Business Organisation and Environment
This domain examines why businesses exist, how they are classified and how external forces and growth choices shape strategy. SL questions often ask you to apply STEEPLE, SWOT and Ansoff to a short case rather than list definitions.
Core rules and concepts
- Sectors: primary extracts raw materials, secondary manufactures, tertiary provides services, quaternary handles knowledge and information.
- Entrepreneurship creates a new venture; intrapreneurship develops new ideas inside an existing organisation.
- Legal structures: sole traders and ordinary partnerships are unincorporated, so owners usually have unlimited liability. Private and public limited companies are incorporated and offer limited liability. Franchises, joint ventures and multinationals spread risk and capital but reduce control.
- Hierarchy of aims: mission, aims, objectives, strategy, tactics. Objectives should be SMART.
- Analysis tools: STEEPLE covers external political, economic, social, technological, environmental, legal and ethical factors. SWOT separates internal strengths and weaknesses from external opportunities and threats. The Ansoff matrix links products and markets: penetration, product development, market development, diversification.
Worked example
A bakery with one shop wants a second outlet in a nearby town and a click-and-collect website for existing customers. The second shop sells existing products in a new location: market development. The website reaches existing customers through a new channel, which is closest to market penetration. Adding gluten-free cakes for the new town would be diversification, the highest-risk option because both product and market are new. A STEEPLE scan might highlight social demand for healthier food, technological uptake of online ordering and economic pressure on household spending. The recommendation should match risk to the bakery's cash reserves and experience.
Traps that cost marks
Do not confuse limited liability with being a limited company; ordinary partnerships do not automatically give it. Do not label a new outlet as diversification. STEEPLE factors must be external to the business, and SWOT weaknesses must be internal. A business plan supports planning and finance applications but does not guarantee funding or success.