Aspects of Business Environment and How They Impact Business Functions

Business and Business Environment

INTRODUCTION

Business environment refers to surroundings of a business in which business exist and operate. This environment includes all those factors that affect functioning and growth of organisation. This report discusses various aspects of business environment and how they impact functioning of various type of organisation like public organisation, private organisation and voluntary organisation. In context with private organisation report discuss various aspects of BMW's micro and macro environment and those of Transport for London and Nation Trust in respectively in relation with private organisation and voluntary organisation. Report discusses purpose of these organisations' existence and their size and how different organisational functions interrelate with each other and their impact on organisation structure along with internal analysis of organisation and their impact on external environment.

LO 1

P1 Purpose and Legal structure of different type of organisation

Business organisation are of various type established with their own purpose but these organisations are divided in main three types on the basis of common objectives. These are-

Private Organisation

Organisations that are established and run by private people who are owners of the business and all the major decision related to the business are taken by owners of the organisation. Purpose of this organisation in to increase their profitability and gain maximum return on their monetary and non-monetary investments. This report discuss various aspects of BMW, German multinational automotive company as a private organisation. Legal structure which is also know as ownership structure legal structure of BMW is corporations (Elijayar and et.al., 2017). Presently 50 percent stocks of the company are held by its owners Stefan Quandt and Susanne Klatten and 50 percent stocks of the company are public float which are available to public.

Public Organisation

Organisations that are owned and operated by government and provide services to public. These organisations do not seek to earn and raise profit and funding of this type of organisations is raised through fees and taxes. This report includes Transport of London as an public organisation. TfL is a local government body which is responsible for transport in London, England. This organisation's is a statutory organisation and legal status of the company is that it is an executive agency within GLA, which refers to Greater London Authority. TfL is headed by Mayor of London and Commissioner of Transport for London this is not operated with profit motive and most of its budget is allocated from fares.

Voluntary organisation

Organisations that are established voluntarily by individuals without any profit motive and main purpose of this type organisation is to address certain issue that are prevailing in society (Cabral and et.al., 2019). This report discuss National Trust which operates with a purpose to look after places of historic interest or natural beauty permanently for the benefit of nation. National Trust is an independent charity and membership organisation for environmental and heritage conservation in England, Wales and Northern Ireland. Legal structure of National Trust is that it is an independent membership and non profit organisation and is headed by president who is The Prince of Wales and director-general, Chairman. Being a membership organisation motto of the organisation is that everyone is welcome to be a part and member of the trust. Members are not paid and join trust because of their interest and concern for nature and historical places.

P2 Size and Scope of organisations

BMW (Bayerische Motoren Werke AG) or (Bavarian Motor Works)

German automotive company established in 7 march 1916 byCamillo Castiglioni, Franz Josef Popp and Karl Rapp, BMW produces cars and motorcycles. BMW from 1916 to 1918 used to build aircrafts and tanks for Germany’s Army practically in the period of the First World War. The Bavarian Company started again the built of aircraft and tanks also for Germany’s Army from 1939 until 1945 in the period of the Second World War. The Bavarian company in 2015 was world’s twelfth-largest producer of motor vehicles, with 2.279,503 vehicles build. BMW it is headquartered in Munich but it has factories in Germany, Brazil, China, India, South Africa, the United Kingdom, the United States and Mexico. BMW had a great name in the motorsport competition such as Touring Cars, Formula 1 and Sports car. The first name of the company it was Bayerische Flugzeugwerke AG and it was named as Bayerische Motoren Werke AG in 1922. The first ever BMW engine built was a straight-six engine for an aircraft and it was called BMW IIIa. The Bavarian Company after the First World War they built motorcycles engines, farm equipment, household items and railway brakes. The first ever motorcycle built by BMW it was the BMW R 32 in 1923. BMW also made vehicle for police and this division it is know as BMW Protection Vehicle Series, the usual cars used for this division are the X5 and X6, but the difference between an usual X5 and a BMW Protection X5 it is that the BMW Protection X5 has 3000 kilograms, 900 kilograms more than an usual X5 which has only 2100 Kilograms. BMW became an auto vehicle manufacturer in 1928 the first ever BMW auto vehicle it was actually a Dixi  redesigned but named as BMW 3/15. After 2 years BMW started to build sport cars and large luxury cars. The BMW’s main were aircrafts engines, motorcycles and auto vehicles until the Second World War. During the Second World War BMW used forced labor such as prisoners for building their aircrafts engines, with motorcycles as sideline, the auto vehicle production was blocked in the period of the war. All the BMW factories were bombed in the period of the war and also the West Germany was banned from manufacturing aircraft engines. After the war the Bavarian company survived by selling products like pons and bicycles. In 1948 BMW restarted the manufactory of motorcycles. BMW finally restarted the auto vehicle production in Bavaria after seven year in 1952 with the BMW 501 luxury wagon. The range of BMW vehicles increased in 1955, with the production of the cheaper BMW Isseta  a micro car under licence. With the slow sales, small vehicle production and entered in a serious financial problem and in 1959 the Bavarian company was almost brought by their biggest rival Daimler-Benz AG. A large investment of the brothers Quandt resulted as the survive of the Bavarian company as a separate entity. The auto vehicle BMW 700 had a great success and somehow it was the recovery of the company. In 1962 BMW created a new vehicle class compact sedans were the beginning of the company reputation in the range of sports  vehicle. The BMW 5-series the mid-size sedan was created in 1972 and after 3 year BMW created the small-size sedan known as the BMW 3-series, after one year in 1976 BMW brought in the luxury coupe BMW 6-series and finally the most luxurious BMW ever made started in 1978 known as BMW 7-series, which was the large luxury sedan. The BMW Motorsport division showed their first car on roads in 1978 and that was a mid-engine supercar. This was following by the BMW M5 the mid-size sedan in 1984 and after the only 2 years in 1986 they also made the first small-size supercar M3 E30 which was a legendary car and won many trophies for the Bavarian company. BMW in 1986 also built the first V12 engine for the BMW 750i the luxury sedan. The Bavarian company bought in 1994 the Rover Group, but unfortunately for BMW all the business cause a large financial losses. BMW sold big part from the Rover group in 2000 the only choose to keep the car brand MINI. The first ever BMW off-road vehicle was BMW X5 in 1999 but the Bavarian company chose to start a new niche of vehicle with the X5 model known as the SUV (Sport Activity Vehicle). In 1995 BMW chose to enter in the roadster category with the BMW Z3, a cheap roadster with two seats. BMW already test electric cars for over four decades, we can say that all of those vehicles put a stone to the incredible electric cars that BMW has now. The first ever BMW electric car was built in early of 1972 and it is known as BMW 1602e the car used 12 volt batteries, because the car could travel only 37 miles with one full charge they said that the project it is not a massive success. BMW tried again in 1975 with the LS Electric but unfortunately that vehicle was even worst than the 1602e because it could travel only 19 miles with full charge. In 1987 BMW also tried to build an electric vehicle but this time they used eight BMW 325iX and they converted the drivetrain to an electric drivetrain that must send all the power to the front wheels this vehicle could be drove for more than 90 miles with full charge, two of those cars were used by the Deutsche Post because those two were the combi model of the 325iX, the other six vehicle were used by the employees of the German government. In 1991 BMW had an electric prototype vehicle called BMW E1 it had a range of over 190 miles full charged and this was a real step for the electric cars that we have today, but this vehicle was only a prototype nothing more. BMW built 25 electric vehicles between 1992 and 1997 the base of the vehicles were the BMW 325 E36 these vehicles could travel more than 90 miles and had an top speed of 84 mph. In 2008 BMW tried an electric experiment over other brand that they own MINI, the Bavarian company built around 600 MINI for public, if you would liked to get one of these electric MINI you had to pay 850 sterling pounds per month for it but in those money you had also the charge station access and the vehicle insurance. The BMW started the production for I3 in 2013 and it is still in production this vehicle has a total range around 115 miles.

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In context of size of BMW it operates worldwide and sales network of the company spread in 140 countries and all of the functions of the company are performed by more than 130000 efficient employees. Scope of BMW varies on the basis of services and products that are provided by the company. BMW is a premium car and motorcycle producer and its scope is dependent on its brands that are BMW, Mini, Rolls-Royce, BMW I, BMW X and in motorcycle BMW Motorrad. Along with this company offers various other variables in cars (Gorman, 2019). Scope of the company also is visible through their vision and mission that is to be the most successful premium manufacture in the industry and BMW is leader in providing premium product and premium service for individual mobility.

Transport for London (TfL)

With a budget of more than 11 billion pounds TfL is local government body of London that look after transport in Greater London. TfL employs around 28000 employees. Functions of TfL are to manage various road routes and rail networks that are  London Underground, London Overground, Docklands Light Railway and TfL Rail. However national rail is not covered in scope of TfL. But trams, buses, taxis, cycling provision and river services are included in scope of TfL. Scope of TfL also includes for commissioning the construction of the new Crossrailline jointly with national department for transport and franchising of its operation after it is completed.

National Trust

National Trust completely known as national trust for places of Historic Interest or Natural Beauty (Brudney, Prentice and Harris, 2018). Mainly scope of National Trust includes working for the purpose for which this organisation have been established that is preservational of historic places and those of natural beauty. But specifically scope of organisation works on prevention of selling of inalienable land. National Trust owns 500 heritage property of 610,000 acres. This organisation is funded by membership subscription, entrance subscription and revenue from gift shop and restaurants within its properties.

LO 2

P3 Relationship between different Organisational Functions

Organisational functions that are undertaken by organisation to achieve their objectives. Functions performed in organisations differ on the basis of their nature and objectives. These functions are more than then one in business organisations and their efficiency depends on effectiveness of their linkages with other functions of the organisation. Effectiveness of interrelations in organisations' functions bring desired result in context with individual functions.  Interrelation of functioning and their link with objectives and structure of organisation in one such organisation is as follows-

Production Department- most important functional area in BMW this undertakes function of converting raw material into finished goods of the company, for this reason it have to have relation with sales department to know about the required quantity of production (Cacciolatti and Lee, 2016). With HR to have best possible employees for production functioning and with finance department to get adequate budget allocation for production.

Operations Department- This department undertakes responsibility to see that orders of the customers are fulfilled in best way in terms of time. This covers managing production cycle and fulfilling requirements of raw material for production. Most important relationship of operation department is with production department and sales department.

Finance- Finance department manages finance of a company in terms of investment in various activities mostly production, marketing and operations of the company. All the functional department to fulfill their financial requirements have to maintain relationship and effectiveness of investment and return (Martensen and Mouritsen, 2017). This can be said as linkage of financial investment with non financial investments like efforts bring effectiveness in operations.

Sales- This is interdependent function in BMW, effectiveness of other function specially production bring effectiveness in sales function and at the same increase in sales and demand of the product brings effectiveness to other functions of the organisation as it gives rise to profit and that contribute in effectiveness of other functions.

Link with organisational objectives and Structure-

Organisational objectives and their fulfillment is an important purpose that insist organisation to perform all these functions. Organisational objectives become basis for performance of these functions and effectiveness of functions and interrelation brings completion of organisational objectives. 

Structure of BMW is closely related with its functions as structure of BMW is network oriented and all the functions are divided on the basis of functions that are performed by the company. All departments are independent but connect to each other interchangeably. Business of the organisation maintains independent division and production specialization is key initiative of organisation.

LO 3

P4 Impacts of Macro environment on BMW's operations

Macro environment refers to factors that are present in external environment and are capable to affect operations of a company. These factors are political, economical, social, technical, environmental and legal (Sharma and Syam, 2018). No organisation can avoid influence of external factors on its operations including BMW. Effects of these factors increases when organisation operate in more than one country and BMW being multinational company operates worldwide making all these factors more influential. Impact of,

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Political- Growing role of international agencies in international business and its management have made it necessary to focus on this factor. Political factors have various impacts that are negative and positive. For instace when company wants to expand its operation in other country and political environment of that country restrict their entry. This instance known as negative impact of the political factor.

Economical- international businesses have to consider economic condition of all the countries where they are willing to operate. BMW is a premium vehicle company making its products luxury and comparatively expensive than other companies' vehicles. Those countries whose economic condition are positive like developed countries and spending pattern of people are favourable then BMW have good scope in that country for profit in that country.

Social- BMW offers luxury vehicles and sale of its product is highly affected by perception of people towards luxury and expensive goods (Sipho and Daniel, 2017). When perception of people is positive and favourable for luxury goods BMW can easily expand and grow its operations in that country.

Technological- technology have a key role to play in growth of all the companies specially of automotive industry. Customer experience are entirely dependent on technological factor. This requires organisation to keep moving with improved and latest technology. This sometimes is a costly affair and incur a considerable amount for businesses.

Environmental- Sustainability of environment have become key consideration not only for few international and national agencies but for every global citizen and that is why BMW have to make products that do not harm environment in any negative manner then only it will be able to gain desired profit.

LO 4

P5 Internal and External Analysis of BMW

Internal analysis refers to analysis of factors that exist in internal environment of business and are affected by internal factors that are strength and weakness of business organisation (Bharadwaj, 2018). External analysis of business refers to opportunities and threats that exist in external environment. This analysis is as follows.

Internal Analysis of BMW - Key factors of internal analysis are:

Strength-

• Most valuable automotive brand of the world. Being a valuable brand and that too globally is one of the biggest strength of BMW and company has take maximum advantage of its strength and next step to strengthen this is that company maintain its position in the world.
• Geographically Diversified revenue streams (SHTAL and et.al., 2018). This means that BMW's revenue generation strategy is different on the basis of geographical area.
• Innovation and Technological Advancement.
• Diversified product portfolio.
• Plans for hybrid models. Hybrid model refers to vehicles that can be run on electricity and natural gas.
• BMW provide full repair inclusive for 3 year or 200.000km, 4 years or 200.000km or 5 years and 200.000km. But of course these repair will cost you from 500 Sterling Pounds to 2000 Sterling Pounds.

Weakness-

• Little product differentiation.
• Inadequate strategic alliances.
• Cars recalled. Many vehicles of BMW were recalled due to technical issues faced by companies.
• The history that was created around BMW company in the period of the Second World War (1st of September 1939 until 2nd of September 1945).

External Analysis of BMW

Opportunities-

• Timing and frequency of new model release.
• Changing lifestyle and increasing orientation of customers for luxury and premium vehicles.
• Market Expansion.
• Strategic alliances for the company with other national companies.
• Autonomous driving technology.

Threats-

• Rising problems related to fuel.
• Increasing competition.
• Price of its vehicles.
• Increasing government regulations.

P6 Interrelation of Macro factors with Strength and Weakness

Strengths and weakness of the company greatly impact the way company deals with impact of macro factors (Do Quang, 2017). This is why they are interrelated. In context of BMW their strength which is 'innovation and technological advancement' which make it possible for company to deal with changes in technological environment of the company. This not only allows company to deal with changes but company can also stay on forefront by its innovation and technological advancement.

Geographically diversified revenue streams allows company to survive and grow in different type of economic situations.

Most valuable brand, this strength allows company to grow in every kind of market with its own social environment as no matter what are the perception of the society valuable and reputed brands are required and desired by everyone.

In terms of weakness of and its interrelation with Macro environment then important weakness that company have is that product have very differentiation and that make it difficult to stay and grow in market where people are looking to have something which is not common or in other terms which is exclusive. This is a big social factor that people want to have something which is exclusive and only they have that product.

Other weakness of the company is cars recalled. This factor affected its image negatively in two forms showing that company's technology is not efficient and ruined image of the brand have a socially negative impact (Cao and Chen, 2019). Reason being this type of event easily change perception of society about brands and it become difficult to win their trust again.

Inadequate alliances, alliances with the local brands make it easy for companies to deal with local governments' rules and regulation and BMW's strategic alliances are inadequate saving it from any kind of benefit that it can have in terms of political implications.

CONCLUSION

On the basis of this report it can be concluded that different type of organisation have different purposes that members or owners of the organisation seeks to fulfil. Where private organisations are working to earn and increase profit, only motive and purpose of voluntary organisation is to address issues of the society and when it comes to public organisation they seek to cater interest of the society. Functions that organisations undertake also differs on the basis of their nature and this report included functions undertaken by BMW and their relation with other functions. Analysis of macro environment and interrelation with internal and external environment have also been performed in this report.

REFERENCES

Books and journals

• Bharadwaj, A., 2018. Changing Dynamics of the Industry. In Environmental Regulations and Innovation in Advanced Automobile Technologies. (pp. 11-21). Springer, Singapore.
• Brudney, J. L., Prentice, C. R. and Harris, J. L., 2018. Beyond the comfort zone? County government collaboration with private-sector organizations to deliver services. International Journal of Public Administration. 41(16). pp.1374-1384.
• Cabral, S and et.al., 2019. Value creation and value appropriation in public and nonprofit organizations. Strategic Management Journal. 40(4). pp.465-475.
• Cacciolatti, L. and Lee, S. H., 2016. Revisiting the relationship between marketing capabilities and firm performance: The moderating role of market orientation, marketing strategy and organisational power. Journal of Business Research. 69(12). pp.5597-5610.
• Cao, H. and Chen, Z., 2019. The driving effect of internal and external environment on green innovation strategy-The moderating role of top management’s environmental awareness. Nankai Business Review International. 10(3). pp.342-361.
• Damanpour, F., Sanchez‐Henriquez, F. and Chiu, H.H., 2018. Internal and external sources and the adoption of innovations in organizations. British Journal of Management. 29(4). pp.712-730.
• Do Quang, H., 2017. Marketing SWOT Analysis of Rolls-Royce Motor Cars. (Doctoral dissertation, Empire State College).
• Elijayar, A and et.al., 2017. BMW 7 Series Marketing Plan.
• Gorman, R.F., 2019. Private voluntary organizations as agents of development. Routledge.
• Martensen, A. and Mouritsen, J., 2017. Prioritising marketing activities in different types of marketing functions. Total Quality Management & Business Excellence. 28(11-12). pp.1264-1284.
• Sharma, A. and Syam, N., 2018. Sales and customer development: An agenda for inquiry. Industrial Marketing Management. 69. pp.133-134.
• SHTAL, T.V and et.al., 2018. Methods of analysis of the external environment of business activities. Revista ESPACIOS. 39(12).
• Sipho, M. S. and Daniel, T., 2017. External environmental considerations in the planning of strategies of car dealerships. Environmental Economics. 8(1). p.83.

Online

• SWOT analysis of BMW. 2019. [Online]. Available Through:  .
• History of BMW about electric vehicles. 2019. Available Through:
• https://www.businessinsider.com/history-of-bmws-electric-cars-2016-5?r=US&IR=T#the-bmw-i3-entered-production-in-2013-and-is-still-on-sale-today-without-the-cars-gasoline-range-extender-it-has-a-range-of-114-miles-14