BUSINESS AND THE BUSINESS ENVIRONMENT
In this particular study, a detailed elaboration of the business environment conditions and their possible advantages and limitations has been portrayed. An overview of the vision and mission has been discussed. There are a mix of three kind of business sectors that have been chosen that is public, private and voluntary and the names being, The BBC, TESCO and the British Red cross. Initially, the size, scope and legal structure of each organization have been explained, specifically. These are further elaborated with findings and occurrences of the micro and macro environmental factor impacting the chosen company that is TESCO. In the later part, a detailed critical analysis has been done on the factors with the help of PESTEL and SWOT analysis in precise and key points, concluding with the ultimate business environment factors, as gathered from the case study.
The concept of business industry has been broadening its branches drastically since early times into several categories and sectors. The kinds of business industry have made a mark in recent times by emphasizing of innovative styles of business. The self driven venturing type of business is also expanding in several parts of the United Kingdom. In fact, a large number of fresh pass outs and graduates are acquiring training on entrepreneurship, which is one of the advanced strategies to reach business target rapidly. Apart from the typical or signature business sector, there are several forms of earning established in today’s world, which are also legally registered as well as authorized by the government.
In general, the business industry consists of three main sectors, such as the public, private and voluntary. In this scenario, three organizations, that are, Tesco, BBC and the British red Cross have been selected, which shall be broadly classified and elaborated based on their organizational structure and business environment.
LO1. P1 The motives and purposes with legal structure of each organization
Each of the sectors comprises of specific functioning elements and a distinct functional flow. According to Prajogo (2016, p.241), the public form of business as the name suggests, are mostly focused on public welfare purposes, whereas the private category can be stated as a core profit earning quarter, based on its own criteria. The third sector is the voluntary business, that is one of the fastest growing business types and largely encouraged and initiated by a particular group of mass for the betterment of the society. It can be categorized as both commercial and non-profit. There are two types of organizations and having different scopes and structure, there is a little difference in both sectors.
Private sector: A private factor business like Tesco tends to make optimum profit and there is no interaction of government and public body. Most of the retrial other business organizations have the same scope. Purpose of this organization is to expand most shareholders to increase investment.
Public sector: State or government bodies in favor of individuals operate public sectors organizations. In this concern, there are lesser aspects of profit. Some health care bodies as well as financial institutions are available in UK like Red Cross those tend to make the same operations. Scope of such organsiations is to follow developing measures of the society. In some terms, some voluntary organizations have match with public sector, but the differentiation lies within structure.
Similar to the selected firms, there are several other firms under the category of public, private and volunteering sectors. Some of the renowned companies in the United Kingdom are,
The National trust of UK
The Royal bank of Scotland
The John Lewis partnership
Each of the organizations, possess different types of legal structures that can be differentiated briefly. As per Menychtas et al. (2014, p.104), the volunteering organizations are solely run by personal or corporate charities and donations and most acts of the company law are assimilated by the Royal Charter. While, the public sectors are open business bodies which serves for the general mass and public for their regular and basic needs and promotes public awareness. Some of the examples of such examples can be, the NFC, the natural England and more. Most of the public organizations are also enforced by the royal charter in UK, as per the legal structure.
Unlike the above two, the private sector can vary and are mostly considered via partnership and sole proprietorship, where the internal functioning system depends on its type.
Apart from the above mentioned differences of the industries, there are sub divisions under the voluntary sector. The nonprofit sector is one of the most important sectors. There are a number of nonprofit organizations that run in UK. The renowned organization like the Red Cross and Oxfam does not put off their incomes to the owners but also possess a selected set of payment receivers. Their main motive in a nutshell is to promote social welfare factors, such as fundraising, training in socio-cultural aspects, free membership and more.
Whereas the profit sector can vary from partnership, proprietorship, franchise and more and these sectors, evidently has more shares in case of market and rapid growth, if proper business regulations are carried out. In case of a profit sector, the profit is te ultimate goal. These types of organizations are very particular about financial transactions and statements. Some of the blazing examples are the crowdrise, abila and more.
P2. An outline of the size, scope and structure of the different sectors
The motive and legal structure of the public body BBC
The British Broadcasting Corporation of the United Kingdom is a broad governmental body that determines certain public services to the entire section of mass, which is supported by the (Ofcom) that is the office of communication, which is the main broadcasting regulatory of the nation.
The mission and vision of this particular company is to serve the mass with eminent and current news affairs and spread certain kind of urgent awareness that is helpful for the general public. Since, it is a public body, the legal structure of BBC comprises of several hierarchies and a large group of people, such as BBC board, its sole traders and executive committee, functioning under the jurisdiction. The Royal charter was responsible for establishing the company and the financial and funding structure requires to be maintained as per the Charter criteria.
The motive and legal structure of the private company Tesco
According to Bah and Fang (2016, p.159), The Tesco is one of the leading retail companies and aims to provide a large variety of services to its customers. Its business is based on products like, groceries, home ware and hardware services. The profit made by the company is solely restored by the organization, itself. The Tesco legal structure is based on corporate governance, and is maintained by different hierarchies, such as the decisions making is split between the internal hierarchy to deal with and shareholders mainly. The company also consists of a licensing team that deals with any legal or license related matter.
The agenda and legal structure of the voluntary body, the British Red Cross
The British Red Cross is one of the leading volunteering organizations of UK and its purpose is to train the3 mass with high level trainings for self health care and first aid. It is enforced by a large number of professionals as well and qualitative training is provided to many youth and fresh graduates, such as, CPR, aiding in natural disasters, operating certain tools and more.
The fundamental legal structure runs via corporate donations and the regulations were incorporated by the Royal charter. The organization consists the chief executive and more than 30,000 volunteers.
As explained above, the scope, size and structure of an organization represents the areas, market shares, products, people and types ofg services it covers. The subject also includes how many employees and workers the company holds and other strengths of the company including its expansion history. For exam,ple, the Lenovo is one of the organizations that possess a large expansion graph, from the recent years. In expaination, a business can be small scale, large scale or medium scaled. A small scale organization in UK usually can consist of 25-250 people strength where as in a large scale firm the strength of 250 is minimum. There are also micro sectors of business in the nation that is considered the smallest body of all types. Irrespective of the size and strength, the motives and mission and vision of all profit sectors are similar and relevant. For example, establishing a global image or be established across the nation.
M1. Analyzation of the scope and sizes of several organizations are interrelated to business goals and product and services
As stated by Epifanova et al. (2015, p.137), in a way, the nature of scope in a public body incorporates innovative ideas, which works for the betterment of the products and services. For example, a new venture that is to be established by company can be modified as per experts opinions and practical samples to meet consumer demands.
The private sector involves several risk factors, like narrow corporate culture, lack of justification unlike the public bodies, the scope being lesser.
The volunteering organization cherishes the utmost independency in decision making about advanced and new ideas, it is open to different opinions about introducing new services, or involving new members in the group and are not bound to the meeting of targets and profits like the rest of the sectors, in most cases.
D1. A critical analysis of the entanglement of different organizations and the interlink between the mechanism
Along with the functioning of the organizations, there are minor and broader complex criteria are attached to them. In Order to breakdown some of the most important complexities in each organization, the human and system behavior can be taken into consideration. In evidence, human behavior complexity or environmental complexity is comparably more in case of BBC. It is a large organization and internal conflicts between employees can influence the corporate culture, eventually affecting the business.
Whereas, the complexity in system behavior often termed as the operational behavior can be higher in a private firm like, the Tesco. According to Shehu et al. (2014p.101), apart from Tesco there are other companies which are based on smaller scale of business and undergo lack of operational management. Some of the blazing examples of such scenarios can be, work culture and social pressure, miscommunication in management team, lack of record storage, flowchart maintenance and usage of appropriate technologies.
According to the five basic complexities in business framework, the complexity in productivity, which comes under the later part of organizational functioning, is another common issue. This issue can arise in case of any nonprofit organizations such as the the Red cross. As this type of organization solely focus on its services provided to the public and is not completely profit based, a well designed strategic planning failure shall highly affect several aspects of the company, such as company reputation, increase in attrition rate, employee or voluntary dissatisfaction and other complex issues.
As mentioned above, there exists a highly competitive market creating impact on the internal and external functioning system of each organization.
Communication between the departments in each type of organization
The public, private and nonprofit organizations work in specific ways, but above all possess similarities between the functioning structures. The similar related factors like firm communication between each of the departments in the company, is one of the most eminent links between the working structures.
In the opinion of Rubtsova et al. (2015, p.241), the public sector like the BBC, requires immense amount of interaction in between the departments and assertive communication for proper collaboration among the teams. This specific organizational function qualifies for all kind of organizations.
The indulgence of organizational charts
The similarity in the functioning style of the organizations includes the formation of charts in order to portray the clarity in the company thread. For example, which set of employee’s reports to the specific manager, the different levels of management and the distinctive chain of management.
Creating feedback process
There are several feedback processes that has been incorporated over the years in TESCO, to keep track of the ongoing thought process of the co workers and peers. The 360 degree feedback process is one of the effective mediums to get through the obstracles.
LO2. P3. The interlink between the functioning structure of TESCO and the link to the structure of organization
In this scenario, the interlink between the internal functions of the private organization TESCO shall be elaborated. Tesco is a huge organization and is ever advancing in case of expansion of its branches and divisions. The organizational structure of TESCO is slightly different from the regular private sectors, as it is one of the exceptionally leading companies in the United Kingdom.
The organizational structure of a private company starts with the senior management team. It also comprises of a senior management team, who is known to collaborate efficiently with the lower levels of the hierarchy, which keeps the functional departments work in a smooth manner. The management team often organizes frequent meeting to update and gather information of employee details and product details, in order to discuss competitiveness in the market. It consists of a research and development team which responsibly keeps the company product, finance and other aspects ahead of its competitors with effective strategic planning and development. As per Wild (2014, p.120), the company consist of a human resource team that is responsible for the retention and selection of new hires followed by the entire field functioning team.
TESCO is known to have a similar hierarchical structure with the chief executive is the top hierarchy responsible for the main authorizations and approvals of the firm. There are categories of managerial levels. TESCO also consists of a remarkable customer service group, for which the recent income margin has been exceptionally stable.
Figure 1. The fundamental location based functional flow of TESCO
(Source: Alqahtani, F.A. and Saba, T., (2013, p.480)
M2. Analysis of the limitations and advantages of the factors and impact on the structure
In a private sector, like the TESCO, the independent private company, the regulations are narrowed down to their specific organization function and all the decisions are taken by a smaller group. The chances of disputes and internal conflicts among employees are comparably higher due to this reason. Though the scope in a private company is narrower, it is much simpler, if the corporate governance regulations are well maintained. As per Budhwarand and Debrah (2013p.140), influencing the objectives are different in case of partnership or joint venture in private companies, depending upon the percentage of share, each partner holds. These factors are responsible for the launching of new products and revenue margin. Specifically, every decision taken by the company influences the factors. Apart from the technical department and financial department, the organization can also include trained professionals who shall provide the company with eminent decision making factors.
In case of TESCO, the focus on expansion on the external organizational structure is depriving attention to the internal work culture in TESCO. Research and reports states that, the employee’s customer service department are under immense work pressure and requested over time, increasing customer satisfaction and increase in sale, but simultaneously increasing employee dissatisfaction, which is a huge limitation to the company.
LO3. P4 The positive and negative effects of macro upon business environment
A respective business faces different forces from internal as well as external sources. These forces are categorized as micro and macro factors. Micro factors are like organizational capacity and weakness, that all of those will be considered while making strategies. On the other hand, macro factors like political, social and economical forces bring strategic changes. For example, economic rates of UK will get a change; there will be an impact on pricing strategies.
The macro environment covers, the basic strength of a private sector and all kind of business sectors, on which it runs. One of the most eminent negative impact, according to previous research is the,
Fiscal Policy impact
Excessive usage of online sales by customers
Advanced technological usage of TESCO
Increase in product quality and company reputation due to online sale
The fiscal policy is a large criterion while running an organization. The increase in collection or taxation revenue by the government has impacted TESCO in a negative way. Moreover, the excessive utilization of online buying by customers has affected TESCO both positively and negatively. The profit increased margin has enriched the company with high revenue, but at the same time the store sale quantity has decreased immensely.
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