BUSINESS AND THE BUSINESS ENVIRONMENT HIGHER NATIONAL DIPLOMA(HND) IN BUSINESS MANAGMENT H.M.MASHHAR (2679 Words) 1 Executive Summary This assignment is provides the information regarding to the business and its operations, The purpose of this report is to evaluate the different types and purposes, size and scope of organizations and how they relate to organizational structure in Sri Lanka. Firstly, the author will explain the different types and organizations. Secondly, how the structure, size and scope of different organizations link to the business and product and services offered by organization will be analyzed. Thirdly, the author will be discussing about the interrelationship among different organizational functions and how they link to organizational objectives and structure. Moving on, advantages and disadvantages of interrelationships between organizational functions and finally the impact that can have upon organizational structure will be analyzed. 2 Contents 1.0 Types of organizations ............................................................................................. 5 1.1 Private Sector ................................................................................................... 5 1.2 Public Sector .................................................................................................... 6 1.3 Voluntary Sector…………………………………………………...……….....….....6 2.0 Legal Structures ........................................................................................................ 7 2.1 Sole Proprietorship ........................................................................................... 7 2.2 Partnership ....................................................................................................... 7 2.3 Private Limited Company ................................................................................. 8 2.4 Public Limited Company................................................................................... 8 3.0 Size and Scope of Different Types of Organizations ................................................. 9 4.0 Public/Government organization – Ceylon Petroleum Corporation ......................... 11 5.0 Private Organization – Fadna Tea...................Ошибка! Закладка не определена. 6.0 Voluntary Organization - Sri Lanka Cancer SocietyОшибка! Закладка не определена. 7.0 The relationship between the organizational functions and how they are linked with the objective and the structure ...................................................................................... 15 7.1 Advantages of Interrelationship between Organisational Functions ............... 15 7.2 Disadvantages of Interrelationship between Organisational Functions .......... 15 8.0 Conclusion .............................................................................................................. 16 9.0 References .............................................................................................................. 17 Table of tables Table 1: Advantages and Disadvantages of Private Sector ................................................... 5 Table 2: Advantages and disadvantages of public sector ...................................................... 6 Table 3: Advantages and disadvantages of sole proprietorship ............................................. 7 Table 4: Advantages and disadvantages of partnership ........................................................ 8 3 Table 5: Advantages and disadvantages of private limited company..................................... 8 Table 6: Advantages and disadvantages of public limited company ...................................... 9 Table 7: Classification of size .............................................................................................. 10 Table 8: Petroleum Annual report................................ Ошибка! Закладка не определена. Table of figures Figure 1: Businesses of Ceylon Petroleum Corporation ...................................................... 11 4 1.0 Types of organizations 1.1 Private Sector The organization that come under the private sector are owned and operated by individuals and groups. The objective of a private sector organization is to generate income and earn profit. Organizations in the private sector are usually free from government control or ownership, but sometimes choose to partner with a government body in a public-private partnership to jointly deliver a service or business venture to a community (Kurtz and Boone, 2009). When it comes to the products offered by the private sector supermarkets, they focus mainly on homeware, furniture and electronic items. And also, there’s more innovation in the private sector supermarkets. For examples Cargills, Keels and Arpico are manufacturing their own products, basically trying to manufacture most of all the products they sell. They manufacture like diary, frozen food, confectionaries and beverages under their own brands or different brands and also they offer extensive products including imported products too. (Gunewardene and Alihussain, 2020). Advantages Disadvantages No government Intervention Registration of company is a long process Private Ownership High risk environment More efficient compared public sector High Capital required in order to acquire profitability 5 1.2 Public Sector The organizations that come under the public sector are usually owned and operated by the government. The primary objective of a public sector organization is to provide services to the citizens. Public sector organizations do not operate with the motive of earning profit. (Rainey, 2009) Objective of public sector is to create employment opportunities. Industry in the public sector is usually located in areas where there is underdevelopment so as to generate jobs and income for local people (O'Donnell and Boyle, 2008). Advantages Disadvantages Services available to all consumers Funds often limited Not profit motive Inefficiency More job employment available Higher cost for government which means higher taxes Table 2: Advantages and disadvantages of public sector 1.3 Voluntary Sector A voluntary organization is a group of individuals who are together with an agreement, usually as volunteers, to form a non-profit making organization to achieve a common goal. Such as trade associations, trade unions, learned societies, professional associations, and environmental groups, also they mainly promote public welfare services related to aid, development and emergency relief. They usually operate within the spiritual, scientific or academic sectors. 6 2.0 Legal Structures One of the most important decisions to make is choosing the legal structure of the organization. The legal structure of the organization depends on factors like the liability, profit sharing, taxations and record keeping (Allen, 2007). 2.1 Sole Proprietorship A sole proprietorship is a small business that is owned and run by individuals. That person may receive help from family, friends and others to operate or start the business but he or she is the legal owner of the business, He does business in whatever way he wants also he or she should take care of all the profits, losses and liabilities. According to the laws and regulations of Sri Lanka, it is mandatory for any entity incorporated under a name other than the full name of the owner provided in his or her National Identity Card to register the proposed business name. Table 1: Advantages and disadvantages of sole proprietorship Advantages Disadvantages All profits belong to the owner Unlimited Liability Independent and all the owner Lack of Capital makes the decision No legal documents required Labour Intensive 2.2 Partnership Partnership is two or more persons who combine their resources to start a business and agree to share risks, profits and losses. The partnership is traditionally the favored method of business organization for many professionals like doctors, solicitors and accountants. They can share facilities which a sole practitioner would be unable to afford. It is also very common for small businesses to operate from this base, as it enables start-up capital and expertise to be drawn from a number of people. Partners, like sole traders, often raise their contributions through a bank loan and are also personally liable for business debts. (Adams, 2016, p. 466) There are three types of partnership: 1. The traditional partnership. 2. Limited partnership. 3. Limited liability partnership. 7 Table 2: Advantages and disadvantages of partnership Advantages Disadvantages More capital can be raised Unlimited Liability Losses can be shared among partners Slow decision making compared to Sole Proprietor Legal partnership agreement is important which incurs a nominal charge 2.3 Private Limited Company These types of companies will have “LTD” with its name after the registration. Companies can’t sale the shares to the general public and the shares will be owned by a small number of members. (family, friends or shareholders) Table 3: Advantages and disadvantages of private limited company Advantages Disadvantages Limited liability Unable to issue shares to the general public Cannot be listed in stock exchange Investors are not automatically entitled to all the profits More capital raised Tax reduction can be 2.4 Public Limited Company Public limited companies are listed on the stock exchange, they will be traded publicly on the official stock market and the Company has its owned separate legal rights apart from its members. Its formation, working process and activities are strictly managed by rules, laws, and regulations. A company must have a minimum of seven members, but there is no limit for maximum members. The company will collect the capital by selling shares to the public and those shareholders will become a member of the company. 8 Advantages Disadvantages Limited liability Company’s information is transparent Can be listed in stock exchange Several constraints and procedures are required Unlimited number of stakeholders Company can be taken over if majority shares are purchased Table 6: Advantages and disadvantages of public limited company 3.0 Size and Scope of Different Types of Organizations The size of an organization depends on its objectives, demand, growth, and profit potential. Organization size also depends on its level of activity such as Local Business, National Business, International business and global business... A small-scale enterprise is a business that employs a small number of workers and does not have a high volume of sales. Such enterprises are generally privately owned and operated sole proprietorships, corporations or partnerships (Gustafson, 2017). Medium-scale businesses typically result from the slow and steady growth that results from a successful small business. As a company earns more revenue, it sets aside the capital needed for buildings, equipment and more employees, eventually bridging the gap between small business and large corporations (Marquis, 2016). Number of employees will be 51-100. Large-scale businesses have a huge number of employees and have a high volume of revenue. The hierarchy of management is more complex than in medium-sized enterprises. These businesses are distinguished by a large number of customers, business contacts, and a large volume of business communication. (World Bank, 2019). 9 Large Medium Small Micro Number of More 51 - 300 11 - 50 Less than employees than 10 300 Annual More Rs. Rs. Less than revenue than Million. Million. Rs. Rs. 251 Million. 750 – 16 – Million 15 250 750 Table 4: Classification of size 10 4.0 Public/Government organization – Ceylon Petroleum Corporation Ceylon Petroleum Corporation CEYPETCO is the national oil and gas company of Sri Lanka. It was set up as a state enterprise by Act. No. 28 of 1961 in parliament. Ceylon Petroleum is the largest and the major petroleum production company in Sri Lanka with an annual income of nearly US$ 3 billion. Ceylon Petroleum Corporation's main oil refinery is located in Sapugaskanda. It was started in August 1969 to process 38000 BPSD of Iranian light crude oil.. First LPG production was started in 1971. CPC began producing and distributing Lubricant Oils 65,000 kilo liters of it is required annually. Annually spend Rs. 30 billion for lubricant oil. Sri Lanka spent around $ 4 billion in 2018 to import crude oil. Most oil consumption by vehicles. Sri Lanka had huge losses $ 1.5 billion, The International Monetary Fund said, bailout loan if Sri Lanka implements a formula to adjust fuel prices. In 2017 CPC plan to sell 35 years at a cost of $ 100,000 per year Trincomalee China Bay Oil Tank Farm for India. (Source: – CEYPETCO-Annual-Report-2018) Vision - To be a sustainable entity in the petroleum and related industries; pioneer new opportunities and deliver value to our stakeholders. Mission - Be a financially, socially, and environmentally sustainable business that places emphasis in long run gains. (Source: – CEYPETCO-Annual-Report-2018) LUBRICANT FUEL FOR INDUSTRIES AUTO FUEL FUEL FOR POWER AVIATION FUEL OUR BUSINESSES AGRO CHEMICAL EXPORT BUNKERING BITUMEN DOMESTIC FUEL 11 Total Number of Employees Permanent staff Staff cost Annual revenue Annual import (crude oil) 2770 1455 Rs.6019 MN US$ 3 billion US$ 4 billion Ceylon Petroleum Corporation running with huge losses of $ 1.5 billion. (Source: – CEYPETCO-Annual-Report-2018) 12 5.0 Private Organization – Fadna Tea Food & Nature (Pvt) Ltd is a limited liability company which was established in 2004.Food & Nature (Pvt) Ltd under the brand name “Fadna” is presently manufacturing and marketing many varieties of herbal teas in comfort tea bags form both locally and internationally "Fadna" Herbal Tea are manufactured without preservatives, artificial flavors or colors. The primary objective of Fadna is to embed happiness in one’s lifestyle by promoting good health through the intervention of modern technology; while preserving its natural goodness. Hence, it is presented in a simple and effective manner with no artificial food additives, making consumption safe for both children and adults. . (Fadna.com, 2020) Vision - Our vision is to provide the world with quality natural herbal tea products to ensure the health and well-being of mankind. Mission - Thereby improve our Sri Lankan natural herbal formulations, by the use of modern technology following the ancient indigenous medicinal knowledge our forefathers in order to deliver good health, happiness and satisfaction to mankind, thus creating a better world within our Sri Lankan styled society. (Fadna.com, 2020) 13 6.0 Voluntary Organization - Sri Lanka Cancer Society Sri Lanka Cancer Society was established in 1948, since from 1948 steadily expanded their social services throughout the island wild and in 1997 the society was incorporated by an Act of Parliament. A cancer patient in the Sri Lanka Cancer Society is a human being who deserves the most care, protection and the best quality of life. Our mission is therefore to place a separate focus on providing cancer patients with the best possible care, regardless of their cultural, social, ethnic or religious background. Mission - Therefore has a singular focus, to provide the best care for cancer patients, irrespective of their cultural, social, ethnic or religious backgrounds. Hope - To see a cancer-free world but until then, we strive to provide solace and care to needy cancer patients primarily through our facilities. (slcs.lk, 2020) 14 7.0 The relationship between the organizational functions and how they are linked with the objective and the structure The activities of the Human Resources department are responsible for all aspects of attracting, developing and rewarding employees. A strong relationship between HR and finance departments is the key to the business success. (assets4business, 2020). However marketing and human resources aren't as separate as they seem to be, an organisation needs to attract profitable customers to achieve the sales target but getting eligible and talented assets into the organisation is also crucial for the long-term success of the organisation. (Thatcher, 2020). Operations managers and human resource managers collaborate with each other, primarily on administrative issues regarding remunerations and other matters. they can align the workforce with group vision, strengthen the supply chain and evolving the businesses to suit the changes taking place. Focusing on production competency and cost control enables strong improvement in the business (Reynolds, 2020). The accounting department must work jointly with the marketing department to monitor trends in the business as well as manage the efficiency of sales promotions and so that the objectives can also be achieved (Bowlin, 2020). 6.1 Advantages of Interrelationship between Organisational Functions Since workers have skills in that particular field that would result in fast, productive and more assured execution of tasks while growing work-related errors. In the integrated structure, the consistent existence of the career path enables workers to be highly motivated to advance their careers when they move up within the hierarchy. (Parikh, 2016). 6.2 Disadvantages of Interrelationship between Organisational Functions Business strategies and procedures make it difficult to respond to changes immediately. If some work requires two departments to participate, it can be interrupted due to lack of cooperation between departments where functional groups would operate with a higher efficiency standard. The drawback of successful organisation is that there are increased chances of disagreement between department heads due to different factors such as pride, the same role.. (Gleeson, 2020). 15 8.0 Conclusion This report is based on various types and purposes of organizations and legal structures. The author discussed the size and scope of a range of different types of organizations. On the other hand, the author has analyzed how the structure, size and scope of different organizations link to the business objectives and product and services offered by the organization. Then the author explained the interrelationship between organizational function and how they link to organizational objectives and structure. Finally, the author analyzed the advantages and disadvantages of interrelationships between organizational functions and the impact that can have upon organizational structure. 16 9.0 References Allen, K. (2007). Growing and managing a small business. 2nd ed. Boston, MA: Houghton Mifflin Co. Adams, A. (2016). Law for business students. 9th edition. Great Britain: Pearson Education. Ebert, R J & Griffin, R W. (2017). Business Essentials. 11th Edition. United Kingdom: Pearson. Aaker, D A. (1984). Developing Business Strategies. United States: John Wiley & Sons. Bryce, A. and Wilson, J. (2002). Business management for Standard Grade. Oxford: Heinemann. 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