BUSINESS AND BUSINESS ENVIRONMENT OF ASDA
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 a middle man. 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, middleman, 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.
P1 Organization, types and legal structure
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. But here we will deal only with three types of organization and they are as follows
Sole trading organization
Sole Trading Organization: According to Gaur and Padiya (2017, p.42) It is a structure which is run by a single individual. And there is no distinction between the owner and the business entity. Characteristics of sole trading organisation are as follows:
Ownership: The organisation is owned by a single owner.
Liabilities: Since there is single owner all the business liabilities falls on him.
Risk: In this trading organisation all the risks such as the loss of the company are handled by the owner.
Profit: The entire profit of the company is enjoyed by the owner himself.
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 are kept private in this organisation.
Disadvantages of sole trading organisation are as follows:
Risk: in this organisation all the business related risks are undertaken by the owner himself. For example: if the organisation incurs some loss then the whole responsibility comes on the shoulder of the owner (Schiefelbein and 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: Partnership business organisation is run by minimum two and maximum twenty people. In this organisation all the decisions, risks and liabilities are shared by the members 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 really 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.
P2: Size and Scope of different types of Organization
A business organization is an individual or group of individuals collaborating to achieve certain commercial goals. Organizations vary from one another in terms of its scope, structure and size. According to size there are four different kinds of organizations. They are micro organization, small scale organization, medium scale organization and large scale organizations.
(Source: www.asda.com, 2017)
Marketing, finance, HR and operations are interrelated in ASDA. It focuses on the quality and not price to survive in long run. The officials of ASDA want to increase the brand loyalty by increasing the quality of the product rather than lowering the price. It focuses on the digital resources and natural content. The main objective of the marketing team ASDA is to satisfy the customer by providing them quality product at a reduced cost. Management of ASDA is providing better training facilities to their workers so that they can handle their customers more efficiently. They are bringing new products to the market to attract the customers and at the same time bringing new channels of distribution.
In an organization HRM plays a crucial role for the survival of the company in the market. The recruitment and the training procedures in a company are looked by its HRM. In order to establish the company in the competitive world the HRM of ASDA is giving the employees sufficient training so that they can attract more customer. People with same mentality and objectives are hired in ASDA. According to the HRM the employees and the management should share the same viewpoint regarding the company to ensure its success in today’s competitive market.
The marketing department is improving the quality of the product which will help the company to fulfill its objective of meeting the needs of the customers by paying minimum cost. The HR team is providing sufficient training to the employees so, that they can efficiently carry the marketing responsibilities to position the company. The HRM of ASDA hires the right person for the company. Even they look after the worker's problems demands and compensation so, that they can work well and satisfy the customers to fulfill the objective of the company that is to satisfy the needs of the customers at minimum cost.
D1 Complexities of an organisation and inter relation between different organisational function:
In sole trading business structure all the responsibilities like credit, loan falls on the owner and if the owner fails to repay the debt at time the business may close down.
In a partnership organisation complexity arises when the conflict arises between the partners especially due to difference in the view. Secondly if any one of the partner quits from the business then also situation becomes complex which result in the closer of the business. The complexities of corporation occurs because of difference in the view points among the members of the corporation, sluggishness, communication problem and lack of coordination.
As stated by Mundial (2013, p.178), in an organisation the departments such as marketing, Finance, HR are interrelated. The departments must coordinate with each other for the success of the organisation. The survival of the organisation depends on the correlation between the departments. The main motive of marketing department is to satisfy the customer by providing them the quality product. The marketing department promises the customer to provide better quality of the product just like the HR department who promises the worker to provide a better work environment. The production of an organisation depends upon the company’s budget which is set by the finance department.
On the other hand the HR is also related to the finance department. For example-if the finance department allocates more resource for the HR department then the HR department can provide them quality training by maintaining the HR cost. Thus we can say that all the departments of an organisation are interrelated.
P4 Impacts of Macro environment on business operation
A business is affected by the external and internal factors. The external factors are known as macro environment and the internal factors are known as the micro environment. The elements Macro environment is economy, finance, law, infrastructure, customers, environment, weather, customer and technology. The below table represents how the external factors affect a business organization
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