M., Bruque-Cámara, S. and Minguela-Rata, B., 2017.
Environment determinants in business adoption of Cloud Computing. Industrial
Management & Data Systems.

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