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Assignment Unit 1 HND Btec
Assignment Unit 1 HND Btec
HND BUSINESS
Unit 1: Business and Business Environment
Prepared and submitted by: Muhammad Rafay Gulzar
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Table of Contents
Business and Business Environment:..............................................................................................1
Introduction:....................................................................................................................................1
Types of Organizations:...............................................................................................................1
For profit organizations:...........................................................................................................1
Not for profit organizations:.....................................................................................................1
NGO:........................................................................................................................................1
Sectors:.........................................................................................................................................2
Private sector organizations:....................................................................................................2
Public sector organizations:......................................................................................................2
Legal Structure:............................................................................................................................2
Sole Proprietor:.........................................................................................................................2
Partnership:...............................................................................................................................2
Private Limited:........................................................................................................................2
Key Stakeholders:........................................................................................................................2
Investors:..................................................................................................................................3
Employees:...............................................................................................................................3
Customers:................................................................................................................................3
Suppliers:..................................................................................................................................3
Organizational size and scope of operations:...............................................................................3
Small scale organizations:........................................................................................................3
Medium scale organizations:....................................................................................................3
Large scale organizations:........................................................................................................4
Selected Organizations:................................................................................................................4
Gucci............................................................................................................................................4
Introduction..............................................................................................................................5
Structure...................................................................................................................................5
Scope........................................................................................................................................6
Prada.............................................................................................................................................7
Introduction..............................................................................................................................7
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Structure...................................................................................................................................7
Scope........................................................................................................................................8
Louis Vuitton...............................................................................................................................9
Introduction..............................................................................................................................9
Structure:..................................................................................................................................9
Scope......................................................................................................................................10
Comparison and Contrast...........................................................................................................10
Organizational Functions...........................................................................................................13
Organizational Functions of Gucci.........................................................................................13
Analysis..................................................................................................................................15
Organizational functions and Pandemic.................................................................................17
External/Macro Factors and PESTLE analysis..........................................................................17
Internal/Micro Factors................................................................................................................18
SWOT Analysis.........................................................................................................................18
Relationship between Internal and External factors..................................................................20
Internal & External Factors in Pandemic and their impact on Decision making.......................20
Bibliography..................................................................................................................................21
1
Introduction:
This Report consists of three sections. It will help understand different types of organizations and
their purposes, sizes and scope of different organizations, relationship between functions of
organizations and how are they related to the structure and objectives of organizations.
Moreover, it throws light on the impacts (both positive & negative) of macro environment upon
the business operations. Internal and external analysis of chosen organizations & relationship
between the external macro factors and strengths and weaknesses is also a part of this report.
Types of Organizations:
On the basis of the purpose of the objectives, organizations are mainly divided into three
categories:
NGO:
NGO stands for Non Governmental Organization. As it is clear from its title, an NGO is an entity
working for the purpose of providing welfare to the society without the intervention of
government.
NGOs exist in the world but they serve different purposes due to the difference in legal liberty in
every country.
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Sectors:
There exist two kinds of sectors when we talk about organization sectors. These are
distinguished on the basis of their purpose of making profits. The two sectors into which
organizations are divided are the following:
Legal Structure:
On the basis of Legal structure, organizations are categorized into three different categories.
These categories describe the liabilities, profit and loss sharing and no. of owners of the type of
organization under discussion. The following are the categories on the basis of different legal
structure:
Sole Proprietor:
Sole proprietor is a type of organization which is owned by a single individual. The single owner
is liable for all debts in such kind of organization. The individual is solely responsible for all
profit and loss. This is the simplest kind of legal structure of organizations.
Partnership:
Partnership is the type of business which is formed by the two or more owners in such a way that
all the owners share profit and liabilities equally.
Private Limited:
A Private Limited Company offers Limited Liability or Legal Protection for its Shareholders. A
Private Limited Company lies between a partnership and widely owned public company. A
Private Limited Company is identified by the company name, number of members, formation,
directors, meetings, shares, etc.[ CITATION pri21 \l 1033 ]
Key Stakeholders:
The entities who have stake involved in the organizations operations are of four types and are
linked to the company in the ways mentioned below:
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Investors:
Investors are the entities which provide financial support to organizations for their operations.
Other than the management which runs the organization, investors are also the building blocks of
an organization who invest in organizations to acquire returns.
Employees:
Employees are the individuals who work under the supervision of their higher managers to
achieve organizational goals and objectives. Higher the efficiency of the employees, higher is the
chance of goal attainment of the organization.
Customers:
Customers are the entities without the existence of which a business cannot run. The revenue of a
business is generated by selling its products or services to its customers thus, making profits (if
revenue is greater than costs). Without customers, the goal attainment for an organization is
impossible.
Suppliers:
A supplier is a person or business that provides a product or service to another entity. The role of
a supplier in a business is to provide high-quality products from a manufacturer at a good price
to a distributor or retailer for resale. A supplier in a business is someone who acts as an
intermediary between the manufacturer and retailer, ensuring that communication is forthcoming
and stock is of sufficient quality.[ CITATION sup15 \l 1033 ]
The scope of small scale organization is of national level. For instance, a small scale freight
forwarding organization having 10 employees has its outreach globally but it is still working as a
small scale business. Small scale organizations can grow overtime to transform themselves into
large scale businesses.
The scope of medium scale organizations can be of national or regional level or both levels
simultaneously. A hotel with 200 employees being operational in Pakistan is an example of
Medium scale organization. However, it can also grow and transform itself into a large scale
organization by expanding to other countries (International Market).
The scope of large scale organizations can be of national, regional, international and global
level depending upon its nature of business activities. For instance FedEx has more than 250
employees and has its business outreach around the globe.
Selected Organizations:
I have chosen Fashion industry for my research and report writing. The three organizations I
have chosen in the current Fashion Industry are:
Gucci
Prada
Louis Vuitton
Gucci
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Introduction
Gucci is an Italian fashion label. It was founded in 1921 by Guccio Gucci. It started out as a
luggage manufacturer and a producer of luxury travel goods for the Italy’s wealthy upper class.
Gucci’s headquarter is in Florence, Tuscany, Italy.
Structure
The Structure of Gucci is a centralized structure as shown in the figure below:
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Scope
Gucci is operating internationally having 487 running stores worldwide in more than 70
countries according to statistical data collected in 2019.
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Prada
Introduction
Prada is a luxury fashion house founded in 1913 in Milan, Italy by Mario Prada who was
grandfather of Miuccia Prada, an Italian fashion designer. Miuccia Prada is the current owner of
Prada. Prada specializes in leather bags, shoes, travel accessories & perfumes.
Structure
The structure of Prada is also a centralized structure and is shown in the figure below:
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Scope
Prada is currently working worldwide (Internationally) by distributing leatherwear, ready to
wear, footwear in more than 70 countries through a network of 633 stores.
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Louis Vuitton
Introduction
Louis Vuitton is a French Fashion house which was founded in 1854 by a French fashion
designer namely Louis Vuitton. Presently, it is owned by LVMH group which is the largest
luxury goods group and also owns 75 other brands including Givenchy.
Structure:
The Structure of the parent of Louis Vuitton which is LVMH is also a centralized structure as it
is shown in the figure below:
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Scope
Louis Vuitton is internationally operational and provides its offerings in the market through a
chain of 4915 stores in 2019 while 5003 stores worldwide recorded in 2020.
Organizational Functions
Organizational functions are the core processes or set of processes which are carried out by a
business in order to achieve its set goals and objectives. These functions are carried out within an
organization within specific department or areas of that particular organization. Common
organizational functions include:
Explanation: The orders are disseminated from the top management which requires planning
skills in order to prepare strategies and plans for management to implement and ultimately
execute them to achieve the set goals and objectives. The executives who are to report to the
CEO and Chairman BODs as their reporting supervisor are:
The above mentioned are the departments of a specific are which run with above 100 employee
in each department working for a common goal. All of these above listed personnel are required
to report to their reporting officer or CEO about the performance of their department time to
time. Moreover, the segregation of the executives is based on three different criterions.
The difference is between the structures of the organizations. Gucci having a centralized
structure keeps on going with a centralized manner of information flow while Louis Vuitton has
a decentralized structure as the decision making power is not limited to some specific individual
executive officers but is distributed among the employees working in the organization. Prada has
a structure much like Gucci and is well centralized just as Gucci’s Organizational structure.
Analysis
Firstly, the executive members of the management are designated according to the departments
of the organization. Secondly, the criterion of executives to supervise is division based. And
thirdly, the executives are designated to supervise and to keep a check and balance on the basis
of regions/zones of the globe. This enables the owners of Gucci to implement and execute the
plan and strategies to attain the goals and objectives and also minimizes the risk of failure. The
risk of failure is minimized due to the factor that the CEO has arranged the executive officials in
such a way that no error can be under looked resulting in decreased chances of risk and failure.
Thus, the organizational structure of the organization does play a significant role in supporting
and helping goals and objectives of the organization.
Advantages:
The advantages of the interrelationship between organizational functions and the impact they can
have on the organizational structure are:
A good connection between different individuals assists the association with having a
decent understanding between the various departments.
An administrator or a pioneer, who suffers a heart attack and still deals with the work
expertly and consistently, has a decent impact towards the group/representatives, which is
awesome illustration of good interrelationship between the authoritative individuals.
If an organization tunes in to the possibility of the representatives from the various
departments, it brings about the expansion in the benefit of the organization on the
grounds that the workers are more capable, and they know the market.
The great connection between the various departments causes the increment in the
viability of the business and in the development of the business.
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Disadvantages:
Coordination Between different functions of units get poor after engaging relationships
between departments due to lack of focus on one function.
The competition between different functional departments increase as a result
conventional employees are unable to adopt changes in the new environment.
A decentralized system can be harmful as the access to information which is required for
decision making is available for every employee and it can be used against the
organization in a harmful way.
Examples:
In Gucci does not let its employees to access the unconcerned information just because
of the risk that the employees, if provided, might use the confidential information to
spread bad impact on the company’s fame. Thus, Gucci does not provide any
unconcerned information to its employees.
If Prada would have given the access of its private information of the organization, the
company would have been a failure as the company would have been hijacked, robbed or
could be impacted negatively in any way.
In Louis vuitton the decision making power is distributed among the employees just to
help the customer with rapidness and effectiveness of the organization simultaneously.
The rapid decision making would help the product to be made more quickly than that in a
centralized structured organization as this would require many approvals.
Recommendation:
The organizations should focus on their goal attainment through keeping a centralized structure
of the organization to decrease the risk of errors and mistakes which lead to less chances of
success. This can be done by managing every division, Zone (Region) and Department within the
organization. There is a very strong connection between the organizations functions and
structure. Thus, if the organizations functions will be performed on performance standards, the
organization structure will be a strong one and will be a centralized one while if not then Vice
versa.
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For instance, in the current situation, work from home is being implemented and practiced a lot.
For this purpose, the IT department improves its functions as well as all other departments. The
HR department has started E-Recruitment and E-training to the existing employees. The
marketing departments of the above mentioned companies have started focusing on their E-
commerce platforms to keep their audience engaged. Likewise, the finance departments have
also focused on online meetings and e-operations. This is all done in order to keep going for their
organization’s goal attainment. If all these functions are not inter-linked, these organizations
would be unable to achieve their target goals and objectives.
Political: The political factors include the political forces acting and influencing any
business in its surroundings. For instance, A store owned by Gucci, Prada or Louis
Vuitton can be influenced negatively as in if riots and protests are being carried out in the
surroundings of a business premises, their sales can be affected as general public would
avoid to go out for shopping for travel goods, footwear, ready to wear, luggage bags, and
many other luxury products.
Economic: The economic factors are the economic barriers or price brackets in which
different salaried persons or money possessors have buying power of buying a specific
offering of the company. For instance, People in Pakistan are mostly salaried persons
having a fixed range of salaries. Thus, introducing a high priced luggage bag in Pakistan
will not be a good idea as there is very little market for expensive products in Pakistan.
Only the upper wealthy people have that buying power to purchase an expensive product
in Pakistan.
Social: Social factors depend upon the norms and culture of the society in which the
business is operated. For instance, if in fashion industry, Gucci, Prada or Louis Vuitton
introduces Luxury bags while the culture of Pakistan does not allow people to wear that
specific bag e.g. Luxury bag made of Snake skin, People would never go for that product.
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Technological: Technological factors depend upon the changing technology. They may
include obsolescence of old technology used to manufacture market or deliver products
and services. For example, if Gucci, Prada or Louis Vuitton do not focus on their
ecommerce stores, they will lose their audience engagement by not attracting new
prospects as well as by losing their existing customers.
Environmental: Environmental factor depend upon being environment friendly and
supporting the resistance in any unacceptable change in the climate or environment. For
instance, If Gucci, Prada or Louis Vuitton manufacture and sell highest quality
Medicated masks in the present situation of Covid, it will be a great success protecting
the environment from the transmittable virus.
Legal: Legal factors depend upon the laws and regulations of the country in which the
business is being operated. The state laws may ban any product which is harmful for
humans or impose heavy taxes on luxury items. For instance, the Pakistani Government
has imposed 25% on any import of luxury bag including bags manufactured by Gucci,
Prada or Louis Vuitton. This will increase the cost for anyone to buy such products and
may discourage him to buy such products.
Internal/Micro Factors
The Factors affecting the business in its surroundings internally are called the Micro Factors and
such an environment is called micro environment. Micro environment include the following
factors:
Customers
Shareholders
Suppliers
Media
Employees
Competitors
SWOT Analysis
Gucci Prada Louis Vuitton
Strengths Gucci owns a Its Financial The Brand Is
strong brand Position is high on
name strong recognition
It delivers Has a Low Association to
Superb cost structure quality of
Quality helps improve products
It has a Skilled pricing Wide network
Workforce Possesses of stores
It possesses Patents and worldwide
control over trademarks as
distribution strong
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intellectual
property
rights
Weaknesses It has Rental Lack of
Liquidity property adoption of
issues i.e. its imposes other cultures
Liabilities substantial Extra High
outnumber its charges on it pricing
Assets and affects
It lacks in profit
Research and It spends less
development on Research
efforts and
Gucci lacks in development
promotion Production
through automation
appropriate helps
advertisements manufacture
product in no
time while
this large
number of
products are
difficult to sell
Opportunities Gucci has Has Growing
opportunity to opportunity to market
capture newer boost sales by potential can
markets using online be of great
It has platforms i.e. opportunity
opportunity to website and for LV
attract younger social media Increase in
consumers stores number of
It has the New skilled working
opportunity to labor is an women can
improve its opportunity play a vital
sales by for Prada to role in easy
focusing on its hire them and hiring of
online deliver & get skilled
platforms; better employees
website and customer
ecommerce value
stores
Threats Counterfeit Competitors Having
Products are the biggest European
Competitive threat to Prada designers not
accepting to
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References:[ CITATION Bha20 \l 1033 ], [ CITATION Mom18 \l 1033 ][ CITATION Bha19 \l 1033 ]
Internal & External Factors in Pandemic and their impact on Decision making
In the current Pandemic situation worldwide, the emerging needs have changed. For instance,
The Recruiting process has totally shifted its platform of operations to online via online meetings
and e-recruitment and e-hiring. Thus, without identification of the new current Human Resource
need through external environment analysis, a Business let us say Gucci could not have hired
new employees and skilled labor through online medium.
The decision making process is impacted by the emerging situation and the new trends in the
surrounding environment. The business management has to change its strategies in order to keep
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going with the changing situation worldwide. This is done in order to achieve the organizational
goals despite of the continuous shifts in the emerging business environment.
Bibliography
Bhasin, H. (2019, January 11). swot-analysis-louis-vuitton. Retrieved from
www.marketing91.com: https://www.marketing91.com/swot-analysis-louis-vuitton/