Business and the Business Environment

This document provides an overview of different types and purposes of organizations, analyzes the chosen organization (Iceland Foods Ltd.), discusses the legal structure for types of organizations, and explores the complexities of analyzing one organization with other types of businesses. It also examines the macro environmental factors that influence the organization and conducts a PESTEL analysis. Additionally, it discusses the interrelationship among different functions within the organization using an organizational chart and highlights the complexities in the supermarket chain industry.

BUSINESS AND THE
BUSINESS ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
SECTION 1.....................................................................................................................................3
Overview of different types and purposes of organizations........................................................3
Analysis of each of the chosen organizations..............................................................................4
Legal structure for types of organizations...................................................................................4
Complexities analyses of one organization with other types of businesses, functions
interrelatedness using organizational chat and how they relate to structure................................5
SECTION 2.....................................................................................................................................7
Macro environmental factors influence on organisation.............................................................7
SWOT Analysis.........................................................................................................................10
Weaknesses and strengths interrelate with factors of macro environment................................11
Key findings of internal and external analysis..........................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment refers to a collection of people, organization and other forces
which may or may not be under the control of the organization. It is the aggregate of all the
internal as well as external factors that affect the functioning of the company. Organization has a
structure and its graphical representation is called organizational chart which conveys the details
of roles, responsibilities and relationship between individuals within the organization (Ji-fan Ren
and et.al., 2017). Iceland's foods Ltd is a British Supermarket chain and has its headquarters in
Deeside, Wales, United Kingdom. They mainly deal in frozen food groceries including meals
and vegetables and other grocery items. In the further report the following points will be
discussed: different types, sizes and scope of organization. Interrelationship between various
functions within the organization and their link to organizational structure. Positive and negative
impact of macro environment on business operations. Light will be put on internal strength and
weakness of specific businesses and their interrelationship with external macro factors.
SECTION 1
Overview of different types and purposes of organizations
There are different types of businesses in the market which are public, private and
voluntary. They have different purpose in the market which is very clear, and they must focus
upon them so that they will be able to achieve the objectives and goals. Public organizations for
example, Sainsbury’s belong to this type, and they have large market share, and they require a lot
of resources to be able to operate in the market easily. The purpose is to provide the best of
services to the customers and services as well so that the satisfaction level increases and resulting
in higher market share. Private organizations such as Iceland Food Ltd. which use hi-fi
technology in their daily businesses operations so that there is going to be better functioning and
the business will be able to gain high profit margins which is going to be very good for the
organization. The shares of this type of organization have limited shareholders who gain from
these businesses which is a very good factor. Voluntary organizations such as British heart
foundation works for the benefit of the society and not for profits. The aim of the organization is
to get in charity and donations from people and use it for the welfare purpose solely.

Analysis of each of the chosen organizations
Iceland Food Ltd. is belongs from the retailing industry which is having limited
stakeholders but not more than 250 stakeholders can be there in a private organization. In a
public organization there can be more than 250 stakeholders which means the profit is going to
be distributed amongst all the stakeholders equally or according to the percentage of stake they
are holding in the organization. Sainsbury’s has a lot of stakeholders which is why the company
does not have enough investment for the expansion since the profits are being distributed and for
global recognition there have to be investment which have to be made.
Legal structure for types of organizations
It is the upper management which is responsible for all the legal and ethical factors of the
working environment. The contract law is in the hands of the upper management, and they can
mould it according to the management as to however they wish it to be (Fleming, Lynch and
Kelliher, 2016). Be it private, public or voluntary this contract is going to reduce the conflicts in
the organization and retention of the employees is going to be present. Well on the other hand,
Employment laws are got the organization to have a good environment to work within and the
productivity of the company is also going to improve. There have to be equality acts, partnership
acts, etc which have to be worked upon and followed by the organization and daily operations
are planned around them so that there is going to be better performance of these businesses in the
market. Employment law
This is a daily operating act which is for all sectors (private, public or voluntary) which
companies must follow. This is a law which is passed by the government of UK so that all the
organizations follow them and there is going to be panellizing by the local government if not
followed.
 Partnership act 1890
When there are two or more people wanting to start a venture they have to legally register
themselves in UK. There are a lot of conflicts and further separations are going to be easier and
not a lot of legalizations which have to be done.
Size and Scope
 Micro

There are not more than 10 workers in this business and the turnover of this business is going to
be not more than £2 million every year. These businesses are contributing to a lot of employment
in the organization.
 Small
There is a minimum of 50 employees who work in this business, and they have a turnover of
£10million each year. The local government is also supporting these businesses in UK which is a
great advantage which these businesses have in the country.
 Medium
There is a minimum of 250 employees working in these organizations and the turnover is going
to be £50 million each year (Saura, Palos-Sanchez and Correia, 2019). The growth of economy
of UK is greatly being affected from this factor.
 Large
There are more than 250 employees at least working in this type of organization and the turnover
must be more than £50 million each year. The economic system is very must dependent on this
factor and employment is the highest in these organizations.
Complexities analyses of one organization with other types of businesses, functions
interrelatedness using organizational chat and how they relate to structure.
Interrelationship among functions.
 Finance and Marketing – In the traditional context, there have been adversarial tug of
war between finance and marketing as on one side marketing wants to spend money to
promote and on the other hand finance who wants to save money (Azudin and Mansor,
2018). But in the contemporary organization like Iceland foods Ltd which posses the
shared vision for the business and both work together to make sure resources are spent in
monitored way by making cross-departmental communication a priority both can explain
their counterparts. Marketing department should give return on marketing investment to
finance department.
 Production and Finance – Both the functions are integral part of the organization as
production department ensures that there is finished stock available every time to meet
the needs and demands of the customers and finance department ensures that there is
adequate money resources available all the time. Iceland's foods Ltd, both functions are

dependent on each other because production of good requires raw material, machinery,
labour and all these require monetary expenditure. And finance department needs funds
to allocate in different departments and funds comes if company does good amount of
sales and there are enough funds at company's disposal.
 Finance and Human resource – Both functions are perceived as opposite ends of the
organization as HR values people as their asset while finance values assets that are easily
quantified. Iceland's food Ltd as HR is responsible to hire competent employees that
drive business performance and create value for the organization and the effort of HR
should be reduced turnover which ultimately benefits the finance department as it will
have more money to grow business. And same is the case with finance department, for
hiring new candidates and providing them training requires money and it will be provided
by finance department.
 Human resource and Production – Both the functions are somewhat interrelated as in
Iceland food Ltd production department needs human resource for production of goods
and handling all the logistics. Production department's function is to organize work which
requires designing jobs, establish job standards and performance measurement and all
this requires human resource. The same is the case with human resource department,
without production of goods or handling the logistics there is no need for human resource
in the company.
Organizational Chart
Organizational chat shows the structure of the organization, relationship between each
individual and their reporting relationship. Iceland foods Ltd divides their organization structure
based on the functions and make separate departments like finance, marketing, human resource
and production and each department is head by the respective manager and under them there are
few supervisors (Gabryelczyk and Roztocki, 2018).

Complexities in supermarket chain industry.
The supermarket chain industry faces some complexities like :
 Quality management: As Iceland foods Ltd is based on food products and grocery items
the major complexity is storage and maintenance of the food products as they are
perishable and need to be managed effectively.
 Maintaining hygiene: As food products need extra hygiene and need to be stored at a
clean place therefore this is a complexity that Iceland foods ltd supermarket chain has to
face. Lack of hygiene will decrease customers satisfaction and will lead to low sales.
 Supply chain management: As Iceland is a food chain, and they deal in perishable
products therefore their supply chain should be smaller so that the products do not get
stale.
SECTION 2
Macro environmental factors influence on organisation
Currently there are lots of factors exits within the Iceland foods’ macro business
environment which can affect its daily business operations in both terms, negatively and
positively. In this situation, the management of company have to conduct the PESTLE analysis
for systematically identifying different key external factors of the business environment (Ali,
Miah and Khan, 2017). Analysis of macro environmental factors is very necessary task to

Iceland Foods company to make appropriate strategies to proper deal with the impact of these
factors. The PESTLE analytical tool has used here to identifying different key macro factors of
Iceland foods company.
PESTEL Analysis
Currently PESTEL analytical tool is used by different companies and venture within the
market for analysing their various macro environmental factors. This is very appropriate tool,
because this PESTEL term indicates six key macro environmental factors, called; political,
social, environmental, technological, economic and legal which has been described below;
Political factors: These political factors highly affect to different Iceland foods ltd. There are op-
level management of a company has always required to fulfil different obligations relating to
governmental policies. Suppose, the company responsible to fulfil the obligation of taxation
within the United Kingdom. The positive impact of legal factors on this company is that, existing
government plays an excellent role in maintaining an ethicalness within country’s business
environment (Abbas and et.al., 2019). On the other side, the negative impact of these factors is
that, existing government of the UK has imposed very higher rates of taxation, so it is very tough
to Iceland foods to pay a huge fund in taxation.
Economic Factors: This company has highly affected by these economic factors as well. There
is positive impact of the UK’s economic factors is that, this country has well-developed
economic conditions. In this situation, company can simply influence to people or customers to
buy its different range of products and services, because they also have very higher living
standard due to country’s effective economic condition. The negative impact of these factors is
that, economic factors of the UK promotes high competition in the market place. There are
competitors also tries to take lots of advantages through well-developed economic conditions,
and that’s why this economic factor puts negative impact on Iceland foods.
Social Factors: Existing social factors of the UK can affect very positively to this company,
because most people within this country are fully literate, so they value those companies which
provides products and services with excellent quality. There is positive impact of these factors is
that, most people in the UK believes in purchasing quality products and services, so that
company can gain huge profit margins by this factor, because company already has provided
quality products. Social factors put negative impact on company as well (Meyer, D. F., Meyer
and Neethling, 2016). For example; people mostly like to purchase products and services from

those company which provides huge fund in CSR (corporate social responsibility), and currently
Iceland foods is not able to give huge fund in CSR, so that this factor will negatively affect to
Iceland foods ltd.
Technological Factors: Technological factors of the UK always gives opportunity to company
for boosting its existing performance and productivity within market place. These factors also
affect this company in both ways negatively and positively. There is positive impact of these
factors is that, by implement different new and modern technologies within own workplace, this
business can simply improve its performance. On the other side the negative impact of these
factors is that, implementing hi-fi technologies within own workplace increases the expenses of
Iceland foods.
Environment Factors: Environment factors also highly affects to Iceland Foods company in the
market place. Currently top-level management within this food retail company have to avoid
those all activities within its workplace which can impact natural environment in negative way.
The positive influence of these factors on company is that, by considering different
environmental protection rules and regulation, the company can simply work in the welfare of
natural environment. Negative impact of these factors is that, currently natural resources are
continuously decreasing, in which this factor influence to company for paying huge fund to
different suppliers for taking raw-material from them to make different food products.
Legal Factors: Legal factors mainly influence to company following different laws and
regulations of that country where it serves (Ayatse, Kwahar and Iyortsuun, 2017). Currently the
UK is key market place of Iceland foods company, in which existing management of this
company is fully responsible to adhere the UK’s business law. Positive impact of these factors is
that, with the support of UK’s legal environment, this company can simply run its business
operations in ethical manner. On the other side, understanding all laws, regulations and standard
is very complicated task to Iceland foods, so that this is negative impact of legal factors.
Evaluation
These all are factors of Iceland foods’ macro business environment. Top-level
management of this company have to make some productive strategies to deal with the
influences of these factors. Currently these all factors are influencing company in negative and
positive both manners, so that existing management should handle impacts of macro
environment factors in productive way.

Strengths and weaknesses of company
There are analysis of strengths and weaknesses is very necessary task to this company. In
this situation, top-level management at Iceland foods can adopt SWOT analysis tool for
identifying and analysing its various strengths and weaknesses. After analysing own strengths
and weaknesses, company can simply make appropriate business strategies.
SWOT Analysis
SWOT analysis tool is very beneficial in the terms of gaining analysing various micro
environmental factors of the company (Gupta, 2016). Basically, this SWOT term indicates four
major internal factors of Iceland foods ltd. called; strengths, weaknesses, threats and
opportunities. That’s why this analytical tool is very productive to company. These four key
factors of tool have been discussed below;
Strength: Currently Iceland foods company has wide range of food products and services which
attracts lots of customers within market place. The company is fully able to provide quality
products to customers as well, so that this factor of company contributes increasing its brand
value in market place. Nowadays, it has workforce of many effective and talented employees
who helps to Iceland foods ltd. to maintain the quality standards of its various food products.
Weakness: Iceland foods ltd. has very business expansion strategies, and that’s why from
establishment to date, this company has expanded its business operations only in few countries,
like; Ireland, Netherlands etc. So that, existing managements should focus on more expanding its
business operations widely in the international market.
Opportunities: Nowadays, this venture has lots of opportunities within market place which can
support to company for gaining huge success in market place. For example; it has an opportunity
to attract lots of new customers by using digital marketing strategy, because this strategy is
highly trending in market place (Kazimieras Zavadskas, Antucheviciene and Chatterjee, 2019).
On the other side, Iceland foods ltd. has an opportunity to boost its performance by using
different modern and digital technologies within its workplace.
Threat: Currently there are precious natural resources continuously decreasing because of high
population, in which this is very big threat to Iceland foods ltd. because its various food products
developed through only various natural resources. There is huge market competition is also key
threat to this company.
Justification

These all are major strengths, weaknesses, threats and opportunities of company. In this
situation, these all internal factors influence to the management’s decision-making to take
decisions towards systematically deal with the impacts of these factors.
Weaknesses and strengths interrelate with factors of macro environment.
On the basis of SWOT analysis tool, the business has los of strengths and weaknesses. In
this situation, these all weaknesses and strengths of company fully interrelates with different
macro environmental factors of company.
There are company has strength of producing various quality products and services, in
which this strength interrelates with social factors of the macro environment, because currently
most people in the UK very like to consume quality products (Paschek, Ivascu and Draghici,
2018). On the other side, currently company has lots of effective and talented employees, so that
this strength interrelates with legal factors, because Iceland foods fully adhere employment law
within its workplace, so that this law influence to employees for maintaining their effectiveness
in the workplace.
Iceland foods ltd has weakness that, it not has effective business expansion strategies, in
which this factor interrelates with political factors of macro business environment, because
government of the United Kingdom highly supports to those businesses which wants to expand
their business operations in other country. In this situation, top-level management of company
have to take lots of advantages through its governmental policies of business expansion to widely
expand its business operations in different new countries.
Key findings of internal and external analysis
Factors which has involved in the company’s internal and external business environment
are highly affecting to this company (Barbosa, de Oliveira and Santos, 2018). These factors have
provided different growth opportunities to company. For example; technological factors
contribute in achieving company’s objectives on time. On the other side, these factors affect to
company negatively as well.
CONCLUSION
It can be concluded that organization has different types like public, private, voluntary
organization and have legal structures that includes employment law, partnership Act etc, and

also have different sizes like micro, small, medium, large. They have purposes for their
establishment. As Iceland foods Ltd is also a supermarket and has functional structure and comes
under private organization. They have the following functions like finance, marketing, human
resource, production etc. and they have interrelationship between them which helps in achieving
organizational goals. The organization has to face certain complexities like quality management,
maintaining hygiene, and to adopt effective supply chain management. Their operations is
impacted both negativity and positively by macro environment which include PESTLE. The
company has both strength and weakness for that they perform SWOT analysis and identify the
interrelationship with factors of macro environment.

REFERENCES
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