Effect of Micro and Macro Factors on Business Objectives: PESTEL Analysis

This study analyzes the effect of micro and macro factors on business objectives and decision making process by implementing PESTEL analysis. It explores the political, economic, social, technological, environmental, and legal factors that impact the business environment. The study focuses on Sainsbury, a leading supermarket chain in the UK, and discusses the implications of Brexit uncertainties, economic conditions, social trends, technological advancements, environmental concerns, and legal regulations on the company's objectives and decision making process.

Business And Business
Environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
PART A ..........................................................................................................................................3
Various types of Organisations........................................................................................................3
Scope and Size of organisation........................................................................................................5
PART B............................................................................................................................................9
Analyse the effect of micro and macro factors on objectives of business as well as decision
making process by implementing PESTEL analysis..............................................................9
Implement suitable type of SWOT analysis which have a major impact on decision making
process. ................................................................................................................................12
Explain how strengths and weaknesses interrelate with macro factors................................13
CONCLUSION..............................................................................................................................15
REFERENCES .............................................................................................................................16
2

INTRODUCTION
Business environment can be refer to as collection or sum of external and internal factors
like staff members, consumers wants and needs, demand and supply, government and clients.
Respective components has a direct impact on the purpose of organisation in direct as well as
indirect way so it is very much effective to control and coordinate respective factors by building
strategies and tactics properly. The following study is about Sainsbury which is the second
widest supermarket chain in the UK marketplace. The following report is going to cover
different types, sizes and scope of the organisation by differentiating within not for profit, non
governmental and profit organisations . Further it includes the various kinds of complexities and
structures of international, global and transnational business formations in order to gain proper
understanding regarding business and related activities. In addition to it elaborate the way
through which various functions related with mission of organization. In the part B it includes
the environmental analysis both internal and external with the help of PESTLE and SWOT and
their interrelationship with macro factors.
PART A
Various types of Organisations
 Divergence in between not for profit, non governmental as well as profit
organisations by using examples of organisations within the three different sectors
by commenting on their legal structure.
Basis of difference Profit Non profits Public sector
Definition The private sector is
driven by the revenue
and growth so that
salaries of respective
organisations can be
impressive (Wu,
The non profit sector
is separate from
oneself from both the
public and private
sectors, but it
collaborate with either
In public sector wide
range of opportunities
available that shows
the diversity of the
sector itself. Public
employment refers to
3

Buyya and
Ramamohanarao,
2019).
of them any time. the jobs which
contribute in effective
running of country at
every tier.
Example The example of
private sector
organisation is
Sainsbury in
respective assignment
For Non profits the
example is Oxfam.
Example of Public
sector is NHS.
Legal structure:
Public sector: In public sector organisations there are kinds of legal structure exist to serve
different purpose and objective that are as follows:
 Public corporations and nationalised industries: Respective sector business activities
at broad level. NHS come under respective public sector legal organisation.
 Local authority undertakings: A local authority undertakings that run as a part of
government departmental under the direction of minister.
 State services: In state services consist of the management of state wise such as defence,
education.
Private Sector and its judicial composition:
 Sole trader: It can be refer to as an individual who is the exclusive owner of the
enterprise and responsible for keeping all profits after all taxes has been paid. Sole traders
are often employed waged employees and bear all risks.
 Partnership: To overcome from the issues faced by the sole trader the business concern
may be generated. It is the union of various persons approximately in between 2 to 20
partners.
 Public limited company: Unlike private limited company, it is also a larger kind of joint
stock company. It is basically an incorporated enterprise which is run by Board of
directors instead of shareholders. Sainsbury operated under legal structure of public
limited company.
Voluntary organisation legal structure:
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The main judicial composition come under voluntary organisation are as follows:
Unincorporated organization: Respective kind of legal structure is best fit for the small groups
by membership, small goals, low income which not intend to acquire property.
A trust: Trust is build up to carry off the financial aspects in order to achieve the decided goals
and objectives. They possess the formal relation among three different individuals that are
presenter, trustees and beneficiaries. Oxfam come under legal structure of trust.
Limited structure: Respective company structure increasingly popular for voluntary
organisation, often appropriate for managing staff or large amount of funding.
Purpose of business and supply of services and goods.
The prior focus of Private organisation is to gain benefit by elaborating the needs and
demand of consumers as Sainsbury operates to earn profit by satisfying consumers needs. The
major objective of of Non profit organisation is to work for the advantage of society in which
Oxfam work for the elimination of poverty that is major problem in front of country. Public
sector units work to provide essential services to underprivileged and large section of society in
which NHS provide best health treatments to people (Stanković and Novaković, 2019) .
In context of Sainsbury by using the distribution network with wide supply chain to
acquire large number of consumers. In context of Oxfam they directly serve consumers to bring
out from the poverty. In NHS they diagnose diseases of consumers and accordingly treat them.
Scope and Size of organisation.
Divergence between medium, micro and small size as well as large enterprises.
Basis of
difference
Micro
enterprises
Small
enterprises
Medium size
enterprises
Large
enterprises
Definition A micro
enterprise usually
operates with the
less than 10
individuals and
begin their
business activity
Small enterprise
is the business
that employs a
small no. of
workers and not
have high volume
of sales. It is
The medium size
enterprise made
up of enterprises
which employ
fewer than 250
employees (Wu,
Buyya and
A large enterprise
is an enterprise
that check the at
least two
conditions that
are at least 5000
employees and
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with small
amount of money.
Example of micro
business is ice
cream parlour,
cafe in
neighbourhood.
independent
owned and
operated
company that is
limited in size
and revenue
depend on
industry.
Ramamohanarao,
2019).
annual turnover
greater than 1.5
billion euros and
balance sheet
total of more than
2 billion euros.
Purpose The major
purpose of
business activity
to lead the
livelihood by
serving limited
individuals
(Tuiskula and
et.al., 2019)
The small
enterprises
operate in small
region by using
specific products
and services.
They work for
earning profit by
giving
employment to
people and give
contribution in
economic
development.
In large enterprise
they focus on
bring innovation I
their products and
services to build
the distinctive
image in
marketplace
which helps them
to remain
competitive in
marketplace.
Market share, profit share, growth and sustainability.
Basis Sainsbury NHS Oxfam
Market share Sainsbury sales
dropped by 1.8%
due to bringing
down their market
share to 15.3%.
NHS is the world's largest
publicly funded health
service provider and
devolved in England,
Scotland, Wales and
Northern Ireland (Sebikari,
2019)
IN Context of Oxfam they
operated in various nations
such as America, Australia,
Canada, Belgium and many
more.
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Profit share In the end of
financial share in
the end of march
is 239 million
British pounds.
It still paid for out of
taxation, it has no
shareholders and not seek
profit. It by providing the
universal service and fit for
the criteria of service rather
than a business.
Oxfam's total profit
increased by the £18.6m to
£427.2m in 2017/18 which
derived majorly by
activities of trading,
fundraising and institutions.
Growth and
sustainability.
To grow and
sustain in the
marketplace they
focus on cutting
down carbon
consumption,
maximise energy
and water
efficiency and
limiting food
waste minimum
on their value
chain
(Schaltegger,
Hörisch and
Freeman, 2019)
In context of NHS they are
accountable for the 6.3% of
the England's total carbon
emission and 5% of the
total air pollution that
enhance rate of
sustainability in market.
The accepted definition of
the sustainable
development in form of
achieving economic
growth, environment
protection and social
progress. With the help of
their GB's programme
which seeks in attaining
sustainable development for
people who living in
poverty.
Various kinds of structures linked with scope and size of operations.
Private organisation:
Size
Scope: The scope of Sainsbury is to reach at large no. of consumers by entering into the new
market to sell the products and services. They already have the large market share in the UK and
outside the market. So respective organisation is very much potential for economy as it
contributes a lot in employment.
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Public organisation:
Size: It is one of most important healthcare service provider in context of medical and best
treatments to consumers.
Scope: The scope of National healthcare services is to provide facilities like screening,
treatment, antenatal screening and many more to around 64.6 million people in the UK market
and 54.3 million people in England. (Rofiq and Pramono, 2019)
Voluntary organisation:
size: Oxfam operations are not that much large because they offer facilities to individuals in
order to reduce poverty, providing relief from disaster as well as advocacy for gaining
competitive advantage in overall market area.
Scope:
The major scope of Oxfam that they want to give the services in the market of foreign
and try to provide services to individuals who are experiencing some kind of injustice. It raises
voice for people suffer from the poverty and affect on their process of making decisions.
Complexities of international, global as well as transnational organisation structures.
With the help of transnational organisational structure, management organize business
with different dimensions like such as geography, functional and product levels. The major
complecity behind using respective structure is complexity that likely to interfere with efforts in
achieving integration and coordination at various tier (McDonald and Eisenhardt, 2019)s.
Organisations find difficulty in balancing needs of differ functional, geographical and product
stakeholders.
In international structure which take care of international operations of business that
deliver the works and responsibilities in proper manner. In that regards the major complexity is
that it requires separate manager locally for managing international counterparts and global
allocation of resources turned to be difficult affair.
Global organisational structure can be define as global operations that are primarily
organized based on product orientation, function and which bring complexity in operating the
works and activities in proper manner. So the major challenge is to manage the multiple kind of
product lines as marketing and production departments are not properly integrated.
Determine how functions are linked with mission of overall organisation and objectives
commenting on interrelationship in various departments.
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For an organisation it is very much potential to maintain the relationship with other
department in order to gain effective results. In context of Sainsbury there are various functions
to carry out the work in proper manner that collaboratively work in attaining business-objectives
and goals that are as follows
Human resource and Marketing:
Both the functional areas work in collaborative manner for acquiring the objectives and
goals of organisation (Quinlan and et.al., 2019). Marketing department plays very crucial role in
acknowledging the requirements of consumers and build products accordingly. As per the
requirement of human resource in marketplace they provide information to HR department and
they select potential candidates within the organisation. By choosing one of most potential
candidates that enables in achieving business goals and objectives in Sainsbury.
Marketing and finance:
Marketing and finance department have the close relationship with one another to attain
the goals and objectives of organisation. In relation with marketing department which provides
relevant information to finance department regarding the financial source best suited for
organisation and benefits occurs by using it (Popescu and Popescu, 2019). Finance department
on other hand give adequate funds as per the financial condition of organisation to market the
services and products for remain in the competition in market area. The roles and functions of
both the departments enables in achieving the desirable outcomes positively.
So it can be said that all the departments work together by intercourse responsibility and
roles with each other in order to gain desirable outcomes.
PART B
Analyse the effect of micro and macro factors on objectives of business as well as decision
making process by implementing PESTEL analysis.
The External business environment consist of the broader forces which not only affect on
the business activities but also on the micro environment (McDonald and Eisenhardt, 2019). So it
is very much potential for business to evaluate respective factors by using the framework that is
PESTLE analysis that are as follows:
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Political factor: Here are the some political factors which directly influence on the business
activities of Sainsbury that are as follows:
Brexit uncertainties: In the year 2016, UK marketplace voted in favour to leave the EU that
hinders or affect seriously the consequences of the Sainsbury and other English super market
chains. Due to leaving the EU which make inconvenient for supermarkets in affording the import
product from the international market. As in enhance in price of foreign products to passed up to
the end consumers that bring Sainbury in difficult situation to push hard in order to ensuring that
they can be continue spending for maximising profitability positively. So it is very much
important for respective organisation to evaluate the effects on business activities to take actions
promptly.
 Advantage: Due to brexit the cost of staples such as dairy and meat that rises the cost of
products that squeezed consumers disposable income growth that tend to do better,
because people stop eating out and eating in.
 Disadvantage: The major disadvantage from the Brexit on profitability of organisation
that it is very difficult for them to sell products at less price as it slow down disposable
income of consumers.
Economic factor: Such factors comprises of the interest rates, inflation as well as employment
rate that affect directly on the business works and activities in both positive and negative manner
(Marijs and Hulleman, 2019). In context of Sainsbury the economic factors which directly
affect on their business are as follows:
Rising fuel cost: In earlier years, fuel prices rises gradually in the market and eliminating the
offerings of fossil fuels. Ultimately, high prices of fuel appear situation to making it expensive
for transporting goods and services around the whole nation. Respective factors directly
influence on supplying products and services in effective price range to consumers.
Fierce competition: Sainsbury encounter the fierce competition in the marketplace, as in UK
there are no. of supermarket chains operated which includes Tesco, Morisons, Waitrose and Lidl.
With there are no. of independent corner stones that provide specialist food as per consumers
demand that work as an major threat for them.
 Advantage: Due to change in economic conditions in the UK marketplace they can be
able to take proper steps by using the proactive approach for remaining competitive in
overall market area (Hofmann, 2019).
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 Disadvantage: Due to decrease in disposable income of consumers, it directly affect on
the pricing of products and services negatively.
Social factor: In social factors consist of the change in the taste and preferences of the
consumers, in context of Sainsbury People of the 21st century shows the trends towards the
healthy eating so it bound organisation to adopt respective changes in order to remain
competitive in marketplace positively.
 Advantage: With the innovation in the products and services of organisation they can be
able to gain sustainability in marketplace and helps in gaining competitive edge.
 Disadvantage: change in consumers taste and preferences that simultaneously bring
changes in organisational proceedings that carry out rigidity of employees.
Technological factor: In technological factors consist of the change in technology by using the
advance kind of tools to enhance consumers experiences positively (Heirati and Siahtiri, 2019).
In context of Sainsbury technological advancements in analytics such as usage of artificial
intelligence and Big data helps to organisations all around the globe in order to gain some
knowledge about their operations and proceedings in positive manner. In that regards
Supermarkets such as Sainsbury advancements in analytics proved beneficial in gaining highly
developed framewoks that determines about how much a procut is expected to sell which helps
in estimating the side of both demand and supply of products and services.
Online shopping: In UK marketplace, Sainsbury offers their consumers the online shopping
options as customers want to order the groceries comfortably from their home. So the arrival of e
commerce along with its utilization in industries that deal with food in early years.
 Advantage: Respective factors helps in gaining the competitive edge in the marketplace
as preference to consumers proved very much beneficial for organisation.
 Disadvantage: Change in technology and adopting respective technology required lots of
time and investment.
Legal factor: Such factors are comprise of regulations, legislations and laws that immediately
impact on the organisational works and capabilities (Hassanien and Dale, 2019). The legal
regulations related with the money laundering, consumer protection ,health as well as safety
regimes and many more. Due to modifications in preferences and changes of customers rules
imposed like salt, high fat and sugar food or drinks that determines individual interest.
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 Advantage: The application of the new rules and regulations on food leads towards the
gaining higher profitability and sustainability in market.
 Disadvantage: The law imposed by the UK government that is reduction in content in
sugar drinks by 20% in 2020 adversely impact on their profitability.
Environmental factor: In environmental factors consist of the awareness towards the saving the
environment and carbon footprints in order to remain competitive in marketplace. Here are the
some factors:
Carbon footprints: Chains in supermarkets are accountable for the large footprints of carbon,
whether it is exporting services and products from one side of the country to another side. As the
environmental concern is on mount, organisations all across the globe are supposed to reduce
the carbon footprints for gaining competitive advantage in market area (Hair Jr, Page and
Brunsveld, 2019). They by identify the new ways to become the more environment friendly to
manage the ecological changes due to their operations.
 Advantage: The positive effects of various environmental factors on activities of
enterprise that companies can be able to provide one of the best products and services to
the consumer that other competitor can not hence it gives competitive advantage.
 Disadvantage: While an organisation not follow the environmental laws and regulations
then government impose the fine and penalty that directly impact on organisational
goodwill and brand value adversely.
Implement suitable type of SWOT analysis which have a major impact on decision making
process.
Internal analysis is the exploration of the organisational competency, cost position and
competitive viability in the marketplace in order to gain desirable outcomes. In context of
Sainsbury which is the second largest supermarket chain in UK marketplace needed to evaluate
the internal strength and capabilities in order to remain competitive.
Strength
 Right expansion moves: Sainsbury
which from the small grocery store that
deals at a limited extent expanded to
the convenience store and become the
Opportunities
 The most important growth opportunity
for Sainsbury that gone are days when
people from rural area not uses branded
products and services. In today's
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supermarket chain which shows the
right kind of their expansion moves that
no one can copy easily.
 Philosophy of business: The major
philosophy of business is to help
consumers to live well at less (Gregory,
Ngo and Karavdic, 2019) They rely on
the sustaining the low cost strategy
across the product ranges.
scenario people prefer to purchase
branded products. So it is very much
potential for them to enlarge business
opportunities in positive manner by
elaborating their needs and wants
(Grenčíková, Kordoš and Sokol,
2019)
Weaknesses
 The major weakness of respective
organisation like the other retail brands
Sainsbury also encounter various kinds
of risk from brand switching. Instead of
using the string loyalty programs and
promotions they not able to retain their
consumers in positive manner.
 The another major weakness of firm is
due to the high competition in market
and added risk of online retailers they
not able to attract the large no. of
consumer base and trying to cut down
cost.
Threats
 The major threat in front of
organisations that dealing is fierce
competition in the marketplace.
Respective factors is very detrimental
in the progress of organisation in order
to remain competitive in marketplace.
So with the help of proper planning and
coordinating with the team proved
beneficial for them.
It has been analyzed that by evaluating the internal business environment organisation can be
able to take effective decisions in regards of strategies, recruitment of employees and many
more. To collect important outcomes it is needed to analyze the internal environment of
Sainsbury competitors that is Tesco.
Strength:
The major strength of respective organisation
that it is one of the biggest retailer in the whole
world in context of sales and revenue in
Weakness:
Although Tesco is the market leader but use
always low cost strategy that hinders their
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compared to other retailer chain in Britain.
The another important aspect that it
continuously grow its stores in number of
locations to enhance market base.
profitability and sustainability into the market.
Opportunities
Respective organisation have the
opportunity to expand in the emerging market
and records its presence in the online market to
remain competitive in marketplace.
Threats:
The major threat in front of respective
organisation that Tesco surround from the
fierce competition such as Walmart, Aldi and
many more that hinders their profitability and
sustainability.
In that regards evaluated that internal analysis is very much important and by comparing with the
competitors organization can be develop strategies accordingly.
Explain how strengths and weaknesses interrelate with macro factors.
In an organisation there is a close relationship in the Micro and macro factors of the
organisation that needed to be understand in proper manner to build strategies and tactics in
proper manner that are as follows:
Political Factors
 Strengths: The major strength of organisation
by political factor that it enhances profitability
in market as they use proactive approach
(Chaffey, Hemphill and Edmundson-Bird,
2019)
 Weaknesses- with the advent of Brexit,
which lower down the price of products and
services, in that case Sainbury by buying
products in bulk helps them to sell products in
lower price.
Economic Factors
 Strengths- Change in price of fuel and rise in
competition helps to organisation to build new
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kind of strategies and tactics that helps to
remain competitive in marketplace.
 Weaknesses- While they face rise in fuel
pricing and fierce competition which directly
influence on their profitability and
sustainability (Gaganis, Pasiouras and
Voulgari, 2019)
Social factors Strengths: The major advantage of change in taste
and preferences of consumers that organisation
always remain competitive in positive manner.
Weaknesses: The major weakness that while an
organisation put one of their best efforts in adopting
changes, in context of Sainsbury while they put
efforts in managing changes they diverted from their
core activities.
Technological factors Strength: Adaptation of advance kinds of tools and
techniques helps to Sainsbury in raising the standard
of living of people and gaining superfast delivery of
products (Aydiner and et.al., 2019)
Weaknesses: By adaptation of advance level fo
technological advancement organisation faces high
risk regarding the protection of consumers
information.
Legal factors Strength: Various kinds of regulations and laws such
as health and safety regimes helps to create the
positive work environment in which every one can
give one of their best efforts in organisational
development and enhancement positively.
Weaknesses: when an organisation not follow the
obligations and regulations it negatively affect on
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their performance and goodwill that is very much
valuable assets for an organisation.
Environmental factors Strength: By using the eco friendly ways of
producing products and services helps to organisation
in lower down their cost of production in a limited
time period that builds consumer loyalty positively
(Ansoff and et.al., 2019)
Weaknesses: Environmental regulations impact
adversely and pressure on the using various business
practices. So it is very important to evaluate
respective factors in order to build strategies and
tactics in proper manner.
So it is very much important for an organisation to measure or evaluate the important
attributes in order to remain competitive in marketplace.
CONCLUSION
From the above report it has been concluded that in the business world there are no. of
organisation exist with different size, scope and legal structure to serve the consumers needs and
demand in positive manner. It is significant to analyse the business scenario and factors which
directly and indirectly affect on their business goals and objectives .Business environment plays
very much important role to operate business and related activities in very smooth manner. With
the help of internal and external business environment organisation can be able to build strategies
and tactics in order to remain competitive in marketplace.
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