Business environment refers to all external and internal elements which may affect the company functions such as employees, customers, supply, management, business regulations and demand.
Private organisations:
Private organisations aim to make a profit and it is the part of the economic system of an organisation. In the UK, private companies need to have one director and there is no maximum limit to the number of directors allowed in the private company. Directors in the private companies take responsibility for the management and they have duties of the companies' financial situation. Private companies do not need to have a company secretary and company secretary can also be a director of the company (Eriksson 2016). In private companies in the UK, the companies can have many shareholders and shareholders are the members of the company. The private company must have at least one shareholder, however, sole-trader is allowed in private companies. Private UK companies need to have registered office within the areas of England, Northern Ireland, Wales or Scotland.
Sole trader:
Sole-trader is fully in charge of the business and the owner of the business needs to submit the self-assessment tax return through government site. The owner and the business are not taken as separate entities and the owner of the business will be subjected if the business will get into the debt. The owner of the business will be personally liable for the business of sole-trading (Schlagwein and Hu 2017).
Partnership:
Partnership business follows the same type of sole trading setup and in the partnership business, there would be more than one individual sharing the responsibilities of the business. The business profit can be shared between each partner as they are in a partnership agreement. The each of the business partner is responsible for payment of their own tax (Iqbal et al. 2015).
Limited Liability Partnership:
An LLP business gets the separate legal entity from the partners and partners of the business are personally responsible for the business debts and liability is limited to each partner in the business.
Limited company
A limited company has the separate legal entity and it gives limited personal liability of the business to the extent of the capital investment. In a limited company, accounting is more complex and the companies have to submit accurate accounting each year annually (Garson 2017). Limited companies pay 19% Corporate Tax.
Public Company
Public sector companies aim to give services to the citizens. Public companies have their purpose to provide service to the people regardless of their education, health and people. Public companies must start the business with a minimum of £50,000 and this amount is promised to be paid by the shareholders (Brunsson 2016). In a public company, there must be two directors and a public company needs to have a secretary. The company must be set up for a lawful purpose and the companies' share trade on a stock exchange. Public companies can raise money by selling off their shares to the public and finance of the company can be raised through retained profit and loans (Palmer and Hartley 2016). Board of Directors takes the management decisions of the organisation.
Voluntary Organisation
Voluntary organisations aim to create social impact and it is not meant for profit. Voluntary companies are the not-for-profit organisations and these companies are independent of national and local government. Voluntary organisations are distinct from private sector organisations (Worthington and Britton 2014). Charity of the voluntary organisation is status and it is not the structure of the organisation as it can provide a tax advantage. The legal structure of the voluntary organisations has four big elements; trust, company limited by guarantee, incorporated association and charitable incorporated organisation. In the UK, voluntary organisations can have the different legal structures named community benefit society, Community Interest Company, co-operative society and royal charter bodies.
P2 Explaining the size and scope of a range of different types of organisations
Private company
McLaren Group
McLaren Group is a private company and it is in the automotive industry. McLaren started its journey in 1985 and it is headquartered in Surrey, the UK. McLaren has three subsidiaries, McLaren Technologies, McLaren racing and McLaren Automotive. In the year 2017, more than 3,200 employees worked in McLaren. In 2017, the revenue of the organisation was £871 million.
The mission statement of McLaren is to provide racing expertise and be diversified into the high-performance and global sports car business (Mclaren.com 2018). The vision of McLaren is to provide game-changing technology along with innovation in the automotive industry.
McLaren posted sales record in the year 2017 in the US market as it sold 3,340 cars. Revenue of McLaren reached USD 251 million and the volume of the cars reached 1.1 t. cars (Mclaren.com 2018). The scope of McLaren Group lies in the operations of the business as the company allows the customers to modify the vehicles based on their preferences. McLaren provides limitless scope for the personalisation of the cars.
Iceland supermarket
Iceland Foods is a private company and it is in the retail sector. It was established in the year 1970 and it is headquartered in Wales, the UK. In the UK, Iceland has stores in more than 800 locations. Iceland has more than 23,000 employees across the UK (Icefresh-foods.co.uk 2018). Iceland Foods mainly sell the frozen foods and groceries in the retail stores. Iceland Foods has an approximate 3% market share of the UK food market.
The vision of Iceland Foods is to be unique British business which focuses on innovation, value and convenience.
Revenue of Iceland Foods reached £260 million and in the UK, there are four big players in the UK in the supermarket business. In addition, Iceland Foods saw the first-half earnings of the business slowed down; however, it has a huge scope of the business which will allow them to reach large numbers of customers through promotions.
Public company
Transco
Transco is a public company in the UK and it is a British multinational gas and electricity utility company. Transco has it headquarter in Warwick and in London. Transco has more than 25,100 employees and it is on the London Stock Exchange (Nationalgrid.com 2018).
The mission statement of Transco is to achieve respect and recognition in the best Transmission Utilities and it wants to set up the benchmark in operational parameter.
Revenue of Transco reached £15,035 million in the year 2017 (Nationalgrid.com 2018). In the UK, Transco is in the national gas distribution business and it has a national gas distribution network. It has scope to operate gas transmission network and it has a monopoly in the UK market.
British Airways
British Airways is a public limited company and it is the largest airline in the UK. British Airways started its operation in 1974 and it has 272 fleets. British Airways operates in more than 183 destinations (Britishairways.com 2018). It has two hubs, Gatwick Airport and Heathrow Airport. British Airways is listed in London Stock Exchange.
The mission statement of British Airways is to be one destination for the customers ensuring the customers must act responsibly to take care of the world.
Revenue of British Airways touched to £11, 44 million in 2016 (Britishairways.com 2018). In the UK, British Airways has a 16% market share. In 2016, 45,200 thousand passengers were carried by BA. British Airways has scope to improve the service and destinations offering to the passengers. They can improve the booking flights; aircraft control system, catering equipment and hospitality as well.
P3 Explaining the relationship between different organisational functions of McLaren and how they link to organisational objectives and structure
Functions of different departments
Marketing: Marketing department serves and coordinates the clients about the products and services. Marketing department defines and manages the brand so that they can conduct the campaign management for marketing initiatives. As stated by Mcdonald et al. (2017), the marketing department produces the marketing and promotional materials with creativity so that the products or services must sell. McLaren has a marketing department where the employees are trying to break the ground in the business of presenting Formula One and McLaren Technology Group. McLaren marketing does maximise the value of the brand.
Operation/production: This department is responsible for managing the services and goods in order to create a process for planning, coordinating and organising the resources needed for the company. Operation department of McLaren controls the daily duties and work of the organisation along with McLaren management asks the employees to supervise, hire and train the staffs to work effectively.
Finance: Finance department in an organisation controls the expenditure along with operating expenses, debt and payroll (Banerjee and Srivastava 2017). In addition, the finance department keeps the track of revenue. In McLaren, finance department manages and invests all money along with internal and external reporting.
Human resources: McLaren management believes that in order to succeed in the business, they need to motivate, attract and retain the best talents. McLaren Company finds out the insights of the employees and McLaren takes the strategy of learning and growing which makes the organisation agile. McLaren has more than 3200 employees and McLaren wants to increase the innovation by valuing the diversity within the workplace.
Organisational structures
Divisional structure: The sole aim of the divisional structure of the organisation is to make a group for each function into a division. In divisional structure can correspond with geographies of the organisation as each division may contain necessary resources. Large multinational companies follow geographic departmentalisation where management segregate the function of the organisation into various geographic divisions (Weatherley and Otter 2017). Geographic division increases the flexibility of the organisation. However, McLaren follows the product departmentalisation where McLaren segregates the authority based on the product subsidiaries. Each of the division will account for the product and sales.
Matrix: Matrix organisational structure helps to report the relationship set as the grid. This structure does not follow the traditional hierarchical figure as it follows only a dual reporting relationship. Matrix organisational structure is helpful when the company has more than one product or services (Worthigton and Britton 2014).
Relationships between the functions, objectives and structure
The business organisation follows a specific organisational structure which helps the management to spread the chain of command. Organisational structure provides help in making the relationship between two organisational departments. Working in synchronise way among the departments help the organisation to reach the organisational objectives. Organisational structure sets the decision-making authority for the organisation and functions of the specific set by the organisational structure. McLaren's divisional structure helps the management to instruct the staffs and management wants the employees must enjoy what they do.
Task 3
P6 Explain how strengths and weaknesses interrelate with external macro factors of McLaren
Strengths of McLaren lie in the strong brand concept, high-quality automobiles, racing car champions and state-of-the-art eco-friendly manufacturing facility. The strong brand concept can help McLaren to sell high numbers in the UK; however, a current economic condition in the UK is not suitable for high numbers of car sale. Current GDP growth in the UK is 0.4% and lower growth of GDP signifies that customers will not be able to purchase luxury cars. On the other side, the economic condition of the UK is better than other EU based countries and disposable income of the UK's people touched £27,300 in 2017 (Hopkin and Alexander 2018).
It indicated that people can spend money on luxury automobiles and it can increase the sales of the cars. McLaren manufactures racing car and eco-friendly manufacturing can help the organisation to have sustained growth in the industry. Eco-friendly cars can make the atmosphere sustainable. In recent time, global economic power is shifting and trade liberalisation and technology transfer are happening. The UK government would cut the carbon emission limit and this would save billions on fuel cost. McLaren is maintained the technological innovation and McLaren has is having a competitive advantage from the brilliant employees.
McLaren's weaknesses lie in the production of the fewer cars, a high price in the market, limited qualified repair shops and limited retailers of McLaren cars. The recent Brexit incident in the UK has posted a political crisis and the government is busy to make a future political transformation in the UK. The relationship between the UK and other EU based countries is not good. McLaren fails to find the good retailers of their cars in the European market and they cannot expand the qualified repair shops in the European market as well (Hopkin and Alexander 2018).
Current economic crisis in the UK market could be another reason for the future lower sell of McLaren cars as these cars are expensive. If McLaren is thinking about expanding the cars sell in the Asian market; import tax is also there which will make the cars more expensive. People's preferences are changing and people's demand for the luxurious cars is increasing. However, production of fewer cars leads to the high price of McLaren cars. Recent digital transformation can help the McLaren to attract new customers using social media and online platforms.
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