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ECON3323 Business and the Business Environment

University: ICON COLLEGE OF TECHNOLOGY AND MANAGEMENT

  • Unit No: 1
  • Level: High school
  • Pages: 15 / Words 3794
  • Paper Type: Assignment
  • Course Code:

    ECON3323

  • Downloads: 799
Organization Selected : Unilever
Question :

Following are the questions which are considered by the student for achieving the tasks.

  • Analyse the various types of companies, including their size and scope.
  • Analyse the interrelationship of various functions in the company & how they are link to the organisational structure.
  • Define the positive & negative influence of external environment upon the business functions.
  • Determine the internal strengths of particular business and justify their interrelationship with the macro factors.
Answer :

INTRODUCTION

Businesses get affected by many factors such as suppliers, competition, government regulations etc. Internal components can be controlled but external factors cannot be controlled. Hence companies make such strategies that help in running operations well in such dynamic business environment. Current assignment will explain the business environment of Unilever which offers consumer goods to wide range of people. Study will highlight purpose, legal structure of public, private and voluntary companies. It will compare these firm on the bases of their market share and scope. Report will describe relationship between various functions of organisation. SWOT analyses of Unilever will be done.

TASK1

P1 Describe various organisations’s type

Private Ltd: Organisations which are owned by individual, partnership, associations and agency that are operating for earning profits, without any state governance.. To from such companies two directors are appointed, register firm under rules and regulations of government and headquarter should be situated in UK. Private companies are of several types:

Sole Proprietorship: these are such entities which are owned by single person, as one person bear all the risk and enjoy profit of organization. It can be salon, small grocery store etc. (Agarwal, Grassl and Pahl, 2012).

Partnership: This is another kind of private companies which are owned by two or more partners. Both partners bear loss and enjoy profit. Roles and responsibilities are divided into these partners. Purpose of these firms is to generate profit and sustain in market for longer duration.

Limited Liability: these are another kind of private firms which are limited by liabilities. Unilever comes under this criteria as it is paying tax against generated profit and company needs not to pay liability to is consumers if it fail to generate profit.

 

Public Company: It is controlled by state to work for betterment, provides product or service, well being, solve national issues. Its major earnings are from shares that are purchase by public to earn profits and be shareholders (Bah and Fang, 2015). Shares are available in Equity, Debentures and dividends. Legal structure include process of registration by 'Common house' in UK, appointing director and secretary, sell some shares to public before incorporation. British Broadcasting Corporation runs as public firm.

Voluntary Organisation: It refers to that association which is free from government, controlled by broad, provides services for benefits and operates as non-profits firms. The purpose of such firms is to improve wellbeing of people and work for social welfare. Legal structure is comprises of team of some members come together for goals, no profits and no intention of creating assets. Oxfam is the global brand which is working as voluntary firm. It is working to reduce poverty and fight for human rights.

 

P2 Explain distinguish organisation with its scope and market share or size

Private Organisations: Unilever is the leading private firm that offers high quality goods to wide range of global consumers.

Size and Scope: It is the big firm that has 169000 employees across the world. It has headquarter in United Kingdom London. (Unilever SWOT & PESTLE Analysis, 2019).. Vision: Unilever's statement is kept simple with view of making sustainable place which refers to that business plan urge long term sustainable growth.

Mission: This Statement includes targeting consumers by adding quality to lives through providing products to meet basic and everyday needs.

Stakeholders: investors, consumers, employees, managers are shareholders, business as single entity under Unilever group. There is agreement between these two of equalisation, under which it represents same interest on shares for both shareholders.

Public Corporations: BBC is the most popular broadcasting firm that works under government guidelines.

Size and Scope: It is employing more than 20,950 workforce worldwide and operates in 28 languages including on television, radio and online (SWOT analysis of BBC, 2019). It has scope in showing diversified culture, communities and region of different countries to increase awareness in society.

Mission: Statement of BBC is to act for public interest, serving audience of all ages, high quality, extraordinary output and programs which provides information, education and entertainment.

Vision: This statement states that BBC wants to become most creative organisation in world by delivering qualitative programs to fulfill public purpose.

Stakeholders: Its shareholders are customers, taxpayers, government, investors and employees who hold stake in company.

Voluntary Associations: Oxfam is multinational associations under which 17 firms are operating in 94 nations internationally to find solutions for poverty and injustice. Every firm works together to achieve influence over society by joint efforts.

Size and Scope: Recently company is providing its services in 90 nations (Oxfam Marketing Plan, 2016).

Vision: To work for development of poor people and improve condition of backward communities.

Mission: To boosts sales of various firms working under Oxfam to provide financial support to charitable organisation.

Stakeholders: Volunteers, government, trust, trustees, donors, supporters, staff, government of UK, and general public of different countries.

TASK2

P3 Examine interrelationship between company’s functional units and significance of these relationship

Each function of company is interrelated and are affected by organisation goals (Boons and Lüdeke-Freund, 2013).

Research & Development and Production Department: Research team works to understand market needs and requirement of consumers. There is a need that research unit exchange information about requirement of production to the production division so that product will be according to need of market and acceptable by customers. Quality standards are also set by research departments in processes of manufacturing according to industry measures and competition analysis to achieve organisational objectives.

Marketing and Human Resource Department: Marketing team market the product by using several marketing strategies. HR team ensures that talented and experienced person get hired who has ability to work in marketing department. This aids in handling operations well. Marketing team communicates about workforce requirements and HR team meet that demand so that company’s goal can be obtained.

Finance and Marketing Department: Marketing team works to sales more products so that revenue can be increased and finance team works to manage funds well so that cost can be minimized or controlled. Their relationship helps in making balance between cash outflow and income generated by the organization (Crane and Matten, 2016). Marketing department needs support to exploit opportunities present in external market to earn higher profits and attain organisational objectives.

Organisational structure: this is the management of company to deal with its employees and to interact with them. There are generally two major structure’s type: centralized and decentralized..

Centralised Structures: This is the kind of structure where top management acts as decision maker, rest level of workers have to follow their instructions. Lower level of employees do not even get involved in any kind of decision. This kind of structure is helpful in making quick decisions and minimize delay in completion of task. It develops discipline at workplace and help in managing employees in significant manner. (Gharajedaghi, 2011).

Decentralised structure: This is another kind of structure where power of taking decision for business is distributed. Employees are being involved in decision making process hence people feel happy which raise productivity of the company to great extent. Unilever has this kind of structure where top management involves people and employees share their views and coordinate well with top management.

TASK3

P4 With the help of examples show how macro environment has impact on business

Unilever is the global brand that offers personal care, beauty etc. many products. It get affected by many uncontrolled factors, these components are explained as below:

Political: (Gilboy, 2016). Policies of government, labor law etc. affect the business unit, if there is change in foreign trade policy then import and export will be affected. In this condition Unilever will not be able to generate profit from the foreign country. This increases company's image in market and less hindrance in success. If Unilever fails to comply government rules then it may face legal issues which will negatively impact on its brand image and sustainability.

Economical: there are many things such as exchange rate, tax rate etc that has high influence over business activities. If cheaper products with quality are in demand, which affects supply of Unilever products. When products are in demand Unilever will supply to meet need of market and generate higher revenues and profits. If goods are not in demand it will impact on Unilever's cash flow and profits negatively.

Social: Changes in life style, culture affect the overall working of organisation, if particular culture is against to use particular cosmetic product them sales of that item will get reduced which will be loss to Unilever. On other hand if there is positive changes in social needs then sales will be increased (Hamilton and Webster, 2018).

Technological: Technological changes, automation, R&D activities, etc. Unilever has higher level of automation which allows it to supply on time, competitive edge in industry and positive cash flow. If Unilever fails in updating technology it will impact cash flow, brand reputation and profit margins negatively.

Legal: Laws impact on business to great extent, if government makes changes in safety law then practices of the Unilever will be changed that would enhance operational cost of business on other hand if it is in favor then company will get benefit to raise its productivity (Kolk, 2016). If Unilever fails to follow rule and indulge in any type of illegal activities it will face consequences as negative brand image, less revenues and profits.

Environmental: Factors which includes ecological aspects like raw material, pollution. Carbon emission, weather, climate which affects different industries efficiency. Unilever wants to improve brand image as environmental friendly to build strong brand image, less legal cases, expansion and growth of processes, improved productivity. If Unilever fails to compile with environment it will impact its reputation, breaching rules, fines and penalties which affects profits and revenues of company.

BBC was established in 1922 as national broadcaster, but now it has become world largest broadcasting company operating worldwide. This makes it prone to external environment and factors of nations it is processing in, through PESTLE impacts of these factors can be realised:

Political: All factors which are operated and govern by government that have direct impact on working of organisation. Stability of political party in country, tax and trade policy, etc are included in this. Functions and operations of BBC is controlled by Royal Charter which are representatives of government. This impacts company positively as BBC never runs out of funds to functions properly and generate revenue (Li and et. al., 2011). On the other hand, implementing changes is complex process for BBC as its approval have to cross many levels.

Economic: Factors like growth rate, inflation, income level, unemployment rate which has impact on purchasing power of customers. Productivity of workforce in UK has risen but salaries data are not reflecting changes, this will allow BBC to recruit skilled staff at competitive packages. This will help company to improve efficiency of processes, increase in innovative results and attainment of organisational objectives. If BBC fails in grabbing this opportunity this will increase its cost, lower down profits margins and low quality of services.

Social: Factors are trends, women participation, etc. are included in social factor. BBC has gained knowledge of social trends which are focusing on concerns in society, consumer activities, pressure of Non-government organisations and other communities groups. This has positive impact on goodwill and promotion strategies of BBC which is resulting in gained market share and higher revenues. Negligence of this factor may have negative impact on image and earnings of BBC.

Technological: Fast improvements in technological aspects has changed marketing, production and research for organisations (Palgrave Macmillan, London.Brown, 2018). BBC have invested in technology development in sector to increase innovation in processes and build self-sufficient operations. This helps company to increase productivity, less wastage of resources, effective results and higher profits margins. If BBC failed in making appropriate advancements in technology time to time then qualitative aspects will be hinder and thus revenues and profits.

Legal: It comprises all factors like health and safety, consumer rights, product safety, employment equality, etc. BBC have global presence which makes it follow laws of every region and thus becomes tricky. Before entering into new geographic location, it is essential for BBC to research and understand about laws affecting its operations. This will help company to build strong legal entity, less fines and penalties and smooth functioning in BBC. If organisation fails to access to such law and start operating without proper legal process it will fined that will affects it revenue overall.

Environment: Climate changes, growing pollution, changing ecosystem and other changes in environment are considered essential these days. Corporate Social Responsibilities are followed by BBC as it broadcast various programs representing social and environment issues and increase awareness to general public (Ren and et. al., 2017). This improves brand image of BBC which helps company to increase its revenues, image and market share. Failing to perform any environmental responsibility, various environmentalist group will impose and this effects image and revenues of BBC.

TASK4

P5 SWOT analyses

SWOT Analysis of Unilever:

 

Strengths

Weaknesses

Strong strategy framing and financial performance is depicted by high returns and net profits.

Strong brand image of Unilever

Increasing popularity as it is meeting demand of every age and income level (Schaltegger, Hansen and Lüdeke-Freund, 2016).

Less focus on personal and health care products, Unilever is unable to target grocery segments in market.

High dependency of Distribution channel on distributors and retailers demand.

Opportunities

Threats

Globalisation is the opportunity for business.

Skin care segment is increasing demand for premium products.

Competition locally and globally is biggest threat to Unilever.

Changing laws create threat to business

SWOT Analysis of BBC:

Strengths

Weaknesses

BBC has strong customer loyalty.

BBC strength is technical, software and graphic design that helped to become leader in industry.

BBC has been blamed because of touching sensitive issues of world and increased controversies against its image (Tayur, Ganeshan and Magazine, 2012).

This is major weakness of BBC, higher operating cost while other competitors are cost effective.

Opportunities

Threats

Joint partnership with satellites channels is brining more opportunities of popularity for BBC.

Stepping into entertainment and fashion zone, it is revealing more opportunities for BBC (Vaiman, Sigurjonsson and Davidsson, 2011).

Competition from channels like CNN, it is becoming important to have competitive advantage.

Other domestic news channels are posing competition and reducing audience for BBC.

P6 Determine relations of strength and weakness with external factor

Particulars

Unilever

BBC

Political

Unilever complying with local and regional laws made by government have positive impact on strength of strong revenue generation and brand image.

There is interference of Royal Charter Commission which is representatives of government. This have reduced its controversies of raising sensitive issues of world and improved brand image.

Economic

Increase in inflation rate have negative impact on demand for products and thus impact its strengths of developing strong strategies for marketing plan negatively.

Increase in inflation rate in UK, have risen the cost of raw material and processes which has negative impact on its increased operating cost.

Social

Present trend of adapting healthy lifestyle has positive impact of increasing demand for organic grocery segment for Unilever (Yu and Ramanathan, 2013).

Society are now moving towards creating awareness about social issues of world and BBC's image of raising issues has positive impact on its reputation.

Technological

Technological advance countries allows Unilever to automate its manufacturing and distribution process by which company's weakness of depending on distributors and retailers is reduced.

Adhering to updated technological of using satellites channels to operate globally has reduces cost of BBC and become competitive in industry.

Legal

Strict laws related to consumers rights affects company's strength of positive brand image negatively due to rise in cases against Unilever.

Some countries are strict about showing particular connect of entertainment and fashion and BBC have filtered content but it still have controversies against channel.

Environment

Usage of renewable material in packaging, alternatives uses of products has allows Unilever to build its strength of strong brand image and generating revenues (Zsambok and Klein, 2014).

Raising many environmental issues on its channels and funding various organisation working to provide employment opportunities has positive impact on reducing its controversial image.

 

  • Political Factors: Political factors primarily incudes the policies and regulations which can adopted by government in order to effectively carry out business activities. However, in context to retail sector profitability as well as revenue is enormously affected due to political factors.
  • Economic Factors: Economic factors basically includes inflation rate, exchange rate and several other such factors. Currently the economic outlook of retail sector is very uncertain which impacts the overall profitability.
  • Social Factors: Social factor primarily includes shared beliefs of people. Furthermore, social changes enormously impact way of shopping of consumers under retail business. In recent times in has being witnessed that now the consumers basically want branded products with logo of multinational brand.
  • Technological Factors: The use of technology within retail sector is very necessary in order to significantly handle the competitive business environment with proper efficiency. However, through regular introduction of new technology competitive advantage is gained.
  • Environmental Factors: This factors essentially includes factors relating to climate change and several other factors which potential affects functioning of a company. However, environmental factors enormously impact functioning of retail sector organisations.
  • Legal Factors: There are several legal factors, which positivity as well as negativity impacts the overall business operations. The government imposes several legal implications to order checking the functioning of retail sector organisation. Legal factors basically include: copyrights, patents laws and many others.

Interrelationship of micro and macro environmental factors

Social Factors: Social factors are basically based on values which are laid down of population. These factors highly determine the sales of an organisation.

  • Strength: Trendy products launched by respective organisation extensively affects the overall performance.
  • Weakness: With fast changing demand of customer’s large amount of products are kept unsold.

Technological Factors: Technological factors basically includes level of innovation which an organisation adopts in order to effectively carry out business.

  • Strength: Technological advancement has enormously increased the market share of company.
  • Weakness: Huge amount of funds are required in order to significantly adopt the latest technology.

CONCLUSION

It can be summarised as internal and macro factors have direct impact on business unit. Private, public companies are different from each other in term of their formation of business and their market size. There are various factors present in macro environment which have impact on processes and decisions of organisation. This can be depicted by PESTLE Analysis which factors of macro environment.. Every external factor influence the business unit to great extent,changes in exchange rate, political stability may affect operations that may create problem for business to run operations for longer duration easily.

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