Understand The Business Environment
Private Sector
The private sectors are part of the economy that is not government controlled, and is run by individuals and companies for profit. The private sector encompasses all for-profit businesses that are not owned or operated by the government. In the United Kingdom there are many private businesses that have sole traders, partnerships, companies and franchises. The sole trader is the most common form of business ownership and is found in a wide range of activities (e.g. window cleaning, plumbing, electrical work, busking).
Advantages:
Limited liability – This is the most important advantage of incorporation. Limited liability protects the personal wealth of the shareholders
Easier to raise finance – both through the sale of shares …show more content…
and also easier to raise debt
Stable form of structure – business continues to exist even when shareholders change
Provides more privacy of information than an public limited company
Disadvantages:
Greater admin costs (though much cheaper than being a public company)
Public disclosure of company information (annual report & accounts + annual return)
Directors’ legal duties (set out by Companies Act)
Public Sector
The part of the economy concerned with providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service (such as public education), and services that encourage equal opportunity.
Advantages
There is limited liability for the shareholders. The business has separate legal entity. There is continuity even if any of the shareholders die. These businesses can raise large capital sum as there is no limit to the number of shareholders. The shares of the business are freely transferable providing more liquidity to its shareholders.
Disadvantages
There are lot of legal formalities required for forming a public limited company. It is costly and time consuming. In order to protect the interest of the ordinary investor there are strict controls and regulations to comply. These companies have to publish their accounts. The original owners may lose control. Public Limited companies are huge in size and may face management problems such as slow decision making and industrial relations problems.
Voluntary Sector
The voluntary sector or community sector (also non-profit sector) is the duty of social activity undertaken by organizations that are not for-profit and non-governmental. This sector is also called the third sector, in contrast to the public sector and the private sector. Civic sector or social sectors are other terms for the sector, emphasizing its relationship to civil society. Some of the organisations are charities (e.g. Oxfam and Red Cross), Trusts (Housing Associations), Local Community Interest Organisations (neighbourhood Watch Schemes) and Societies (Scouts, Guides, Theatre Groups and some sports clubs).
1.2 Explain the functions of different organisational structures
There are 3 main types or business structures. These are Tall Structure, Flat Structure and Matrix Structure. It’s important to have a structure that helps your business operate efficiently. All organisations use a structure to aim towards achieving their goal within and without the business.
Tall Structure
This is a business that is organised into layers, with higher layers having more authority than those below them. The advantages of this structure are that job roles are clearly defined and decisions can be made quickly by the people at the top. A disadvantage is that information and decisions made by those on top may take longer to reach those nearer to the bottom especially if someone has to be sent down to each level.
Flat Structure
In this organisation there are a smaller amount of layers with more people to each layer. In a flat structure decisions are usually slightly modified to adjust to the different sections within the business. A Flat structure works best when all workers are motivated and skilled.
Matrix Structure
This type of structure is when a business hires employees with many different types of skills such as finance, operation, marketing and human resource skills. Then employees get put into groups so each sector of work has a different perspective about each task. An advantage for this type of structure is that each individual employee can teach another the skills they have, this is useful when someone isn’t in for the day because another employee can take over the others persons work for the day.
1.3 Describe the features of different types of legal structures for organisations
The main legal business structures for companies in the UK are Sole Trader, Partnerships and Limits Companies.
Sole Traders
This is a straight forward and uncomplicated structure. These types of legal structure are when an individual runs and owns their business for themselves. A sole trader is liable for the debts of the business personally and gains all the profits for themselves. A sole trader has to pay income tax on a net profit from the Inland Revenue’s Self-Assessment system.
Partnerships
A partnership is when two or more people partner up fort the soul’s purpose of operating and managing a business. Usually the profit gained is shared 50:50 by the two partners but sometimes it may not be as even. Each of the two or more owners is liable for any debts of the business. There can be an exception to the personal liability for partnerships where are different legal requirements, this is a ‘Limited Liability Partnership (LLP)’ is set into place. It’s important that partnership agreements are drawn up to ensure each aspect of the company is covered. The most important issue to discuss and cover are the profit share, benefits in kind, interest paid on capital invested in the partnership and dissolution of the partnership.
Limited Companies
The difference between limited companies, sole traders and partnerships is that they are and have separate legal entities. Limited companies offer a basic good for expansion and are also more “attractive” to outside investors.
The main types of limited companies are Private Limited Companies that are Limited by shares, Limited by guarantees and (PLC).
Private Limited Company (limited by shares)
The liability of a limited amount unpaid share holdings for directions. The majorit6y of UK companies are private companies and are limits by shares.
Private Limited Company (limited by guarantee)
These are limits by the amount of shareholdings director that have guaranteed to add to company assets.
Public Limited Company (PLC)
The public limited company is subjected to strict regulations, particularly publication of financial information
Understand the organisational environment
2.1 Describe the Internal and External Influences on organisation
Internal & External influences
An internal influence is when the positive and negative attitude can affect our work throughout the company.
This is internal so it’s made by employees and manager. All of our internal work is projected outwards by the businesses reputation and other ways that people outside the company view our services. The external Influence is the way we receive feedback from customers, suppliers and our competitors. Also it is how we let that influence us internally to make the company image look better so we will end uo getting more customers and create a positive name for the company.
2.2 Explain the use of different models of analysis in understanding the organisational environment An Organisational Analysis is a way of reviewing the development, working environment, personnel and operation of a business or something else associated with businesses.
There are many different models of analysis in many different organisation but the most common three are Activity Diagrams, Business Domain Models and Competitive Comparison …show more content…
Matrix.
An Activity Diagram is used to break down a process in detail and is used to ensure no steps are missed during a task or pre-completed task. They also make it easier to understand the information as it can provide a visual picture of the information in basic, alternate and exception flows.
Business Domain Models clarify the information created and managed by an organisation without digging deep into the organisations structures. Models such as this can clear up misunderstandings and get everyone involved and understanding one another.
Competitive Comparison Matrices compare current and potential future state of a system or to the company’s competitors. This knowledge and understanding can significantly help with prioritising the important and unimportant improvements that may or may not need to be carried out and will focus a company’s concerns on the factors that will develop the company further instead of making the changes that won’t make and significant different to either sales or product creation.
2.3 Explain why change in the business environment is important
It is extremely important for changes to be making with a working environment because change with in a company is how company growth in maintained and it may even result in the company growing as a whole.
For example if the a company started out with 1 manager and 10 employees, if the building wasn’t updates or extended to make it a little bigger there wouldn’t be room for more employees to work so the company won’t get any bigger. At Delta Auto Parts (the company I am currently working for) the managers and owners made the decision to expand the storage room for all the car parts we sell. Then they ordered a lot more car parts in do we would have more to sell. Now the company is earning more money and has become very well know within Havering and Barking areas and we have over taken many competitors in sales that we would never have imagined over taking at least for the next couple of
year.
The private sectors are part of the economy that is not government controlled, and is run by individuals and companies for profit. The private sector encompasses all for-profit businesses that are not owned or operated by the government. In the United Kingdom there are many private businesses that have sole traders, partnerships, companies and franchises. The sole trader is the most common form of business ownership and is found in a wide range of activities (e.g. window cleaning, plumbing, electrical work, busking).
Advantages:
Limited liability – This is the most important advantage of incorporation. Limited liability protects the personal wealth of the shareholders
Easier to raise finance – both through the sale of shares …show more content…
and also easier to raise debt
Stable form of structure – business continues to exist even when shareholders change
Provides more privacy of information than an public limited company
Disadvantages:
Greater admin costs (though much cheaper than being a public company)
Public disclosure of company information (annual report & accounts + annual return)
Directors’ legal duties (set out by Companies Act)
Public Sector
The part of the economy concerned with providing basic government services. The composition of the public sector varies by country, but in most countries the public sector includes such services as the police, military, public roads, public transit, primary education and healthcare. The public sector might provide services that non-payer cannot be excluded from (such as street lighting), services which benefit all of society rather than just the individual who uses the service (such as public education), and services that encourage equal opportunity.
Advantages
There is limited liability for the shareholders. The business has separate legal entity. There is continuity even if any of the shareholders die. These businesses can raise large capital sum as there is no limit to the number of shareholders. The shares of the business are freely transferable providing more liquidity to its shareholders.
Disadvantages
There are lot of legal formalities required for forming a public limited company. It is costly and time consuming. In order to protect the interest of the ordinary investor there are strict controls and regulations to comply. These companies have to publish their accounts. The original owners may lose control. Public Limited companies are huge in size and may face management problems such as slow decision making and industrial relations problems.
Voluntary Sector
The voluntary sector or community sector (also non-profit sector) is the duty of social activity undertaken by organizations that are not for-profit and non-governmental. This sector is also called the third sector, in contrast to the public sector and the private sector. Civic sector or social sectors are other terms for the sector, emphasizing its relationship to civil society. Some of the organisations are charities (e.g. Oxfam and Red Cross), Trusts (Housing Associations), Local Community Interest Organisations (neighbourhood Watch Schemes) and Societies (Scouts, Guides, Theatre Groups and some sports clubs).
1.2 Explain the functions of different organisational structures
There are 3 main types or business structures. These are Tall Structure, Flat Structure and Matrix Structure. It’s important to have a structure that helps your business operate efficiently. All organisations use a structure to aim towards achieving their goal within and without the business.
Tall Structure
This is a business that is organised into layers, with higher layers having more authority than those below them. The advantages of this structure are that job roles are clearly defined and decisions can be made quickly by the people at the top. A disadvantage is that information and decisions made by those on top may take longer to reach those nearer to the bottom especially if someone has to be sent down to each level.
Flat Structure
In this organisation there are a smaller amount of layers with more people to each layer. In a flat structure decisions are usually slightly modified to adjust to the different sections within the business. A Flat structure works best when all workers are motivated and skilled.
Matrix Structure
This type of structure is when a business hires employees with many different types of skills such as finance, operation, marketing and human resource skills. Then employees get put into groups so each sector of work has a different perspective about each task. An advantage for this type of structure is that each individual employee can teach another the skills they have, this is useful when someone isn’t in for the day because another employee can take over the others persons work for the day.
1.3 Describe the features of different types of legal structures for organisations
The main legal business structures for companies in the UK are Sole Trader, Partnerships and Limits Companies.
Sole Traders
This is a straight forward and uncomplicated structure. These types of legal structure are when an individual runs and owns their business for themselves. A sole trader is liable for the debts of the business personally and gains all the profits for themselves. A sole trader has to pay income tax on a net profit from the Inland Revenue’s Self-Assessment system.
Partnerships
A partnership is when two or more people partner up fort the soul’s purpose of operating and managing a business. Usually the profit gained is shared 50:50 by the two partners but sometimes it may not be as even. Each of the two or more owners is liable for any debts of the business. There can be an exception to the personal liability for partnerships where are different legal requirements, this is a ‘Limited Liability Partnership (LLP)’ is set into place. It’s important that partnership agreements are drawn up to ensure each aspect of the company is covered. The most important issue to discuss and cover are the profit share, benefits in kind, interest paid on capital invested in the partnership and dissolution of the partnership.
Limited Companies
The difference between limited companies, sole traders and partnerships is that they are and have separate legal entities. Limited companies offer a basic good for expansion and are also more “attractive” to outside investors.
The main types of limited companies are Private Limited Companies that are Limited by shares, Limited by guarantees and (PLC).
Private Limited Company (limited by shares)
The liability of a limited amount unpaid share holdings for directions. The majorit6y of UK companies are private companies and are limits by shares.
Private Limited Company (limited by guarantee)
These are limits by the amount of shareholdings director that have guaranteed to add to company assets.
Public Limited Company (PLC)
The public limited company is subjected to strict regulations, particularly publication of financial information
Understand the organisational environment
2.1 Describe the Internal and External Influences on organisation
Internal & External influences
An internal influence is when the positive and negative attitude can affect our work throughout the company.
This is internal so it’s made by employees and manager. All of our internal work is projected outwards by the businesses reputation and other ways that people outside the company view our services. The external Influence is the way we receive feedback from customers, suppliers and our competitors. Also it is how we let that influence us internally to make the company image look better so we will end uo getting more customers and create a positive name for the company.
2.2 Explain the use of different models of analysis in understanding the organisational environment An Organisational Analysis is a way of reviewing the development, working environment, personnel and operation of a business or something else associated with businesses.
There are many different models of analysis in many different organisation but the most common three are Activity Diagrams, Business Domain Models and Competitive Comparison …show more content…
Matrix.
An Activity Diagram is used to break down a process in detail and is used to ensure no steps are missed during a task or pre-completed task. They also make it easier to understand the information as it can provide a visual picture of the information in basic, alternate and exception flows.
Business Domain Models clarify the information created and managed by an organisation without digging deep into the organisations structures. Models such as this can clear up misunderstandings and get everyone involved and understanding one another.
Competitive Comparison Matrices compare current and potential future state of a system or to the company’s competitors. This knowledge and understanding can significantly help with prioritising the important and unimportant improvements that may or may not need to be carried out and will focus a company’s concerns on the factors that will develop the company further instead of making the changes that won’t make and significant different to either sales or product creation.
2.3 Explain why change in the business environment is important
It is extremely important for changes to be making with a working environment because change with in a company is how company growth in maintained and it may even result in the company growing as a whole.
For example if the a company started out with 1 manager and 10 employees, if the building wasn’t updates or extended to make it a little bigger there wouldn’t be room for more employees to work so the company won’t get any bigger. At Delta Auto Parts (the company I am currently working for) the managers and owners made the decision to expand the storage room for all the car parts we sell. Then they ordered a lot more car parts in do we would have more to sell. Now the company is earning more money and has become very well know within Havering and Barking areas and we have over taken many competitors in sales that we would never have imagined over taking at least for the next couple of
year.