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Internal and External Factor of Business

University: Regent College London

  • Unit No: 5
  • Level: Undergraduate/College
  • Pages 16 / Words 4000
  • Paper Type: Assignment
  • Course Code: JNB522
  • Downloads: 28
Question :

Business is an activity of the entrepreneurs where they are indulging in providing goods and services to the consumers according to their needs and demands. There are various environmental factors that influence and affect the activities of the business. It includes factors like competitors, government, customers, technology, legal, political, etc.

You are newly appointed at JP MORGAN FINANCE AND INVESTMENT as a client manager. Your role is to evaluate the various types of the company of prospective clients along with their organizational structure. You are also asked to explain the three types of organizations by the CEO that may approach you for the services like loan, mortgage, and various other business services. For this purpose, you are required to answer the following questions.

  • How many types of organizations are there? Explain them on the basis of their size and scope.
  • How various functions within the organizations are interrelated and how are they linked with the structure of the organization?
  • With help of the examples explain the influence/impact of the microenvironment, both positive and negative upon the operations of the business.
  • Determine the internal weaknesses and all the strengths of the business and explain its relationship with the external macro factors.
Answer :
Organization Selected : JP Morgan

INTRODUCTION

Business environment is the most important part of organization which is operates various activities related the business operations and functions. There are two important factors includes such as internal and external factor that is performed different functions like customer sanctification, supply chain, customer relation, management etc.

This report will discuss about the JP Morgan organization and it will enhance their business all over the world. This report also discuss about the important factor which is impact on the macro environment.

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TASK 1

P1 Different types and purposes of organization

An organization can be referred as a group of people that is organized to accomplish common objectives and goals. Organization has a physical management body structure that determines relationship between management and employees.

In this context, different types and purposes of organisations incorporating in private, public and voluntary sector will be described in this task (Calabrese and Sarno, 2018). The motive of an organization is managing products and services and keeps focus on customers.

The organization has different types-

Sole trader

A sole trader known as a sole proprietorship is a simple business structure whereby a single person runs own business. They are legally responsible for all business issues and liable for finance. They are self-employed and have records of sales and expenses. The main objective of sole trading organization is earn more profit without any sharing. Stationery shop is an example of sole trader.

Advantages

  • They are the boss of their own business.
  • They keep all profit percentage.
  • Business start-up capital is low.

Disadvantages

  • They have unlimited liabilities for debts.
  • Capacity to raise capital is limited.
  • They have the all day-to-day decision making responsibilities.

Partnership

InaPartnership business, two or more people start business with sharing money, responsibilities, skills and other resources. Profit and loss sharing depends on terms of legal partnership agreement. Partnerships have two varieties; one is general partnership and second is limited partnership (Chuang and Huang, 2018). Reduce the business development risk with the help of partnership. Restaurants are example of partnership business.

Business can start with low capital.

Partnership business has huge borrowing capacity.

The partnership has limited external regulations.

Disadvantages

  • Partners have unlimited debts liabilities.
  • Every partner is equally liable for debts.
  • Disagreements and conflicts between partners are highly risky.

Private sector

A private company is a company which has their own business policies and plans. They may issue stock and have shareholders, but these shares don't trade on public exchanges.

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There are four types of private company- sole traders, limited liability Corporation, S corporation and C Corporation. The responsibilities of legal entity are depended on owner of the business. Arcadia Group Company is part of private sector.

Advantages

  • Private companies have limited liabilities, main advantage is subject of tax and rate is less than of sole and partnership.
  • A private company gives a handsome amount of travel allowance to employees.

Disadvantages

  • Power distribution among the management and people will raise arguments between them.
  • Maintain the company's accounts are not easy.

Public sector

A public sector/ company is the legal call of a limited liability that issues shares and liability to the public. According to legal structure of public company it can sell shares to public.

Sometimes public sector have partnership with an organization in the private company to make public-private partnership. This sector generally operated by the country’s government. Civil Service and Fast Stream is public sector organization.

Advantages

Capital raising via public issue shares- Public sector/company can issue its shares capital, where it is listed.

Widening the shareholder base and spreading risk- Issue shares to public, arise the opportunity to expand risk of ownership among stockholders.

Disadvantages

Public companies are state property; they suffer from political affairs and act according to politicians.

Public company is not easy to control who is the owner and shareholder of the company.

You may like this sample: Operations Management of Cadbury

Voluntary sector

The voluntary sector is generally comprised of those organizations whose purpose is to provide benefits to society, usually without profit as a motive. This sector is separated from public sector; many organizations are connected with government on all levels to support it. Main purpose of voluntary sector is to create social wealth (Biloslavo and Edgar, 2018). For Example- The welcome trust is based on the non-profit organization.

Advantages

The voluntary sector makes efforts to reduce poverty in society.

Employees who are working in the non-profit motive, they have their own interest or commitment towards the organization.

This sector work for helpless people

Disadvantages

Fund development and rising is the biggest challenge for voluntary sector.

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Differences between different organization types on the basis of size, legal structure, objectives-

TASK 2

P2 Relationship between different organization functions

An organizational structure is a framework to operate certain organization activities in hierarchy to accomplish goals and objects. Structure includes roles and responsibilities rules and regulations. It shows information flow from top management to lower management. In centralized organization, the information flow from top to bottom level Therefore, the decentralized business body information flow at various levels. Organization structure has different types, JP Morgan is organization based on the Finance and Investment

Line Organization Structure

A line organization has direct, vertical relationship between different level of organization. In line structure departments directly connected to organizations goals. JP Morgan Finance Limited use line organization structure. JP Morgan include product and marketing in this line organization structure and power authority follows the chain command. Line structure of JP Morgan is explained the above (Amankwah‐Amoahand Adzoyi, 2018). The line structure has a vertical relationship at all departments level. Each department of organization is internally connected to each other. This inter connected relation best for to make decision and take action on decisions. But this structure has a negative face, which is if one department not performing well, it will make affects on remaining departments. This line structure is best for those organizations who has limited staff. This structure work in a single line and deliver information at all level of organization. Advantages of line structure-

  • Easily understandable.
  • Easy to take fast decisions.
  • Built a healthy and strong relationship between departments.

Disadvantages

  • Neglects specialists while making plans.
  • As the organization grows, line structure will be less effective.

Divisional organizational structure

Organizations that operate across various horizontal goals use a divisional organizational structure. This structure permits much authority between groups of the organization. JP Morgan Finance Limited use divisional organization structure. It has many divisional like raw material, technology, etc. In this structure each department of JP Morgan operates its own organization, controlling on resources and investment of money on projects. This structure can be divided as a geographically. Divisional organization structure of JP Morgan is show in above chart (Pedersen and Hvass, 2018). Divisional structure gives the greatest flexibility to JP Morgan in different division, allow each to operate its own organization with one or more persons and reporting to head company's management. Negative side of this organization structure is that focus on same functions in different area cannot be discussed. In this structure organizations divided as a function, product, geographic area, projects etc. A single person can operate every division and divisions have their sub-divisions. Each division has one head and report to top management of the parent company.

Relationship between other functions

An organization has different departments and they all work differently in their zone but they all have same purpose which is achieved organization goals and increase the organization's productivity. For smooth business running each department is necessary and they depended on each other for their work. HR, finance. IT, marketing and operation all are the department of an organization and they internally connected to each other (Hamad and El‐Gohary, 2018). Organization management reserve the power of decision making but they take opinion of departments before making the decisions. Relation between different departments explain the below-

Human resource

The human resources department is one of the main department of organization. HR department have some responsibilities like- selection and recruitment of qualified and skilled employee, organize training program for freshers, frame plans and policies and take care of employees health and safety. JP Morgan HR department work for other departments for the organization growth. This department connected with finance, IT, operation etc. departments. Marketing department promote organization in the market, sell products and services, and motivated people to become part of company. Finance department give brief idea of company funds for the conduct training and other activities.

Finance Department

Finance departments maintain all financial records, department maintain profit and loss account of the organization, percentage share of amounts for other activities. JP Morgan's' finance department maintain financial records, and provide funds when they require. Finance department provide funds to HR, marketing and others departments. HR departments use this amount for training and development of employees, while marketing department utilizes fund for company's promotion and sells of products. For fast and latest technology finance department provide money to increase company's growth. Investment in operations department for manufacturing of qualitative products.

Marketing

This department is the backbone of the company, marketing department sale and promote company's products and services and earn profit. Good company's sale helpful to increase company value and open more growth opportunities. JP Morgan's sales department work hard for increase its market value. Product promotion play role to make product known for public and people come to know about organization and wanna to connect with organization, which is beneficial for HR department. More sale makes more profit and more profit good sign for finance department. IT and operation departments helpful to produce qualitative and technical products.

IT department

IT department provide latest and fast technology to each department and this support make company's work easy and effective (Ahmmed and Noor, 2018). With the help of IT department HR department can easily maintain employees records, finance department use tools to keep company's financial statements, operation department manufacture products with the use of fast and current technology.

Operation department

The operation department produces products and services and sale out them in the market and generate company profit. Marketing department is responsible for products sales, and this sale makes profit of the organization and finance department maintain records of selling. The selling amount will utilize in other department growth. IT department provide technologies for production of qualitative products.

TASK 3

P3 Positive and negative impacts of macro environment upon the business

Macro environmental factors affects the overall business empire of organization. These external factors are influence the organizations activities, policies and strategies. In this order to macro environmental factors analyse PESTLE model will be useful. PESTLE stands for Political, Economical, Social, Technological, Legal and Environmental, these external factors affects the day-to-day business affairs. As JP Morgan Finance and Investment located in the United Kingdom.

PESTLE model analysis

Political factors

In this political factors government policies and plans, government stability, tax policy, import-export business policies, national political affairs, local and global market are come. Frequently change in government policies can influence the organizations' environment and policies (Kasemsap, 2018). Government of country make laws and regulations which make negative and positive impact on organization.

Positive impact

Country government make policies to increase the productivity and generate maximum profitability of business empire. Appreciation of new entrants, flexible trading policies, changes in business production, simple global trading policies are the positive political factors impact. Before making the policies' government firstly think about the country profit. JP Morgan Finance and Investment government can take part in the finance matter whenever, leaving the industry harmed to political impact.

Negative impact

The government always give priority to the nation. They make some dynamic policies which are good for nations but can make negatively impact on the organization productivity and profitability. Governments policies are more beneficial for nations compare to organization. The operations of JP Morgan more affected after the BREXIT referendum and customers or clients graph decreased.

Economic Factors

Economic factors includes exchange rate, crisis, interest rate, inflation, investments of private and public sectors, customer's disposable income, expenses, infra costs, availability of transport medium, communication etc. Economic factors are those factors who run country economy and these influences the business environment. These factors divided into macro and micro environmental factors. Macro factors deal with management and micro factors are about how people spend their incomes.

Positive impact

Financial business and economy both are tied. If the economy is high in the nation it will definitely make positive impact on organization. In 2008 because of global financial crisis United Kingdom economic conditions was very bad. But with changes of company and government policies economic conditions of United Kingdom begun to strong again. After the changes in policies JP Morgan gets high benefits such as more revenue and profitability.

Negative impact

Because of the economy is declining and high inflation rate, no doubt it will make negative impact on business empire. When inflation is high, the financial results is negative. Inflation rate affect the country currency and its value is unstable. Crisis in the United Kingdom economy could affect JP Morgan business organization in negative way.

Social Factors

It also known as socio-culture factors, and this area involve the belief and attitudes of country population. Social factors includes numbers of population, age, gender, health awareness, attitude towards career, education, income distribution etc. Customers taste and requirements are changeable by nature. With the lunching of new product in the market customer purchasing decision change. Financial services are least impacted from changing taste of customers, but for the market sustainability in the competitive environment it is necessary for the organization to complete the needs and requirements of customers.

Positive impact

Social environment influences the buying behaviour and needs, affect customers perception about the financial sector. Customers like to visit financial institution like JP Morgan for financial advice for investment and getting loan. Customers can be advised with enough information regarding the high return on investment.

Negative impact

Main negative impact is customers changing nature. With the use of the latest technology customers can get more information from internet. JP Morgan also impacted by customers changing behaviour. This make negative impact on organization profitability and productivity.

Technological factors

Technological factors affect marketing and management of the organization. These factors include government investment on research, new technology adoption, new products and developments and obsolescence of current technology. Technological improvements affects all the industries, with the increase in technologies financial sectors also benefited. New and advanced software is helpful for management to evaluate accurate data in minimum time. It will be good for saving cost and time for organization. Financial organization like JP Morgan also affected by technological factors. For sustain in the market it is necessary that management use the latest technologies.

Positive impact

The positive impact of technological factors that with the use of the latest technologies' organization save cost and time. JP Morgan uses the latest application of data maintain in order to keep safe big data effectively.

Negative impact

The negative impact of technologies is that it is expensive. It can increase the organization cost and management have to appoint extra skilled employees to maintain data.

Legal factors

Legal factors includes legislations elements like employment law, tax policies, employees health and safety law, patent and copyrights etc. To avoid legal affairs managements needs to follow defined laws in the country. Company need to know what is legal and what is not. If organizations want to trade globally, it has to set its own rules and regulations.

Positive impact

Organization like JP Morgan has to follow laws such as data protection, employments law, labour law company law.

Legal Factor

Legal factor is needed of JP Morgan organization to follow all the important laws that is required for the business development. Legal factors are related to the policy, rules and regulations, opportunity, equal rights for employee etc. this is very important part of organization to maintain the working culture of business environment. All the rules and regulations are generated by government because of human welfare. Every organization always know about the policy because this is very helpful for control and handle the business operations and functions. Employee can use this law for growth and development. They have equal rights to use them and also improve the performance towards the organization.

Environmental factor

Environmental factor is very important for increasing the productivity and raw material which is helpful for doing the business in proper and ethical ways. It also fixes the targets which is set by government to increase the productivity and profitability in marketplace. This factor is impact on the business environment such as sustainability, change of climate, waste material and recycling the product etc. they have responsibility to manage the business process effectively and efficiently. There are some important issues and problem faced in the market like the demand of customer has been increased and they buy the best quality of product that is available in the marketplace.

TASK 4

P5 Internal and External analysis of JP Morgan Finance organization in order to determine the Strength and Weakness

JP Morgan is the fastest growing organization that is analysis the entire business process to identify the External and internal factor of organization. This organization is use different technology to increase the performance and efficiency of company. They provide the best quality of services in marketplace (Townsend and Piramuthu, 2018). The main objective of this organization to increase their productivity and profitability. External and Internal analysis is the important part of organization to identify the actual need and requirement of business process.

JP Morgan is investment company to provide all the facilitates and services regarding the commercial banking services, Loans and provide finance on the product etc. this is type of banking sector to manage the entire business process in proper manner. This organization is located in the United Kingdom to expands their business all around the world.

Strength

The strength of this organization to determine those employees who has capabilities to provide the job according to their efficiency. Jp morgan is the fastest growing organization to control the facilitates and services which is required for business growth and development. This includes Financial resources, brand image, trust and loyalty, human resource competencies services and product etc. these are the important resource which is playing important role in the business development. This organization always concern about the increase their performance towards the achievements and goals. This organization is based on the financial banking to provide the best quality of services. Financial advisor has managed the entire business process in proper manner. This advisor is easily giving the suggestion regarding the financial business. This organization is using new technology to increase the sales and productivity in marketplace. This finance and investment company is to be completing their work with the help of online medium. The customers easily check their status by Internet. This is the biggest strength of this organization to increase their services. It is a leading organization to use new strategy for develop an effective plan for growth and development. It will balance the share value and generate the high revenue in marketplace. This organization will maintain the position in global market. It will increase the deposit money and decrease the time. The total ratio of deposit is increased by 179%.

Weakness

The main weakness of JP Morgan face many issues and problem due to the financial crisis. It will reduce the market share in the global market which is affect the business process. Some times, the international market fluctuate due to the recession. This recession is affect the entire business process and various type of many issues and problem face in the business operations and functions.

Opportunities

JP Morgan organization provide the opportunity to their employee regarding the job options. It also communicates with the new venture to increase the business across the world. For development, it communicates with the nearby local banking for taking help to invest fund for business development. They provide the credit card services to easily buy the product with the help of online and card. In United Kingdom, Most of the people use credit care services because it is very useful and every one used them. This organization has expands the business in geographical areas to cover the entire business all around the world. This company will set the targets and try to achieve the goals and objectives in marketplace.

Threat

This commercial banking is facing many problems and there is risk on the business development process. The competition level of market is very high. The most important threat is that financial crisis which is affect the business operations and functions. It will negative impact on the organizations.

P5 Strength and Weakness of interrelate with the external macro factors

JP Morgan is the fastest growing organization which provide the best quality of services in marketplace. Internal and external factor is directly affect the business process and operations. There are some important factors discussed as following:

Political factor

This factor is impact on the political environment such as tax policies, trade traffic etc. this factor is influence to improve the business operations and functions. All the rules and regulation, laws policy generated by government.

Economical factor

This factor is impact on the performance of organization as well as economy conditions. It is impact on the profitability of organization. This factor includes unemployment, interest rate, foreign exchange, cost of raw material etc.

Social factor

This is the main factor which is mainly focused on to determine the latest trends. This is very helpful for understand the requirement and need of customer. This factors impact on cultural trends, lifestyle change, attitude change and demographic etc.

Technological factor

The technology has increases all over the world therefore, it is directly impact on the business operations and its performance (Popovič and Castelli, 2018). This factor includes development and research, use mobile technology, automation and digital technology etc.

Environmental factor

This factor is impact on the ecological environment and it is very important element which is helpful for growth and development. This factor includes sustainability, climate change, waste material, recycling etc.

Legal factor

Jo Morgan is the best organisation to understand the legal law which is helpful for manage the business process. This factor includes such as safety and health, customer law, restriction and regulations etc.

CONCLUSION

This report discussed about the Scope and Size of organization and it also describes the positive and negative factor which is impact on the business functions and macro environment. It analyses the internal and external of JP Morgan to determine the strength and weakness of organization.

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