Unit 3 Business and Business Environment BTEC Level 5 HND Diploma Business Regent College Higher Education


There are different types of organisations are working in business environment. All the organisation have their different objectives according to their nature and legal structure. As per their nature such organisations are classified as public, private and voluntary. To attain success in their operations, management of all the organisations is need to consider the macro-environmental factors. Such different factors are named as political, economical, social, technological, legal and environmental etc. It provides the opportunity to manager is to formulate new strategies and business plan which helps accomplishment of organisational objectives. PESTLE analysis is the effective tool which helps in removal of their weaknesses and improves their strength regarding satisfaction of the different demands of customers. M&S is British multinational retailer in London (Avramenko, 2012 ).

In the present report explain about, Different types of organisation like public, private , voluntary and their legal structure, Size and scope of different types of organisation, relationship between different organisational functions and its link with organisational objectives and structure. Also, through PESTLE analysis evaluate the positive and negative impact of external environmental factors, application of the tool of SWOT analysis to identify strength and weaknesses and interrelation of strength and weaknesses with external macro-environmental factors.

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Task 1

P1 Types and Purpose of private, public and voluntary organisation and their legal structure

M&S is multinational retail organisation which serves their business activities in all over the world. It was founded in 1884 in UK. This organisation is deals in diversified products which includes clothing, home products and luxury food products. The total number of which are possess by this organisation within UK are 979. There are many competitors are persist in market which deals in retail sector and have significant impact upon their business activities. The major competitors which prevail in market includes ASDA and Tesco.


M&S, NHS and Oxfam are three different sector organisation. In this part, their purpose and legal structure is defined with respect to their different advantages and disadvantages.

Difference between For profit, Not-for-profit and Non-government organisation

For profit


Non-government organisation

The main aim of such organisation is to earn large number of profits

Their main is to provide their business activities for the development of economy of country

They provide their business activities to provide benefit to society

Such organisations are known as private

These companies are called public

These organisation are known as NGO

For ex. M&S

For ex. NHS

For ex. Oxfam

In business environment, organisation are classified into three different sectors such are known as private, public and voluntary. All the different sectors have their different purpose and legal structure which is need to fulfil for performance of their business functions. All such different sectors are defined below:

Private sector

It is important part of economy which is run by the private individuals or group for the purpose of earning huge amount of profits for the purpose of satisfaction of the requirements of their different stakeholders (Bovee, Thill and Raina, 2016). Upon the business operations of private organisations, there is no control of governmental authorities. Still there are many restrictions are imposed by state authorities which directs the business activities of organisations which are comes under the purview of private sector.

M&S is multinational retailer which deals in diversified products such as clothing, home products and luxury food products. This organisation is founded in 1884 in UK. This organisation has more than 979 stores in UK from which 615 indulge in the business activity regarding selling of food products.

Purpose of M&S

  • The main purpose of M&S is to become multi-channel retailer and attains sustainability in their operations internationally
  • Earning of large number of profits
  • Providence of high quality products for maintaining high level of customer trust

Legal structure of private organisation

  • Sole proprietorship: It is such form of organisation which is owned and run by single natural person and there is no legal distinction between the owner and enterprise. Such owner of enterprise has total control over the operations of business and personally liable for all debts.
  • Partnership: It is an agreement between two or more parties to cooperate each other regarding running and management of business organisation. Their main aim behind the formation of partnership is to accomplish business targets for earning large number of profits (Cavalcante, Kesting and Ulhøi, 2011).
  • Limited companies: This will includes two type of organisation such as private and public. The directors and shareholders of organisation have limited liability according to their contribution in capital and unpaid amount of shares.



Angel investor and venture capitalist funded the private limited companies

High cost is involved in the process of formation of organisation

Separate legal entity having life time existence

High rate of taxation

  • Cooperation: It is an association of persons which build the organisation voluntarily to meet out their economic, social and cultural needs. This will includes non profit community organisation.



Easy to form this type of cooperative companies

Limited amount of capital

All the members having the limited liability within the organisation

Less motivation behind providence of their business functions

Advantages and Disadvantages of private company



Less intervention of government authorities

No support of government

Limited liability of shareholders

Many restrictions are imposed regarding subscription of capital

Public sector

The public sector organisation is that part of economic system which is controlled by national, state and local governments. Under this, includes such organisation which provides the services regarding defence, healthcare etc.

NHS is public organisation which provides free basic medical facilities to the individuals of society for development of their livelihood. Some other services are also provided like dental and optical care.

Purpose of NHS

  • Providence of basic medical facilities to poor individuals of society
  • Helps in improving the living standard of individual
  • Provide quality services which ensures maximum safety of health of individuals

Legal structure of public organisation

  • Central government: It assists the functions provided by departments of central and state authorities.
  • State government: It assist the activities which are performed agencies under authority of state government (Hair, 2015).
  • Local government: Oversee the functions delivered by public organisation

Advantages and Disadvantages of Public company



Provide functions for development of the society at optimum level

Availability of limited amount of sources of fund

Large number of resources are present

Large amount of government intervention

Voluntary organisation

Such organisations are formed for removal of the issues which are present in society and make the world better place to live. They are not working to earn profits and all the amounts are used for development of society. For establishment of such kind of organisation, need to fulfil the conditions which are provided by governmental authorities (Hamilton and Webster, 2015).

Oxfam is non profit organisation which provides their activities with the helps of volunteers in all over the world. It was established in 1942 and different functions are provided like removal of poverty, disaster relief, advocacy, policy research etc.

Purpose of Oxfam

  • Development of the policies which contributes in removal of poverty
  • Providence of educational programmes which improves their knowledge
  • Provide functions which helps to bring reform in society in respect of poverty and advocacy

Advantages and disadvantages of non profit organisation



Development of overall country

There is no guarantee regarding continuity of such NGO

Availability of the support of large number of individuals of society and governmental authorities

Large number of conditions are imposed by government for carrying their operations as NGO


It has been observed from the above discussion that private organisation works for earning huge amount of profits. Public organisation for the development of economy and voluntary organisation for improving the living standard of individual.

P2 Size and scope of different organisations


The organisations are also differentiate on the basis of their size and scope. This includes description of the different size of organisations includes Micro, Small, Medium and large. All the four types of organisations have different objectives. This question also includes about interrelation between the concept of supply and demand (Karagiorgos, Drogalas and Giovanis, 2011).

Different types of organisation

There are different types of organisation which are working in business environment. Such organisations are differentiate on the basis of size and scope. According to the size of organisation, this can be classified into Micro, Small, Medium and Large. It is also observed from analysis that according to the size of organisation their objectives are different. Such different organisations are defined below:

Micro: It is very small organisation in which less than nine employees are working. Such organisation having the turnover less than €2 million. For the purpose of establishment of such kind of organisation there is need of less amount funds. In this majorly includes family business which are formed by one or two persons.

Objectives of such organisation is also different in comparison to other businesses. Their main aim is to survive in market for attaining quality in their products and services.

Small and medium: This will includes privately owned corporations, partnerships and sole proprietorship in which less number of employees are working for the purpose of earning large number of profits of profits. Such organisations are able to ascertain the support of government in their business activities and taking the benefits for preferential tax policies. For consideration of organisation as small and medium need to have the employees more than 50 but less than 250. For ex., Rowlinson Knitwear is small organisation in which 70 employees are working.

The objectives of such organisation is to attract large number of customers for improvement of their sales and profitability.

Large: This includes all the organisation in which large number of employees are working which are more than 250. For the purpose of establishment of such organisation need to fulfil all the conditions provided by government. Large number of funds are required to operate the business functions of large organisation as they provide their products and services in many countries.

The main objective such kind of organisation is to expand their business operations for attainment of large market share. For ex., M&S is large organisation which operates their business function in many countries.

Industry: It is refers as production of the goods and services related to that in an economy. The source of revenue is the indicator which helps in identification of its relevant industry. If the organisation earns profit from large number of sources then it is considered that working in different industries (Kolk, 2016).

Supply: This includes about the amount of good and service which is available in market for the consumption by buyer at specified price.

Demand: This can be understood from the concept that willingness of buyer to pay the price for the purchase of specific good or service.

In retail sector, there is huge relation between the concept of supply and demand. If the demand in market is high of their products then to need to supply more products.


It has been observed from the above analysis that there is direct relation between supply and demand. According to the size of organisation there is difference in their objectives.

Task 2

P3 Interrelation between different organisational departments and their link to objectives


The main departments which performs their functions in M&S includes marketing, finance, human resource and operations. Their functions provides support to other department is to accomplish their tasks effectively. Collective efforts of all departments helps in achievement of organisational objectives. Here, also define about organisational structure and five common business objectives.

Different types of department and their interrelation

M&S is multinational retailer which provides their products and services globally. Behind the success of M&S, there is huge role is played by major departments like marketing, finance, Human resource and operations. Role of such departments and their interrelation is understood from the following points which defined below:

  • Operation: The main department of organisation is to optimally utilise the given resources for providence of quality products to their end customers. They have the duty is to evaluate the information provided by marketing department to assess the demand of their different products in different market segments. It helps to manage their operations according to their demand and preferences for their optimum satisfaction. To bring efficiency in their operations, depends upon HR department is to appoint skilful employee which improves their capability regarding use of innovative technology ( Nishitani and et. al., 2012).
  • Finance: The main role of this department is to assess the requirement of fund by different departments for performance of their functions. They have the responsibility is to raise the funds through use of different sources and effectively allocate to different departments for improvement of their overall efficiency. For guidance of the employee’s of different department they prepares budget which helps in appraisal of the actual performance of employees and develop plans which contributes to meet such set standards.
  • Marketing: This department of organisation provides the function regarding promotion and advertisement of their products of organisation for attraction of the large number of customers. They have the responsibility is to conduct research which helps to assess the competitors which prevail in market and strategies which are adopted by them. The function of this department assist other departments like operation is to accomplish their goals in more efficient manner. Similarly, it has direct link with finance department. Allocation of adequate amount of funds helps in use of modern tools of promotion which spread awareness among the individuals of society.
  • Human resource: This department has the role within the organisation regarding planning about workforce and management of overall employees in effective manner. The different functions which are provided by this department includes recruitment and selection of employees, appraisal of performance, determination of remuneration, training and development etc. In interrelation to other departments it helps in appointment of skilful employees which have knowledges regarding their fields and helps in accomplishment of tasks within stipulated period of time. They also build the training and development programmes which motivates the employees to perform hard in organisation and to attain higher position in organisation.

Five common business objectives

As discussed above the role of different departments in m&S helps in achievement of their different business objectives. The five common objectives for which M&S provides their diversified business operations are defined below:

  • Survival: One of the basic objective of all organisation is to attain sustainability in their operations which helps in their long term survival in market. In this regard, operational department of M&S frame many strategies and plans as per the requirement of their different segment of customers which assist the employees to bring innovation in their operations to satisfy their needs (Osterwalder and Pigneur, 2010).
  • Increasing sales: This is another important objective of M&S is to improve their sales figure which helps to grab large market share. In this regard, main role is performed by the marketing department is to effectively use promotional and advertisement techniques which helps in attraction of customers of their competitors also.
  • Maximizing profit: M&S is private organisation which work with aim of earning huge amount of profits. To achieve this objective, need to ascertain collective efforts of all departments. Marketing department helps to improve sales, operation department helps in reduction of production cost, finance department through effective allocation of funds etc.
  • Satisfaction of customers: It can be achieved with the help of good quality products which is hand of operation department.
  • Growth: Main role is played by HR department in the growth aspect of M&S through formulation of different strategies.

Organisational structure

  • Function-based: Divide the structure on the basis of different departments for ex., marketing, finance etc.
  • Geography based: Segmentation of structure as per different target markets.
  • Product based: Deciding up the structure of organisation according to their diversified offerings. For ex., M&S, clothings, home products, food etc.
  • Consumer based: Structure of organisation is segmented on the basis of consumer demand and behaviour.


It is observed that different departmental functions are interrelated to each other which contributes in achievement of organisational five common organisational objectives defined above.

Task 3

P4 Positive and Negative impact of macro-environmental factors


PESTLE analysis helps in identification of the factors which are present in business environment. It provides opportunity to the management of M&S is to ascertain the positive and negative impact of all such factors upon business operations.

PESTLE analysis

M&S is the British multinational company which do business in the retail sector and have over 800 outlets throughout the globe. However, there are more than 30 nations where the company have their operations. This is the largest clothing retail segment chain in the UK and also engaged in the retail sector. Many of the its local stores offer clothing and food, and since the year 2000 M&S have introduced to enhance their projects into diverse range of the tools and technologies. Here, PESTLE analysis of the organisation helps out to know about the positive and negative aspects of the organisation. Here are mentioned hereunder:

Political Factors: Government fixes various rules and regulation for organisation to follow by these health and safety standards like- planning for the risk determination, risk knowing and risk control. If the organisations do not follows the standards then in that case, M&S will be liable to pay penalty (Osterwalder and Pigneur, 2010).

  • Positive: Having major operations in UK where government is stable which helps to attain positive impact upon business.
  • Negative: There are many restrictions are imposed on import and export after exit from EU which has negative impact upon their business.

Economical Factors: Now, economic outlook is highly not fixed and this is highly to affect retail sales, as citizens do not required to have spare cash in order to spend on the retail clothing.

  • Positive: If the economical situation of country is good then it helps in expansion of business operations.
  • Negative: Low level of income of individuals decrease the demand of product which has negative impact.

Sociological factors: In the past year's society has varied. M&S is rendering to expanding its organisation's brand. For responding to the existing affordable clothing industry supermarkets which have highly enhanced over the past few years caught up along with fashion trends.

  • Positive: M&S provides good quality clothes which helps to attain the trust of customers.
  • Negative: Frequent changes in current trends has negative impact upon business

Technological Factors: This is the crucial in the retail market. Organisations must handle their brands efficiently. It helps the retail organisation like M&S through adoption of new technology is to strength their security, risk and compliance. In the present scenario, there is huge increase in the amount of cyber breaches which dangers customer data and credit card records. It helps in supervision of regulatory aspects which ensures higher safety. If not adopted such technologies then it will creates negative impact upon their business (Business Environment. 2018.).

  • Positive: Use of new technology helps in improvement of the quality of product and productivity
  • Negative: This will results in increase of cost of production and price of clothes which has negative impact upon their sales.

Legal factors: This includes all regulatory aspects related to intellectual property rights which are need to follow by organisation while providing business functions. In this regard, many tools are provided like trademark, copy right and patent. It is the duty of management of M&S is not breach any of the rights related to such aspects in any country otherwise, it has negative impact upon their business operations and which lowers down their productivity and profitability. This will also helps in securing of their new inventions and innovations and improve their image in between the clients and customers. This will provides the opportunity to expand their business operations successfully for attaining higher market share (Pikka, Iskanius and Page, 2011).

  • Positive: Fulfilment of these frameworks helps in building their brand image.
  • Negative: If the organisation not paying attention then have to face legal prosecutions.

Environmental factors: It is the duty of all the organisation is to assess the negative impact of their business operations upon environment. In this regard, M&S is need to develop environment friendly and sustainable products which satisfies the requirements individuals of society. They also need to formulate the strategies regarding reduction of adverse impact of their business operations upon society which helps to align their interest with their functions. The positive impact of all such activities is ascertained upon their sales and profitability. But if such aspects are not fulfilled then it results in financial penalty from governmental authorities.

  • Positive: It provides the opportunity to gather the support of society
  • Negative: Diminished brand image in market and reduction in profitability and sales.


It has been observed from the above analysis that favourable conditions helps the M&S is to accomplish their objectives and improves their profitability. But due to having their operations in many countries also attains the negative impact is upon their business operations.

Task 4

P5 SWOT analysis of organisation for identification of strength and weaknesses


Here, management of M&D use the tool of SWOT analysis for the purpose of identification of their strengths, weaknesses, opportunities and threats.


  • Marks and Spencer is one of the largest multinational retailer industry deals in clothing, home appliances and foods. It contributes 90% of revenues to the UK market.
  • It has advanced technology and innovative ideas through which it keep innovate its products
  • It has large customer market across the globe. 35 million customers were recorded in 2017 across the globe.
  • It has its online store through which it sell its products and services
  • M&S has its own reliable CSR strategies which is centralised around customer satisfaction and building society standard at next level (Pulver, 2012).


  • Organisational structure is not as flexible to adopt changes of domestic markets.
  • There are many strong retail brands are existing in market which creates negative impact upon their market share (Shigang, ).
  • As being a big brand M&S is need to protect their products from copying by outsiders


  • Due to development of the existing technology, M&S has the opportunity is to develop their own website which helps in promotion and higher number of sales of their products.
  • There are large number of opportunities are available to enter into new market segments which helps in improvement of their market share and profitability.


  • There are many retail outlets are threat for M&S due to operation on discounted prices
  • Existing governmental policies regarding retail sector


From the above analysis, it is ascertained that M&S has large number of strengths which helps to grab the opportunities through optimum utilisation of their given resources. It contributes in preparation of effective strategies fro removal of current weaknesses.

Task 5

P6 Interrelation of strength and weaknesses with macro-environmental factors


There is huge relation ascertained in between the strength and weakness of organisation with external environmental factors. The different strengths of M&S helps to grab the external opportunities which are available in market (Reinhardt and Stavins, 2010).

Interrelation of strength and weakness with external macro-environment factors

  • Strength-opportunity strategy: One of the internal strength which is identified from the SWOT analysis of M&S is that large number of funds are present with organisation which helps to expand their operations in new country for attraction of new customers.
  • Strength-Threats strategy: The main strength of M&S that it is well known brand and provide good quality products which helps in removal of the threat of many other retailers present in market.
  • Weakness-Opportunity strategy: The external opportunity which is available is to M&S is use online mode of business to expand their business operations and improves sales figure which helps in removal of the weakness regarding low market share due to involvement of local retailers (Reed and et. al., 2013).
  • Weakness-threats strategy: The threat which is identified by the M&S is government policies for retail sector. So, through adoption of effective approaches they have the opportunity is to minimise the weakness regarding securing of their inventions and innovation from copying by the outsiders. It provides the opportunity is to improve their brand image.


From the above analysis, it is understand that strength of an organisation helps to grab the opportunities which are present in external environment and also helps in removal of tehir weaknesses to accomplish their desired objectives.

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It has been concluded from the above report that organisations are classified into three different types public, private and voluntary. The main aim of public organisation like NHS is to work for the benefits of society. For private organisation like M&S has objective is to work for earning large number of profits and on the other hand, voluntary organisation like Oxfam has the aim is to removal of poverty from the country. Such organisation is not provide their business functions for earning profits. There are different types of departments are working in organisation like marketing, finance, operational, Human resource etc. and their functions are interrelated to each other. Such combine efforts helps in achievement of organisational targets.

You may also like to read: Unit 22 Aspects of Contract and Negligence for Business UKCBC Level 6


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