Business and the Business Environment

This document discusses the different types and purposes of organizations, the size and scope of different types of organizations, and the relationship between different organizational functions and their links to organizational objectives and structures. It also identifies the positive and negative impacts the macro environment has upon business operations, supported by specific examples.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK1.............................................................................................................................................3
P1. Different types and purposes................................................................................................3
P2. Size and scope of different type of organisation...................................................................5
P3- The relationship between different organisational functions and their links to
organisational objectives and structures......................................................................................7
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples................................................................................8
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses..........................................................................................................10
TASK 4..........................................................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors.................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The term business environment is the sum total of internal and external factors where it
directly impacts the operational activities of business (Appelbaum and et. al., 2017). Analysis of
same mainly helps in identifying external threats and opportunities and internal strength and
weaknesses. With this, the business can easily tap the useful resources which will assist them in
planning and improves the overall growth and performances. The organisation which is to be
considered for this report is Sainsbury which was founded in 1919 and deals in retail sector. In
this report, critical analyses of complexities of different types of business structures and inter
relationship of the different organisational functions will be explained in detail. Apart from this,
the report will critically evaluate the impact that both macro and micro factors have upon
business objectives and decision making.
TASK1
P1. Different types and purposes.
In the business world, there are various types of organisations which exit at the market
place and each have different purposes for their existence.
Public organisation
The public organisations are the ones which are directly owned and operated by the
government of the country. These organisations are very transparent in nature and the primary
objective of such organisations are to supply different services to the people which will help in
fulfilling their needs and requirements.
Purposes of public organisations
 Employment generation: The first and foremost purpose of establishing public
organisation is to generate the employment opportunities. With this, the organisation is
able to involve participation of general public and the overall growth and development
will be seen in this sector.
 Redistribution of wealth and income: As the primary objective of the public sector
organisation is to identify and analyse the requirements of the people and work on to
make them satisfied. They do not work to earn greater amount of revenue and profits.
Thus, it enhances redistribution of wealth and income where the concentration of power
is equally distributed between the individuals.

 Source of capital formation: The public sector organisations are concerned with the
rate of economic growth and pattern of wealth and income distribution. In this, the
profits can be easily utilised from business enterprises. So this helps in promoting capital
formation.
For instance, BBC is a British public service broadcaster. It is the world oldest national
broadcasting organisation. They have headquartered in Westminster, London. BBC generated
revenues from commercial subsidiaries BBC Studios Lmt.
Private organisation
The private sector organisations are the ones which is run and operated by individual or
group of individuals. The primary objectives for this type of organisation is to earn greater
amount of profitability. Such organisations offers more pay to their employees as compared to
the public sector organisations (Charter, 2017).
Purposes of private organisations
 Generates profitability: The main purpose of private sector organisation is to maximise
the level of profitability as their only intention for existence at the market place relates to
earn huge revenue.
 Selecting the right organisational structure: Private organisations have greater amount
of interest in assuring the right kind of organisational structure for their respective
business interest. There is different type of individuals involved in running and operating
private companies and each one of them has different benefits for the company and
stakeholders.
 Restricting access: The another major purpose of private organisations is to restrict or
limit the access to the policies, strategies and plans of the company. They work
immensely in order to maintain the secrecy, privacy and confidentiality of information.
For instance, Sainsbury is the private company which is headquartered in UK and has
commenced its operations from the 1919. This deals in retail sector and primary purpose of this
is to earn huge amount of revenue and maintaining financial stability by bringing various new
and innovative products on regular basis.
Voluntary organisations
The voluntary organisation is the one which works for the benefit and fulfilment of the
social or societal objectives in order to build social influences instead of profitability. Such

organisations are independent, secular, flexible, non-profits people organisation which works for
the benefit of the society.
Purpose of voluntary organisations
The primary purpose of voluntary organisation is to work with the people who are
involved in upbringing the societal growth and development. It works to identify the needs and
requirements of the individual’s groups and communities. It prevents the areas of monopolistic
tendencies of the government and provides education to the poor or weaker section of the society
on different aspects like health, well being, etc.
For instance, Oxfam is a merger of 20 independent charitable organization, focusing on
removing global poverty at some extent. The firm is non-profit group with many operations
initiating in societies. The firm was founded by Winnie Byanyima in 1942 (Côrte-Real and et.
al., 2017).
P2. Size and scope of different type of organisation.
Private organisation
The private organisation which will be taken into consideration is Sainsbury.
 Mission: The mission of the company is that “to offer quality services to respective
customers”
 Vision: The vision statement of the company is “to be the superior valued company by
serving customers, in communities in which company is operating, having loyal and
committed employees and also shareholders”.
 Business objectives: The SMART business objectives of the company is “to maximise
the sales and profitability by 5% by end of the year 2019”.
 Purpose: The primary purpose of Sainsbury is to be the largest in chain of supermarket
and earning greater amount of profitability and revenue. Apart from this, they will focus
on regular innovation through which new and innovated products can be brought in to
satisfy customers which will be of superior quality.
 Scope: The Sainsbury has wider scope in terms of future perspective as it is operating at
global level. It covers almost each and every country. Company have diversified business
such as hypermarket, superstore and convenience shop. They also deal in grocery item at
low cost for their respective customers.

 Size: The size of the company is very large because it is operating at global level, it
employees approximately 450,000 people. Furthermore, the profitability of the company
is estimated at approximately £1,320 million
 Legal structure: The legal structure of the private company like Sainsbury can be sole
proprietor, partnership, limited liability, etc.
Public Organisation-
In this report, BBC is chosen as public organisation.
 Mission: The mission of firm is “to act in public interest, serving target audience on basis
of impartiality, high quality information with effective communication medium”.
 Vision: The vision is to educate and entertain target audience with right information
around the world.
 Business objectives: The objective of BBC is “to become best journalism in world”.
Also, to gain market profit of about 10% by 2019.
 Purpose: The purpose is to provide impartial news and information to make audience
understand about recent issue taking place in society.
 Scope: The scope is to bring awareness about social issues with accurate information’s
in audience.
 Size: The firm have targeted audience from every age group, so that generations are
aware about current issues in society.
 Legal structure: The legal structure of public company like BBC is there should be at
least two shareholders and having market capital of about £50,000 to be in public sector.
Voluntary Organisation-
The firm chosen is Oxfam which is a non-government organisation (Foss and Saebi,
2017).
 Mission: The mission of firm is to organise programs that address structural causes of
poverty and related injustice in society.
 Vision: The vision is to work together as unit at global platform for educating public on
how to practise individual rights in particular society.
 Business objectives: The business objective of Oxfam is to practise welfare activities for
society and increase morale among internal audience of organisations.

 Purpose: The purpose of firm is to collaboratively work with many local organisation to
reduce global poverty at some extent.
 Scope: The scope is to provide appropriate assistance to local people for their
betterment.
 Size: The firm have target almost every nation to remove poverty at global platform
 Legal structure: The legal structure of Oxfam is build up with trustees who are
responsible in forming legal structure for charity, its assets and activities. They also form
the Council of Trustee, which is governing body of Association of Oxfam.
TASK 2
P3- The relationship between different organisational functions and their links to organisational
objectives and structures
The operational functions is considered to be key aspect, for every organisation in
growing business in competitive market ( Gorur and Mulukutla, 2017). Majorly, each department
collaboratively works, as a team in operating business activities. The activities are operated
through marketing, production, human resource, sale and finance department, accordingly helps
in increasing profit margin of firm. When talking about Sainsbury, supervisors of each
department effectively communicate, in order to complete assigned objectives in specified time
durations. The inter-relationship of these functional department are mentioned below:
Marketing with Human Resource Department: The functions of human resource is to
“hire right candidate at right job profile in right time” in an organisation. On other hand,
marketing department is considered to be a soul of firm, in achieving competitive advantage. The
marketing manager communicate with human resource department, for requirement of skilled
workforce in a team. Then after, the human resource department fulfil demand, by recruiting and
hiring right applicant in working environment of Sainsbury .
Finance With Sales Department: The finance department have to precisely allocate
funds in operating business activities in organisation. Whereas, function of sales department is to
effectively introduce promotional activities in target market. In context with Sainsbury, sales
manager estimate budget that will be required in performing such activities in external
environment. Therefore, the manager need to communicate with finance department for approval
of financial budget.

Production with Marketing Department: The growth or decline of business totally rely
on production department of any organisation. The production process of any goods take place
on demand by consumer in target market. In regard with Sainsbury, the marketing manager have
good relations with production department, for fulfilling demand and supply of quality goods in
market. Henceforth, these initiatives will help management in increasing profit margins in retail
industry.
Human Resource with Finance Department: The human resource and finance
departments are capable enough for growing business and capturing market that are not been
attained by competitors. When it is talked about Sainsbury, the human resource departments are
directly linked with finance department, to hire consultancy firms for recruiting talented
applicants required more funds in organisation. The finance managers have to appropriately pass
budget, for hiring human resource in Sainsbury (Hillary, 2017).
Some advantage and disadvantage of inter-relationship between functional department of
Sainsbury are discussed below:
Advantage: The strong relations will help Sainsbury managers to plan strategies for
development of employee and organisation performance at global platforms.
Disadvantage: Sometimes, due to miscommunication between top-management and
employees might results in conflicts within internal environment.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations, supported by specific examples.
It is required that critical assessment should be done on macro-environment, for
successfully operating business activities within an organisation(Saebi and et. al., 2017). In
context with Sainsbury, the external environment include political, economical, social,
technological, legal and environmental factors that have influence in growth of business in retail
sectors. These factors are mentioned below:
Political Factor: The political factors includes rules and regulations, that are been
framed by ruling government of UK . In context with Sainsbury, the top managers have
accurately adapted tax rates, acts of legislations and assurance of financial stability in market,
where business are expanded.

Positive:The positive influence of adopting political factors is the business activities cab
be performed in systematic manner.
Negative: Due to various taxes imposed by government on Sainsbury, might influence
the relationship of firm with investors.
Economical Factor: The economical factors includes inflation rate, interest rate and
economic growth in particular nations. When talking about Sainsbury, management key concern
is on leverage cost, demands, profits and prices of commodities in target market place. The top
manager need to be aware about changes in taxations imposed by UK government (Ji-fan Ren
and et. al., 2017).
Positive: The diversification and internationalisations are considered to be effective
strategies, for developing business and contributing in balancing economic condition of nation.
Negative: The negative factor could be that changes in taxation might result in decline of
profit margin
Social Factor: This factors is blend of culture, norms and values that allow any
organisation to sustain their business in target market. The Sainsbury manager, needs to plan
strategies for producing high quality goods that will satisfy society.
Positive:The positive impact on Sainsbury is there is awareness between internal
environment, about of recent trends adapted by society. Thereafter, will produce customised
product for consumers.
Negative: The negative impact is there could be chances that anti social group may
provoke customers not to use their products.
Technological Factor: As technology are changing rapidly, the managers of Sainsbury
should know about new equipment that are been launched in market.
Positive: The utilizations of new equipment will be helpful in producing quality product
for customers.
Negative: The research on new technologies will consume more time and high cost of
management of Sainsbury.
Legal Factor: This factors include current and impending laws that may affect
Sainsbury, in area such as employment, competitions and health safety in internal and external
environment.

Positive: Due to implementations of patent law by Sainsbury, will help them to create
positive image in mind set of consumers.
Negative: The regular intervention of government will have negative influence, on
operations of business activities in an organisation.
Environmental Factor: The weather conditions, climatic change, waste management
and laws related on pollutions have influence on environment. When talking about Sainsbury, if
the manager reduce waste, it will beneficial in reducing wastage of raw materials to some extent.
Positive: The positive impact of environmental factors is, it help Sainsbury firm to
produce ozone-friendly product for customers.
Negative: There could be chances that customers may not like such type of product
produced by firm.
P5 Conduct internal and external analysis of specific organisations in order to identify strengths
and weaknesses
The SWOT analysis helps a firm to identify their strength and weakness, for sustaining
their business in competitive market. There are various opportunities that are been observed by
business analyst of firm. Some of the opportunity could be increment of customer relationship
with effective sale-promotional activities in market (Linder and Williander, 2017). The internal
factors include strength and weakness, whereas external factors include opportunity and threat.
The SWOT assessment on Sainsbury are mentioned below:
Strength: Sainsbury is considered to be leading firm in retail industries. The top ranking
has become biggest strength for firm. The management were able to expand their operations in
India, China, Hungary and many other nations.
Weakness: When growing business Sainsbury have faced many failures, such as they do
not have sufficient funds for operating business activities in an organisation.
Opportunities: Sainsbury management are planning to explore their business in South
Africa, Brazil and Mexico and this is considered to be the biggest opportunity. As their
competitors are trying to capture local market.
Threat: The firm are currently facing threat on pricing of goods from their competitors
(Aldi and Lidl). It is very difficult for Sainsbury to compete with discounter firms.
SWOT analysis of BBC

Strength: BBC is being identified as the first to broadcast the new news on Television. Channel
is also been described as the first one to extend their digital channels to CBBC and Cbeebies.
Also they have a regular news update.
Weakness: It has been analysed that news displayed by them sometimes is also fake, they are
engaged in creating hypothetical scenarios.
Opportunities: Company can think of new ways to attract more consumers, they can also
increase the popularity of their channel.
Threat: They have a huge threat from their competitors, which can affect their growth and
profitability aspect.
Porters five forces model for Sainsbury:
It is an framework which help in analysing the present competition present in
marketplace. It will help in building sustainable business model for and strategies for Sainsbury
plc. Another words it provide insight to manager of Sainsbury to explore profitable opportunities
in retail industry. Here are some element of porter five force model which are explained below:
Threats to new Entrants: New entrepreneur in retail business bring innovation which
become threat to Sainsbury plc to lower their pricing policies. Company have to provide value
proposition to customers with improve quality product. Sainsbury plc have to manage all kinds
of challenges to minimize the risk factor present in marketplace.
Bargaining power of suppliers: Every company buyers their raw material from various
suppliers. In this case Sainsbury plc can develop effective supply chain with multiple suppliers to
reduce the cost of raw material. Company manager have maintain dedicated suppliers in order to
fulfil the demand of customers as well as of market.
Bargaining power of buyer: In today modern world, buyers have become more
demanding. This put pressure on Sainsbury plc to generate profit for longer period of time. Firm
to level management can make blueprint for creating larger customers base. Sainsbury marketing
team should make innovative product and should often facilitates consumers by offering
discounts to attract more and more buyers.
Threat to substitute product: Threat to substitute product is high if its vale and offering
is different from present offering in the industry. Sainsbury can focus on service to remove this
threat. Company should not be product oriented as consumers prefer high services from the
organisation.

Rivalry among the existing competitors: Sainsbury operates in a very competitive
business environment so company have to take effective measures to tackle the intense rivalry.
Sainsbury plc can set specific standard by providing quality services to their respective buyers to
minimize the competition. Company can also collaborate with the competitor to increase the
market rather than competing in small segments.
By analysing the five competitive forces Sainsbury can develop effective plan to generate
more profit and able to expand their business at larger scale in retail industry. Company can
identify the current trends of marketplace and offer product as per the requirement. With the help
of porter's five force model Sainsbury plc manager can make quality decision for company which
facilitates in generating profit for long period of time.
TASK 4
P6 Explain how strengths and weaknesses interrelate with external macro factors
Sainsbury strength and weakness are linked with macro environment. As growth of
business totally rely on these factors in cut throat competitions in market. The leaders need to
critically assess the factors which have both direct and in-direct impact on business activities in
retail industries (Linnenluecke, 2017). The relations of strength and weakness with external
factors are mentioned below:
Political Factors: As Sainsbury firm are operating business operations across globe. It is
necessary, that top management needs to include tax rates and acts of legislations in planning
strategies, for stabilizing business in target market.
Strength : Sainsbury is operating in different countries which have different tax rates,
legislations and economic condition. By following all the rules and regulations company an
make huge profit and able to capture large market share in limited time period.
Weakness: The weakness is as ruling bodies are changing, new legislations may have
negative effect on business activities.
Economic Factors: The change in inflation rates have an impact on market shares. In
regards with Sainsbury, the economical factor is prime concern for producing goods in local and
global market. It is necessary that firm stakeholder is satisfied.

Strength: The firm is aware about changing taxation policies and accordingly plan
strategies for gaining profit margins.
Weakness: Though the firm is operating in international market, still there is dependency
in UK market, for improving market shares.
Social Factors: As the trends are currently changing, UK based customer are switching
to bulk and one-stop shopping. So, Sainsbury firm have to provide their product on online
platforms.
Strength: The management will be aware about different culture in which business need
to be expanded. Accordingly, designed customised product for potential buyers.
Weakness:It is necessary that in-depth research is required for getting information , about
preference on specific product.
Technological Factors: The productions department of Sainsbury are using new
equipment for producing quality product for customers.
Strength: The firm is able to satisfy their customer offering high quality goods and
services. Also there is an increment in customer base.
Weakness: The managers of Sainsbury have to bear high cost in purchasing new
machineries within an organisation.
Legal Factors: The legal factors include laws and interference of government on supply
of raw material and production of goods in international platforms. When talking about
Sainsbury, changes in company laws, have direct impact on relationship with stakeholders and
business operations.
Strength: Recently, the firm have reduced price on fuel and offering them to customer.
These initiatives taken by manager of Sainsbury, helped them to increase customer base.
Weakness: There are chances if firm do not follow legal policies of particular nation, the
business may not grow in target market.
Environmental Factors: The Sainsbury firm, have developed strategies of reducing
carbon footprint by 50% in 2020.
Strength: The concern about environment problems have become important issue in
society. Thereafter, production department of Sainsbury are also producing paper bags instead of
plastic for grocery to save nature. This develop a positive impact on the minds of customers as
well as on society towards environment.

Weakness: The weakness might that management unable to follow some environmental
law while doing business activities. By using paper bags it may increase the cost for the
company. (Pearson, 2017).
CONCLUSION
From above report, it has been concluded that business operations are adversely affected
by external environment. Also different type of organisation structure designate roles and
responsibilities of leaders for growing business in competitive market. The interference of
government hampers the day-by-day activities in work culture of Sainsbury. The SWOT analysis
have helped Sainsbury firm to identify strength and weakness, while attaining competitive
market shares.
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