Business environment plays a major role to determine organisational strategies. It depends on the structure of the organisation. Different organisations include different structure. This study has presented the organisational structure of sole trader, corporation and partnership business. This study has revolved around ASDA, a multinational retail company of UK, in order to evaluate the impact of organisational structure on business environment. This study is intending to present the internal and external analysis of ASDA. It also presents the interrelation between the organisational strength and weakness with external factors of the organisation. Legal structure of an organisation has a major impact on the objectives of the organisation along with its products and services.
Business is a financial activity where exchange of articles takes place between two organizations with the help of monetary exchange. Sometimes a business activity takes place with the help of an intermediary. The external and internal factor that affects the business but is not under the business control is known as business environment. The external factors that affect the business are customers, suppliers, clients, government, intermediary, technology and political issues. Some factors have a direct impact on the business and some have indirect impact. Thus, we can say that business environment is the total surrounding that affects the functioning of the business firm directly and indirectly. ASDA is a British supermarket retailer that runs under subsidy of the Britain retail corporate giant. The company also provides financial services, mobile phones and network. The company satisfies the need of the customers through minimum investment.
According to Fleischmann et al. (2014, p.42) an Organization is an entity consisting of people or institution having a common goal and is driven by the same external force. According to Auer et al. (2014, 79), an organization can be of various types such as private company, public company, sole trading company, partnership, co operatives and corporations. However, here we will deal only with three types of organization and they are as follows
Sole Trading Organization: According to Gaur and Padiya (2017, p.42) It is a structure which is run by a single individual. In addition, there is no distinction between the owner and the business entity. Characteristics of sole trading organisation are as follows:
Liabilities: Since there is single owner all the business liabilities falls on him.
Risk: In this trading organisation all, the owner handles the risks such as the loss of the company.
Profit: the owner himself enjoys the entire profit of the company.
Advantages of the sole trading organisation are as follows:
Ownership: Since there is only one owner, therefore he is free to take any kind of decision related to business.
Profit: in this trading all the profit is earned by the owner himself.
Private data: all the business related information is kept private in this organisation.
Disadvantages of sole trading organisation are as follows:
Risk: In this organisation all, the business related the owner himself undertakes risks. For example: if the organisation incurs some loss then the whole responsibility comes on the shoulder of the owner (Schiefelbeinand McGinn, 2017, p.39).
Finance: if the owner takes any kind of loan then he alone is responsible to repay that loan or debt.
Partnership business: minimum two and maximum twenty people run Partnership business organisation. In this organisation, all the members share the decisions, risks and liabilities equally.
Advantages of the partnership business are equal responsibilities are taken by the members, profits are shared equally by the members and the organisation can survive in long run since there are heirs.
Disadvantages of partnership are there may be difference in the views of the member's, absence of one member can affect the organisational work and the firm may close down if there are two partners and anyone quits from business.
Corporations: A corporation form of business is a type in which the business entity is regarded as a separate entity responsible for the liabilities and assesses and run by a group of people. A corporation is generally guided by the legislations of the government for its daily and operational activities.
Advantages and disadvantages:
The main advantage of a corporation entity is its ease of collection of investment through selling of shares. The liability on the other hand is imposed on the shareholders only for the respective share. The lifespan of a corporation kind of business entity can be long as it can be transferred to next generation very easily.
On the other hand, the most important disadvantage of corporation type of business is the issue of double taxation. Both the entity and the shareholders are bound to pay tax for the same income. Different kinds of corporations have various types of taxes, which sometime becomes a burden. An important point of concern is its independent operations. The management can run the business without even informing the owners.
Private Limited Company:
Private limited company is a privately held business organisation. Liability of a private limited company is determined based upon the amount of share. Two members can start it but the maximum number is restricted by company acts. The venture can be started soon after registration, as this type of organisation does not require any certificate for the venture.
Private limited company builds with members who are acquainted with each other. Hence, the management process turns an easy one. There is a major flexibility in business conduct of this type of organisation. Major advantage of this type of organisation is the limitation of liability. Liability is determined based upon the amount of share.
Transferability of share is restricted for this organisational structure and this count as a major challenge for it. Limitation of numbers of member is another disadvantage for private limited company. Share of private Ltd Company cannot be quoted in share market.
Public Limited Company:
Securities of public Ltd Company traded on stock exchange. There are strict restriction regarding the organisational performance and management of this type of organisation.
There are certain advantages in public limited company regarding rising of capital through issuing shares. It also reduces the level of risk based upon the number of shareholders. As this organisation has opportunity to possess numerous shareholders, organisations have major chance of growth and development. It contains a simple exit strategy by transferability of shares that provides advantage to the investors to involve in the organisation.
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