Contrasting Businesses - Features, Stakeholders and Organisational Structures PDF

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BTEC Level 3 National Extended Diploma in Business and Finance. Unit 1 Exploring Business...

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UNIT 1: Exploring Business

Contrasting Businesses - Features, Stakeholders and Organisational Structures Level 3 National Extended Diploma in Business

Introduction As part of my journalism for Surrey Heights magazine, I’ve been chosen to look into the features of two businesses that contrast each other to analyse the reasons for their success. I picked out two contrasting businesses that appealed to me the most and further looked into them and collected information that would help me explain how the businesses became successful. The two contrasting businesses that I selected for this report are Apple Inc and Oxfam. Apple Inc being an American multinational tech company, considered one of the Big Four tech companies in the world, which focuses massively on maximising their profit margins and revenues. Oxfam being a non-profitable charitable organisation founded in England whose main focus is to help and lift those out of poverty.

Apple Inc TASK 1: Explain the features of two contrasting businesses P1 What is Apple Inc? Apple Inc is a multinational company which is based in California and is one of the famous SIlicon Valley businesses that have become successful over the years by designing and developing state of the art computer software and hardware to sell to consumers all around the world. Apple was founded by Steve Jobs, Steve Wozniak and Ronald Wayne in 1997 and quickly grew to be the first billion-dollar company in the world.

Ownership Apple is a publicly held company owned by thousands or even millions of people which means that its shares are available on the market to the public. Apple is owned by its shareholders . The largest shareholder is Arthur Levinson, who owns 1.16 million shares of the company. Levinson is also chairman of the board at Apple, and CEO of a research and development company called

UNIT 1: Exploring Business Calico. Tim Cook is the second largest shareholder, owning 901, 474 shares of the company.

Liability Liability is an obligation of a company, or amount to lenders and suppliers. Apple is a private company meaning the shareholders of the company have limited liability. The shareholders can only lose as much as they invested meaning their main concern for the business is to generate high profit margins to make back invested money. They are not responsible for the losses of the company such as debt and claims against the business, their personal assets are not at risk.

Purpose Apple’s primary purpose is to keep making a profit and they do that by having a strong brand image which is now globally recognised. This means that their end goal is to create value for the shareholders (make money). Apple’s success can largely be attributed to the fact that it has created a unique brand with many loyal customers who’ll upgrade to the latest Apple device annually when the new product range comes out. Apple has a strong brand image, topping the list for the most valuable brand across the world, 8 years running, with a brand value of $182.8 Billion and explains why they’re able to charge more than their competitors even though it’s the same level of technology. By Apple selling their products at premium prices, it means they’re generating a high revenue meaning profit margins and they have a higher competitive advantage. Sector Apple Inc is a company that fulfills the requirements for the secondary, tertiary and quaternary industry. Apple manufactures their own stock produced by the primary sector and they process their goods and services in their factories where they’re made so the company belongs in the secondary sector. They provide supporting services which store and distribute the goods which have been manufactured and Apple relies on advertising to promote their products which makes them belong in the tertiary sector as well. Apple relies heavily on information from the other sectors to test existing products to develop new ways of sourcing and producing new products to generate higher profits (research and development). This makes them fit into the quaternary sector. Being a part of the quaternary sector especially, contributes a lot to the success of Apple as it provides the company with the ability to further advance their services and helps to promote further expansion of the business.

Scope Apple is a multinational business and its business transactions take place across national borders. The US remains Apple’s biggest market and the country alone accounts for 45% of Apple’s revenue. The second major geography that Apple dominates in is Europe. From the region, it generated around 23% of its revenue in 2019. China is another profit-making market with 16.7% of Apple’s total revenue generated in China in 2019. Apple also has markets in Japan and Asia

UNIT 1: Exploring Business Pacific and wishes to expand its global presence into India, one of the world’s fastest growing economies. By Apple operating in multiple different nations, it allows the business to enter new markets and build new customer bases. It also gives Apple access to a pool of new potential workers with unique skill sets which then keeps Apple ahead of competition and allows the business to generate a higher revenue.

TASK 2: Explain how two contrasting businesses are influenced by stakeholder P2 Define what a stakeholder is A stakeholder is either an individual, group or organization who is impacted by the outcome of a business. They have an interest in the success of the business and can be internal or external. Stakeholders can have a positive or negative influence on a business. Apple has both internal and external stakeholders inside the business. Internal stakeholders include shareholders, employees and managers. External stakeholders of Apple include the local community, customers, government etc. Maintaining a good relationship with stakeholders will have a positive impact on the business and contribute toward the success of Apple Inc.

Role of stakeholders in Apple and their influence in business decisions Apple values the interests and concerns of a number of key stakeholders. To a certain extent, Apple’s success is due to its ability to satisfy stakeholders and corporate social responsibilities. Apple’s stakeholders directly affect the business in terms of customer perception and sales revenues. The company has a firm approach when addressing the interests and concerns of the stakeholder groups. These stakeholder groups push Apple to do well and improve, and Apple affects them by satisfying their interests. Apple’s stakeholders have a number of concerns including the sustainability of the business, product quality and function, productivity rates and financial performances. For Apple, the most significant stakeholders are the shareholders/investors, customers/consumers and Apple’s employees. Customers/consumers (external) Apple prioritises customers as its top stakeholder. The main interest of customers/consumers is for Apple to supply efficient, good quality products/services at an affordable price. Apple products are generally priced at a higher price compared to competitor products in the market. However, Apple’s premium pricing strategy is acceptable because it matches the high quality and aesthetics of these products and a loyal customer base. The role of customers is to buy the company’s products/services and bring necessary revenue into the business to earn profits and continue

UNIT 1: Exploring Business operations. They support Apple with every purchase they make and each purchase also shows what products/services to invest in further. Customers share their opinions and experiences after purchasing from Apple online or with the customer service department and may request changes in products/services. In doing so, customers help guide the direction of the business therefore improving it. Customers/consumers massively influence the decisions Apple makes as the majority of its profits come from customers/consumers so if the company can’t keep up with the customer’s taste,values and spending power then Apple will lose them. This means investing into conducting market research over time to find out what customers like and dislike about Apple’s products, services and overall interaction with the company. Meeting the wants and needs of the customer encourages more repeat purchases, generating more revenue for the business therefore widening profit margins. The company set a number of environmental programmes for recycling and responsible sourcing due to customers’ demands and complaints about business sustainability. Apple’s employees (internal) - Employees are considered second-priority stakeholders. The main interests of these stakeholders are proper compensation and career development. Apple employees determine Apple’s ability to innovate and develop profitable products. The role of employees is to carry out tasks for the success of the business. Their efficient work rate and productivity directly reflect on Apple’s profit and success, therefore, it’s important for Apple to choose its employees wisely and disregard any that aren’t meeting up to the criteria of the business. Apple’s employees are in a position to impact the company if they’re unhappy so they have a big impact on the company’s business decisions. It is in Apple’s interest to retain staff that are competent at their job as having a high staff turnover means that the company is having to constantly train new staff all the time meaning there are more training costs. More company costs means less profit for the business therefore affecting the success of Apple Inc. Directors (internal) - Directors are another important stakeholder of the company. They have a massive impact on the success of the business as their role in the business is to participate in board meetings to enable the board to reach essential changes/decisions and make sure that the company’s obligations are fulfilled. Apple’s directors act together as a board to manage day-to-day affairs but typically the board may delegate certain powers to individual directors.

TASK 3: Explore the organisation structures, aims and objectives of contrasting business P3 Apple has a hierarchical organizational structure. This type of structure is typical for larger businesses. It relies on having different levels of authority with a chain of command connecting multiple management levels within the organisation. The decision-making is mostly formal and

UNIT 1: Exploring Business flows from the top down so this creates a tall organisational structure where each level of management has clear lines of responsibility and control. As Apple grows, the number of levels increases and the structure grows taller. An advantage of Apple having a hierarchical structure is that there’s clear lines of authority and individuals in the business know who to report too. For example, if a customer has a problem with a product or service in store and came to an Apple employee to report this, the employee would immediately know to report to the customer service shareteam or store manager to deal with the customer's problem. Having clear lines of authority is good for the business as it eliminates confusion and allows creates accountability within the company. A disadvantage of Apple having a hierarchical structure is that it can complicate chains of command and create inconsistencies in management that can slow down decision making in the business and impede work. Slow decision making can seriously impact Apple as a company as it disrupts innovation and time it takes to implement new ideas. Customers, shareholders and employees will get frustrated. This may cost the company time and money and may impact future relationships. Apple’s mission is ‘to bring the best user experience to its customers through its innovative hardware, software and services’. In Manifesto dated 2009, Tim Cook (CEO) set the vision specified as ‘We believe that we are on the face of the earth to make great products and that’s not changing.’ Apple’s objectives are to provide innovative hardware, software and services to their customers and retain faithful customers by encouraging repeat purchases. By doing this Apple generates more revenue, widening profit margins therefore contributing to the success of the business.

Oxfam TASK 1: Explain the features of two contrasting businesses P1 What is Oxfam ? Oxfam is an international non-profitable organisation that works together with different communities across the world to aid and support families in poverty. Oxfam was founded in 1942 in Oxford, England and its headquarters are in Nairobi, Nigeria. Oxfam was founded by Cecil Jackson-Cole and was named after the Oxford Committee for Famine Relief.

Ownership Oxfam is a non-profit organisation as well as a public charity with professional help. Oxfam is a confederation of 19 independent charitable organizations. Oxfam India and Oxfam Japan are also associated with Oxfam International, with both organizations set to become full affiliates in the

UNIT 1: Exploring Business near future.

Liability Oxfam is also a limited liability company which is a private company. Meaning all shareholders are legally responsible for all the debts a company has to the extent of the amount of capital they invested.

Purpose Oxfam’s purpose focuses on helping people have a better life and they do this by working with communities and governments to improve the lives of people by creating lasting solutions to the injustice of poverty. Oxfam’s key objective is to ‘save lives’ globally and they do this by providing clean water, food and providing better healthcare in poor areas. Oxfam also helps people claim a fairer share of natural resources, increase money for basic services such as education and health to bring economic and social freedom to societies. They are part of a global movement for change, which empowers people to create a future that is secure and free from poverty. Unlike Apple, making a profit doesn’t contribute to the success of the company. Oxfam’s success is measured by how many they can help build better lives.

Sector Oxfam belongs in the tertiary sector. In the tertiary sector you provide a service and as Oxfam is providing people in need with help such as clean water and food etc by selling clothes and from collecting donations from donors.

Scope Oxfam is an international non-governmental aid organization and works with 67 countries around the world. In 2017-2018, Oxfam worked directly with 19.5 million people worldwide.

TASK 2: Explain how two contrasting businesses are influenced by stakeholder P2 Role of stakeholders in Oxfam and their influence in business decisions Employees/volunteers(internal)Employees and volunteers are an important stakeholder for Oxfam. The employees are interested in fair pay and volunteers are more interested in providing a good service to those in need for personal satisfaction/experience. Both want to be heard by Oxfam so they feel like they’re benefiting/contributing to the company, therefore, it is important Oxfam has an easy chain of communication. The role of employees and volunteers is to help the business run smoothly by organising events, campaigning and fundraising money for the charity. Them having such an important role in the business, employees/volunteers influence Oxfam’s business decisions a lot. Oxfam relies mainly on its volunteers, being a non-profit organisation as they’re not getting paid so they listen to their volunteers/employees on how the business should run. If the

UNIT 1: Exploring Business volunteers/employees become unhappy and decide they no longer want to be a part of Oxfam, this would impact the charity as it would slow down growth and goals of the company. Because it's a voluntary job, it will be harder to recruit new employees/volunteers compared to Apple being a profit business so if they voice their opinions and require things to be changed within Oxfam, Oxfam is more inclined to listen therefore they have a big impact on business decisions. Oxfam’s trustees(internal)Another important stakeholder for Oxfam is its trustees. They’re responsible for law in Oxfam, its assets and its activities meaning they’re mainly interested in the growth of the business as they’re held responsible for anything that messes up. The role of its trustees is to oversee and control big decisions within the charity and every decision ultimately goes through them first. They share ultimate responsibility for governing a charity and directing how it is managed or run. Trustees safeguard the charities assets - both physical assets including property, and intangible assets such as its reputation. Oxfam’s trustees influence the direction of decisions made in the company as they have voting powers so if the trustees don’t agree with the way something is being done, it ultimately couldn't be done as they direct the business. Oxfam’s donors/supporters (external) Oxfam is a very important stakeholder for the business. The main interest of donors/supporters is to know where their money is going within the charity and how it is being used to help the lives of others. Oxfam keeps donors/supporters happy by keeping them updated on the progress of their goals so they feel secure that their money is going to a right cause. The role of donors/ supporters is to keep the business afloat by providing funds to allow employees/volunteers to come up with long lasting solutions to beat poverty. The charity had a total income of £409m last year, of which £176m came from the government and other public authorities. Oxfam is dependent on donors/ supporters as they’re a main contributing factor towards the success of Oxfam meaning that they have a lot of power within the business. Corporate donors/supporters have a bigger influence on business decisions as some corporate donors/supporters may support the charity on the basis of collaborative marketing so Oxfam would need to make sure to incorporate campaign partners and sponsorships into their marketing. Oxfam received £31.7m from the UK government so for example if the UK government wanted to change the way the Oxfam runs things, Oxfam are more inclined to do so to satisfy the government as their donations have such a huge influence on the success of the charity.

TASK 3: Explore the organisation structures, aims and objectives of contrasting

UNIT 1: Exploring Business business P3 Just like Apple, Oxfam does work in a hierarchical structure with the CEO and trustees working together to delegate decisions and affairs for the business. However unlike Apple, Oxfam does operate in a tall organisational structure as well as a matrix as it is a multinational business. A matrix structure is an organisational structure in which some individuals report to more than one supervisor or leader. An advantage of having a matrix structure is it can help break down traditional department department barriers improving communication across the entire organisation. An disadvantage of a matrix structure is that there may not be a clear line of accountability for project teams given the complex nature of matrix structures. This can be problematic as it goes against the values of Oxfam for accountability. Oxfam mission is to address the structural causes of poverty and related injustice. Oxfam has a vision that nine billion people will live equitably and free from the injustice of poverty, on a planet that has the natural resources to sustain them. Their vision is to work together internationally to enable people to exercise their rights and manage their own lives. Oxfam wants a world where people are valued and treated equally, enjoy their rights as full citizens, and can influence decisions affecting their lives. Oxfam leads by example in demonstrating the same values that they wish to see in the people they work with and those they aim to influence. Their values are empowerment, accountability and inclusiveness. Their approach means that everyone involved with Oxfam, from staff to supporters to people living in poverty, should feel they can make change happen. Th...