Qualification - Higher National Diploma in Business
Unit Name - Business and the Business Environment
Unit Number - Unit 1
Unit Level - Level 5
Assignment Title - The Business Environment of a Multinational Organisation
Learning Outcome 1: Explain the different types, size and scope of organisations.
Learning Outcome 2: Demonstrate the interrelationship of the various functions within an organisation and how they link to organisational structure.
Learning Outcome 3: Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations.
Learning Outcome 4: Determine the internal strengths and weaknesses of specific businesses and their interrelationship with external macro factors.
Timely Delivery Of Orders From Unit 1 Business and the Business Environment - Higher National Diploma in Business Assignment Help Online
You are required to investigate and explain three different types of organisations, their size and classification to highlight differences between them. This should include their legal structure, size and scope, as well as their key stakeholders. For one of the organisations you must then explain the various functions within the business and create an organisational chart to explain the interrelationships between different functions. You must also explain how this would be different in the other two organisations. You are required to analyse the current environmental factors that influence/impact your chosen organisation.
Organizations differ in terms of domains, strategies, processes, and outcomes. Perhaps, types, size, and scope are key factors of differences. In the international business environment, performances of organizations are closely linked to organizational structure and external factors. The purpose of this report is to analyze different kinds of organizations and evaluate the relationship between business objectives and organizational structure.
1. Introduction to provide an overview of different types of organisations and the growth of the international business environment.
Chapter 1: Different types, size and scope of organisations
1.1: Overview of different kinds of organisations
Organisations differ based on three kinds - private, public, and voluntary. Every organisation has unique environmental factors and also differ in terms of their operations.
1.2 Private sector
Private sector organisation:A private sector organisation is a company or enterprise that is owned and operated by individuals or groups of individuals rather than by the government (Jones, 2013). Private sector organisations can be found in both the for-profit and not-for-profit sectors, and they vary greatly in size and scope. Some of the most well-known private sector organisations include Apple, Walmart, and Google.
One of the key advantages of private sector organisations is that they are generally more nimble and responsive to change than their government-owned counterparts. This can be seen in the way that private sector organisations are often able to quickly innovate and adopt new technologies, while government organisations can often be slower to respond. Additionally, private sector organisations typically have more freedom to make decisions without having to worry about political interference. An example of a private sector organisation is Microsoft that is a management firm and offers services like audit, consulting, and advisory support.
1.2.1 Sole trader
A sole trader is an unincorporated business owned and operated by one person. It is the simplest type of business structure and is relatively easy to set up. A sole trader can operate in their own name or choose to trade under a business name. They are personally liable for all aspects of the business, including debts and losses.
A partnership is a business relationship in which two or more people agree to pool their resources for mutual benefit. In a partnership, each person contributes money, property, labor, or skills to the venture and shares in the profits and losses.
Partnerships can be formed for any purpose, but are most commonly used in business. There are different types of partnerships, including limited partnerships, general partnerships, and limited liability partnerships. Every type is linked with specific benefits and risks.
Limited partnerships are formed by two or more people who agree to invest money in a business venture with the expectation of profit. The partners share financial outcomes of the business according to their agreement. Limited partnerships are regulated by state law, and each state has its own laws regarding limited partnerships.
When two or more people decide to mutually come forward and kickstart a business together, they also share losses and profits. There is no minimum count of partners essential for a general partnership, and no formal paperwork is necessary.
1.2.3 Private Limited Company
A private limited company is a type of company in the United Kingdom and many other Commonwealth countries. It is a company which has limited liability and a minimum of one director and one shareholder.
The shareholders do not remain responsible for the debts that the company may incur, and the directors are liable for any wrongful or illegal actions that the company may take only to the extent of their shares in the company. It must also file certain documents with the appropriate government agency, such as its articles of association and a statement of capital.
1.2.4 Public Limited Company
A public limited company is a type of company that is registered with the Securities and Exchange Commission (SEC) and has shareholders who can purchase and sell its stock on a public stock exchange. The key difference between a public limited company and a private limited company is that the former is required to disclose certain financial information, such as annual reports and shareholder information, to the public while the latter is not.
Some of the key benefits of a public limited company include:
- Increased credibility with customers and suppliers
- Access to capital markets through issuing shares
- Greater flexibility in terms of ownership structure
- Limited liability for shareholders
1.3 Public sector
Public sector organisation:A public sector organisation is an organisation that is owned or controlled by the state or a public body (Jones, 2013). The term indicates organisations that provide goods and services for the benefit of the public, such as schools, hospitals and roads.
The public sector can be contrasted with the private sector, which is made up of businesses that are possessed by private individuals or groups. The private sector is responsible for the production of most goods and services in the economy, while the public sector is responsible for providing essential services such as healthcare and education. A good example of a public sector organisation is Microsoft that specializes in selling proprietary software products and services to customers across the world.
1.3.1 Fire services department
The fire services department is responsible for fighting fires and rescuing people from burning buildings. The department is also responsible for investigating the cause of fires, and working to prevent future fires from happening.
The fire services department is made up of a team of highly trained firefighters, who are equipped with the latest firefighting equipment. The department also has a number of support staff, who are responsible for maintaining the equipment and providing administrative support.
The fire services department operates out of a number of fire stations, which are spread out across the city. The department also has a number of vehicles, which are used to respond to emergencies.
The firefighters who work in the fire services department are highly trained and experienced. They undergo regular training to ensure that they are up to date with the latest firefighting techniques.
The department is also responsible for educating the public about fire safety, and working to prevent fires from happening in the first place.
1.4 Voluntary sector
Voluntary organisations are groups of people who have come together to do something that they feel is important, without being forced to do it (Jones, 2013). They can be anything from a group of friends who get together to help clean up their neighbourhood, to a large organisation that raises money to help people in need. A good example of a voluntary organisation is PETA (People for Ethical Treatment of Animals).
PETA - PETA is an international non-profit organization that aims to promote ethical and compassionate treatment of animals. It was founded in 1980, and today has over 3 million members and supporters worldwide (PETA, 2022). PETA works through public education, campaigns, research, animal rescue, and legislation.
PETA's main focus is on promoting vegetarianism/veganism, as they believe that this is the best way to reduce the overall suffering of animals. They also campaign against the use of animals in experiments, factory farming, the fur trade, and other forms of animal cruelty. In addition, PETA works to help animals who have been victims of natural disasters or abuse.
1.5 International companies
International companies indicate companies that are headquartered in one country but have operations in many countries. They may be public or private companies and span a wide range of industries.
There are many benefits to doing business with an international company. First, these companies often have a global reach, which can give your business access to new markets and customers. Additionally, they may have more experience and resources when it comes to doing business internationally. Finally, working with an international company can help your business learn new techniques and best practices from around the world.
1.6 Global companies
The globalization of business means that companies are increasingly looking for new opportunities to do business in international markets. This has led to a growth in the number of businesses operating in multiple countries. In order to be successful in this environment, companies must understand the different cultural and legal environments in which they are doing business. Additionally, they must have the ability to adapt their products and services to meet the needs of different markets.
The international business environment is also becoming more competitive. Companies are facing new competitors from all over the world. In order to be successful, they must be able to identify and exploit new market opportunities quickly. Additionally, they must be able to respond rapidly to changes in the global marketplace.
The growth of the international business environment is creating both challenges and opportunities for companies. Those that are able to understand and adapt to this changing environment will be well-positioned to succeed in the global marketplace.
1.7 Transnational companies
Transnational companies are companies that operate in multiple countries. They are also known as multinational corporations (MNCs). These companies have a global reach and typically have operations in multiple countries.Transnational companies often have a complex structure, with many different subsidiaries and divisions. This can make them difficult to manage. However, their size and scale can give them a significant competitive advantage.
Transnational companies often face criticism for their environmental and social impact. They have also been accused of exploiting workers in developing countries.
Franchising is a business model that allows entrepreneurs to start and run their own businesses by purchasing the rights to use another company's brand name, products, and business system. Franchises are typically found in the retail, food and beverage, and service industries.
Licensing is the process of acquiring and maintaining a license to use or sell certain intellectual property. A license may be obtained from the owner of the intellectual property or from a third party who has been authorized by the owner to grant licenses. The term "licensing" can also refer to the act of granting a license.
Licensing is often used in business to protect intellectual property, such as copyrighted material or patented inventions. By granting a license to use the intellectual property, the owner can control how it is used and ensure that it is not abused. The terms of the license may be specified in a contract between the parties involved.
1.10 Joint venture
A joint venture is when two or more businesses team up to create a new company. This can be a great way for businesses to expand their reach and grow their profits. In a joint venture, each business contributes something different, so it's important to make sure everyone is on the same page before starting.
The organisations differ in terms of size and scope. The mission and vision statements also differ when organisations exhibit unique sizes. In this section, background of organisations identified in the previous sections are explained.
It is known that there is a link between organisational structure and business objectives. The two are interrelated and dependent on each other. Organisational structure provides the framework within which business objectives are pursued and achieved. Business objectives, on the other hand, provide the motivation for organizational change and development.
There are different types of organisational structures, each with its own advantages and disadvantages. The most common types are functional, divisional and matrix structures. The type of structure that an organization adopts should be aligned with its business objectives.
For example, if the objective is to become more customer-focused, a divisional structure may be more appropriate than a functional structure (Knoke, 2018). In the case of Microsoft, it follows a combination of structures based on the services proposed.
The link between organisational structure and business objectives is not always a linear one. Sometimes, changes in organisational structure can lead to changes in business objectives. And, sometimes, changes in business objectives can lead to changes in organisational structure. This is known as the reciprocal relationship between organisational structure and business objectives. In the case of PETA, business objectives have decided the structure of the firm. As they focus on promoting veganism and reducing animal abuse, their organizational structure is more open, functional, and also interconnected.
The link between organisational structure and business objectives is an important one and should not be underestimated. It is essential that both are aligned if an organization is to achieve its goals and objectives.
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2. An explanation of each of the chosen organisations, including: background details of the organisation; the products and services they supply; the size and scope of the organisation; their vision, mission and business objectives; the organisational and legal structure; and information about their stakeholders.
Chapter 2: Interrelationship of the various functions and link to organisational structure
2.1 Background information of Microsoft
Microsoft Corporation is a multinational technology firm based out of Redmond, Washington. It builds, establishes, licenses, and also sells computer software, consumer electronics, personal computers, and related services. Some of its popular range of products include Microsoft Office package, Internet Explorer, and operating systems. Recently, it has also launched web browsers, game consoles, and tablets (Microsoft, 2021). With respect to the year 2016, Microsoft is known as the world's largest software maker by revenue. It is undoubtedly a highly valuable company in the world.
Microsoft has a diverse customer base. It sells its software to individual consumers, small and medium-sized businesses, and large enterprises. The company also offers a variety of services, including support and consulting services, training, and certification. Microsoft's main competitor in the software market is Apple Inc., which mainly sells closed-source software to individual consumers, while Microsoft's main competitors in the services market are Google and Amazon.
2.2 Organisational Structure and Stakeholders of Starbucks
There is a strong relationship between the organisational functions and objectives and the structure. The organisation's structure will be aligned to support the achievement of its objectives, and the departmental functions tend to be aligned so as to enable the achievement of the organisation's goals (Knoke, 2018).
The structure will also dictate how decisions are made within the organisation, and how work is allocated and monitored. The functions will provide the means by which the organisation carries out its work, and how it monitors and evaluates performance. This relationship between organisational functions and objectives and structure is important to consider when designing an organisation. It is also important to review regularly to ensure that the organisation is still fit for purpose. If the organisation's objectives or structure change, then the functions and how they are carried out will need to be reviewed.
The organisational structure of Microsoft is -
Microsoft has a corporate structure that is divided into several divisions and business units. The divisions are responsible for the different products and services that Microsoft offers, and the business units are responsible for different areas of the company's operations. Microsoft's organizational structure is designed to allow the company to be nimble and respond quickly to changes in the market.
2.3 Interrelationships between different departments
Each division has a president who reports to the CEO. The presidents are responsible for the overall performance of their divisions and for making sure that their divisions are meeting the goals set by the CEO (Microsoft, 2021). The business units have a variety of leaders, including general managers, marketing managers, and engineering managers. These leaders are responsible for the day-to-day operations of their business units and for developing new products and services.
Microsoft's organizational structure gives the company a lot of flexibility. The company can quickly respond to changes in the market by changing the focus of its divisions and business units. This flexibility allows Microsoft to maintain its position as a market leader.
The advantages of interrelationships are as follows.
1. Helps in achieving organisational objectives: A good relationship between organisational functions and objectives ensures that all the departments work together towards achieving common goals. This coordination between different departments leads to increased efficiency and effectiveness in achieving desired results. The coordination between departments at Microsoft has remained outstanding thereby enabling the brand to rank on the top management consulting firms.
2. Increases workers' motivation: When organisational functions are well aligned with objectives, it leads to increased motivation among employees as they feel that their individual efforts are contributing towards the success of the organisation (Jones, 2013). This feeling of being a part of something larger than themselves boosts morale and drives employees to give their best.
3. Facilitates effective decision-making: A good relationship between organisational functions and objectives results in better decision-making as all the relevant information is available to decision-makers. This helps in making timely and effective decisions that are aligned with the overall objectives of the organisation. Microsoft is an example of an effective decision-making model to release products that pioneer in the global arena.
4. Improves communication: Communication is essential for coordination between different departments and objectives. A good relationship between organisational functions and objectives ensures that communication flows freely among all the departments, leading to better understanding and cooperation.
5. Promotes team work: A good relationship between organisational functions and objectives fosters team work as different departments need to work together to achieve common goals. This spirit of teamwork leads to better performance and results
Some of the disadvantages with these interrelationships are as follows.
One major downside is that it can lead to a lack of communication and coordination between different departments within the organisation (Jones, 2013). This, in turn, can impact on the efficiency and effectiveness of the organisation as a whole. For example, in organizations like Microsoft, there are several departments and the interdependency is way too high.
Additionally, this type of relationship can also create silos within the organisation, whereby different departments become isolated from one another and are reluctant to share information or work together. This can limit creativity and innovation, as well as making it more difficult to resolve problems. With organizations like Microsoft, this needs to be taken enough care of.
Finally, this type of relationship can also make it harder for managers to gain an overview of the organisation as a whole, as they are unable to see the linkages between different departments. This can lead to decision-making that is not as well informed as it could be.
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3. In detail, explain the functions for one of the chosen organisations, using an organisation chart to show how the functions interrelate and an explanation of how they relate to structure.
Chapter 3: Positive and negative impact of macroenvironment on Microsoft
3.1 Overview of SWOT Analysis
SWOT analysis is a strategic planning tool. It is used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a business venture or project (Jones, 2013). A SWOT analysis can be conducted for any business, product, place, industry, or person. It is most commonly used in business and marketing contexts, but can be applied to any scenario. The SWOT analysis process begins with identifying the key factors involved in the venture or project. Every organization, including Microsoft, needs to carry out SWOT analysis to gain competitive advantage.
• A well-known software company - Microsoft is known as the largest developer in the world and specializes in cloud computing. There are also commercial cloud services offered by the brand.
• Consistent growth in market visibility - There is consistent growth in terms of market share and reach. In fact, the worth of this brand has reached over 2 trillion USD as of 2022.
• High customer loyalty - It includes products like Office 365 that are unparalleled and hold highest customer loyalty in spite of numerous competitors in the world.
• Diversified product portfolio - Microsoft includes several software products and services that remain complete and address every domain needed for individuals and businesses in their daily operations.
• Lack of innovation - The growth of the firm is constant. However, the innovation associated with each product is lagging when compared to its competitors like Amazon and Google.
• Failed acquisitions - While Microsoft has acquired brands like Nokia, the success rate of these acquisitions is limited.
• Losing leadership in certain segments - When internet browser was initially launched, it was capturing the market but after the release of Chrome and other new browsers, Microsoft lost its leadership.
• Large opportunities in the cloud computing domain
• Cost leadership approach in its product lines
• Massive opportunities to grow in artificial intelligence and machine learning domains
• Diversifying the portfolio further
• New partnerships
• Several criticisms in the past on the way workforce was treated
• Massive competition in the PC and smartphone markets
• Vulnerable to software piracy
• Extreme pressure from open source software applications
Table 1: SWOT analysis of Microsoft
- Strong brand awareness and high market reach and visibility for its products and services
- Excellent supply chain that can add to profitability
- High market capitalization supported with brand reputation
- Regular enhancement of stock keeping units (SKUs)
- Security flaws observed in its software applications
- Failed acquisitions in the past
- High fluctuations in currencies affecting the PC market
- Large opportunities in the cloud computing domain
- Cost leadership approach in its product lines
- Massive opportunities to grow in artificial intelligence and machine learning domains
- Diversifying the portfolio further
- Several criticisms in the past on the way workforce was treated
- Massive competition in the PC and smartphone markets
- Vulnerable to software piracy
- Extreme pressure from open source software applications
The SWOT analysis makes it clear that Microsoft has several opportunities but is also shaken by new trends and customer needs. These have affected the way the brand has projected itself in the global market. On the other hand, currency fluctuations continued (Link & Scott, 2019). It is high time that Microsoft makes a visible improvement to its product line with new acquisitions and partnerships that can capitalize on areas like machine learning, artificial intelligence, and cloud computing.
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4. Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations.
Chapter 4: Internal Strengths and Weaknesses of Microsoft and their interrelationshipwith external macro factor
4.1 Overview of PESTLE Analysis
Macro environment consists of general factors that affect organisation and industry as a whole. It refers to the broadest level of the external environment and includes elements such as political, economic, social and technological (PEST) forces. These factors can have both positive and negative influences on an organisation (Ho, 2014). The growth of Microsoft can be attributed to changes that have happened in the macro environment. For instance, taxation policies have added ease to licensing and better management of vendors. However, the political landscape in certain countries acted as negative forces in letting the brand grow further.
Many positive influences can result from a favourable macro environment. For example, political stability and good economic conditions will make it easier for businesses to operate, reducing costs and enabling them to focus on growth. Social changes may create new opportunities for businesses, such as the growth of the age-related healthcare market or the increasing demand for environmentally friendly products. Technological advances can provide opportunities for businesses to improve efficiency and increase their competitiveness.
A favourable macro environment can help to create a positive business climate, which is essential for long-term success. Businesses that are able to take advantage of the positive influences in the macro environment are likely to be more successful than those that cannot (Ho, 2014). There are many factors in the macro environment that can have a negative impact on businesses. Political instability, natural disasters, and economic recession are just a few of the things that can cause a company to struggle.
4.2 Political factor
Microsoft is a multinational corporation and as such, is affected by many political factors. For example, the company has had to comply with antitrust laws in many countries. Further, the brand also had to cope with currency and taxation regimes that affected business operations. It is also appropriate to highlight that the brand had paid over 10 million USD within two years as a lobbying practice to build its image. This is the probable reason for Microsoft to be termed as a lobbyist.
4.3 Economic factor
Microsoft is subject to fluctuations in the economy, as most businesses are. The company's income and stock prices can be affected by things like recessions and inflation (Microsoft, 2021). Further, the fluctuation in exchange rate has left Microsoft stuck with global pricing for its proprietary products. After the outbreak of COVID-19, Microsoft faced global pressures in meeting demands of customers in a cost-effective way.
4.4 Social factor
Microsoft has had to deal with public opinion about its products and business practices for many years. The company has also made changes to some of its policies in response to social pressure. However, there is inadequate mobile presence of this brand thereby creating a view of an outdated organization.
4.5 Technological factor
Microsoft is a technology company, and as such, must continually innovate and adapt to new technologies. It must also manage the risk that comes with new technology adoption. As it had entered the gaming console market, it needs to cope with new changes and demands from gamers (Microsoft, 2021). Microsoft needs to improve its presence in offering cloud-based services. In spite of its growth, it is facing a tough competition and the brand needs to invest further in R&D.
4.6 Legal factor
As a global corporation, Microsoft is subject to a variety of legal regulations. The company must comply with laws relating to things like antitrust, data privacy, and intellectual property. In the past, the brand has been accused for engaging in several lawsuits related to gender discrimination and inappropriate handling of employees that incurred around 9 billion USD as fines.
4.7 Environmental factor
Microsoft must consider the environmental impact of its business activities. For example, the company has been working to reduce its carbon footprint in recent years. In fact, it has also made it a point to spend about 50 million USD within 5 years to improve its machine learning and artificial intelligence technologies mainly to deal with the environmental change.
The strengths and weaknesses mentioned in the previous section are closely linked to external macro factors. For instance, the consistent market growth is the reason for Microsoft to manage during tough times. However, the lack of innovation is the reason for it to get hit during technological and economic changes in the external market. In fact, the diversified product portfolio makes its technical knowledge prominent but this remains insufficient as it needs to adapt to latest trends by thoroughly understanding the social factors.
In the previous sections, three organisations based on the size and scope are chosen and analysed namely, Microsoftand PETA. From the SWOT analysis, it is evident that the management might have to make decisions based on the responses from the customers. For instance, there is a weakness on the lack of innovation mentioned in the SWOT analysis and this stresses the need to decide on extended product lines. This gives the competitive edge to the brand. Likewise, strong customer loyalty can be taken advantage of in launching new products and services. This is an advantage to the decision-makers of Microsoft.
5. Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors.
Solution: Chapter 5:Conclusion
Organisations largely differ based on size, scope, mission, vision, and impacts of the environment. There is a close link between business objective and environmental impacts, size, and scope. Three businesses - Microsoft, fire services department, and PETA have been analysed throughout this assignment. It is evident that PETA is a voluntary organisation and maintains a hierarchical model in terms of communication. However, Microsoft operates in competitive arenas. Microsoft is also liable to shareholders which is the reason it needs to take every signal from the external environment seriously. As a result of the PESTEL analysis, it was clear that the brand was undergoing a tough time due to lack of innovation and high competitiveness in the market. Nevertheless, it can still capitalize with the customer loyalty and market size it has captured over the years. All of these can push an organisation like Microsoft to understand the external environment better and sync it with the internal environment.