Business Environment

Introduction:

The environment of a business is very much important for an organisation to run the business effectively and efficiently to earn maximum profit (Craig and Campbell, 2012). So the manager of the organisation needs to analyses the micro and macro environment of business by using SWOT analysis PESTEL analysis. It is a matter of great regret that the business of an organisation is also being affected in various ways. Competitors, Suppliers, Buyers, creditors are influencing the nature of business. The author here is going to discuss types of business based on size and legal structure. They will discuss here goal, size, types, goods or services of private, public and voluntary organisation. The authors will analysis the SWOT and PESTEL on private business. The author will try to link the Aviva Plc to the basics function of a private organisation. In this report,,, the author will also discuss different types of organisational structure,, and finally,,, it will be linked with private business. The author needs to show the difference between small, medium and large organisation. Finally, the author will try to discuss all the important issue as per learning objectives.

P1: Explain different types and purposes of organisations; public, private and voluntary sectors and legal structures.

According to the size, nature and functions, business organisations can be categorised into several sectors such as Private, public and voluntary. The classification can be done as primary, secondary, small, big and some other categories (Craig and Campbell, 2012). Several types of business organisations have prevailed in industry v. These are denoted here:

Private sector organisation: Private sector organisation is operated by an individual or some people who want to gain profit by engaging in business activities (Lee and Gross, 2019). All the individuals have the motive to earn a proper profit so that the financial change can be derived. There are some motives for this type of business like:

Ø Obtaining the highest amount of profit is one of the main motives.

Ø Maximization of wealth.

Ø The organisational structure is determined to improve the business and enhance profit and reducing liability.

Private organisations can be exemplified as sole proprietorship business, partnership business and so on.

Sole proprietorship business: Sole proprietorship business is found and directed by only one person,, and the person is the all in all of the business. There are no partners for whom the profit has to be shared. At the same time, all the liabilities are also maintained by the owner. To form this type of business, one needs very low capital. The formation has no difficulties in legal considerations (Lee and Gross, 2019). There are lots of examples of this type of business such as grocery shop, bakery, fast food shop and so on.

Partnership business: Partnership business is formed by some partners who are engaged for earning profit according to the contractual relationship. This type of business is not restricted,, so many difficulties for maintaining legal actions. In order to form a partnership business, at least two persons and nit more than 20 persons (For banking industry the maximum number should not exceed 10) are needed (Lee and Gross, 2019). The partners are liable according to the shared capital and contract. The profit and loss is shared according to the shared capital or contractual ratio also.

Voluntary organisation: Voluntary organisation is operated for serving the people of the societies. Earning profit is not the motive of this organisation. There are several issues faced by the people,, and voluntary organisation is formed to solve several issues of the general people (Lee and Gross, 2019).

Public sector organisation: Public sector organisation ensures the large number of products for the manufacturing purposes by which a large number of activities are operated. This type of organisation is denoted as a company,, and the owners or shareholders of the business are liable according to the shares. The main motive of the business is to enhance the profit for the owners or the shareholders (Davies, 2020). Public sector organisation includes the following categories:

Private limited company: Private limited company is formed under the company act for which at least 2 persons and not more than 7 persons are required as the owners to start the business. Maximising revenue and wealth is the main motive of this business. The salient feature is that the owners have limited liability (Davies, 2020). The capital is vast of this type of organisation.

Public limited company: Pubic limited company is also run under the company act 1994. However, the main difference is that public limited company has at least 7 shareholders,, and the maximum number is unlimited according to the shares of the company. The shareholders cannot be forced to have the liability more than the owned shares (Davies, 2020). This type of organisation can invite the public to sell the shares of the company in order to raise capital.

Co-Operative business: Co-operative business is formed and run by a certain group of people of society who are mainly derived of the rights of several things and wants to change the condition by combining all the capital and ideas. This type of business helps to ignore the ill competition among the people (Lee and Gross, 2019).

P2: Explain the size and scope of a range of different types of organisations.

The types of business organisations are mainly determined according to the size and scope of activities. Basically, the classification of business based on size can be of the following chart..

Figure: Classification of business based on size

Source: (Lee and Gross, 2019)

SME	Microbusiness	Small business	Medium business	Large business
Employees	>than 10	>than 50	>than 250	<than 250
Turnover	Under £2 million	Under £10 million	Under £50 million	No boundary

Table 01: Classification of business based on employees and turnover

Source: (Davies, 2020)

Business organizations can be of private, public and voluntary organisation. Private, public and voluntary organisations are also classified according to the size and scope of activities. Here the organisation from each type is going to be listed.

Privates Company (Aviva Plc): Aviva Plc is an insurance company of the United Kingdom. It generally provides insurance service such as general insurance, life insurance and pensions. Aviva Plc is considered as the largest generalinsurance company in the UK as the company serves a large number of clients. The insurance company has the Headquarter in London, UK,, and it was founded in 2000. Aviva Plc is operating in 16 countries,, and the served area will be spread further. It has been recognised as one of the successful insurance company in the UK (Aviva plc, 2017).

Types of business: Private Company

Number of employees: More than 30000

Market growth: Aviva Plc is a growing company. The span of business is getting enlarged.

Countries served: 16

Public Sector (Crown Prosecution Service): Crown prosecution Service or CPR is the public sector organisation that works for operating prosecutions for the criminals in England and Wales. It was founded in 1986. The Headquarter of Crown Prosecutions Service is pretty France, London. The organisation averagely receives fund for incorporating prosecutions service is about £592 million. CPR is mainly engaged and operated by the government to provide the base of advice and opinions to the police and other law enforcing agencies to determine the actions against the criminals. Legal advice is served by CPR. This public the institution determines findings of the prosecutions for criminal activities and provides assistance to the police whether any charge should be brought against a certain criminal or not (CPS, 2019).

Type of organisation: Public.

Area served: England and Wales

Number of employees: More than 6000.

Voluntary (Cancer Research): Cancer research in the UK was established in 2004 in Redman Place, London in order to lessen the death of people due to cancer. Cancer research in the UK is the world's largest independent institution for operating research for the cancer patients. This organisation provided treatment, advice and preventive advice for the patients so that the life-taking disease cannot toll the valuable lives. Several campaigns are run and operated by this voluntary organisation (C.R., 2008).

Type of organisation: Voluntary

Number of employees: 3964

Number of volunteers: 40000

M1: Analyse how the structures, size and scope of different organisations (public, private and NOGs) link to the business objectives and product and services offered by the organisation.

Business organisations are classified and categorised according to the size and scopes of the range of activities. According to the size to business, organisations can be classified into three categories such as small, medium and large. Basically, small organisations can be formed by less number of employees and capital and at the same time medium,, and large organisations have more employees and capital. There are other classifications by which the organisations can be categorised. According to the legal structure, the categories of business can be private, public and voluntary. Each type of business has separate objectives and functions for which all the activities are performed (Craig and Campbell, 2012). The differences are seen from organisation to organisation. The organisational structure, functional structure, capital, size, scope and other are the influential matters by which the categories of business can be placed. There are lots of functions, activities, objectives, importance’s for which the organisational activities are determined and performed. There are some certain factors for which the sizes, scope and so on of the business are determined. These are here:

Organisational structure: As there are several functions to be played by the organisation, the activities and roles are divided according to the nature of the activities. Every employee has significant roles to be played properly for the growth of the business. The job responsibility of the employees is identified and determined by organisational structure. It denotes to the duty and responsibility of an employee to be done as per the order of the immediate leader of the organisation. The employees can understand the goal and mission of the organisation and perform activities to derive organisational success. If the organisation fails to direct the employees according to the principles of the organisation, the success cannot be derived. And organisational structure defines the roles and responsibilities of the employees. The employees can understand properly about the required activities to be done in order to attain the goal. The organisational structure refers to to the range of activities of the organisations. The flow of leadership and directions are detected by organisational structure. So, it is a dominant factor that defines the scopes of the business.

Size of business: The roles of business organisations and activities are determined severely by the size of the business. According to the size of the business, business organisations can be small, medium and large. An organisation has specific products for the consumers by which the activities are arranged as per the organisational principles. The stakeholders who are engaged in the organisation can understand the ability and financial capacity of the business. The size denotes that an organisation is small, medium or large. The production process is different according to the size of the business (Lee and Gross, 2019). The large organisation can manufacture a lot of products than a small organisation. The size of the business also determines the number of employees. Moreover, it should be recognised that small business doesn’t have much scope for enlarging the business.

Thus it has to be sincerely recognised and understood that the objectives, actions and functions of business are referred and determined by the organisational structure and sizes.

P3: Explain the relationship between different organisational functions of organisation of your choice and how they link to organisational objectives and structure.

There are lots of organisational functions that are performed according to the organisational principles. In order to spread the functions, organisations are seen to make promotional activities. Aviva Plc is one of the largest insurance companies in The UK. At present, this insurance company is serving more than 33 million customers from 16 countries (Aviva plc, 2017). Aviva Plc wants to be one of the best insurance companies in the world. For this reason, the company promotes the activities in several ways. Several departments handle specific jobs,, so that the arenas of the business can be improved and enlarged. From combining all the resources to recruit employees and financing activities- all the processes are determined to spread the scope of the business. The relationship between the organisational functions of Aviva Plc is described here:

Products, goods and service: Aviva Plc is an insurance company,, and the motive of the company is to gather a maximum number of clients for whom the several insurance policies can be offered. The improvement of insurance policies is very necessary to gather more clients (Aviva plc, 2017).

Marketing: The marketing activities of Aviva Plc are very significant. There is an efficient marketing team which promotes the services of Aviv Plc. The company sometimes hires the personnel who are the icons of individual field so that the promotional activities can be effective. The services are infirmed to the clients by the marketing team. The objectives and organisational goals are determined by the marketing department (Aviva plc, 2017).

Finance: Aviva Plc has to gather the required capital so that the insurance activities can be done. Moreover, effective sources for investing money are needed to be found. The finance department of the company is very aware of the financial decisions for deriving the objectives of the organisation.

Human resource management: The human resource management of Aviva Plc is also determined for deriving the goal of the organisation and meet the objectives (Aviva plc, 2017). Efficient employees are recruited for several activities,, and the employees are selected as per the capability to handle the activities.

Aviva Plc has a proper organisational structure into which the employees find it very convenient to understand the objectives and goals so that the performance can be effective to reach the destiny.

P4: Identify the positive and negative impact the macro environment has upon business operations of the organisation of your choice.

Macro environments include political, economic, social, technological, environmental and legal factors. It has both positive and negative impact on business. These are given below:

Political impact: AVIVA Plc is running the business all over the world , so they have to face both national and international barriers. Brexit is now a big issue for Aviva. If Britain exit from the EU, then it will be a positive side for Aviva that is foreign company need to pay high tax to the UK government (Aviva plc, 2017). As a result, some foreign company may leave the business. On the other hand, it will be a negative effect also that is Aviva also need to pay a higher tax to the other EU country.

Economic: It includes GDP, GNP, NI, and Inflation and so on. It hits the business of Aviva Plc directly. Because of Brexit will increase the cost of daily commodities. So the consumer needs to pay more money to survive,, and they will lose the interest in insurance (Authors et al., 2019).

Figure: Macro environmental factors

Source: Author, 2020

Environmental: It is very good for the business that Aviva Plc is very concern about the environment. They use mostly all environment-friendly elements to decrease pollution. But they also need to face several legal restrictions from the government to reduce the use of of carbon and so on.

Social: Social factor is another element of the macro environment. It helps the organisation to understand customer demand mainly (Authors et al., 2019). Social factor deals with age, taste, values, educational level of a nation and so on. Higher educational background encourages the people to do more insurance on their life and assets.

Technological: Aviva is mainly technology-based organisation from the beginning of their business. But still,, they are focusing on innovation. They have tried hard to adopt the situation of technological advancement so that they can provide more service to the clients.

Legal: It is also good for the business where the manager of the organisation needs to face several types of barriers from national and international authorities. Aviva Plc is being affected by tax laws, environmental laws, minimum wage law and so on.

P5: Conduct internal and external analysis of any other organisations of your choice in order to identify strengths and weaknesses.

Strengths and weakness are very much important for an organisation. The author here analyses the SWOT on Aviva Plc to find strengths and weakness.

Strengths of Aviva Plc: They have a strong capital position and a robust balance sheet that attract the investor mostly. Aviva also has 300 years of experience and huge clients. Around half of the total population of the UK is their clients. They are very much strong in technology also. They provide a high quality of service to Canada. As a result they are now 2^nd position in the insurance industry in Canada (Aviva plc, 2017).

Weakness of Aviva Plc: They have limited success apart from from the core business. Not very good at product demand forecasting leading to a higher rate of missed opportunities compare to its competitors. They are not highly successful in integrating to the different culture (Aviva plc, 2017).

M2: Analyse the advantages and disadvantages of interrelations between organisational functions and the impact that can have upon the organisational structure of the organisation of your choice.

Organisational the structure is very much important for an organisation where the manager of the organisation needs to consider different types of structure. Because of different types of the structure has defined the goal of the organisation (Kortmann, 2012). There are different types of organisational structure are available such as:

Functional structure: It is a group-based organisational structure where the manager allocates different types of employees to a group to work for some specific organisational goal. It has a vertical structure where the manager of the organisation needs to use different types of function for the organisation.

Figure: Functional Structure

Source: (Kortmann, 2012)

Advantages: The most important advantages of functional organisational structure is that grouping efficient employees for the most important department of the organisation. This is most important and applicable for the big organisation where success is being achieved by the group activities of the different functional department. One more important advantage is a functional organisational structure boost the speed of the organisation. Because employees do not get a burden of workload.

Disadvantages: The most possible disadvantages of functional organisational structure are lack of coordination. Because there are few employees in an organisation who are less active and less engaged in the group. As a result,, some employees get full pressure of the whole task.

Divisional structure: It is one kind of organisational structure where the the manager that groups each organisational function into a division. Each division contains all the necessary resources and functions within an organisation to support the product line and geography.

Figure: Divisional organisational structure

Source: (Kortmann, 2012)

Advantages: The division performs well because it allows an organisation to focus on specific product or service of an organisation. Each division has its own president of the vice president that control the overall activities of the organisation. It also allows an employee to follow a common culture of the organisation and spirit de corps. It shares the experience of the employee into a group.

Disadvantages: It also has some weakness such as a company comprised of of of competing divisions may allow office politics instead of sound strategic thinking to affects its view on such matters.

Metrix organisational structure: It is very much important for the organisation where the manager deals with more than one box. In a Metrix organisational structure, there is more than one boss to an employee. It is very much complex,, but it is definitely helpful for the organisation to achieve organisational goal.

Figure: Metrix organisational structure

Source: (Kortmann, 2012)

Advantages: Firstly it increases the motivation of the employee. It encourages the democratic leadership of the organisation. It contributes valuable information to the organisation to lead the organisation effectively. In this structure, every decision of the organisation has been made by the employee’s point of view. So the employee of the organisation also shares efficient information to the others.

Disadvantages: It is very much expensive process because it needs double management system. Though it improves the abilities of the employees, it needs to use all the resources.

D1: Provide a critical analysis of the complexities of different types of business structures and the interrelationships of the different organisational functions of organisation of your choice.

Complexities in private business: Starting a private business is not very tough for anybody. There is no legal requirement to start a business. But still, it has different types of complexities such as collecting capital is one of them. Because there are few numbers of owner needs to share all the capital. There is lacking employees also. In some cases, the owner is playing the role of employees (Amatori and Colli, 2013). The owner needs to take all kinds of decision from her own head. So sometimes they have faced huge problems to run the business effectively.

Complexities in public business: There are huge complexities in the public business. First of all, they need to follow different types of laws from the government of the nation. They need to register their business in joint-stock exchange commission at first. Then they need to publish the memorandum of association and article of association (Amatori and Colli, 2013). The public business has some more barriers such as AGM, bonus, dividends and so on.

Complexities in voluntaries business: Though voluntary is not a business they are running their business more likely business organisation. The most complexities of voluntary business are allocating money and volunteer. They need a donation from other organisation and donor. So that sometime it would be difficult for the organisation to run the function. Now a day,, people don’t want to work without money or voluntarily (Amatori and Colli, 2013). So that voluntary organisation faces different types of barriers from different sources.

Interrelation with different organisational function: It is very much important for an organisation to define the relationships between different organizational function. For example, the finance department of Aviva Plc decides how much money they need to collect from different sources. But this decision would be influenced in various ways. The marketing department of Aviva Plc will inject their requirement to the manager of the organisation,, so it is very much important for the finance department to take their requirement seriously before they finance money. The accounting department will record the transaction has occurred in the business.

P6: Explain how strengths and weaknesses interrelate with external macro factors of any other the organisation of your choice.

Strength and weakness of an organisation are the important elements of the microenvironment. Strength of an organisation is very much effective for tackling with external forces. The manager of the organisation needs to focus on their strength so that they can achieve organisational goal. Strength indicates capabilities, competitive advantages and financial stability to fight against external macro forces. But sometimes strength of the organisation can help the organisation to boost the performance and overcome the weakness also.

Basically,, SWOT and PESTEL are very much important for an organisation. There is a “T” in SWOT. It indicates threats. Though SWOT deals with internal issues but threats are the part of external factors. On the other hand, there is a T in the PESTEL analysis. It stands on technological factors. Though technological advancement is part of internal strength but PESTEL deals with external factors of the organisation.

Based on the above discussion, it is very much clear that strength and weakness are interrelating with the external macro-environment. SWOT will be relating with PESTEL to determine the forces on business. Finally,, it would be said that strength and weakness are a major part of the business which is capable of tackling the external forces.

M4 Apply appropriately SWOT/TOWS analysis and justify how they influence decision-making.

SWOT stands on strength, weakness, opportunities and threats. It deals with the internal environment of the organisation. The author will discuss here SWOT analysis on Aviva Plc and how it impacts on decision-making process of the organisation.

Strength of Aviva Plc: First of all,, the most important strength of Aviva Plc is their experience. They are around 300 years of experience to run this business. It affects the decision-making process of the organisation. Manager of an Aviva Plc is focusing on market share. They dominate the market strongly (Aviva plc, 2017). Half of the total populations of UK are the member of Aviva Plc. So they have a huge number of employees to control the business activities.

Weakness of Aviva Plc: Aviva is a financially strong company,, and they have vast experience in the field business (Aviva plc, 2017). But they are not innovative. Because they can’t expand the business in so many destinations.

Figure: SWOT factors

Source: Author, 2020

Opportunities: Aviva Plc has a huge opportunity to expand the business in all over the world. They have financial capabilities, strong manpower and most effective resources to achieve organisational goal. So Aviva Plc needs to find out the most effective destination to expand the business. Aviva Plc can acquire the desire goal if they also minimise the cost of business. Aviva Plc should be used more development program for the business to earn a profit (Aviva plc, 2017).

Threats: It is an external factor that influences the business in several ways. Market competition and rival behaviour of a competitor are very much effective. Zurich Insurance, Chubb is efficient competitor for the business. Aviva Plc need to tackle them in the UK and Met life ALICO and international cony.

Conclusion:

Business is playing an important role in the society. It tries to fulfil consumer needs and demands. As a result, it needs to operate different types of an organisational function to fulfil the need and demands of consumer as well as organisational goal and objectives. In this report,, the author has discussed private, public and voluntary organisation (Knoll, 2008). The author has used here Aviva Plc as a private organisation, Cancer research as a voluntary organisation. The author has also discussed about the organisational goal of AVIVA plc and their performance. In this report,, the author has discussed about the organisational structure of Aviva Plc. The author has also discussed SWOT analysis of AVIVA plc.

Reference list

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UNIT 1 Business Environment, BTEC-HND, UK