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How Working of An Organisation Affected by Business Environment?

731 Downloads1 I Published: 12 Nov ,2019

Introduction

Business Environment means the overall environment surrounding an organisation. It includes internal, as well as external environment which effects and influence working of a company (Hillary, 2017). While the internal environment is necessary for effective internal management, the external environment takes all the outside factors into account which affects the business. The current report is based on Virgin Atlantic, which is one of the biggest airline companies in private sector, National Health Service (NHS), one of the prominent public sector organisation in the UK and Barnardo's, which is a voluntary company in the UK. It covers different types, sizes and scope of various organisations and interrelationships of different functions within an organisation and how these link to corporate culture. The report also includes both positive and negative impacts of macro environmental factors and determination of internal strengths and weakness of a company.

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Task 1

P1. Different Types and Purposes of Organisations

In a business environment, it is imperative that various different types of organisations are analysed in relation to their purpose, legal structure and stakeholders. Such information would allow organisations to conduct in-depth analysis of each type of organisation and gain a better understanding. Various different types of organisations are discussed below:

Private Organisation:

These organisations are the ones which are incorporated and incepted to earn profits. These could be corporations, partnership companies or private agencies. These companies could be self sustaining or non-federal entities. The biggest example of one such organisation is Virgin Atlantic which is owned by Richard Branson and since it inception, the firm is successful of being one of the prime choices of customers to choose while travelling (Hamilton and Webster, 2018). The purpose, legal structure and stakeholders of the company are mentioned below:

  • Purpose of Virgin Atlantic:

The organisation provides effective commercial aviation services to its customers globally. These destinations include, Asia, Africa, the United States, Middle East and Mexico. Along with airline services, this company offers various other services like car, hotel, holiday booking facilities etc. the firm is currently working on expanding its business operations providing more efficient services to its service users globally.

  • Legal Structure:

The legal structure of Virgin Atlantic supports all the legal framework that of a private organisation where the company is completely owned by a single entity yet have shareholders (Quinlan and et. al., 2019). The company works to earn trust of their shareholders and effectively gain profit which is them distributed among these entities as per their share in the company. These individuals have limited responsibilities for Virgin Atlantic' s financial liabilities according to their shareholdings' value.

  • Stakeholders:

The most prominent stakeholders of Virgin Atlantic are, customers, shareholders, employees, community, etc. The organisation has a separate yet crucial role for these stakeholders. For instance, they are required to provide cost-effective yet quality service to their customers and at the same time the company is responsible to provide an impressive value of shareholders' investment in the firm. Similarly, Virgin Atlantic has responsibilities towards community too and is required to operate in ways which provides welfare to people along with the business.

Public Organisation:

These organisations operate in the public sector and are operated and owned by the Government. The existence of these organisations is merely to provide its effective products and services to the citizens of their nation. They do not seek profit like private organisations. One such public organisation is National Health Services, UK, which provides effective healthcare services within the country. Its purpose, legal structure and stakeholders are mentioned below:

  • Purpose:

The purpose of NHS is to provide social and healthcare services to people of the UK. These services include, Emergency Care, Dentists, Pharmacies, Mental Health Services, etc. This organisation provides a range of services and work consistently to provide effective care to the public (Tregear, 2015).

  • Legal Structure:

The legal structure of the NHS covers various legislations like Health and Social Care Act, 2012 and Equality Act, 2010. Both these legislative acts legally bound the organisation to provide equal health services to the people regardless their race, creed or status. Moreover, this organisation also comply with equality law which ensures equal treatment to employees.

  • Stakeholders:

The stakeholders of NHS include, patients, suppliers, special interests groups, local council, Academy for Healthcare Science, National School of Healthcare Science, Healthcare Science Professional Bodies, etc. who influence the working of this organisation and encourages effective healthcare services to the public (Fan, Lau and Zhao, 2015).

Voluntary Organisations:

Those companies are formed by people which depends upon regular or occasional volunteers to run their business operations and it is uncertain that these organisations have a paid staff. Categorisation of these organisations is set by State autonomies or aids from various philanthropies. Barnardo's a voluntary organisation which was founded in 1866 for children welfare. Its purpose, legal structure and stakeholders are described below:

  • Purpose:

Barnardo's provide effective services and healthcare facilities to children. These services include adoption and fostering, protecting children from sexual exploitation, domestic violence and reduction of child poverty. With such positive deeds, the company encourages people and volunteers to effectively contribute in their causes.

  • Legal Structure:

The legal structure of Barnardo's is influenced by the legal framework which is set for voluntary organisations. Its legal structure consists of various short term objectives, low income levels and is not structured properly as to acquire regular employees. This is because this company encourages various volunteers to join the cause and work as per their will without any favour in return.

  • Stakeholders:

Barnardo's stakeholders are its patients, children in need, its volunteers, government and various organisations like Norfolk County Council and Newport City Council (Strategic Partnership, 2019). These stakeholders are associated with the company to assist and guide the organisation to transform its services given to the children and provide a better and safe environment to them.

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P2. Size and Scope of various organisations

All the organisation mentioned above exist for different purposes. However, it is crucial to determine their offerings, size and vision and mission of these organisations to better understand how these contribute in their purpose (Crane and Matten, 2016). These aspects for all these organisations are mentioned below:

Virgin Atlantic:

Offerings

Organisation's Size and Scope

Company's Vision

Company's Mission

The company offers innovative and effective aviation services with outstanding and effective facilities. Along with this, it offers personalised on board services to customers as a strategy to retain them further with the company.

With almost 9,000 employees, the company has managed to cover a worldwide area with so many locations and build a strong customer base in each country of its operation (Virgin Atlantic Airways' Competitors, Revenue, Number of Employees, Funding and Acquisitions, 2018).

Vision of Virgin Atlantic is to provide its robust and transform the aviation business for good. Another vision of this firm is to provide safe, secure and consistent services to all its customers.

The mission of the organisation, as per the owner Richard Branson, is to keep the innovation consistent and provide more effective offerings and facilities to its global customers.

National Health Services (NHS):

Offerings

Organisation's Size and Scope

Company's Vision

Company's Mission

NHS provides all the facilities covered under social and healthcare to the people of the UK. It covers all the areas of healthcare facilities and provides effective and technologically advanced medical assistance to all the patients requiring the same.

Almost 1.5 million people are associated with NHS to provide effective and necessary medical treatment to patients and the firm is expanding its operations to reach areas where there are less-effective facilities for the people (How many NHS employees are there?, 2018).

The company's vision is surrounded on providing better care, better value and better health through gaining access to healthy as well as infection-free methods which contributes to better health of its patients.

The mission of NHS is to provide quality services by employing latest and more effective methods, equipments and skilled practitioners who could provide even more robust facilities and healthcare to public.

Barnardo's:

Offerings

Organisation's Size and Scope

Company's Vision

Company's Mission

Barnardo's provide effective services which are centralised on betterment of children. They provide a range of facilities which help young people, protect children, give them a better and safe environment, etc.

There are more than 600 outlets of Barnardo's in the UK donating valuable accessories, clothings and quality possessions for children and young people (The Retail Department, 2019). The organisation operates in all of UK and is considered one of the most effective voluntary organisations in the country,

Vision of this company is concentrated on betterment of each and every child in need and company is focused on expanding its operations in ways which ensures benefits of each child.

The mission of the firm is to channelise each of its resource towards giving effective assistance to children and provide them with environment which fosters their growth,

Task 2

P3. Relationships between organisational functions and their link with its objectives and structure

It is essential to determine all the functions of an organisation and how these are aligned to provide effective support to the firm in accomplishing its objectives (Hunter, Saunders and Constance, 2016). The functional structure of Virgin Atlantic is mentioned below:

Illustration 1: Functional Structure of Virgin Atlantic

There are various departments within the organisation that carry diversified functions for the company. These functions and their interrelations with each other is discussed below:

  • Administrative and Legal Department:

This department carries out all the legislative and administrative functions for Virgin Atlantic (Trevino and Nelson, 2016). This department is required to align its operations with other departments to ensure effective and authenticated flow of paperwork and compliance of each department with their set legislations.

  • Marketing Department:

One of the most crucial departments for Virgin Atlantic is Marketing. It is responsible for analysing the market and develop strategies which assists the company in building its market share and customer base. These functions are crucial for the company to communicate their services to the masses (Zur Muehlen and Shapiro, 2015).

  • Manufacturing Department:

It carries out duties of building the infrastructure and air planes for the company in ways which ensures maximum security and comfort to its customers. Along with this, it is also required to research the most prominent and technologically advanced methods and processes to ensure its that customers get the most effective services possible (Beatty, Samuelson and Abril, 2018).

  • HR Department:

Any organisation which aims to provide robust facilities and offerings to its customers are required to be supported by skilled and talented employees. The HR department within Virgin Atlantic plays the function of recruiting, selecting and managing skilled and talented personnels so that they contribute up to their full potential towards achieving organisational objectives.

All these departments and functions are interrelated. For instance, HR department is required to manage employees of all the other units and provide effective training to them to enhance their marketing and engineering skills. In the same manner, Marketing department interrelates with sales and finance departments to ensure the most effective strategy to market the products in the market. The most advantageous aspect of these interrelation for the company is that the policies and procedures ensures collective growth for each department limits the scope of conflicts of interest. This way, it ensures employee engagement and each employee, process and equipment are effectively aligned towards providing the most effective service to customers.

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Task 3

P4. Positive and Negative Impacts of the macro environment on Virgin Atlantic

Within each organisational setting, external environment plays a prominent role in determining aspects which influences the operations of the company. Virgin Atlantic operates globally and for that firm, PESTLE analysis is being used to determine external pointers that have an impact on the company (Stacey, 2016). This analysis is mentioned below:

  • Political Factor:

This factor is surrounded upon the political stability which effects the company. While political stability favours an organisation, political instability induces challenges for the firm. For instance, within the UK, Virgin Atlantic had been subjected to political instability recently after the events of Brexit. It caused quite an uncertainty within the policies within the nation which negatively affected Virgin Atlantic. However, there are still negotiations going on regarding European Flying rights after Brexit which seems likely to pull through. Moreover, there are various nations in Asia, Middle East which are politically stable and ensure effective stability and consistency in their policies for the firm.

  • Economical Factor:

This factor is completely centralised upon the economic performance of the country. Post-Brexit, the UK witnessed reduction in the value of Pound, which reduced the standard of living of people in the country. Such depreciation of currency forced the company to reduce its cost in order to sustain its customer base. However, on the bright side, Brexit also caused interest rates and fuel prices to drop. This provided ease to Virgin Atlantic in conducting its operations within the country.

  • Social Factor:

This factor is completely centralised on the social trends which influences operations of the company. This factor has been very favourable for Virgin Atlantic as there has been an extensive enhancement in travelling and this trend has caused a substantial increase in customers travelling via this company. However, quite recently, there have been certain strikes by the pilots and other crew members of the firm which have negatively affected the company and its employee retention (Virgin Atlantic Christmas strikes – will the industrial action affect my flight?,2019).

  • Technological Factor:

With enhancements in technology, each company is required to follow the trend and modify its operations in a way which could be technically advanced and could satisfy the ongoing technological needs of its customers. The firm invests heavily in R&D and its organisational culture encourages innovative and technologically advanced practices. This enables Virgin Atlantic to be quite ahead in using various effective techniques that ensures appropriate safety and maximum comfort to the customers.

  • Legal Factor:

This factor undertakes all the legislative elements which are required to be complied by an organisation to ensure government support and favouring legal environment. There are various legislative acts like Equality Act, 2010 and Employment and Labour Law, 2018 which allows the firm to function in such a manner ensures maximum employee commitment. The legislative environment of UK as well as the localities it operates it provide the company utmost legal support to conduct its operations in the company effectively. However, the recent pilot strikes and ongoing legal tiffs with the employees have caused quite a negative environment in the company.

  • Environmental Factor:

With ongoing environmental preservation, each organisation is required to work in ways which helps the company in ensuring appropriate conservation of natural resources. It is part of their Corporate Social Responsibility that companies effectively accomplish set standards that fosters growth of environment. This factor induces force on Virgin Atlantic to reduce CO2 emissions from their air planes. In addition to this, the company is also required to abide by Environment Act, 1995 which encourages ethical practices towards the environment and which has forced the company to implement effective waste management systems to reduce waste production from its organisations.

Task 4

P5. Internal and External Analysis of Virgin Atlantic to determine its strengths and weaknesses

For an organisation as big as Virgin Atlantic, it is crucial to determine internal and external aspects which could be strengths and weaknesses of the company and could later help in determining its opportunities and threats (Ji-fan Ren and et. al., 2017). For this, SWOT analysis is the most effective method which is described below:

BASIS

DESCRIPTION

STRENGTHS

·The biggest strength of Virgin Atlantic is its unique branding strategies and innovation in its products and services which helps in gaining maximum attention of customers.

·Its strong brand image creates a positive perception about its offerings in the minds of customers.

WEAKNESSES

·The company has failed in differentiating its services from rest of its competitors within the country.

·Still lacks the global presence like other competitor companies like British Airways.

OPPORTUNITIES

·One of its biggest opportunities is the new runway at Heathrow which would allow more of its flights to operate simultaneously.

·More customers are indulging themselves in travelling which provides it opportunities to give them enhanced and more effective services in future.

THREATS

·Brexit is one of its biggest threats as there have been a loss in national customers and the ongoing financial challenges that is faced by the firm.

·Intense competition from companies like Emirates, British Airways and Lufthansa are serious threat to the company.

P6. Interrelation of strengths and weaknesses of Virgin Atlantic with external macro environmental factors

There is an effective interrelation of strength and weaknesses of the company with its external environmental factors. This interrelationship is mentioned below:

Political Factor:

It concerns with political stability of the country in which Virgin Atlantic operates. All the policies and regulations that affect working of company are included in macro environment,

  • Strengths:Political stability allows the company to formulate consistent long term internal policies which would provide consistent benefit to the company.
  • Weaknesses:Areas like UK with political instability would force the firm to bring consistent changes within its structure to align itself with that of the government.

Economical Factor:

The economical facet is taken into consideration in this factor. It is crucial for Virgin Atlantic to formulate effective financial strategies in relation to the economic performance of the country.

  • Strengths:If the value of money is increasing and the country supports FDI, then it would be favourable for the firm to formulate strategies which could enhance its profitability.
  • Weaknesses:Ineffective economical performance would cause the company to bring negative changes in its pricing policy to support the market demand.

Social Factor:

The social aspects are taken into account in this factor. To sustain the change, the firm has put special emphasis in providing healthy food items and comfortable services which are as per the social demand.

  • Strengths:Movement in alignment with the demand causes more attraction of customers towards the company and ensure effective satisfaction of these service users.
  • Weaknesses:With such drastic changes, it is a challenge for the firm to develop aspects as per the social demands which could be a threat of customer switches.

Technological Factor:

With ongoing innovation in the company, Virgin Atlantic is quite effective in technological use. Its services, in-flight systems and ground systems all use advance technology (Pearson, 2017).

  • Strengths:the biggest strength of the firm is that is provides robust services to customers and effective technological facilities which helps it to be competent in such a competitive business environment.
  • Weaknesses:With such innovation, the company also requires huge capital in its operations to implement such advance technological processes and equipments.

Conclusion

Thus, it is concluded that business environment influences the working of an organisation in various manners. It is of vital importance to determine the purpose, scope of various different types of organisations to effectively differentiate between diverse companies. It is also required that each function within the organisation interrelates and contributes in achievement of its objectives. Lastly, internal and external analysis of micro and macro environment factors provide effective insight on determining its strengths, opportunities, weaknesses and threats.

References

Books and Journals

  • Beatty, J.F., Samuelson, S.S. and Abril, P.S., 2018. Business law and the legal environment. Cengage Learning.
  • Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
  • Fan, S., Lau, R.Y. and Zhao, J.L., 2015. Demystifying big data analytics for business intelligence through the lens of marketing mix. Big Data Research. 2(1). pp.28-32.
  • Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University Press.
  • Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business imperatives. Routledge.
  • Hunter, I., Saunders, J. and Constance, S., 2016. HR business partners. Routledge.
  • Ji-fan Ren, S., and et. al., 2017. Modelling quality dynamics, business value and firm performance in a big data analytics environment. International Journal of Production Research. 55(17). pp.5011-5026.
  • Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
  • Quinlan, C., and et. al., 2019. Business research methods. South Western Cengage.
  • Stacey, R.D., 2016. The chaos frontier: creative strategic control for business. Butterworth-Heinemann.
  • Tregear, R., 2015. Business process standardization. In Handbook on Business Process Management 2 (pp. 421-441). Springer, Berlin, Heidelberg.
  • Trevino, L.K. and Nelson, K.A., 2016. Managing business ethics: Straight talk about how to do it right. John Wiley & Sons.
  • Zur Muehlen, M. and Shapiro, R., 2015. Business process analytics. In Handbook on Business Process Management 2(pp. 243-263). Springer, Berlin, Heidelberg.
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