Unit 1: Business and the Business Environment

Unit code L/508/0485
Unit type Core
Unit level 4
Credit value 15

Introduction

The aim of this unit is to provide students with background knowledge and understanding of business, the functions of an organisation and the wider business environments in which organisations operate. Students will examine the different types of organisations (including for profit and not for profit), their size and scope (for instance, micro, SME, transnational and global) and how they operate.

Students will explore the relationships that organisations have with their various stakeholders and how the wider external environments influence and shape business decision-making.
The knowledge, understanding and skill sets gained in this unit will help students to choose their own preferred areas of specialism in future studies and in their professional career.

Learning Outcomes
By the end of this unit a student will be able to:
1 Explain the different types, size and scope of organisations.
2 Demonstrate the interrelationship of the various functions within an organisation and how they link to organisational structure.
3 Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations.
4 Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors.
 
Essential Content

LO1 Explain the different types, size and scope of organisations
Different types of organisations:
Differences between for profit and not for profit and non-government organisations (NGOs).
Micro, small, medium-sized enterprises (SMEs). Different business purposes, objectives and supply of goods and services.
The range of legal structures associated with different forms of business: sole traders, partnerships and private limited companies.

Size and scope of organisations:
Differences between large, medium-sized and small organisations including objectives and goals, market share, profit share, growth and sustainability.
Global growth and developments of transnational, international and global organisations.
Differences between franchising, joint ventures and licensing. Industrial structures and competitive analysis.
Market forces and economic operations e.g. scarcity and choice, supply and demand, income elasticity.
Stakeholders and responsibilities of organisations to meet different stakeholder interests and expectations.

LO2 Demonstrate the interrelationship of the various functions within an organisation and how they link to organisational structure
The various functions within an organisation:
The role of marketing, finance, human resource management and operations within an organisational context and the interrelationships.
How functions relate to overall organisation mission and objectives.

Organisational structure:
Different structures depending upon the size and scope of the organisation, including bureaucratic and post-bureaucratic, parent, strategic business units (SBUs), matrix and functional levels.
Organisation structures and complexities of transnational, international and global organisations.

LO3 Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations
The context of the macro environment:
The application of the PESTLE framework and how organisations need to monitor and forecast external influences.
How the macro environment influences/impacts upon business activities: the impact of the digital revolution on production and consumption; the impact of social technologies; cybersecurity; emerging BRICS markets, the global shift in economic and social power and ethical and sustainable growth.
How organisations go through the transformation process and overcome resistance to change in response to the changing market environment.

LO4 Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors
Frameworks for analysis:
Introduction to SWOT and/or TOWS analysis and how they can assist in the decision-making process within organisations.
Key external macro factors including the competitive environment and government intervention that influence organisations and business.

Sample Answer to Explain the different types, size and scope of organisations (Plagiarised, Do Not Copy)

Types of Organisations

1. Private Sector Organisations

   • Sole Proprietorship: A business owned and operated by one individual. The owner is personally liable for all business debts.
   • Partnership: A business owned by two or more individuals who share responsibilities, profits, and losses.
   • Limited Liability Company (LLC): A flexible form that provides limited liability to its owners (members), blending elements of partnerships and corporations.
   • Corporation: A legal entity separate from its owners (shareholders) that offers limited liability and can issue shares of stock.

2. Public Sector Organisations

   • Government Agencies: Departments and bodies responsible for administering public services and implementing government policies.
   • Publicly Owned Corporations: Organisations established by governments to operate commercially and provide essential services (e.g., postal services, utilities).

3. Non-profit Organisations

   • Charities: Institutions established for charitable purposes, relying on donations and grants to fund their activities.
   • Non-governmental Organisations (NGOs): Entities independent of government involvement, often focused on humanitarian or social missions.

Sizes of Organisations

1. Micro-enterprises

   • Typically employ fewer than 10 people.
   • Operate on a small scale with limited market reach.

2. Small and Medium-sized Enterprises (SMEs)

   • SMEs employ up to 250 people (in the EU definition).
   • Contribute significantly to employment and economic activity in many sectors.

3. Large Enterprises

   • Employ more than 250 people (in the EU definition).
   • Often have substantial market presence, diverse operations, and complex organisational structures.

Scope of Organisations

1. Local Organisations

   • Serve a specific geographic area or community.
   • Examples include local shops, small service providers, and community-based organisations.

2. National Organisations

   • Operate within the boundaries of a single country.
   • Include large corporations, national charities, and government agencies at the national level.

3. Multinational Organisations

   • Operate in multiple countries, often with significant global reach.
   • Include multinational corporations, international NGOs, and global non-profits.

Conclusion

Understanding the types, sizes, and scopes of organisations is crucial for appreciating their diverse roles in economies and societies. Each type offers distinct advantages and faces unique challenges, shaping their strategies, operations, and impacts on stakeholders and communities.