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Business and Business Environment of McDonald

INTRODUCTION

Business environment means all the internal and external factors including employee, customer, supply, management, supply, demand and other regulations which affect overall performance of business. In present report business McDonald organisation is chosen to view business environment. This present report will cover purpose of various kinds of organisations and explanation of each organisation (public, private and voluntary organisations). After that it is going to be discussed that what are business objectives and structure and environmental factors that impact on business structure. Porter's five models and relationship between strength, weakness and macro factors on business environment is also going to discuss in this report.

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Purpose of various kinds of organisation

Business organisations are the entities which aims is to provide goods and services by carrying commercial needs and to meet customer satisfaction. Different forms of business organisations are sole proprietorships, limited partnership, general partnership, and limited liability partnership. Here we are going to discuss an overview of public company, private company, and voluntary company.(Bryson,2018.) Companies which is publicly traded and traded freely on stock exchange are public companies. Companies which has objective of earning profits and runs by individuals are private company and companies which has objective to benefit society are known as voluntary organisation.

Public companies

This types of company are also known as publicly held traded companies which objective is to sale its securities with general public's. Shares of these companies are openly traded where majority of share is in the hands of government and after that with shareholders. Currently less than 1000 companies are listed on London stock exchange. These companies are formed according to nation's legal structure. Oil company British petroleum is publicly held company operating to provide oil in all areas. They do business in exploration, production, refining, petrochemicals, and in power generation. Main aim of public sector organisation is to provide services to satisfy customer, not generate profit.

Private companies

This types of companies runs by two or more individuals to generate profit therefore it is not owned by government. They contribute to increase countries economy. Public companies shares do not trade on stock exchange but they may issue stocks which have shareholders. Approx 3.4 million sole proprietorships working in UK which means 60% of total. They also contribute large employment, in UK 9,90,000 employers are working at the beginning of 2017. And each private companies providing their role to improve business environment. Vodafone is world's second largest telecommunication company in UK which is providing services in telecommunication and a part of Vodafone Group.

Voluntary companies

Individuals or foundations which runs this types of business does not have any motive to generate profit, their main aim is to provide benefits to the society or to do charities for the sack of society in nations.(Coppin, 2017.) Money they generate by doing voluntary business invests back in society. In UK it is estimated that these sectors contribute £11.7 billion to gross value added and 1,62,965 organisations are working in voluntary organisations to provide benefits to societies. Wellcome Trust in UK was doing business in this sector to provide advice related to medical health benefits to human as well as to animals.

Explanation of each organisation

 

Public (British petroleum)

Private (Vodafone)

Voluntary (wellcome trust)

Background

It started in 1909 in doing business in petrochemical and becomes world's largest company by doing merger with Amoco corporation of United states. In 1914 British government owned ownership of this company for selling shares in public.

It is started in 1982 in United kingdom subsidiary of Racal electronics, which is UK's largest radio technology. In 1991, it merged with Vodafone group and becomes the largest telecommunication industry providing networks in 25 countries.(Ceptureanu and et.al .,2018. )

Sir Henry Wellcome was the founder of Wellcome trust which aim is to provide help to scientists and researchers to expand their knowledge by doing innovation in biochemical research. Their investment portfolio in 2016 was approx £20.9 billion which makes them continuous growth.

Vision

Their vision is to conduct business in ethical manner by fulfilling social responsibilities. Their main vision is to provide improvements in all areas and to stay leading multinational company.

Their vision is to provide best network with best values and services. They also wanted to connected in leading world to become the best communicator leader and to improve communication network in customer's lives.

Vision is to improve health by providing various funding initiatives. Their focus is to do research in biochemical products which provide nutritious to humans as well as to animals.

Mission

Their mission is to improve change their fundamental qualities such they want to improve their way of doing work such as in integrity, honest dealing, treating everyone with honesty etc.

Mission is to become a company which has the highest quality of financial service and to become leading company which is providing the best cellular networks so that customer trust company more.

Mission of trust is to build strong relationship with society so that they will able improve human as well as animals by doing continuous research.

Objective

Their business objective is to fit for the future by developing some new technologies which is producing more energy and to become competitive in market.

Their main aim is to become global organisation which satisfy all the stakeholders as well to customers as well.

Current objective of this trust is to invest £5 billion in next five years to improve health of human and animals by doing biochemical research.

Legal Structure

British petroleum is maintaining legal structure of public companies that is run by board of directors, which appointed in annual general meeting by shareholders.

Legal structure of Vodafone includes board's members which conducts overall business where they have shareholder run by board of director and headed by chairman.

There is no particular legal structure for voluntary organisation any who wants to join to provide benefit to society can enter in this business.

 

Products and Services

British petroleum engaged in doing business of refining, marketing, manufacturing, transportation, trading and supply of crude oils, petrochemicals and food products.

Vodafone is the leading company providing the best telecommunication services to the customer's including voice, messaging, data and fixed line solution.

Main services of Wellcome trust is to do research on biochemical products which provide nutritions to society.

Size

It has 7.5 billion barrels and its material resource base on 5.7 million acres. It has 48 onshore units.

It provides its services in more than 30 different countries. Its annual revenue is about 47.6 billion euros.

It has the largest portfolio investment and it is world largest foundation.

Stakeholders

It has stakeholders like creditors, employees, public, government, suppliers, and unions.

A private company has maximum 200 shareholders but employees do not count in this stakeholder.

Stakeholders in this organisation are patients because they are utilising trust's services.

Organisational objective and structure of Vodafone company with their interrelation.

To achieve task of companies with proper coordination and supervision organisational structure shows how activities are allocated between employees of the industry. This organisational structure develop for future growth of entity. Many structured theories are provided by the professionals which organisation can develop in their working criteria so smooth functioning of working runs in an entity. Vodafone uses matrix structure and task culture. Details of organisational structure are as follows.

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Illustration 1: matrix organisational structure
source: (matrix organisational structure- a quick guide,2018)

Matrix organisation shows combination of two or more organisational structure. Two bosses and managers are their in these types of structure. Concept of two bosses and managers shows that one is for handling functional activities and other one is for traditional project manager.(Botha, Kourie and Snyman,2014.) To meet strength and weakness this structure helps to employ best structured manager.

Matrix organisational structure adopted in firm which has large-scale project. To process great amount of data in efficient manner Vodafone company has adopted these structure so that fast track technology has been applied in the firm. Its main function is that it allow sharing between functional unit and projects in highly skilled resources. Another important function of these structure is that it allow proper communication between organisation which helps to develop efficient team working under the organisation.

This structure is also helpful for employees who wants to increase their learning skills and wants to widen their growth in company. This structure provides them opportunities to grow in highly skilled business environment. With highly professional skilled members this structure provides flexibility in solving issues in organisation and to welcome new sources in organisation.

This structure also provide opportunities to employees to expand their growth in business organisation which makes them to remain loyal towards company where job security is fully provided. When company provides full security employees of organisation work even more hard for fulfilment of organisational objectives. Since experts are involved in handling company's project they do it with full efficient manner so that organisational objective achieved with proper coordination in across all departmental functions. Vodafone company applied this structure so that they can achieve objectives in timely with proper coordination among employees.

Environmental factors that impact on business operations.

External environment have indirect impact on business function. Vodafone company also do analysis of external factors to know about factors that may indirectly create variation in result and outcomes. And this analysis can be done with the help of Pestle analysis.

Political factors

In Vodafone company political factor have more influence to develop structure of companies in particular state. Company face political factor in each state for the operation of their business for which they have faced many problems in creating their task in area which has higher political influence. If we take example of recent conflict in Europe, this conflict affected company a lot.

Economic factor

Vodafone company ha to face this factor as their mission is to expand their business across nations for that they need new units with newly developed zones. If peoples of country has more income than it increases overall GDP of the country where company can measure that people can adopt their innovation of technology in the market.(Kew. and Stredwick, 2017.) This impact helps company to increase their overall profits which expand their business globally.

Social factor

This factor of company depends on peoples culture in which company's operation is done. Vodafone company has purely changed their operation and started working accordingly so that this factor of company cannot affected. Company has to maintain policies which has flexibility in earning local culture in the organisation.

Technological factor

Vodafone companies across the world always been famous for its innovation. Its mission is to follow current trends which are running in the market to satisfy customer needs. Company always makes policies by keeping in mind that their products are mostly technological related so accessing of policies must be capable to capture market. In coming time, Vodafone is also going to introduce 5G in its data plan which also a technological factor of the company.

Legal factor

We can say that it is an internet world where people across all over the world using internet and telecommunication companies are finding ways to improve their networks likewise Vodafone to have many competitors in market. Sometimes Vodafone accused for not paying much to their employees of the company by this impact their goodwill reduced in the market. Therefore, company must have to follow legal structure which make them to built strong goodwill in the market.

Environmental factor

This is the era where every company has to maintain environmental factors because nowadays peoples are becoming more ethical and they expect from company to be always socially responsible in market. Their working policies are to be so effective which helps them to attract individuals who wants to work in their organisation.

These are the factors which Vodafone company has to consider for the success of company. Internal as well as external both factors plays an important role to achieve the success of the company.

Porter's five forces analysis of Vodafone company.

Porter's five forces analyses the external factor that affect an organisation. Business takes decision and change tactics and planning after research has done on these factors. (Dobbs, 2014) Here is chart which shows elements which is used to analyse porter's fiver forces model. 

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Illustration 2: porter's five models
source: (porter's five forces model of BSNL,2017)

Bargaining power of supplier

All wireless companies need higher level raw material in their companies from suppliers. This effect makes suppliers dominant position and company has to bear the cost which supplier charge. Vodafone group also same has to face bargaining power of supplier which impact is that company's overall profitability will reduce. Powerful suppliers use their power and charge higher amount of cost from company.

Bargaining power of buyer

Buyers as all know demand more in less budget. They want to buy product is low cost of product. This situation puts pressure on Vodafone company to achieve higher level of profitability in their overall business. Therefore, Vodafone company is offering higher level discounts and offers to their customer to achieve their loyalty towards industry.

Threat of new entrants

Currently Vodafone company is facing high level of competition in the market, new companies has entered in market with lots of discount and offers and by that customer are attracting more in other companies. Therefore, Vodafone company has to manage strategies which attract more customer and which helps them to compete with other firms in the market. They will able to done this by innovating new ideas which improves their economy in the market.

Threats of substitute products or services

Industries profitability suffers when new substitutes are available to customer in choosing products and services of the companies. Therefore, Vodafone company is trying to being service oriented rather than to become product oriented. They also have to search what customer needs from telecommunication companies rather than what they are buying in market.

These are the internal and external factors of the Vodafone company which are influencing their decision making process in the company.(Calabrese, and et.al ., 2018)

Relationship between strength, weakness and macro factors.

Here is the description of relationship between strength and weakness on macro factors which includes political factor, economic factor, technological factor, legal factor, social factor and environmental factor. Strength includes factor that are massive market coverage, revenues generated, premium cost and weakness includes factors like dropping brand evaluation, losing market share.

Strength relationship on Macro factors.

1.  Massive market coverage.

This affects both political and economic factors in industry. Political factor affects like if companies are doing massive coverage it means they are investing in different countries to expand their business for which company has to face governmental regulations like tariffs, trade control etc. Economic factor also affect when country is facing inflation then investments in that country affect company's profitability.

2. Revenue generated.

Political factor affected with revenue generation, when company's earn higher profitability government will influence in company and will charge some amount of tax from the company. Technological factor also affected with this revenue generation, companies needs large technology to produce product which earn them higher revenue therefore company have to invest in this factor. Revenue generating also will affect environmental factor if company's has higher revenue then they will have to invest money on improving environmental factors of country.

3. Premium cost.

Premium cost will affect technological factor in company when company doing huge amount of investment in needs cost to invest which reduces companies profitability. Like wise legal factor also affected when company has to bear cost to develop laws and regulation with proper care in organisation. Premium cost also affect environmental factor if company earning higher amount of cost then they have to invest it on environment so that government will not influence in company.

Weakness relationship on macro factors.

4. Losing market share.

Economic factor affected with this weakness for the business development market share has to be strong as these helps in providing business growth. Technological factor also affected when market share reduce it reduces overall profitability of the firm so that company can not invest more improving technology of company.

5. Dropping brand evaluation.

This factor will affect economic factor when image of brand reduces it will reduce its goodwill among customer from which company can bear lose in earning revenues. These factor also affect legal factor of the company when product safety of brand reduces which affect company to face lose from their product.(Ifinedo, Pyke, and Anwar,2018.) This factor impacts political factor also when company reduce its image government will inter fear and wants from company to make strategies accordingly.

These are the factors which affecting Vodafone company's macro factors. Company currently bearing these factors and making solutions to improve their overall weakness and improve more the strengths of company.

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Conclusion

From the above study it can be concluded that business environment plays an important role on company's to achieve their growth in future perspective. In this report purpose of various kinds of organisation is discussed with full explanation of public, private and voluntary organisation. Three organisations are selected to discuss public, private and voluntary organisation. After that organisation objective and structure of Vodafone company is discussed. Environmental factors that impact on business operation is also studied in this report. After that further analysis done by doing porter's five models and by doing SWOT analysis impact on macro factors of the company. 

You May Also Like: Businesses Within Food and Beverage Industry

References

  • Botha, A., Kourie, D. and Snyman, R., 2014.Coping with continuous change in the business environment: Knowledge management and knowledge management technology. Elsevier.
  • Bryson, J.M., 2018.Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. John Wiley & Sons.
  • Calabrese, and et.al ., 2018. From mechanical to cognitive view: The changes of decision making in business environment. InSocial Dynamics in a Systems Perspective(pp. 223-240). Springer, Cham.
  • Ceptureanu and et.al .,2018. Sustainability perceptions in Romanian non-profit organizations: an exploratory study using success factor analysis.Sustainability.10(2). p.294.
  • Coppin, A., 2017. Organisation Structure and Design. InThe Human Capital Imperative(pp. 45-49). Palgrave Macmillan, Cham.
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