This document discusses key concepts relating to business and the business environment, including: 1) It outlines different types of organizations (e.g. sole trader, partnership, private/public limited companies), sizes of organizations (e.g. micro, small, medium, large), and the scope and legal structures of businesses. 2) It examines the functions within an organization like marketing, finance, operations, and HR, and how they are related and link to organizational structure. 3) It covers other important business topics such as objectives, stakeholders, market share, profit sharing, growth, sustainability, and the influence of market forces/the economy on businesses.

1. HIGHER NATIONAL
DIPLOMA IN
BUSINESS
Unit 1: Business and the Business
Environment
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2. The Aim
The aim of Business and the
Business Environment is to provide
learners with background
knowledge, skills and
understanding of business, the
functions of an organisation and
the wider business environments
in which organisations operate
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3. Learning
Outcomes
LO1: Explain the different types,
size and scope of organisations.
LO2: Demonstrate the
interrelationship of the various
functions within an organisation
and how they link to
organisational structure.
LO3: Use contemporary examples
to demonstrate both the positive
and negative influence/impact the
macro environment has on
business operations.
LO4: Determine the internal
strengths and weaknesses of
specific businesses and explain
their interrelationship with
external macro factors.
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4. LO1
Explain the different types, size and
scope of organisation
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5. Different
Types of
Organisations
• Profit Organisation
• Non-profit Organisation
• Sole Trader
• Partnership
• Private Limited
• Public Limited
• Limited by Guarantee.
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6. Types of
Businesses
The following are the various types
of registered company. Apart from
these, a business may be set up as
a sole trader (self-employed
person), as a partnership or as a
limited liability partnership (LLP).
Each format has its advantages
and disadvantages.
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7. Sizes of
Organisation
• Small Enterprise
• Medium Enterprise (SMEs)
• Large Organisation
• Transnational
• International
• Global
• Franchising
• Joint Venture
• Licensing.
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8. Small,
Medium
and Large
Business
• Micro Business (Less than 10
employees
• Small Business (Less than £25
million)
• Medium Business (£25 - £500
Million)
• Large Business (over £500
million turnover)
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9. Micro
Business
Microenterprise is a small business
that employs a small number of
employees. A microenterprise will
usually operate with fewer than 10
people and is started with a small
amount of capital. Most
microenterprises specialize in
providing goods or services for
their local areas.
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10. Small and
Medium
Enterprises
The Mid-sized Businesses Growth
Review uses a definition based on
turnover, £25m-£500m per year.
£25m is the upper bound of the
SME turnover definition, whilst
£500m was chosen as a cut-off
point for these ‘smaller’ large
firms.
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11. Companies
Act 2014
SME definition requires that two
out of three characteristics are
met – turnover (less than £25m),
employees (less than 250), and
gross assets (less than £12.5m).
Therefore there is likely to be
some overlap with SMEs in the
MSB population that we are
looking at in this analysis. BIS
estimates that over half of MSBs
also have fewer than 250
employees
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12. The Scope
of Business
The scope of a business involves
(refers) to all the daily activities
(operations) performed by a
business to generate revenue
which includes:
• Sales
• services
• Product
• Development
• Production
• Marketing
• Customers
• Delivery
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13. Legal
Structure of
Business
Organisation
• Sole Trader
• Partnership
• Private Limited Organisation
• Public Limited Organisation
• Franchising
• Licensing
• Joint Venture
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14. Companies House
In the United Kingdom, Companies House incorporates and
dissolves limited companies, registers the information
companies are legally required to supply, and makes that
information available to the public.
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15. Organisational
Purpose
The Purpose of a business
organisation is the fundamental
reason why the organisation
exists.
For example: Global Banking
School is a business organisation
offering HNC and HND in Business.
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16. Business
Objectives
Business objectives are the
detailed tasks or hurdles an
organisation plans to accomplish
in order to achieve the
fundamental purpose.
Objectives need to be SMART in
order for a business organisation
to know what progress it has made
towards achieving the purpose
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17. Business Organisation
 Mission is the fundamental
purpose of an organisation
that outline the reason why
it is in business.
 Mission is broken into set of
objectives that need to be
accomplished
Mission Objectives
 Objectives are the hurdles
or set of tasks that an
organisation needs to
complete so as to acclaim
success.
 Objectives are broken into a
set of tasks that need to be
accomplished to acclaim
success.
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18. Understanding
Business
Organisation
• Aims and Objectives
• Fundamental Purpose
• Stakeholders and
responsibilities
• Shareholders’ Interests and
Expectations
• Customers (Buyers and Sellers)
• Market and Profit Shares
• Growth
• Sustainability
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19. Market Share
Market share is the percentage of total sales (by value) or total
output that a business has in a specified market. For example, for
many years Volkswagen group has enjoyed a market share of
around 28% of global sales of carbonated drinks.
Tutor2u
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20. Profit Sharing
Profit sharing is a variable pay plan or in most
cases, an incentives to employees. In profit
sharing, company leadership designates a
percentage of annual profits as a designated
pool of money to share with employees, and or
a portion of employees, such as executives,
managers or those above them as specified in
their contracts.
(Heathfield, S., 2018)
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21. Business Growth
Business Growth is a stage where
the business reaches the point for expansion
and seeks additional options to generate more
profit. Business growth is a function of
the business lifecycle, industry growth trends,
and the owners desire for equity value creation
https://www.attractcapital.com/business-
growth.html
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22. Business Sustainability
Business sustainability is the adoption
of business strategies and activities that meet
the needs of the enterprise and its stakeholders
today while protecting, sustaining and
enhancing the human and natural resources
that will be needed in the future.
https://www.iisd.org/business/pdf/business_str
ategy.pdf
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23. Global Business
A global business organisation is in most cases, a
large organisation operating in different
countries with facilities, such as production and
distribution established outside the country of
origin. This is different from an international
business organisation
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24. International Business
Growing into an international business, an
organisation needs to have developed into a
national business outfit that has captured a
sizable percentage of the market share in its
country of origin, and based on economies of
scale, extended its distribution network outside
its country with production still retained in the
country of origin.
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25. Transnational Business
This relates to a multinational organisation
operating in more than one countries without a
designated home country; where the production
and distribution are localised by using the local
content (skills, talents, materials, people, etc) of
that country. Each country with a degree of
autonomy, takes decision according to the
economy, demands and the expectations of the
country in which it operates.
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26. What Is Franchising
Franchising is a business format that grants a
licence from on person or business organisation
(Franchisor) to another (Franchisee), which entitles
the franchisee to own and operate their own
business under the brand, systems and proven
business model of the franchisor. Example,
McDonald and KFC
(bfa) https://www.thebfa.org/about-franchising-
the-bfa/what-is-franchising/
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27. Joint Venture
A joint venture (JV) is a business arrangement in
which two or more parties agree to pool their
resources for the purpose of accomplishing a
specific task. This task can be a new project or any
other business activity. In a joint venture (JV), each
of the participants is responsible for profits, losses
and costs associated with it. However, the venture
is its own entity, separate from the participants'
other business interests.
https://www.investopedia.com/terms/j/jointventur
e.asp
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28. Licensing
Licensing is a business arrangement in which
one company gives another company permission
to manufacture its product for a specified
payment. Example, Gucci, Levi, Calvin Klein
https://www.entrepreneur.com/encyclopedia/lic
ensing
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29. Business
Market
Forces
and The
Economy
• Demand
• Supply
• Scarcity
• Choice
• Income Elasticity
• Industrial Structure
• Competitive Analysis
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30. Competitive Analysis
Strategic Business Unit (SBU)
Market share
Sales force
Marketing
Customer services
Research and development
Manufacturing
Distribution
Financial resources
Image
Product line
Quality and reliability
Managing competency
Market size
Market growth rate
Cyclicality
Competitive structure
Barriers to entry
Industry Profitability
Technology
Inflation
Regulation
Workforce availability
Social issues
Environmental issues
Political issues
Legal issues
(Johnson & Scholes, 1993)
Indicators of SBU Strength Indicators of Market Attractiveness
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31. BCG Matrix
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The Star Question
Mark
Cash Cow Dogs

32. LO2:
Demonstrate the interrelationship of the
various functions within an organisation and
how they link to organisational structure
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33. Various
Functions
Within An
Organisation
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The Roles and
Interrelationships of:-
• Marketing
• Finance
• Operations
• Human Resource
Management

34. Organisational Structure
Structures
• Hierarchical
• Flat
• Centralised
• Decentralised
• Parent
• Strategic Business Unit
(SBUs)
• Matrix
• Functional Levels
Styles
• Autocracy
• Democracy
• Bureaucratic
• Laissez-faire
• Transactional
• Transformational
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35. Hierarchical (Centralised) Structure
Communication is distorted: This is a Top
Order and Instructions
are passed down
according to
seniority
Down
Management
Ma
Managing
Director
General
Manager
Marketing
Manager
Sales Manager and
Operations Manager
Supervisor
Operations Staff
Customer Services
S
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36. Flat (Decentralised) Structure
Communication flows Few Layers of Structure
GM/Chief
Executive
Marketing Cashier
Accounts
Officers
Customer
Services
Marketing
Manager
Operations
Manager
Finance
Manager
Sales Distribution
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37. LO3
Use contemporary examples to demonstrate both the
positive and negative influence/impact the macro
environment has on business operations.
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38. Macro
Environmental
(Influences/Impacts)
• PESTLE Framework
• Digital Revolution on
Production and Consumption
• Social Technology
• Cyberspace Security
• Emerging BRICS Market
• Global Shift: Economics, Social
Power, Ethical and Sustainable
Growth
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39. Emerging
BRICS
Market
• Brazil
• Russia
• India
• China
• South Africa
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40. Macro
Environmental
Factors
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Political
Political decisions affect
business performance. The
factors may be negative or
positive, taxes, tariffs, quota,
change of government,
government policies, etc
Economic
Factors that may affect
business performance
positively or negatively are:
exchange rate, inflation,
disposable income, recession,
economic growth, interest rate,
etc
Social
Social –cultural factors,
unemployment, crime,
education, skill development,
age, gender, population
growth, attitude, income
distribution, housing, health,
wellbeing, etc
Technology
New technology, social media,
internet, robot, machinery,
telecommunication, search
engine optimisation, sale per
click, point of sale, tele-
conferencing, skype, email,
text, interactive systems,
computer
Environmental
Ethical issues, pollution,
climate change, raw material,
taxes on pollution, green peace
resistance, negative attitude
due to destruction on
environment, etc
Legal
Equal rights, human rights,
advertisement standards,
health and safety, consumer
rights, deceit, monopoly,
national rules and regulations,
etc

41. Changing
Market
Environment
Process of Change:
• Transactional
• Radical
• Transformational
• Rational
• Resistance
• Overcoming Resistance to
Change
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42. LO4
Determine the internal strengths and weaknesses of
specific businesses and explain their interrelationship
with external macro factors
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43. Frameworks
For Analysis
• SWOT
• TOWS
• 5 Forces
• Force Field Analysis
• Stakeholders Analysis
• PESTLE
• Micro and Macro Factors
• Government Interventions
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44. SWOT Analysis
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Strengths
Internal Capabilities
Of the Organisation
(Skilful workforce, available
funding, image, technology,
equipment, good networking,
good infrastructure, good
reputation, experience,
knowledge, etc)
Weaknesses
Weaknesses within
The Organisation
(lack of finance, lack of skills,
knowledge, experience, lack of
infrastructure, lack of reputation,
myopic, lack of facilities, lack of
credit worthiness, etc.)
Opportunities
External factors favourable to the
industry that can be explored or
exploited by
Organisations (eg. Student
funding, drive for education by
government, demand for
HND/BSc, national minimum
standard, drive for global skills,
improvement on the economy,
demand for quality, etc.)
Threats
External factors negatively affecting
organisations (government review
on institutions offering education,
funding withdrawal, Brexit,
withdrawal European funding on
research, taxes, robot, technology,
UN sanction, wars and rumours of
wars, economic recession)

45. Porter’s 5 Forces
Threats of entrants
Bargaining Power Bargaining Power
Threats of Substitutes
Potential
entrants
Suppliers Buyers
Substitutes
COMPETITIVE
RIVALRY
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46. My Slide Designer
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