BUSINESS AND THE BUSINESS
ENVIRONMENT
HIGHER NATIONAL DIPLOMA(HND) IN BUSINESS MANAGMENT
H.M.MASHHAR
(2679 Words)
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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.
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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
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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
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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
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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.
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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.
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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.
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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).
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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
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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
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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)
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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)
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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)
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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).
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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.
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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.
Pathak, J. (2015). Fundamentals of management. New Delhi: Vikas.
Gunawardane, R. and Alihussain, A. (2020). The race to be the king of retail | Daily FT.
[online] Ft.lk. Available at: http://www.ft.lk/marketing/The-race-to-be-the-king-of-retail/54659429 [Accessed 2 July. 2021].
Gustafson, F. (2017). Definition of Small-Scale Enterprise. [online]
Kossman, S. (2020). [online] Bizfluent.com. Available at: https://bizfluent.com/list-6765198duties-production-department-.html [Accessed 10 July. 2021].
Kozami, A. (2005). Business policy and strategic management. New-Delhi: McGraw-Hill
Published.
Rainey, H. (2009). Understanding and Managing Public Organizations. Hoboken: John Wiley
& Sons.
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