Unit 01 Business and the Business Environment.
Student Name:
Student ID:
1
Table of Contents
Introduction.................................................................................................................................................3
LO1 Explain the different types of organizations, including their size and scope........................................4
P1. Explain different types and purposes of organisations; public, private and voluntary sectors and
legal structures........................................................................................................................................4
P2. Explain the size and scope of a range of different types of organizations.........................................7
LO2. Demonstrate the interrelationship of the various functions within an organization and how they
link to organizational structure...................................................................................................................9
P3. Explain the relationship between different organizational functions and how they link to
organizational objectives and structure..................................................................................................9
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13
2
Introduction
In each and every step of running a business lays uncertainty and risk. To moderate the
underlying risk what is most important for a business organization is to collect right information.
This information indicates information about the business organization, how business operates
and different factors that affect the business. That is the business organization has to take a clear
understanding of the environment of the business. The business environment is essential for the
effectiveness of the organizational functions that can achieve organizational goal. There are
different types of business organization in the market as like private organization, public
organization etc. what are the impact of these business organization & how they operate their
business function are discussed here. International business is defined as the transactions that are
carried out across national borders to fulfill the objectives of individuals, companies, and
organizations. Reason for Growth in International Business is development and expansion of
technology, Development of supporting services, Opportunities in foreign markets, Availability
of low-cost labor, Competitive reasons, Increased demands, Diversification.
3
LO1 Explain the different types of organizations, including their size and scope.
P1. Explain the different types and purposes of organizations; public, private and
voluntary sectors, and legal structures.
Business organization emerges to meet the need of the target customers. But it doesn’t come up
with its assisting source in exchange of nothing. A business organization is mainly established on
commercial purpose. To say it broadly, a business organization is established to make a profit by
running the business and this profit is earned through the products or services provided to the
customers. So business earns money by serving the people what they need and by making their
desired products or services available. Due to the difference in the purpose of business, a number
of members in the business, organizational and other legal structures, scope and nature of the
business, there emerges various types of business organizations which have been discussed
below:
Sole Traders: A sole proprietorship business organization is such an organization where there is
only one owner who is fully responsible for the operation of the business as well as the success
and failure of the business. The owner has to bear all the risks by himself that lie in the business.
This risk is not limited by a certain amount of investment of the owner. Rather he/ she have to be
liable even personally. So among all business organizations, sole proprietorship business’s risk is
the most that an owner has to bear.
If a sole proprietor can’t repay his/ her liability by the cash he/ she has from operating the
business, the owner has to sell his/ her own personal property, land or any other assets to make
the payment (Hierarchy Structure, 2018). As the owner has to bear all the risks, he/she will enjoy all
the profits earned through the operation of the business. But if the organization incurs a loss, the
owner has to bear all losses incurred.
Most of the super shops are established as a sole proprietorship business. The legal obligation
and structures of a sole proprietorship business organization are not complicated at all (Fairweather
and Border, 2004). The entrepreneur has to collect trade license from the local authority, apply for
sales tax permits etc. The business registration of a sole proprietorship hasn’t been made
compulsory. The owner can hire one or more salespeople who will be given salary but not the
partnership on profit and loss.
Partnership: Two or more people come into a written contract to run a business together; the
partnership business organization is formed at that time. Here contract is the most important
4
basis upon which depends who will contribute what amount in the business, who will perform
what activities in the running the business etc. The main objective of a partnership business is to
earn a profit. Like sole proprietorship business organization, all the members of a partnership
business will allocate their profits and losses according to the ratio of profit and loss referred in
partnership contract. All the risks will also be imposed on the partners and they can be made
personally liable. The legal consideration is also too simple in case of partnership business as the
sole proprietorship business. 2-20 people can form a partnership business by collecting trade
license from local authority but here all the partners need to have eligibility by law to be a
member of a business organization. Whether agreement will be in written or verbal form isn’t
made mandatory but a written.
Private Limited Company: The main objective of the private limited company is profit
maximization & expands their business is in the market(Browning, 2012). At first, the founders take
initiatives to establish a company by maintaining all legal requirements such as filing
requirements and submission of other papers like a memorandum of association, article of
association etc. Then for financing purposes, they make a connection with various angel
investors, venture capitalists etc. They also collect their fund through bootstrapping.
Public Limited Company: The public limited Company is Govt. organization. Govt. operates
this kind of organization. There is no significant limitation of the public limited company. The
public limited company basically collect finances its organization by issuing shares or bonds.
People purchase these shares & become a shareholder of public limited organization & gets
organizations profit (Fritz, 2008).
There is no significant limitation of the public limited company. The public limited company
basically collect finances its organization by issuing shares or bonds. People purchase these
shares & become a shareholder of public limited organization & gets organizations profit. The
main objective of a public limited organization like Vodafone is to maximize the wealth of the
shareholders. Profit maximization is just the means to achieve the end – wealth maximization.
Wealth is maximized when the value of ordinary share increases. Ordinary share’s value deepens
on the dividend paid to the shareholders which are dependent on the profitability of the
organization.
Franchise: Franchise is a method to doing business & expanding business from one region to
another region through a licensing relationship. As an example, KFC has lots of Franchise outlet
5
throughout the world. In franchising, there is one franchisor who grants the license to another
third party for expanding the business.
Non Govt. Organization/Charities: It means an organization which consists of individuals
who came forward willingly mainly as the volunteer and have an agreement to form a group to
accomplish a particular purpose. Voluntary organizations are established with a voluntary spirit
and non-profit purpose (Hayes, 2013). The voluntary organization is set up by a group of
individuals for the betterment of society and a special segment of people. This sector is totally
contrasted of the public and private sector. Their main focus on social benefits and improvement
for the people of common interest.
The voluntary sector is non-profit organization aim to bringing the vulnerable people in the
mainstream of the society. For example, Elizabeth Finn Care was established by Elizabeth Finn,
72 aged women, for the betterment of British gentlefolk. This is a charity based foundation
established in 1897 to support old age people, a person with a disability and destitute vulnerable
group. Along with Elizabeth Finn Care - Welcome Trust, Cancer Research UK, save the children
fund are the most known voluntary sectors of UK. They work for the people & development of
the society. (Hoffmann, 2016).
6
P2. Explain the size and scope of a range of different types of organizations.
Organization’s Size & scope depends on what kind of organization it was. Size & scope vary
from types of organization. A private limited company, Public limited company & NGO’s has
different types of size & scope along with a different number of employees, capital &revenue.
Size & Scope of Private Limited Company: The private limited company as like the best way
group consists of a small number of people & small capital. Firstly, they form the business
finance from their relative or SME loan. After getting profit & recognition these small & private
companies expand their business area in the market. The private limited company consists of
minimum 2 owners & maximum 50 owners. After sole property company private limited
company comes so private limited companies are bigger that sole property company & smaller
that partnership company. Land Rover is the UK based Private Limited Company. It’s situated
in London (Jeremy and Tweedale, 2005). Land Rover has 44 Owner & its capital is 15 billion. As
other private organization, Land Rover has also some business barriers. But most of the owners
& employees have the same kind of mentality. So it is comparatively easy to coordinate with
each other. The Land Rover steps forward with some vision & mission that will take them to a
successful destination they believed.
Size & Scope of Public Limited Company: The public limited organization is Govt.
organization. Govt. operates this kind of organization. The public limited company basically
collect finances its organization by issuing shares or bonds. People purchase these shares &
become a shareholder of public limited organization & gets organizations profit. One of the
examples of Public Limited Company is ASDA Stores LTD. It’s situated in England. Asda has
165000 employees & revenue is 3 billion. As Asda Stores Ltd a public company they have huge
opportunities to extend their business. They can extend their business by investing in various
project & financial operations. Besides they can collect finance by issuing shares to the public.
On the hand, if there is any miss management the managers are responsible.
Size & Scope of NGO/Charity Organization: The voluntary organization works for the people
& development of the society. Voluntary sectors are defined as a nonprofit organization
(Kortmann, 2012). Voluntary sectors develop socio-economic development of rural people & their
7
lifestyle. Basically, the voluntary organization is nonprofit & nonpolitical organization. People’s
development is the main objective of the voluntary organization. The voluntary organization
operates their activity by people’s faith. Welcome Trust, Cancer Research UK, save the children
fund is the most known voluntary sectors of UK. They work for the people & development of the
society. Voluntary sectors are defined as a nonprofit organization. Voluntary sectors develop
socio-economic development of rural people & their lifestyle. Welcome Trust is a London based
non-profit NGO. They basically work for the street children & orphans (Meiners, Ringleb and
Edwards, 2018). They build up to them & manage work for them. Welcome trust nowadays
becoming the concern of UK people.
Recently they received a huge amount of donation for they remarkable activity for street
children’s. Welcome Trust is a London based non-profit NGO. They basically work for the street
children & orphans. They build up to them & manage work for them (Long et al., 2007).
Welcome trust nowadays becoming the concern of UK people. Recently they received a huge
amount of donation for they remarkable activity for street children’s.
8
LO2. Demonstrate the interrelationship of the various functions within an organization
and how they link to organizational structure.
P3. Explain the relationship between different organizational functions and how they link
to organizational objectives and structure.
In Land Rover’s Marketing & Sales Department, Marketing is like as a bridge of relationship
with product or service with consumers. This process is effective for both producer & consumer.
By proper marketing producer concern, customers about their product/service besides consumer
know the existence of the products/service from marketing. Though we selected a UK based
large automobile company ‘Land Rover’ in our assessment (Palmer and Hartley, 2012). So Land
Rover has a competitive marketing business environment with other luxurious automobile
company such as Ford, Aston Martin etc. The high demand of the Land Rover SUV’s allows the
Land Rover to increase their business area Organization to grow and expand its operations and
collect more profit from UK market.
For research & development, Land Rover has some social & safety responsibly for the society.
Using cell phone during driving, anti-smoke alarms as well as driving when dunked etc. is the
social responsibility of Land Rover. Land Rover basically a heavy duty vehicle company. So
they mostly concern about Consumers safety. Customer’s safety is one of the major business
objectives of Land Rover. So their research is based on how to improve the functions of their
product. An automatic system, accidental issue, fuel consumption etc. are the most noticeable
thing in their research. And they continuously are developing these issues to modernize their
vehicle.
Human Resource Department, Land Rover recruits mainly from UK workforce. They recruit
employees after testing the ability to work with Land Rovers. Land Rover is very active with
their after sales service/customer service; they always try to give feedback as soon as possible
with significant solvency according to customer’s issues. Land Rover work & manage an advanced
HR management dept. to look after their employees along with the organization. Land Rover always
ensures the 100% of efficiency & outstanding performance (Shaikh, 2015). No, they never compromise
with their quality of work. The human resource management department also disquiets about the pros &
cons along with ethics & practices in the organization. Land Rover’s HR team basically recruits
employees, designing, employee relation, Work environment, Worker demand, employee’s skill
development etc. Marketing is mandatory for any kind of product offering organization. Land Rover also
does marketing globally. They execute different television advertising, billboard, new paper
9
advertisement, online promotion, social media advertisement etc. Land Rover s vision is through their
commitment to quality they will serve the world a new era of transportation. They will meet their
challenging goals by their skilled & dedicated employees & management team.
For Customer Service, Land Rover is greatly following the Consumers law as their opportunity
by delivering high-quality products for the customers to demonstrate consumer law.
Different types of organizational structure: Businesses need structure in order to function and
grow. Organizations are set up in specific ways to accomplish different goals, and the structure
of an organization can help or hinder its progress toward accomplishing these goals.
Matrix Structure: A matrix organizational structure is a company structure in which
the reporting relationships are set up as a grid or matrix. The matrix structure is a bit more
confusing but pulls advantages from a couple of different formats. Matrix structure doesn’t
support the traditional hierarchy.
Divisional Structure: The divisional structure refers to companies that structure leadership
according to different products or projects. Gap Inc. is a perfect example of this. Divisional
structure typically is used in larger companies that operate in a wide geographic area.
Geographic Structure: A several organizational design is a geographic structure. Geographic
structure combined workers from different geographical region. Geographical structure mostly
varies from one region to another region. In UK & America organizations structure varies due to
the geographic structure.
Flat Structure: Flat structure’s other name is horizontal structure. This structure is in between
staff & executives. Renovating a highly hierarchical organization structure into
a flat organization structure is known as delayering. The flat structure may limit the long-term
growth of an organization; management may decide against new opportunities in an effort to
maintain the structure.
10
Figure 1: An organization’s organizational structure (Unerman and O'Dwyer, 2006).
Link with different organizational functions to organizational objectives and structure of
Land Rover:
Land Rover's objective is to extend its services all over the world and increase the base of the
consumers which indicates increasing the number of people who use Land Rover. To make these
long-term goals materialize, the company makes many short-term goals and strategies integration
of which will ensure the long-term success of achieving the targeted goal. Making strategies and
short-term goals lie under the functions of operations.
Under operational function, top executives set long-term goals but they don’t act as the
implementer. The implementer of these goals is the first class employees. When top managers
impose goals on the different departmental head, they convert the goals in terms of their
respective departmental function (Worthington, Britton and Thompson, 2018). For example: if Land
Rover’s top-level executives set goals of increasing the consumer by 2% within a financial year,
customer management department would set their goals to improve the professional behavior of
the employees so that customers get more satisfied with the behavior of the employees.
11
Figure 02 Land Rover’s organizational structure (Hierarchy Structure, 2018).
12
Conclusion
The external and internal environment of a business organization reflects the strengths,
weaknesses, opportunities, and threats of that organization. SO each business organization
should analyze both of the environment carefully, properly and continually to identify the
emerging strengths, weaknesses, opportunities, and threats. Strengths should be focused more
while making any strategies. Weaknesses should be dealt with in a way that they may be
overcome. After identifying the opportunities, the company should grab those using their
strengths as a tool.
13
References
Browning, R. (2012). Setting up and running a limited company. Oxford: How To
Books.
Fairweather, M. and Border, R. (2004). Setting up a limited company. London:
Cavendish Publishing.
Fritz, D. (2008). Die Private Limited Company in Deutschland. Münster: ZAP-Verl.
Hayes, B. (2013). Corporate Security Organizational Structure. Elsevier Science &
Technology.
Hierarchy Structure. (2018). Car Company Hierarchy | Hierarchical Structures And
Charts. [online] Available at: https://www.hierarchystructure.com/car-company-
hierarchy/ [Accessed 12 Dec. 2018].
Hoffmann, E. (2016). Co-operative workplace dispute resolution. London: Routledge.
Jeremy, D. and Tweedale, G. (2005). Business history. London: SAGE.
Kortmann, S. (2012). The relationship between organizational structure and
organizational ambidexterity. Wiesbaden: Springer Gabler.
Meiners, R., Ringleb, A., and Edwards, F. (2018). Legal environment of business.
Boston, MA, USA: Cengage Learning.
Palmer, A. and Hartley, B. (2012). The business environment. New York: McGraw-
Hill Higher Education.
Shaikh, S. (2015). Business Environment. Pearson India.
Unerman, J. and O'Dwyer, B. (2006). NGO accountability. Bradford, England:
Emerald Group Pub.
Worthington, I., Britton, C. and Thompson, E. (2018). The Business Environment.
Harlow, United Kingdom: Pearson Education Limited.
Hierarchy Structure. (2018). Car Company Hierarchy | Hierarchical Structures And
Charts. [online] Available at: https://www.hierarchystructure.com/car-company-
hierarchy/ [Accessed 12 Dec. 2018].
14
