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Business organisation is an entity which is solely based on the international of sustaining a commercial endeavour. This sort of an organisation follows a systematic structure of rules and regulations that governs the other factors of the organisation. The following piece would help Mary and Sue resolve their issues regarding their partnership and other details they wanted to get it addressed. It will comprise brief details about the various types of organisation that exist in a business. It will further demonstrate an understanding of the different factors that exist at a macro environmental level and the ways it affects the business. This will be followed by Porter's five forces analysis which will enable a proper understanding of the elements that determine competition within the organisation. At the end of the piece, a final conclusion will be provided based on the findings.
There are various types of business organisations. These types are the sole proprietorship, corporation and partnership. It is very important to consider the various factors that influence and impact the business organisation. The Sole Proprietorship is that form of the organisation which is run by a particular owner. He/she is the whole and sole person who has all the responsibilities of the business aspects. The corporation form of the business is the most dominant of all the types of the business organisations. The corporate organisation can be said as an entity that follows the legal aspects in order to do business. Partnership is the term given when two or more individuals are doing business together. Partnership too has different classifications. These are the general partnership, limited partnership and limited liability partnership.
In the case of Mary and Sue's 'Little Dessert Shop' partnership is the best form of business for them. Forming a partnership has various advantages. Establishing a partnership is comparatively easier to form and cater to. Although there are many factors that should be kept in mind before the formation of the partnership. This sort of business has more synergy and better potential of performing than the other forms. The formation of the business is easy and does not need any legal formalities. It determines a large resource that is advantageous to the business structure. It also can be said that partnership requires following less terms and conditions and less legal issues than the corporation form of the business. It is also very flexible in nature and is free from the constraints and restrictions in terms of legal affairs. Another advantage of partnership is that it has the access to a greater capital amount (Essays, Research Papers and Articles on Business Management, n.d.). There is no mandatory corporate form of income taxes. In a partnership, the income is declared by filling up an income tax return. Although along with advantages, the disadvantages too tag along. The disadvantages of a partnership might have a threat to infinite liability. As the general partners are responsible for any kind of event taking place within the business, it might cause a personal risk in most of the cases (Study Finance, n.d.). There might be instances where the life of the business is put to a halt with the death or any other critical case of another partner. There might be instances where a conflict rises between the two existing partners which could result in the termination of the business organisation.
Keeping all these various aspects in mind, one should remember that every sort of business form comes with certain advantages as well as disadvantages. Not to forget to mention, both of them have prior experiences in the hospitality sector and have the qualities and skills of managing a small business successfully. Their combined knowledge and skills will help them formulate a balanced judgement which will enhance the business and will make it a successful venture.
The Porter's five forces help in analysing the competitive aspect that leaves an impact on the business. These factors contribute to the growth and development of the business and facilitate in the profitability of the business.
Competitive Rivalry: this factor demonstrates the amount of competition the business might encounter and the strength of those competitors. The products and services given by the 'Little Dessert Shop' to its customers are satisfactory to the customers. They offer their products at a low range which attracts the customers to purchase their items. Mary and Sue were also planning on providing organic products to their customers as most of the people believe in following a healthy diet and are more inclined towards organic food habits. So, in this case they have a moderate competitive rivalry (The Enterprise World, 2020).
Supplier Power: This factor briefs about the ease of changing from one supplier to another depending on the rate of their increase or decrease of the prices they offer. As Mary and Sue buy products in bulk from the local cash and carry, their investment in raw materials are comparatively cheaper. If they wish to buy organic food items for catering to the premium needs of their customers, their investment amount will rise up. In this case, their supplier power is low.
Buyer Power: The Buyer Power determines the factors where a customer can shift from one brand to another depending on their needs that are being catered (HigherStudy.org, n.d.). Although, 'Little Dessert Shop' has quite a great deal of buyers, they still have the fear of their customer shifting to another brand for premium organic products. In this case, their buyer power is moderate.
Threat of Substitution: this factor is the situation when the customers get a better and affordable service and product range from another competitor. This totally depends on the unique quality of products the business is providing its customer with. In case of 'Little Dessert Shop' the threat of substitution is low as the business believes in catering to the needs of their customers in an affordable range than its competitors (Luenendonk, 2019).
Threat of New Entry: This factor demonstrates the rate at which a new rival has the chance of entering the market and replacing the business. Although the business provides it customers with an affordable range of products and has attracted customers with such huge offers and discounts. There still remain higher chances of the business getting replaced by another similar rival if they provide better quality of products to the customers compared to 'Little Dessert Shop'.
The macro factors impact the direct working and performance of the business. It determines the decision making process of the business and helps it plan strategically to improve the business in various ways. The macro environmental factors mainly constitute several factors such as the political aspect, the economic factors, the demographic forces, the technological aspects, the social and cultural aspects, the environmental conditions and the legal factors that bind the company.
Political and legal forces: The business always needs to stay up to date with all the political happenings along with the legal frameworks that enable the business to make a refined decision whenever it is necessary (Ellis, 2020). As 'Little Dessert Shop' is a partnership form of business it does not need to focus much on the legal aspects of the business. But in order to improve the operations of the business, the owners may try to keep them upgraded with the variou laws along with the political impacts of the country that leaves a great impact on the business affairs.
Social and cultural forces: In order to increase the impact on the society, the business owners can use products that are biodegradable to help the environment keep clean. The business never discriminated against any of its customers on the grounds of class, creed, religion, gender, etc. Their purchasing habits can be improved so that better quality products are being given to the customers and generate customer satisfaction (Mageplaza, 2020).
Technological factors: With the invention of technology, every business has some way or the other benefited from it. Implementation of the technology in the business such as ordering online facilities will help the business cater to a larger customer base. If the advancements in technological aspects could be made to use in a proper manner, the business has higher chances of growing and flourishing (Maximilian Claessens, 2015).
All these factors should be kept in mind and considered properly before taking any prior decision and to enhance their products and service in order to cater to a large mass.
The various factors that affect the business and help to enhance its services and products to generate customer satisfaction have been discussed above. Considering all these aspects 'Little Dessert Shop' can formulate strategies and implement those to improve the operation of their business. This will enable the owners to have a clear understanding of the various elements that contribute to the growth and success of the business.
Ellis, J., (2020). What Are Macro Environment Factors? (With Pictures). [online] wiseGEEK. Available at: <https://www.wisegeek.com/what-are-macro-environment-factors.htm> [Accessed 12 December 2020].
Essays, Research Papers and Articles on Business Management, n.d.Advantages And Disadvantages Of Partnership. [online] Essays, Research Papers and Articles on Business Management. Available at: <https://www.businessmanagementideas.com/organisation/types/partnership/advantages-and-disadvantages-of-partnership/8930> [Accessed 12 December 2020].
HigherStudy.org, n.d.Porter's Five Forces Model Of Competition Analysis. [online] HigherStudy.org. Available at: <https://higherstudy.org/porters-five-forces-model-competition-analysis/> [Accessed 12 December 2020].
Luenendonk, M., (2019).Porter's Five Forces Model | Strategy Framework. [online] Cleverism. Available at: <https://www.cleverism.com/porters-five-forces-model-strategy-framework/> [Accessed 12 December 2020].
Mageplaza, (2020).Understanding Of Micro And Macro Factors That Affect Your Business. [online] Mageplaza. Available at: <https://www.mageplaza.com/blog/micro-and-macro-factors-affect-your-business.html> [Accessed 12 December 2020].
Maximilian Claessens, (2015). The Macro Environment - Six Forces (DESTEP). [online] Marketing-Insider. Available at: <https://marketing-insider.eu/macro-environment/> [Accessed 12 December 2020].
Study Finance, n.d.Business Organization | Sole Proprietorship, Partnership, Corporation. [online] Study Finance. Available at: <https://studyfinance.com/types-of-business-organization/> [Accessed 12 December 2020].
The Enterprise World, (2020).Porter's Five Forces Of Competitive Analysis | The Enterprise World. [online] The Enterprise World. Available at: <https://www.theenterpriseworld.com/porters-five-forces-of-competitive-analysis/> [Accessed 12 December 2020].
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