Learner Name Mohamed Firouzdeen Fathima Nuzla

Learner Registration 220905002

No.
Study Centre Name Metropolitan College
Qualification Title OTHM Level 3 Foundation Diploma for Higher Education Studies
Unit Reference No. K/617/3718
Unit Title Introduction to Business
Word Count 3127
Submission Date 31/12/2022

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cheating, collusion and plagiarism as set out in the OTHM policy.
2. I declare that the attached submission is my own original work. No significant part of it has been submitted
for any other assignment and I have acknowledged in my notes and bibliography all written and electronic
sources used.
3. I acknowledge that my assignment will be subject to electronic scrutiny for academic honesty.
4. I understand that failure to meet these guidelines may instigate the centre’s malpractice procedures and
risk failure of the unit and / or qualification.
5.

F.Nuzla
_________________ _________________
Learner signature Tutor signature
Date: 31/12/2022 Date:
 BFC PLC APPRENTICESHIP
STUDY GUIDE

This guide enables the reader to clearly understand the idea of the structure
and classification of businesses. In addition an assessment consisting of
revision cards including aims and characteristics of different businesses and
inter-relationships between organizations
Introduction

Businesses are divided into several types according to their objective, size, type of industry, and
sector. But the common objective of all businesses is to satisfy customers. To carry out its
activity efficiently, a business should overcome the positive and negative environmental factors
which can impact directly or indirectly. From the barter system to the present e-commerce,
nothing wouldn't have been achieved without a proper plan and productivity.

“It’s easy to open a business but it’s an art to keep it open”

Contents
Introduction ................................................................................................................3
Task 1 .........................................................................................................................5
Difference between an Organization and Business ................................................5
The Different forms of Business ownership ...........................................................5
Legal requirement affecting the Businesses Structure ...........................................7
Different types of Sectors of an organization .........................................................8
Task 2 .........................................................................................................................9
How businesses are organized in terms of purpose and objectives ........................9
The expectations of different stakeholder groups in business ..............................10
Organizational structure and function ..................................................................11
Impact of Internal Business Environment ............................................................15
Macro- Environmental Influences affecting businesses .......................................16
How Internal and external factors interrelate and impact business decision
making...................................................................................................................17
References ................................................................................................................18
Task 1
Difference between an Organization and a Business

The term “Organization” means a group of people who join together to achieve some common
objectives.
The term “Business” means an individual or group engaging in commercial, industrial, or
professional activities.

The Different forms of Business Ownership

Businesses classified under its legal structure are,

 Sole proprietorship
 Partnership
 Public limited companies (Plc)
 Private limited companies (Ltd)
Sole proprietorship and partnership come under an informal structure, which means the business
and the owner/owners are not a separate entities from the view of the law. The owner's personal
assets are used to settle business debts or losses. (unlimited liability)
Both private and public Limited companies come under formal structure, which means the
business and the owners or shareholders are separate entities from the view of the law. The
shareholders of the company need not use their personal assets to recover losses or to pay debts.
(limited liability)
An informal business structure is the easiest form of business to start as it is a great way to see if
a business will be successful, before committing more time and effort to start a formal business
structure. When the business is growing, changing into a formal structure is much more
beneficial as it has personal asset protection and creditability.
Informal businesses are small scale that is often run within a small geographical area which
incurs less cost and is targeted to satisfy a small group of customers. Formal Structure runs
within the country or on a multinational level on a larger scale, incurring high costs and
satisfying a large group of customers.
Key Features

Features Sole proprietorship Partnership

Number of 1 2-20
owners
 Capital By the owner By the partners
Investment
Legal entity No separate entity No separate entity
Liability Unlimited liability Unlimited liability
Profit and loss Shared solely by the owner Shared equally or according to the
capital ratio by the partners
Termination By owner's death or personal Due to any partner's mental defect or
will death or bankruptcy

Features Plc Ltd

Number of 2-50 shareholders 7 to an unlimited amount of
Shareholders Minimum 2 directors shareholders
and directors Minimum 3 shareholders
Legal entity Separate entity Separate entity
Liability Limited liability Limited liability
Capital Shares are sold to the Shares are openly sold to the public on
investment shareholders (limited) the stock exchange (unlimited)
Share Shares cannot be transferred Shares can be transferred
transferability
Management By the board of directors By the board of directors

Advantages and Disadvantages

Structures Advantages Disadvantages

Sole proprietorship  Easy to start  Unlimited liability

 Profit is enjoyed only by  Limited investment
the owner  Unstable tax payment
 Low organizational cost  Lack of continuity
 Privacy  One person is responsible
for controlling all the
activities
Partnership  Easy to form than  Tax charged from each
company procedures partner’s personal income
 Ease of funding through a  Conflicts due to different
bank loan views of partners
 Shared responsibilities  Unlimited liability to all
and combined skills for the partners
efficient management  Termination of business
upon a partner’s death
Private limited company  Limited liability  Cannot sell shares to the
 High investment than public
informal structure
  Can continue business  Limited shares
regardless of any owner’s transferability
death  Strict accounting process
Public limited company  Limited liability  High start-up cost
 Shares are open to the  Strict management
public thus raising more regulation
capital  Shares are valued upon
 Transferability of shares the view of the market
 Need to be extremely
transparent

Legal requirement affecting the Businesses Structure

 Sole proprietor - There is no legal requirement for a sole proprietor unless the business
name is different from the owner's name. then it is essential to register the business as
DBA (Doing Business as). Getting a business license is a way of minimizing threats of
external factor intervention. It is optional to open a bank account under the business name
for organizing finance.
 Partnership - This can be registered at the time of formation or later. The partners have
to apply for a registration form and give the following information:
1. Name of the business
2. Address of the head office
3. Address of branch office (if any)
4. Date of admission of partners in business
5. Address of partners
It is necessary to have the signature of all partners.
 Private and Public limited companies - These are the key steps in registering,
1. Approving the business name
2. Submitting the registration form:
 Company registration form
 Consent and certificate of director
 Consent and certificate of secretaries
3. Submitting the Article of Association (AOA) according to the company act no.7 of
2007 which includes,
 The objective of the company
 Rights and responsibilities of the shareholder
 Management and administration of the company
4. Publicly announcing the incorporation noticing the name, registration number, date of
incorporation of the company
5. Applying for the Tax Identification Certificate of the company
6. Opening a bank account under the company’s name
 It is mandatory to issue a prospectus and certificate of commencement before its
operation for Public limited companies while this is not necessary for Private limited
companies.

Different types of Sectors of an organization

A business can be categorized into many sectors. Among them are private, public, and voluntary
sectors. For a nation to function at its best, all sectors must coexist. Although there are
significant distinctions between them, a stable financial and economic system requires a good
balance of businesses from each of these sectors.
Private sector - These are owned and controlled by private individuals or companies. The main
objective of this business is to make a profit to survive and continue the business. The capital is
invested by the owners or by issuing shares or debentures. Job opportunities are high with a
higher salary, but not very secure because failure to perform could result in termination. The
various businesses that make up the private sector consist of, Sole proprietorships, partnerships,
and privately owned national and multinational companies, which include, Resorts, Private
schools, hospitals, malls, etc.
Public sector - These are owned and funded by the government or other state governments
completely or partly. They are non-profit motive and their main objective is to serve the nation's
public by offering free services and goods at a cheaper price than the private sector. Capital
investment is through tax revenue, duty, issuing bonds, and treasury bills. Jobs are very stable
with employment benefits such as allowances and pension benefits. The various areas that cover
this sector are a hospital, libraries, police, infrastructure, etc.
Voluntary sector - These are non-government organizations that are run by volunteers to
provide service to the community. They are non-profit motive and shares some characteristics of
the public sector. The capital investment is through raising funds and membership subscriptions.
Some examples are Charity clubs, NGOs, trade unions, environmental groups, etc.
Task 2
How businesses are organized in terms of purpose and objectives

Business objectives are the goals and outcomes that organizations seek to retain as they expand.
Business owners and executives must monitor performance across the board to ensure that their
organizations are headed on the correct path.
There are many types of business objectives,
 Profit - The main objective of any business is to maximize its profit. Profits ensure a
steady flow of funding for the future renovation and expansion of the business. They
indicate how stable, effective, and advanced an organization is.
 Social benefit - Businesses must contribute to society in some way. As a result,
institutions such as libraries, pharmacies, educational foundations, and others are built
that allow businesses to profit while also advancing society.
 Sales - The goal is to sell more products and increase revenue by setting activities for the
sales team and creating a detailed plan.
 Market share - The company must provide products of the utmost quality to make a
profit and increase demand to create more customers.
 Offering goods and services at a reasonable value.
 Increasing employment opportunities.
 Efficiently utilizing resources and decreasing wastage.
 Measuring growth over the short and long run.
 Survival in the short and long run.
A business may change its objectives due to a decrease in revenue and a loss of sales for survival
and efficiency. Also when competitors imitate or copy their products, to differentiate themselves
from that, a business may change its objectives.
The expectations of different stakeholder groups in business

Stakeholders are organizations or people who are impacted or interested in the business activities
and goals. There are many stakeholder groups in most firms, and they can be generally
categorized as follows:
Internal stakeholders- directly impact the business activity they work for the organization such as
directors, managers, customers, and investors.
 Investors: These are interested parties seeking financial gains, such as loan holders and
shareholders. They expect a return on that investment.
 Employees: They depend on having stable jobs. Due to the organization's support and
benefits, they have a direct interest in it.
External stakeholders- indirectly impact the business activity as they are influenced by the
outcome of the business but are not working for them.
 Customers - They desire the good or service that the business offers, and they expect that
it will be valuable and of high quality.
 Suppliers and vendors - Due to their sales of goods and services to the company, these
stakeholders' income depends on it. Gaining success will increase their business.
 Communities - They do not want the business to harm their well-being, security, or
economic growth. The businesses based in their communities or engaged in local
initiatives may have an impact on spending, job growth, and other factors.
 Governments - They benefit from businesses’ taxes and gross domestic product. They
are an important stakeholder because they collect taxes from both the business as a whole
and from the people it employs on an individual basis.
Organizational structure and function

An organization's goals are directed at certain tasks according to its organizational structure. It is
a way that an organization keeps its relationship with top-level management to low-level
employees. Successful organizational structures specify the duties of each employee and how
they relate to the larger system. It activities used to achieve the organization's goals and
objectives, such as task distribution, supervision, and coordination. An organizational chart
graphically allows us to understand the function and hierarchy.
The most common organizational structures are:

 Line structure -
In which the supervisor has complete control over the subordinate. This is the earliest and
most basic type of organization. The individual at the bottom of the organizational level
receives authority from the highest level executive.

 Functional structure-
As the name implies, a functional organizational structure groups employees according to
the types of work they are responsible for managing and directing.

 Line and staff structure-

In comparison to the conventional line organization, this sort of organizational structure
is better. By designating supervisor and specialist positions, which are connected to line
authority, primary and auxiliary activities in line and staff organization are related to the
line of supervision.

 Project management structure-

This organization is not independent. Instead, it is a structure created within an
organization to achieve a project's or a company's goals. It is headed by a project
manager, who is in charge of the project goals.
 Matrix structure-
It is also the least used and most confusing. Employees are matriculated between many
departments, divisions, and superiors under this system. For instance, a worker for a
matrixed organization might be responsible for both customer service and sales.
Line Structure
Matrix Structure
Impact of Internal Business Environment

The environment which affects the business directly is called the Internal business environment.
It includes all of the organizational members, employees, and informational resources, including
its technological, financial, and physical resources. It is the pillar of business that affects its
strength and weakness which can be controlled by better plans, operations, and decisions. The
internal factors are:
 Value system - This is a set of guidelines and moral principles that a company adopts as
a guideline for how employees should behave under all conditions.
 Vision, mission, and objective - vision refers to the big picture of what the business
aims to accomplish. Mission discusses the company and its business as well as the
purpose for its existence, objectives are the key goals that are planned to be accomplished
within a certain period using the resources at hand.
 Organizational Structure - This specifies how activities are directed within the
organization to accomplish the main objective. These operations include teamwork,
communication, form of a board of directors, level of expertise, and monitoring.
 Corporate culture - The unity and relationship between the board of directors and the
CEO. The level of assistance provided by the workers and other members of the
organization enhances the organization's ability to make decisions and implement those
decisions across the entire organization.
 Human resources - the most important component of the company's assets because they
determine whether it succeeds or fails. The company's strengths or weaknesses can be
attributed to its talents, competencies, attitude, dedication, morale, and commitment.
 Tangible and non-tangible resources - Tangible resources refers to the actual property
that a business has, such as stock, real estate, equipment, and buildings. Research and
development, technological skills, marketing, and financial resources are examples of
intangible assets.
Macro- Environmental Influences affecting businesses

The macro-environment is an external environmental factor that is uncontrollable. Also known

as the General Environment that has an impact on the working methods, decision-making
procedures, business strategy, and performance of every business. The business needs to adapt
itself according to the element of the macro-environment. They function as opportunities and
threats to the business. These are also known as PESTLE factors.
 Political factors - These are the laws, rules, regulations, and policies of the business to
be followed. The business's decisions may be impacted by changes to these laws and the
government, which may also present a threat to the company. either present the business
with new opportunities or threats to the company.
 Economic factors - The country's economic situation, which controls the demand for the
business’s goods and services, strongly influence factors such as purchasing power,
saving patterns, per capita income, credit facilities, etc.
 Social factors - This is made up of elements that affect how people interact with one
another, such as societal norms, values, and aesthetic preferences. The business must take
these elements into account while making decisions, recruiting new employees, and
advertising products and services.
 Technological factors - Businesses must remain up to date as technology develops daily
to further effectively meet customer needs.
 Legal factors - They have a direct or indirect impact on business as a result of relation to
governmental laws. They have a significant impact on how firms operate, how much
money they make, how customers act, etc.
 Ecological factors - business face threats from the government to address environmental
issues by changing their way of environmentally friendly operations. Also, change in
climate has a great impact on the productivity of the business.
How Internal and external factors interrelate and impact business decision making

A company idea that seems ideal on paper could turn out to be poor in practice. Failure can
occasionally be attributed to internal factors within the organization, such as its resources,
workers, or machinery. Sometimes it could be the external factors of the business. The business
can prosper if the internal and external environmental factors affecting it are understood. This
could be done by SWOT analysis which is used to evaluate a business's competitive position and
to create strategic planning. It stands for strengths, weaknesses, opportunities, and threats. The
SWOT analysis evaluates internal and external variables as well as present and anticipated future
situations. The internal environment is affecting upon the strength and weaknesses, while the
external environment affects the opportunities and threats.
STRENGTH WEAKNESS
(Positive impact) (Negative impact)
 Maintaining low cost  Poor customer service
 Strong brand recognition  Bad brand recognition
ENVIRONMENT

 Skilled human workforce  Expired intellectual property (patents,

INTERNAL

 Having large amount of cash in trademarks, copyrights)

hand  Lack of financial resources
 Unskilled workforce
 High cost

OPPORTUNITIES THREATS
EXTERNAL ENVIRONMENT

(Positive impact) (Negative impact)

 Eliminating international trade  Increasing trade barrier
barrier  New competitors
 Change in customers’ taste  Pending government regulations
 Relaxing government regulations  New technology
 New technology  Pending lawsuit
References

1. Devabandu, J. A. (n.d.). Introduction to Business. OTHM Level 3.

2. Simplebooks, T. (2022) The Definitive Guide to Business Registration in Sri Lanka,
simplebooks. Available at: https://simplebooks.com/srilanka/business-registration-sri-
lanka-2/ (Accessed: November 29, 2022).
3. Dua, A. et al. (2019) Private Limited Company vs public limited company, LegalDocs.
Available at: https://legaldocs.co.in/blog/private-limited-company-vs-public-limited-
company#:~:text=A%20public%20limited%20company%20is%20a%20company%20list
ed%20on%20a,held%20by%20its%20members%20only. (Accessed: December 4, 2022).
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https://sproutsocial.com/glossary/business-objective/ (Accessed: December 4, 2022).
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business/objectives-of-business/ (Accessed: December 3, 2022).
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December 4, 2022).
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organizational-structures (Accessed: December 4, 2022).
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December 6, 2022).
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December 6, 2022).
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