A business can be establish easily, but to sustain successfully it needs various resources, i.e. finance, human resources. Businesses organisations works under a framework which is called business environment; its an intermixture of various internal and external factors which reflect firm's function's including staff members, management, customers, supply and demand as well as business regulations. Although business environment presents opportunities and threats for a business; a good manager not only determines the environment but also take actions to respond these forces. It is essential for business to be aware towards ongoing change which occurs in environment, like – customers requirements, new government policies, emerging trends and technological changes etc. so as to make necessary decisions. Therefore, firms which are thoroughly evaluate their environment can easily deal with these changes and gain high competitive edge at marketplace (Agarwal, Grassl and Pahl, 2012). The present assignment is based on Starbucks; it is one of the leading coffee house chain over the world. Apart from this, the report will be described different types of business organisations, such as – public, private and voluntary sectors. Readers will also come to know about interrelationship between various organisational functions. Furthermore, an internal and external analysis will be conducted so as to know strength and weakness of
P3 How organisational functions are interrelated with its goals and objectives
In this competitive era, companies are tend to improve its working procedures so as to complete all tasks and activities. For this, they are trying to collaborate all departments together; it results enhancement in production level of the firm. It is assistive for Starbucks to accomplish goals and objectives in a certain time period. In a business organisation, there are different functional areas which are stated as under: -
- Marketing department – This department of the firm is liable for promoting and advertising products & services to the firm at marketplace. Marketing department promotes and implement a business in its niche which is rely on the products or services of the businesses (Aterido, Hallward-Driemeier and Pagés, 2011). In Starbucks, the units determines those areas in that a product can be befitted, by this firm can focus on its marketing strategy. Thus, formulating marketing budget accordingly. In addition to this, marketing creates awareness towards products as well as also increases customers' interest to purchase these products and services. In context of Starbucks, marketing manager of the company focus on attracting potential customers and grab better future opportunities from target market.
- Human resource department – This unit of a corporate association provides labour law compliances, recruiting, selection, training, development, record keeping, compensation and handle employee grievance as well as performance related issues. These are the essential functions because by this any firm cannot meet needs or desires of management and staff members. Along with this, HR manager of companies also look out how to manage strong employee relations so as to implement healthy and positive working environment. Another role of the person is to hire well qualified and skilled people who have efficient abilities to complete tasks in most innovative manner. HR professionals of Starbucks timely organise training and development programmes for employees so as to improve their skills and knowledge level.
- Accounting or finance department – Growth and advancement of any business organisation is highly depends upon its financial health. Financial department of the company is liable for treasury management, it encompasses with all necessary things, such as – level of risk. Another role of the unit is to control entire cost by reducing wastage and time. The finance department of the firm ensure that all funds or capital are spend as per the budget and operating needs of the firm. In some companies, there is no separate budget for to cover up all deficits (Auzair, 2011). Furthermore, in Starbucks' accounting department managers have responsibility that their customers pay their bills on time. The department also determines investment opportunities for the firm so as to grab better market growth and success; for this there can be used capital budgeting as well as investment appraisal technique.
- Production and operational department – In this competitive era, it is essential for business organisations to generate new and innovative products so as to obtain maximum cutting edge. Production managers focus on generating new and innovative products so as to deliver something to society, beside this they also tend to modify existing offerings of the firms and make them able to satisfy customers' needs and wants. In Starbucks, production managers identifies availability of raw materials and machinery which is required for completion of any task or activity. The department also ensure that health and safety needs are met in the best possible manner, it also determines product's quality control standards. Another responsibility of operational unit is to overseeing production processes and organising the repair and routine maintenance of production equipment. In multinational business associations, there is a close relationship between production management as well as strategic management. It is supportive for businesses to attain their goals and objectives in an effective manner.
- Research and development department – The department is associated with generating new and effective products which are able to satisfy customers' needs in the best possible manner. R&D department also concerned with getting market information so as to make necessary business decisions and grab better opportunities. Although, research activities are associated with marketing activities in order to assure that firm is providing exact services to customers which meets their desires and expectations in most economical way (Avramenko, 2012).
P4 Positive and negative impact of macro environment
Business environment insists with macro and micro environmental factors in which macro environment has a vast impact on growth and viability of the firm. Below is defined major macro environment with their positive and negative impact on business organisations: -
Political and legal factors – It involves government policies, foreign influences, vat rates and taxes.
- Positive impact – having strong relations with political parties help a business organisation to gain high competitive edge and increases growth opportunities as well. Flexibility in government laws also provides various opportunities to business.
- Negative impact – If the political condition of the nation is not so good in which a firm operates then it affects its profits and sales revenues (Burns and Winter, 2011). In context of Starbucks, the firm has blamed for extra hour laws and violation of wages which reflects market image of business in direct and indirect manner.
Economic factors – It involves interest rates, inflation rates, foreign currency exchange rates etc.
- Positive impact – if the economic condition of a nation is good then it can easily allows business to grow and diversify at there. Now customers' interest has shifted to lower priced alternatives and its a great opportunity for Starbucks to improve its proficiency.
- Negative impact – Due to economic recession, people of UK are still not able to spend much amount on leisure activities; it results they prefer to eat low amount of food rather than brands.
Social factors – It encompasses with cultural of the society in a firm lives, their values, beliefs, faith, morales, region etc.
- Positive impact – Starbucks offers low price products as mentioned earlier; it is focusing on making necessary innovations without sacrificing quality. It improves customer base for the firm (Chow and et. al., 2011).
- Negative impact - In present scenario, needs and wants of people are rapidly changing. Now people prefer to consume low calorie food items. Thus, they usually ignore to visit Starbucks; this can put an adverse impact on annual profits of the firm.
Technological factors – In modern era, different tools and techniques of production has been introduced which will also supportive in reducing operational costs. Now technology has transferred to coffee framers it helps in generating more coffee beans that is beneficial for companies like – Starbucks.
- Positive impact – The firm provides wi-fi facilities to customers who visited in its outlets; as they can access to web and complete their work while enjoying coffee. In addition, Starbucks also gives facility of mobile payments to people it reduces need of cash (Commander and Svejnar, 2011).
- Negative impact – Due to technological advancements, different cyber crimes and web attacks occur; it increases different issues and problems while dealing in international market. Apart from this, threat of rising availability of coffee making machines at home reduces the need of going other places to drink coffee only. Due to innovations, people can easily find various ways of making at home rather than going to outlets.
P5 Conduct internal and external analysis
Internal and external analysis of a company can be done through SWOT analysis; it involves strength, weaknesses, opportunities and threats.
· Due to its global market presence, Starbucks is known as the largest dealer of coffee by having highest market share as well as efficient brand value. It firm focus on providing quality and value added coffee by putting an exceptional service experience; it delivers maximum brand equity in comparison with other rivals (Cronan and et. al., 2011).
· The firm is getting higher profitability by raising the number of customers and far surpasses that any of its competition in respect of revenues and entire performance.
· Starbucks has effective and talented workforce, that is liable for providing value added services to customers. While people enter into its outlets, employees give warm welcome to them. This is the main reason behind huge client base because people feel respected at there.
· The expanded food offerings provide a way to Starbucks which make it an attractive place to do breakfast, snacks and lunch.
· Due to higher prices of some products, people prefer to go other coffee retailers and then starts comparison between quality of products.
· The brand has no real diversity in its outlets over the world there is no recognition of local cultural taste (Dahan and et. al., 2010.).
· Starbucks is still dependent on customers' love coffee as it does not focus on making other products; it results firm cannot gain high competitive edge.
· Due to strategic partnerships and strategic alliances in emerging markets; helps Starbucks to introduce its products over the world.
· Starbucks has further opportunity to expand its market in food and beverage sector, including cross selling of its retail items, i.e. sandwiches and ice creams (Fernando, 2011).
· The coffee chain is trying to expand its supplier network; so as to get vast availability of raw materials, i.e. coffee beans; it results to reduces suppliers involvement.
· Saturation in coffee market forced Starbucks to shutdown its stores at several locations.
· Threat of activist stakeholders results decreasing market image of the firm as well as its goodwill. (Gebauer, Paiola and Edvardsson, 2010)
· In addition, profitability of the firm can also threatened by economic recessions and credit crunches; at this customers have lower disposable income and they cannot buy coffee and other products.
Influence on decision making process of Starbucks -
Starbucks is one of the leading coffee chain supplier over the world as the quality of its products and services is excellent. As above defined, the main strength of the company is having global market presence which helps to generate several market opportunities for it. Starbucks has large number of skilled and qualified workforce which help it to produce new and innovative products. By which, the brand will entered into emerging markets and gain high competitive edge. In order to overcome with weaknesses and future threats, Starbucks has developed various strategies and policies thus to effectively perform in market. By considering SWOT analysis, managers will get know complete about their core competencies and make necessary modifications as per the market trends. Due to flexible political system of UK, companies are enable to explore their business areas in others countries without paying high taxes. All this will aids to improve decision making process of the company and help it in increasing sales revenues and profitability.
P6 How strength and weaknesses are related with macro environmental factors
In this over dynamic environment, various macro environmental factors like – political, economical, social, technological etc. has a great impact on strength and weaknesses of the firm. It is fundamental for management to identify the future impact of all these components so as to make necessary business decisions and grab better future opportunities.
Political factors – These factors refer with political condition of a nation as well as its laws and regulations. The political condition of Starbucks is not good as it should be. The firm is being blamed for the violation of wage and hour laws.
- Strength – Starbucks has great political relations then it can easily survive for long term period in target market. Due to lack of government interference in other countries managers can easily expand their business in international markets as well.
- Weaknesses – As Starbucks has expanded itself over the world, thus it may be quite difficult for company to follow laws and regulatory policies of various nation. This may affect company's sales revenues and profitability.
Economic factors – These aspects encompasses with exchange rates, inflation rates, employment conditions, poverty and so on. As Starbucks Imports coffee from various countries so they really have to be aware of changing imports laws which could hinder the importing.
- Strength – Due to globalisation, most of the countries allowing foreign direct investments, it helps in improving financial conditions of the company and increases employment opportunities for people. In past years, economic condition of UK has improved and there is also raised GDP rate of the nation.
- Weaknesses - Economic recession in 2008 has become one of major weaknesses for firms which are operating in UK; because due to lower disposable income of people they cannot spend higher amount on luxurious activities. Credit crunches also forced businesses to shut down; it raised up the situation of unemployment and poverty.
Social factors – According to this, firms should produce products values, beliefs, morales, interest level, taste and preferences of customers, thus to gain high competitive edge.
- Strength – Starbucks targeted demographical segmentation. The firm provides wide range of products prefer by 11 to 50 years of people. Its coffee is loved by youngsters and considered at top when individuals think about coffee.
- Weaknesses - individuals need and want are changing very fast in different regions, thus sometimes it get difficult for companies like Starbucks to meet clients expectations who lives in diverse areas (Hamilton and Webster, 2015). In order to overcome with this weaknesses, firm is required to conduct a market study to know more information about market.
Technological factors- In this, modern era, technology has facilitate working activities and organisational structure of companies by reducing their production time and wastage.
- Strength - Due to innovation and technological upliftment, multinational firms are tend to acquire new and innovative tools of productions; it results improving performance level of the firm and they can easily grab better market opportunities and increase market share as well.
- Weaknesses - Technology is changing at fast pace and required effective skills to used. Thus to hire and trained technical specialists and execute effective plant & machinery at workplace; all this require high cost or expenses which may not be afforded by all companies.
From the above mentioned report, it get analysed that business environment plays a crucial role in growth and success of every organisation as it reflects its functions and working activities in direct and indirect manner. The report has stated various types of business organisation, such as – public, private and voluntary sector all of them has their own missions and visions. Along with this, Crown Prosecution Service is a public sector organisation, whereas Starbucks is a private sector and British heart foundation is taken as voluntary sector organisation. There are different organisational functions, such as – finance, human resources, operation and production, research and development etc. SWOT analysis is helpful for firm to determine its strength, weaknesses, opportunities and threats in order to make imperative business decisions.
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