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Changing Business Environment- River Island

University: University of Cambridge

  • Unit No: 12
  • Level: Post Graduate/University
  • Pages 10 / Words 2500
  • Paper Type: Assignment
  • Course Code: PE7003
  • Downloads: 0
Organization Selected : River Island

INTRODUCTION

Business environment consists of internal and external factors which may or may not be controlled by the management of an organisation thus required to deal with such factors through making an effective decisions and plans. For this, an organisation should have an effective management who are capable to remove the negative impact made by such influencing factors. Internal factors includes employee relation, culture, technological up-gradation etc. whereas external factors includes political conditions, economic situations, legal laws etc. The present project is based on River Island; a UK based private company which deals in providing quality clothing products across worldwide. The project includes different types of organisation along with their purposes, size and scope. Contribution of different department in achieving organisational objectives is also discussed under this report (Avramenko, 2012).

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TASK 1

P1: Types and Purposes of private, public and voluntary organisation and their legal structure

There are number of organisation present in market environment which are operated their business functions with an objective of fulfilling the needs and requirements of customers in such an effective manner that will help in maximising their level of satisfaction. Number of organisations includes private, public, and voluntary. Such type of organisation is preformed in different way to achieve common goal i.e. fulfilling needs of customers. But to sustain in market world, they need to follow all rules and regulations formulated by government of such country in which the business operates.

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Types of organisation along with their legal structure

Private company:

An organisation which are privately owned and controlled by two or more persons is known as private company. The government makes no interferences in the business operations of company thus can be run business more smoothly. As there are lots of restrictions as well implemented by government on private company. For example, private company has not allowed to invite public for the purpose of allotment.

River Island is an example of private company which deals in providing clothing products at reasonable prices across worldwide (Bovee, Thill and Raina, 2016).

It has operated more than 70 stores in UK itself and has generated £925.8m in 2014. River Island in Peru has further decided to expand its business through opening two sores in Jockey Plaza and Miraflaroes Lima.

Purpose of River Island:

The main purpose of River Island is to increase standard of living of people through offering quality clothing products. As offering quality products in market increases competition in fashionable garments industry thus it is important for company to offer wide range of clothing products for all groups of people.

Legal structure of private company

Partnership: It is such type of business which is formed through contractual agreement between two or more persons for the purpose of operating business functions in an effective and efficient manner. The formal agreements describes the terms and conditions of partnership which includes the sharing ratio of profits and losses, capital investment by each partner etc. The main objectives of partner joining together to run company is to earn huge profits (Cavalcante, Kesting and Ulhøi, 2011).

Sole proprietorship: An organisation whose ownership and all power of controlling business operation is attached with single individual known as sole trader. As a single owner, he/she is liable to make decision for the betterment of company and enjoys profit solely without sharing with anyone. He is accountable to himself only for the failure or losses faced by the company.

Limited companies: It is a company in which the members are not personally liable to pay any debts of company as they are liable up-to the amount of unpaid shares or capital. Such company has divided into two types which includes limited by share and guarantee.

Public organisation

It includes organisation which is owned and controlled by government authorities by investing more than 51% share in capital of company. Thus, government has attained all powers to control business operations in more effective and efficient manner. The main objective of such type of organisation is to improve the standard of living of people through offering quality products at a reasonable price.

NHS is the example of such type of organisation which is engaged in offering quality health improvement services at an affordable price. Dental and optical care services are also included in the offered services. Their main aim is to enhance the standard of living of people through creating awareness about preventing health related issue.

Purpose of NHS:

  • Maintaining healthy lifestyle of people.
  • Create awareness about healthy eating so as to live healthy lifestyle.

Reaching to maximum number of customers who are suffered from any health related issues (Hair, 2015).

Legal structure of public company

  • Central government: Handling the business functions operated by state and local government through providing them required funds.
  • State government: Proving support in operations of state government and agencies activities.
  • Local government: Operates business at low scale with the help of getting support from central and state government.

Voluntary organisation:It is like a charitable trust which is established in market for the purpose of fulfilling needs and requirements of society. The company should be registered and required to take permission from government authorities of such country where they want to provide services.

Oxfam is an example of voluntary organisation which is exists in market with an objective of eradication of poverty from the world. It performs several functions such as providing relief to person who are affected from disaster, pro-migration etc. It first came into existence in 1942 with help of taking support from volunteers which includes businessmen, industrialist in form of donations. Through their contribution, the company are able to provide basic necessities of life to needy people (Hamilton and Webster, 2015)

Purposes of Oxfam:

  • Eradication of poverty from the world.
  • Improve the standard of living of people.
  • Creating awareness of getting education in order to achieve life goals.

P2: Size and Scope of different organisation

Every organisation which has operated its business operations in market world have own different size and scope on the basis of they expand their business. For example, River Island, NHS and Oxfam have their own size and scope due to which they exist in market for longer period of time. Size includes the expansion of business to different countries whereas scope includes the chances of sustaining in competitive market with the help of their existing products and services. So the different size and scope such types of organisation are as follows:

River Island:

Size:River Island, a UK based company which has operated its business in multiple countries including America, Ireland, Netherlands and many more. As the company is engaged in providing clothing and textiles products in market which are high in demand in every countries thus the chances of achieving success in expansion of business in different countries are high. The company has generated approx. £925.8 million in 2014 which increases their position in market. To expand business, the management of River Island has decided to open new stores in Chile and Peru with a motive of capturing large market share (Karagiorgos, Drogalas and Giovanis, 2011).

Scope: As River island deals in multiple products such as clothing, textiles, footwear and other accessories due to which the chances of sustaining in market for longer period of time will be more. The company can easily find out the large number of customers due to which they are able to maintain their stable position in market and revenues as well.

Vision: The main vision of company is to provide optimum quality products and services in order to achieve strong brand image in competitive market environment.

Mission: The mission statement of River Island is that they are focuses on providing the hottest looks for their targeted customers. Therefore, they always tried to bring new and designable clothing products so as to maximise the satisfaction level of customers (Kolk, 2016).

NHS

Size:It was first came into the market in 1948 and thereafter has attained 1.5 million people in United Kingdom which are uses their health related services. The company has also come under the list of top five world’s workforces. As NHS has offered medical services to the health related issue people thus the chances of successfully expansion of business to a large scale are high. There are more than150273 doctors along with general practitioners includes approx. 40548 and 314966 nurses are giving their valuable services to the growth of an organisation.

Scope:NHS has covered large area of country where they offered health related services at free of cost thus the chances of capturing large market share throughout the world are more. As it also includes dental and optical services in their offerings list.

Vision:NHS has set a clear vision to maximise the level of healthy lifestyle of every individual of the world.

Mission:The mission statement of NHS states that the company has set a target to reach their health related services to maximum number of people who wants to use their services (Osterwalder and Pigneur, 2010).

OXFAM

Size:Oxfam includes over 20 charitable organisations which gives their maximum valuable contribution in eliminating poverty from the world. It gets sufficient support from large number of volunteers thus able to expand their business operation to large scale.

Scope:As mostly countries are suffering from poverty due to which Oxfam has more chances to exist in market for longer period of time and help needy people to provide basic necessities of life on continuous basis.

Mission:The mission statement of Oxfam states that every individual can able to get basic necessities of life and should not suffered from any life discrepancies.

Vision:The main vision of Oxfam is to throw out the poverty from the world and maximise the standard of living of people (Pulver, 2012).

  • Sole proprietorship are the easiest way of setting up business due to having no complexity in paperwork. The sole trade have unlimited liability which means that they are fully liable to pay all debts of the business. The sale trader has required to produce an annual accounting return for the Inland revenue.
  • Partnership are formed by partnership deed which is a document made by the partners and witnessed by a solicitor. Such deed contains all terms and conditions aggred by partners and determined the legal relationship between the partners.
  • Private companies are not required to sell its share to the general public. The shares can only be traded with the permission of BOD. Whereas public company shares are available through the stock exchange. Private company should required to use Ltd. After its name whereas public company should required to use PLC after its name.
  • Public companies has number of legal obligations such as maintaining annual reports and statement of accounts. It requires paperworks and some more formalities associated with setting up public rather than a private company.

Licensing

Franchising

Joint ventures

In this, one company gives right and permission to another company in order to manufacture their products for a specified payment. It is considered as most profitable way to expand business on large scale.

It is a type of entrance into market by company in which one company agreed to pay fees to other companies with the purpose of using their name, logo while selling their products and services in market.

In this, when two established company meet together with an objective to share ownership, returns risk and governance Through this, they can capture large market share in business world.

TASK 2

P3: Interrelation between different organisational departments and their linkage with organisation objectives

There are number of department which gives valuable support to an organisation from background in order to achieve desired goals and objectives. Such department includes Human resource, marketing, operational etc. therefore the managers of different department are held liable to identify the strengths and weakness of their respective department so as to remove the weakness areas through using their strengths.

Interrelation between the functions of departments of River Island:

Human resource department: Such department mainly focuses on hiring new or promoting existing employees with a hope of getting maximum support from them in achieving organisational desired objectives. HR managers are responsible to identify the skills and abilities of employees and according provide them job position in company. Rewarding something to the employees on the basis of their past performance will maximise the productivity and efficiency level of employees which result in higher profitability of company (Reed and et. al., 2013).

Finance department: This are such department which help company in acquiring new technologies and tools through providing them financial resources so as to execute business operation in more profitable manner. Using latest technology will help in reducing wastage due to which the cost of production will be minimised. This will make positive impact on the profitability of company as well.

Production department: It is the base of an organisation which directs other department to act further. As River Island is offering high quality clothing products but due to change in taste and preferences of customers, the demand of existing clothing products may goes down. Therefore, the production department here after getting information about current trends from the marketing department are able to produce demanded clothing wear products which results in higher profitability of company (Reinhardt and Stavins, 2010).

Organisational structure

The structure of an organisation is divided according to the needs and requirements which are determined as below:

  • Function based: This type of structure is based on the functions performed by the workforces of an organisation. For example, human resource, marketing etc.
  • Geography based: This type of structure is based on the locations in which the business functions has been operated. It depends on the needs and requirement of products in such places.
  • Product based: This type of structure is based on the types of products offered by company in market. For example, River Island offering clothing and textiles products.
  • Consumer based: This type of structure is based on the taste and preferences of customers which help in making changes in their existing products on regular basis.

To achieve this task in full, make a critical analysis of the complexities of transnational, international and global organisations.

River Island is operating in many countries and this is the primke reason that they are facing various problems at the time of operating their business. Their finance division fail to keep fine connection with marketing wing because of vast presence of company. Different type of confusions delay decision making process and sometime results in making wrong decisions.

Global companies: They have invested in many countries. They advertise their products and services with the help of using their brand image in markets. Generally one corporate office which is held responsible for global strategy.

International companies: Such companies have invested in other countries but do not have coordinated product offering in each country. They are more focusing on adapting their products and services to each individual local market/

Transnational companies:It is more complex organisation in which they have invested in foreign operations, have a central corporate facility but give decision making. Research and development teams and marketing powers to each individual foreign market.

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TASK 4

P4: Internal analysis of organisation for identification of strength and weaknesses

To sustain in competitive market for longer period of time, the company y always tried to focus on identifying their actual strengths and weaknesses with the purpose of removing weaknesses through utilising their strengths. For this purpose, the management of River Island are required to conduct SWOT analysis which is determined as below;

SWOT Analysis

Strengths:

  • It has attained more than 350 stores in United Kingdom, Ireland and throughout the Asia and Europe. The company has also 6 online sties which are operating in 4 currencies due to which the company has expand its business operation on large scale.

River Island has attained huge customer based through providing clothing products to all age group of people (Shigang, 2010)\.

  • At past, the company has collaborated with Rihanna with the help of which the company can easily attract large number of customers and increasing their sales figure as well.
  • Providing stylish clothing ware products at affordable prices.

Weaknesses:

  • River Island does not offer discount to the students in the whole year like others small retailers such as Top Shop and New Look.
  • The company has not done a menswear collaboration thus failed to attract wide range of customers.
  • River Island do not provide plus size collection which becomes the main weakness of company due to which other companies such as New Looks, Boohoo takes advantages.
  • The sales figure and turnover of company are not increased as much as their competitors such as Zara who turnover is increased rapidly (Business Environment.2018).

Opportunities:

  • Should Focuses on collaboration to more celebrities in order to attract large number of customers across worldwide.
  • The company should tries to expand its business at international level such as opening new stores in Australia after launching an online site.
  • Should start to offer discount on their products and services in order to compete with their rivals in more effective and efficient manner.
  • Do more marketing strategies in order to promote their quality products and services so as to attract and influence buying behaviour of customers across worldwide.

Threats:

  • Political threat such as rising in the minimum wage which may affects their number of stores available across worldwide. It would decrease their financial position as well as reducing outlets as well.
  • Due to large number of competitors such as Zara which increases their sales revenues in less time due to which it gives tough competition to River Island.
  • Changing in weather mat along bring threat to company as the company offer seasonal clothing wear products therefore in summer season the demand of winter garments are low which affect their profitability (What SWOT Analysis is in simple words,2016).

Macro factors includes political, economical, social, technological etc. which makes huge impact on the business operations of company. It can be further understood by following points:

Political factors:It is concerned with a stability of government which may affects the price of products and services. For example, if new government increases tax rate on clothing products then the price of products are automatically rises due to which the sales figure of company may affected.

Economical factors:It is related with economic stability of country which also may affect the business operation of company. For example increase in economy increases the purchasing power of company thus the sales figure may also rises which in result enhances profits.

Social factors: It is related with behaviour and preferences of customers which may affected the sales figure of company. For example, if the customers required something new in clothing products then the management is required to develop their products accordingly.

Technological factors:It includes advanced technology which help in reducing wastage of resources. Thus, adopting an effective technology improves the quality of products due to which the company can easily attracted customers towards their products.

Read Also: Various Types of Partnership in Business

CONCLUSION

It has been concluded from the above project report that it is important for management to consider the changing business environment which affects the productivity and profitability of an organisation. Every type of business organisation comes in market for some purposes and objectives thus to achieve them, they should have capability to deal with different situation arises due to business environment which are complex and contingent in nature.

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REFERENCES

  • Avramenko, A., 2012. Enhancing students’ employability through business simulation. Education+ Training. 54(5). pp.355-367.
  • Bovee, C. L., Thill, J. V. and Raina, R. L., 2016. Business communication today. Pearson Education India.
  • Cavalcante, S., Kesting, P. and Ulhoi, J., 2011. Business model dynamics and innovation:(re) establishing the missing linkages. Management Decision. 49(8). pp-1327-1342.
  • Hair, J. F., 2015. Essentials of business research methods. ME Sharpe.
  • Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University Press, USA.
  • Karagiorgos, T., Drogalas, G. and Giovanis, N., 2011. Evaluation of the effectiveness of internal audit in Greek Hotel Business.
  • Kolk, A., 2016. The social responsibility of international business: From ethics and the environment to CSR and sustainable development. Journal of World Business. 51(1). pp.23-34.
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