Unit 01 business environment
“An organization is a group of people who work together, like a neighborhood association, a charity, a union, or a corporation. Organization is also the act of forming or establishing something (like an organization). It can also refer to a system of arrangement or order, or a structure for classifying things”
There are two types of organizations
Profitable and non-profitable
Profitable organizations are those whose main goal is to earn profit and these organizations have liability to pay tax from their net income. For example kohat cement is private limited company which primary goal is to earn profit and generate revenue.
Non-profitable organizations are those whose primary goal is to help people nit earn any profit. These organizations don’t pay tax to government. For example shaukat khanum hospital is a non-profit organization in Pakistan treating poor and needy people free of cost.
Introduction to organization
Apple is a public limited profitable organization develops prominent hardware and software best known for its series of personal computers, the iPod and its innovative marketing strategies for its products.
(Margaret Rouse, n.d.)
“A micro enterprise is a small business which sells goods and/or services to a local area or a local market. It employs less than 10 people generally and is geographically restricted. Typically a micro enterprise starts with some form of funding – known as micro credit or micro finance”
For example china city restaurant in Pakistan its employs are less than 10 and don’t have any other branch in Pakistan it providing food and service to people.
“SMB is an abbreviation for small and medium-sized business, sometimes seen as small and midsized business. A business with 100 or fewer employees is generally considered small enterprises”
For example clinix pharmacy in Pakistan has more than 4 branches and has approximately 90 plus employees it providing medicines in Pakistan.
(Margaret Rouse, n.d.)
“Medium enterprises have big capital then small enterprise and with 100-999 employees and medium sized enterprises have 2 to 4 branches”
For example roots school in Pakistan best known for providing best education and have more than 10 branches with 1000 plus number of employees.
(Margaret Rouse, n.d.)
“A business which runs by single owner and the owner is solo responsible for risk is called sole proprietorship. It’s also known as small business with small capital and less number of employees”
Al Hamad Corporation is an import and export farm with 10 numbers of employees and only running by a single owner is an example of sole proprietorship. Small business doesn’t have any shares and their main aim is to earn profit and small business growth depend upon the maturity of their strategy and the biggest challenge for small businesses is capital.
“Partnership is when business have more than one owner is known as partnership its also consider medium sized business it has big capital then small business and have more than 10 employees and have more than 1 branch”
King mall in Pakistan have more than 1 owner and also have big capital and have more than 10 employees. Medium sized business main is to earn profit and extend their business and medium sized businesses also focused on their prestige and spend a lot money on marketing.
“Private limited company considers a large business with more than 100 employees and have large amount of capital more than 1 billion it also register in share market but its share only offer to limited people and the owner have limited liability”
For example kohat cement is profitable private limited company more than 100 employees and have large capital and register in share market. Large businesses always keep their record because they pay a lot tax to government and their primary is to earn profit and to make their company on the top list.
“Anyone who can affect or be affected by the organization's actions, objectives and policies. Some examples of key stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources”
These are the following apple stakeholders
In any organization employees play a vital role in the success of organization every employee have different role in organization for example apple financial department have responsibility to keep balance finance and make strategy for company to make profit with less risk and pay every employee salary on time.
Customers play very important role in organization. In every organization costumers are consider first priority. And they are king of any organization because company generates revenue to sale good to its customers.
Suppliers also play a large role in organizations. Supplier’s responsibility is not compromise on quality and delivers goods on time.
Investors are the main element of the company because company run with finance and without Investors Company will face finance problem.
“In a company or other organization, the HR department is the department with responsibility for the recruiting, training, and welfare of the staff. HR is an abbreviation for 'human resources”
Apple is a large organization and has large number of employees from different countries and from different religion. Human resource play role to keep balance and not discriminate employees on racism basis and human resource keep the things soft in organization so the organization perform its function smoothly.
“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large”
(Heidi Cohen, 2011)
Apple is launching a new phone. How people will know? And why they buy this?
Apple need to do marketing about its product to give people awareness about phone new functions and advertising need to attract people to his phone. So people will buy it. Marketing play a vital role in an organization.
“Finance involves managing assets, liabilities, revenues, and debts for a business. Personal finance defines all financial decisions and activities of an individual or household, including budgeting, insurance, mortgage planning, savings, and retirement planning.”
Apple is a large organization and world famous company. Apple is a billion dollar company and has best finance strategy that’s why investors invest in apple share. If the company don’t know how to manage finance than the company will not get investors and can be bank corrupted.
“Operations management is the administration of business practices to create the highest level of efficiency possible within an organization. It is concerned with converting materials and labor into goods and services as efficiently as possible to maximize the profit of an organization”
In apple if the employees don’t perform good so the company will not achieve its goals and objectives.
“Transnational companies are much more complex organizations. They have invested in foreign operations, have a central corporate facility but give decision-making, R&D and marketing powers to each individual foreign market.”
Transactional organization is combination of global and multi domestic strategies for example human rights commission in Pakistan.
“International companies are importers and exporters; they have no investment outside of their home country”
For example al Hamad Corporation is an international farm have no investment outside of its country but importing goods from other countries that is called international business.
“Global companies have invested and are present in many countries. They market their products through the use of the same coordinated image/brand in all markets. Generally one corporate office that is responsible for global strategy. Emphasis on volume, cost management and efficiency”
For example coco cola is famous global organization have investment and their factories more than 40 countries and selling his products in all over the world.
“The major external and uncontrollable factors that influence an organization decision making and affect its performance and strategies. These factors include the economic factors ;demographic; legal;;political; and natural forces”
What is macro environment?
“The major external and uncontrollable factors that influence an organization decision making and affect its performance and strategies. These factors include the economic factors; demographic; legal; political; and natural forces”
(business dictionary , n.d.)
PESTLE is a reminder which in its extended form denotes P for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environmental. It gives a bird’s eye view to the company from different prospectus to show the picture of new idea to the company.
Apple is one of the biggest American technology companies that have a large amount of cash. It had more than 34 billion in the bank on United States on June 2015. This is making call for higher taxation in the United States where revenue discrimination has become main political issue.
Apple is highly needy on lower cost manufacturing in china. Social and political conflict in china could interrupt industrialized or increase manufacturing costs in that country. There have been also been calls to limit Chinese imports in the United States in an effort to improvement American manufacturing.
1. Improved labor cost in china can snatch apple cheap cost in some products. A strong U.S. dollar could increase exchange rates, making it more luxurious for Apple to do business in key markets like Europe and China.
1. The biggest growth in consumer spending in coming eras will be in areas of the world such as Africa where people are unaccustomed with Apple products.
1. Customers in those markets and younger people in Apple’s established markets, such as the United States, lack the strong emotional accessory to Apple products that drive sales.
1. Contestants such as Google and Samsung have demonstrated a strong aptitude to matching Apple’s products and services. It took less than a year for Google to roll out a payment app; Android Pay, with the same competences as Apple Pay. This means that many of Apple’s signature services and products are no longer sole.
The number of new customer products Apple can bring out is limited. Many of its new offerings, such as Apple TV, will have a limited market.
Partnerships and joint ventures
“Joint ventures and partnering can proposal both partners’ significant benefits, counting sharing experience, skills, and people, equipment and customer bases. Concluded a partnership or joint venture arrangement with a balancing, non-competitive business, you may be talented to open new markets or improve your offer to existing ones”
It's significant to be very careful who you link up with. A contract or bond defining the terms of the partnership or joint venture is vital and further legal protection is advisable.
Teaming up must be a win-win condition for both parties. Businesses complicated with complementary doings or skills are usually the most suitable candidates. For example, a group of sole traders - a carpenter, builder and gas installer/electrician - could form a company, which could upsurge their reliability in the construction trade and allow them to bid for larger contracts. A group like this also represents greater customer appeal, as it's a one-stop shop.
Mergers and acquisitions
“This is when two companies officially merge or one takes over another. Mergers and acquisitions are more suitable to established enterprises and transactions involve commercial lawyers and substantial legal work”
Benefits of business co-operation
Successful business co-operation can deliver:
1. additional resources
1. sharing of the managerial load
1. larger skills and talent base
1. bigger pool of contacts
1. increase in markets
1. change and organic growth using increased resources
1. abridged commercial risk
“Swot analysis includes the collection and portrayal of information about interior and outside factors which have, or may have, an influence on business”
“SWOT is a outline that allows managers to manufacture insights obtained from an internal analysis of the company’s strengths and weaknesses with those from an analysis of external opportunities and threats”
Swot tool has 5 key benefits:
1. Simple to do and practical to use;
1. Clear to understand;
1. Focuses on the key inner and outdoor factors distressing the company;
1. Helps to identify future goals;
1. Initiates further analysis.
Strengths and Weaknesses
Strengths and weaknesses are the issues of the firm’s internal environment. When looking for strengths, ask what do you do better or have more valuable than your contestants have? In case of the weaknesses, ask what could you improve and at least catch up with your competitors?
Opportunities and threats
Opportunities and threats are the outside uncontrollable factors that typically appear or arise due to the changes in the macro environment, industry or competitors’ actions. Opportunities signify the outside circumstances that bring a modest advantage if seized upon. Threats may damage your company so you would better avoid or defend against them.
(mindtools , n.d.)
Apple strength and weakness
“This feature of the SWOT analysis outline identifies the strengths that allow the company to overcome weaknesses, take benefit of chances, and withstand threats in its business environment. These strengths are interior factors specific to the conditions within the business organization. In this case, the following are the most notable strengths of Apple Inc”
1. Strong brand image
1. High profit margins
1. Effective rapid innovation processes
In this aspect of the SWOT analysis, the stress is on the weaknesses or insufficiencies of the company. Weaknesses are internal factors that are problems to business growth. The following business weaknesses are the most notable in the case of Apple:
1. Limited distribution network
1. High selling prices
1. Dependence of sales on high-end market segments
1. Apple is one of a number of American technology companies that has accrued a large amount of cash. It had $34.7 billion in the bank on June 30, 2015. This is generating calls for higher corporate taxation in the United States, where revenue inequality has become a main political issue.
Apple is deeply dependent on lower cost industrialized in China. Social and political unrest in China could disrupt manufacturing or upsurge manufacturing costs in that country. There have been also been calls to restrict Chinese imports in the United States in an effort to boost American manufacturing.
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