Business and Business Environment Business and Business Environment - PowerPoint PPT Presentation

Business and Business Environment

Business and Business Environment Introduction Business is the organised efforts and activities of individuals to produce and sell goods and services for profit. Business commence with a business concept – based on market research and ability to deliver customer value. Business environment is the sum total of all external and internal factors that influence a business. Read the article on ‘Why Good Companies Go Bad’ by Donald Sull (1999) – HBR This constitute suppliers, customers, competitors, Identify examples of companies whom have successfully employees, media, government, economic conditions, responded to the business environment and companies whom have failed to respond. investors & multiple other institutions.

Unit introduction • 4 learning outcomes • 15 lecture sessions • 2 assignments – LO 1 & 2 (1 st Assignment) LO 3 & 4 (2 nd Assignment) • Submission deadlines : 2 nd January 2020 (1 st Assignment) & 24 th February 2020 (2 nd Assignment) – These dates may vary and would be indicated in assignment brief • 4 mandatory reviews for the assignments – 2 reviews per assignment • Assessment criterion

Learning Outcomes • LO 1 – Explain the different types, size and scope of organisations • LO 2 – Demonstrate the interrelationship of various functions within an organization and how they link to organizational structure • LO 3 – Use contemporary examples to demonstrate both the positive and negative influence/impact the macro environment has on business operations • LO 4 – Determine the internal strengths and weaknesses of specific businesses and explain their interrelationship with external macro factors

Unit 01 – Different Types, Size and Scope of Organisations Lesson 01 : Introduction to different types of organisations

Organisation • An organisation is a social arrangement for controlled performance of collective goals. Identify which of the following is considered as an organisation? 1. Ceylon Biscuits Limited 2. Department of Motor Traffic 3. Unilever PLC 4. Local foot ball team 5. School 6. UNICEF

Vision & Mission Mission: Overriding direction & purpose of the organisation . Vision: The desired future state of the organisation. Illustration: Examples of vision Illustration: Examples of mission American Expres s – famous for their great customer service. They believe that customers will never love a ‘To be the most respected and successful car company in America’ (Toyota) company until the employees love it first. Their mission reads: ‘To be the company that best understands and satisfies the product, service and self-fulfilment needs of ‘At American Express we have a mission to be the world’s most respected service brand. To do this, we have woman globally’ . (Avon) established a culture that supports our team members, so they can provide exceptional service to our company. ’ ( British Airways) ‘ The BA Way’ - service that matters for people who value how they fly IKEA – their mission could have been a promise for beautiful, affordable furniture., Instead IKEA dream big with their mission: ‘To create a better everyday life for the many people. Our business ideas support this by offering a wide range of well-designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. ’ Nike – view each customer as an athlete. Their mission is: ‘To bring inspiration and innovation to every athlete in the world. If you have a body, you are an athlete.

Objectives Apply your learning: Identify from the below examples which are the appropriate objectives and justify. • Specific - a clear statement , which is easy to understand on the 1) To achieve a market share of 2% by expected outcome S 2021. 2) To achieve a profit increase of 3% by luxury furniture segment by end of • Measurable - ability to assess the results achieved against the plan 2020. M 3) To retain customers 4) To improve market share by 50% by end of year 2019 • Achievable - within the capabilities of people and resources employed A • Realistic - practical and sensible assessment of capabilities R Pick your brain! List two objectives for an organisation such • Time related - completion date and interim milestone dates where appropriate as BMS T

Classification of objectives Human objectives Economic objectives 1. Economic well-being of the employees 1. Profitability 2. Social and physiological satisfaction of employees 2. Creation of customers 3. Development of human resources 3. Continuous and regular innovations 4. Efficient and effective use of resources National objectives Social objectives 1. Creation of employment 1. Production and supply of quality goods and 2. Promotion of social justice services 3. Production according to national priority 2. Adoption of fair trade practices 4. Contribute to revenue of the country 3. Contribution to the general welfare of the 5. Self sufficiency and export promotion society Global objectives 1. Raise general standards of living 2. Reduce disparities among nations 3. Make available globally competitive goods and services

Different Types of Organisations Organisational classifications Classification based Classification based Classification based Classification based on objective on sector on legal structure on size For profit Public sector Incorporated Non-incorporated Micro organisations organisations organisations organisations Not for profit Private sector Public limited Sole trader Small organisations organisations companies Private limited Partnership Medium companies Large

01. Classification Based on Objectives Based on primary purpose of existence For profit organisations Not for profit organisations • Maximise the wealth of the owners • To provide a service to the general public • Most organisations are for profit organisations • These will have objectives such as.. 1. Hospitals to treat patients • Economy of a country is driven by these organisations 2. Councils may see their mission as caring for patients 3. Government agencies exist to implement government policies 4. Charities to provide societal welfare Research: List down minimum 5 NFP’s and write down their purposes

02. Classification based on sector Public sector Private sector • Companies or businesses wherein government is the owner • These are companies managed, operated, controlled and of the business by a way of majority shareholding in the owned by private individuals business Prime objective is to generate profit by operating within the • • These businesses are owned, operated, controlled and rules and compliances of respective country managed by the government Main industry focus: All most in all industries • • These entities are driven by the purpose of providing the basic public services to common public at reasonable cost. Discussion: List down 5 public sector companies in • Profitability is not a prime motive different industries in Sri Lanka and identify the product/services offered by them • Main industry focus: water, electricity, education, oil & gas mining, defence, banking & insurance, healthcare etc. http://www.treasury.gov.lk/web/department-of-public-enterprises/list-of-public- enterprises?p_p_id=56_INSTANCE_Dfap6NqC8xFn&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=col umn-1&p_p_col_count=1&_56_INSTANCE_Dfap6NqC8xFn_page=4

03. Classification based on size Micro business 1. A business which operates in a very small scale Medium scale business 2. Fewer than five employees including the owner 1. 50-99 employees E.g. – Catering, childcare, event planning, computer services, accountancy Small business Large business 1. Capital investment in plant and machinery does 1. More than 100 not exceed LKR 4.00 million employees 2. Regular number of employees does not exceed 50 persons

SME sector – Sri Lanka CHALLENGES • SME sector (small & medium scale) form the • Access to finance: trade finance – limits the backbone of the Sri Lankan economy – found in development and opportunities for trade. almost all sectors in the economy. • High interest rates for loans • SME sector accounts to 52% of the GDP and 45% of • Inability to provide collaterals the total employment. • Inability to provide credit history • Creating barriers for e-commerce • Logistics of shipping a good or delivering a service • ICT security and data protection • Payments • Weak business environment • Cash flow issues • High taxation • Inconsistent government policies

Group discussion: fill in the table Size Objectives Market share Profit Growth Sustainability Examples share from Sri Lanka Micro business Small business Medium business Large business