Business and Business Environment Report

This report examines the business environment and its impact on Associated British Foods Plc, a leading multinational food processing and retailing company. It analyzes different types and purposes of organizations, the interrelationship of organizational functions, and the positive and negative impacts of the macro environment on business operations. The report also includes a SWOT analysis of the company, highlighting its strengths, weaknesses, opportunities, and threats.

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types and purposes of organisations..................................................................1
P2 Size and Scope of various types of organisations ............................................................3
TASK 2 .....................................................................................................................................6
P3 Inter-Relationship among different organisational functions............................................6
TASK 3............................................................................................................................................7
P4 Positive and negative impacts the macro environment has upon business operations,
supported by specific examples..............................................................................................7
TASK 4..........................................................................................................................................10
P5 External and internal analysis of firm to identify its strengths and weakness................10
P6 Interrelation of strengths and weakness of macro environment elements on a company11
CONCLUSION..............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Business Environment can be defined as a combination of all kinds of internal and
external factors which create a great impact on functions of enterprises i.e. employees,
management, rules and regulations, supply and demand etc. The factors which affect
performances are included suppliers, government, social, technological, economical changes and
more among which some are controllable while others beyond controlled of management. Thus,
it is necessary for organisations to analyse effect of these elements through which business can
run in a proper way (Yu and Ramanathan, 2013). For this manner, an project has been prepared
on business and business environment which entails different types of organisations based on
their scope, size and legal structure. In addition to this, interrelationship of various departments
is also discussed as well as positive and negative impact of macro environment with strengths
and weaknesses. In this regard Associated British Foods Plc has been taken which deals in
private sector organisation of UK.
TASK 1
P1 Different types and purposes of organisations
In a competitive marketplace, there are various kinds of enterprises run with different
scope and objectives. These companies are generally divided on different basis like size, scope,
turnover, number of employees and more (Wack, 2017). In context with UK, these organisations
are basically distributed in three main sectors on the basis of their purpose i.e. For Profit, Not-
for-profit (NPO) and Non-Government Organisation. These companies can be differentiated as:-
Basis of
Comparison
NGO NPO For Profit
Meaning NGO can be stated as
charitable companies
which provide basic
amenities to people of a
nation on low cost so that
they can earn livelihood
in a proper manner.
In this era, companies
are used to provide
commodities to people
for improving condition
of them. They focus
more on raising
standardisation instead
Under this sector, firms are
operated their business
with main is to serve goods
and services as per
requirement of targeted
customers so that higher
return on investment can
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of earning profitability. be gained.
Area of
Operations
Companies under NGO
used to operate business
on large sectors.
Firms in this sector
preform business
operations in targeted
area only (López-
Gamero, Molina-Azorín
and Claver-Cortés,
2011).
Depends on size and scope
of business, organisations
in this sector conduct
operations in either limited
or large area.
Objectives The major objective of
NGO's is to make people
independent and able to
earn in a desired manner.
Promotion of scientific
disciplines, art and
commercialisation are
main aim of this sector.
Completing every demand
of customers and gain
satisfactions as well as
retention of them with
longer period is main
objective of private
organisations.
In addition to above, companies in nations are also distributed in three main areas that are Public,
Private and Voluntary. Functions and legal structure of such firms can be described as: -
Public Sector: In this era, companies are organised, controlled and operated by
governmental bodies. These firms are operated on large level therefore, gives various kinds of
employment to people of own country. Improving infrastructure like roads, transportation and
telecommunication as well as increasing economic condition of a country are some major scope
of these enterprise. BBC Company of UK is a public association which operate business in many
countries.
Private Sector: It includes various companies which operated business on common
objective i.e. to generate more and more income (Business environment. 2018). They provide
various types of services to people as per demand of them. In this context, British Foods Plc is
considered as a good example which is the second largest producer of important ingredients like
sugar, yeast, emulsifiers and more.
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Voluntary Sector: This kind of organisation is framed with thoughtful process i.e. to
provide services for mankind. They worked for providing welfare to societies with main
intention is to improve their conditions and cope up them from problems. OXFAM is taken as
best company under this sector. It is UK based firm which support youngsters in framing a good
nation.
Legal Structure of the Sector
Private Sector: In terms of legal structure, private firms are defined on the basis of ownership
like sole traders and partnerships which can be explained as: - Sole Proprietorship: Under this sort of area, unincorporated business is organised and
controlled by single owners (Li and et. al., 2011). Therefore, as a sole proprietor
individual has to bear up entire profit or loss. Partnership: In this sector, two or more individuals are used to sign a bond as co-
proprietors. All partners are needed to agree on sharing equal profitability or loss in a
proper manner as well as take part in every type of decision making process.
Public Sector: Legal structure of public bodies can be depicted as: -
State government: It is one of an effective discrete enterprise whose main function is to
submit all arrangements authorised by legislature of a country.
Local government: Under this structure, firms are mostly look out for completing
essential needs of people by providing them necessary items on affordable costs. For example:
BBC Company of UK used to provide impartial information and news, factual programming,
current affairs and more in order to create awareness among people about issues of nation and
engage them as well. Purpose of this company used to set out by Royal Character and
Agreement.
P2 Size and Scope of various types of organisations
Now a day, business environment of a country gives various opportunities for
entrepreneurs who want to open outlets with different purposes. It provides them chance to
launch their businesses and expand in other nations as well (Kaufmann, Kraay and Mastruzzi,
2011). They have different scope and size which can be classified as micro, small, medium and
large on the basis of number of employees and contribution in increasing economy of a country.
Size and scope of such kind of enterprises can be described as beneath:
Basis Size Scope Objectives
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Micro Scale In this sector,
enterprises are
generally conduct
business to survive
(Kian Chong, Shafaghi
and Leing Tan, 2011).
It includes small
departmental stores,
shops and more. These
firms have less
number of employees
due to low capital
investment.
As these enterprises
are earn money for
living own life in
better manner
therefore, they do not
contribute much in
increasing economical
rate of nation. The
scope of micro
enterprises covers a
wide range of
activities with less
sophisticated
technology.
Micro level of
companies concern
more on executing
business activities on
daily basis so as to
gain enough capital to
get financially secured.
Small Scale Under this sector,
firms are deals in
different sectors and
always try to complete
demand of
marketplace in a
profitable manner.
Mostly these
companies have near
about 50 employees at
workplace. It includes
companies like A1
Communication,
Talent Plus and more.
Since thousands of
companies in UK are
working on small scale
therefore, they
occupied a large share
in increasing economy
of country. The scope
of small firms entails
with many activities
like manufacturing,
service, retail, whole-
sale business and
more.
Deliver services as per
demand of customers
in effective manner.
Medium Scale Associations working Putting efforts on Increase market area
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on medium scale are
used to serve products
or services in domestic
area and focus more
on moving business in
international market
area. They have less
than 100 but sufficient
number of staff at
workplace. Mr John
Watches, Austin
Fraser etc. are come in
this category.
taking business at
international level,
help in gaining more
profitability which
directly enhance
economy of a country
(Gilboy, 2016). the
main scope of medium
sectors is to acquire
more funds so that
many branches can be
opened.
and enhance customer
base by launching
business on other
locations as well.
Large Scale As it name suggest,
firms in this sector are
conduct business on
big platform having
thousands of
employees at
workplace. They
always focus to gain
competitive advantage
as well as earn a better
position at
marketplace
(Gharajedaghi, 2011).
TESCO, Associated
British Foods Plc,
Sainsbury are some
largest companies of
UK which run
In this sector, firms are
generating higher
income and
profitability, so they
contributed a lot in
developing economical
condition of country.
The main scope of
large enterprise is to
sustain activities of
business.
To provide a wide
range of products or
services and establish
a high competitive
advantage.
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business in many
countries.
Size and scope of Associated British Food Plc: It is a multinational food processing and
retailing company which is situated in London. It has around 345 stores in many countries with
over 13,900 thousand sq.ft. In terms with employees, it has near about 132, 590 with turnover of
15,357 million Euros. So, it support nation in increasing GDP. In addition to this, it works under
54% partnership business with Wittington Investment Limited Company.
TASK 2
P3 Inter-Relationship among different organisational functions
Structure and operation of an organisation:
A structure of an organisation shows how activities and operations of business can be
carried out. It includes utilisation and allocation of resources, assign tasks to employees,
coordination of workers with management and more. All are these things aid a company in
accomplishment of its targeted goals and objectives in given time. Along with this, structure of
enterprises reflects the process in which operational activities are carried out by various
departments. In this regard, it is necessary for make coordination among all departments in a
proper manner whose functions are somehow interrelated with each other.
In order to gain profitability and run business in a proper manner, a company needs to
handle entire functions appropriately. A firm has various divisions like human resource
management, marketing, financial, IT departments and more. All have different roles and
responsibilities but worked on common aim i.e. to achieve success of organisation in a
predetermined period of time (Crane and Matten, 2016). In context with Associated British Food
Plc which is the second largest company of UK required to generate objectives so that it can gain
productivity in a higher manner. The major functions of different departments and their
relationship with business structure can be defined as: -
Marketing: Employees in this sector are contributed a lot in accomplishing objectives of
a company. They perform various functions like promoting products or services in targeted area,
searching sources from where resources like raw materials, labour, funds and more can incurred
on easy manner. Along with this, they find suppliers who provide resources on easy cost and
distributors who distribute commodities in a short period of interval. Thus, all these functions aid
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other departments like production division in getting proper resource, finance sections in
searching sources of funds and more. Thus, marketing department of a company support
employers in enhancing business by providing source from where it can change in production
and other operational activities so that demands of customers can be met on time. This division
also helps research team in identifying demand of customers and their preference. Along with
this, it gives appropriate information to sales department so that they can formulate better plan to
sell products and services in vast area of marketplace.
Human resources management: It is another function of a company in which HR
managers used to provide employees in all sections as per need of them. It is their main duty to
recruit proper staff at workplace who have gained perfect knowledge and skills in a particular
field. In addition to this, they used to give training, learning and various kinds of development
program so that workers become able to work in desired manner (Chetwood and et. Al, 2014).
Therefore, without proper staff members functions of other departments cannot completed on
time. So, all divisions like finance, production, operations, marketing and more are depended on
HR department of an association. Hence, HRM function of an enterprise contributes a major role
in implementing strategies and initiate the same into workforce so that objectives of business can
be completed. This department helps in providing training to workers of all divisions as per
requirement. It would give advantage to British Food Plc in getting high skilled workers who
give support to achieve all objectives in given period of time.
Finance: Finance department performs major function of an enterprise i.e. to distribute
money to other divisions as per requirement in an appropriate way. Managers in this department
used to make records of each business transaction as well as control expenses so that need of
cash in future can be fulfilled. Therefore, this department help other divisions in conducting
activities in a proper manner. In addition to this, finance department also used to prepare various
statements like Balance Sheet, Profit Loss and more through which employers can evaluate how
much part of objective has accomplished. Therefore, this kind of function helps management in
utilising available resources in an efficient manner which would aid in meeting goals and
objectives in a predetermined period of time. Finance managers help other departments in
allocating finance for different activities in proper manner. This would aid British Food
Associated in utilising limited resources in optimum way.
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Research and development: This function is also considered as an important department
in a firm in which managers are used to make proper research on a targeted area (Zeng, Li and
Duan, 2012). They perform various activities in order to evaluate strategies of competitors,
preferences of customers, need of modification in organisational system and more. All these
functions help other divisions in operating their activities in a better manner. This department
also helps other division in conducting their functions more appropriately. For example:
Research managers provide adequate information to marketing team in which area they can find
targeted audience. Along with this, they also help finance team in determining from where they
can find adequate amount of funds on easy rate of interest.
According to Zsambok and Klein (2014), it has evaluated that when all departments and
their employees are interconnected with each other then it will help in achieving objectives of
business in a shorter period of time. But sometimes performance of workers of different
departments gets affected when they are interconnected with each other as it generates
competition in them. Therefore, in this regard, managers of Associated British Food Plc are are
required to develop effective relationship between workers so that they can work in
collaboration. This would help in giving out best performance through which business objectives
can be achieved in short -period of interval.
TASK 3
P4 Positive and negative impacts the macro environment has upon business operations,
supported by specific examples
Associated British Foods Plc is one of a famous enterprise in UK marketplace which
serves various kinds of products like sugar, lactose, enzymes and more in domestic and
international market area (Zsambok and Klein, 2014). It has operated business in various
countries with 345 stores. Therefore, it needs to analyse various factors present in business
environment which creates a great impact on performance of business in both negative and
positive manner. For this process, a PESTLE analysis has been made on this company as
described below: -
Factors Objectives Positive Impact Negative Impact
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Political factors Every nation has its
own political rules and
regulations which are
mandatory for all
firms to be followed. It
includes various laws
like Taxation, Wage
Legislation, Product
labelling and more. All
these create a great
impact in long term
profitability of a
company.
Following rules of
Govt. help enterprises
in running business in
a legal manner.
New taxation policies
and changes in laws
affect working
performance of a firm
in a bad manner.
Economic factors Rate of Inflation,
Saving, Interest,
Taxation, Foreign
Exchange and more
are included in this
factor which impact on
competitive advantage
of an enterprise.
Good economic
condition of a nation
increases aid people in
increasing their buying
power which directly
enhance sales
performance of a
company.
While on the other
hand, economic crises
reduces purchasing
power which affect
profitability of
business as well.
Social factors Demographic, class
structure, education
level, culture etc. are
some social factors
which are needed to be
analysed by
Associated British
Food Plc so that
demand of customers
Considering each and
every element of
socio-cultural factors
aid enterprises in
improving their brand
image through which
more customers are
attracted (Meiners,
Ringleb and Edwards,
On other hand, if
companies will not
follow CSR activities
then it will reduce
demand of products of
such companies.
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can understand. It will
aid associations in
planning marketing
techniques
accordingly.
2014).
Technological factors Technology is
developing at rapid
manner which impact
directly on product
offering of a firm.
Adoption of latest
technologies in
organisational system
aid associations in
conducting activities
in a short period of
interval.
Introducing latest
technologies requires
enterprises to provide
essential training to
employees as well as
much funds.
Environmental
factors
It creates a great
impact on important
aspects of a company
like availability of
resources, raw
materials and more. It
includes various
elements like changes
in climatic condition,
availability of certain
renewable goods,
workplace efficiency
etc.
If companies can make
their business pollute
free and stop usage of
polythene, then it will
help in conducting
business in a more
accurate manner
(Sekaran and Bougie
2016).
Climatic change, laws
of environment
pollution, air and water
pollution etc. creates a
great impact in Food &
Beverage Industry.
Legal factors Due to increase in
competition, it is
necessary for
enterprises like British
Food Plc to consider
Following rules like
healthy and safe law,
em
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while entering into
new market area.
TASK 4
P5 External and internal analysis of firm to identify its strengths and weakness
In order to identify strengths and weaknesses of business, managers of a firm are required to use
SWOT technique (Yu and Ramanathan, 2013). This method aids a firm in evaluate various kinds
of internal and external analyse which highly contributed in enhancing performance level of
enterprise. It would help in evaluating different opportunities as well as threats also. In context
with Associated British Foods Plc, SWOT analysis has been taken in following manner: -
Strength Weaknesses
 Associated British Foods Plc is the
second largest retail company of UK
which operated its business in many
countries (Wack, 2017). This feature
shows its major advantage.
 In addition to this, geographical
diversification, leading market player,
wider business organisation and more
also shows effective features of this
firm.
 Due to heavy investment in allied
bakeries and limited liquidity position
at marketplace, this company has failed
to get retention of customers for longer
profitability.
 Implementation of ineffective and
common strategies also shows major
weaknesses of this firm which gives
opportunity to rivals to take over large
market share.
Opportunities Threats
 Expansion of business in other
countries by merger and acquisition
give opportunity to British Food Plc
generates high revenues.
 Making investment for future usage,
steady expansion of brands, growth in
Bio-fuel production and more helps in
 Economic crises, changing preferences
and demand of customers create much
impact on profitability and productivity
of this company.
 This enterprise also suffers various
problems due to galloping price rates of
food items in such countries where
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enhancing larger market area. financial condition of people is not
good. In addition to this, increasing rate
of competition also generate various
threats (Vaiman, Sigurjonsson and
Davidsson, 2011).
P6 Interrelation of strengths and weakness of macro environment elements on a company
Every enterprise has its own strengths and weaknesses which show how business of them
can go in future. There are various external factors present in business environment which
creates positive and negative impact on a performance of company. In context with Associated
British Foods Plc, this firm has targeted consumers who used to avail branded and private
labelled products (Türetken and et. al., 2011). This retail company has gained a second highest
position in the world by providing products like sugar and some important ingredients of
eatables. But because of less varieties and heavy investment in allied bakeries, profitability of
this firm goes much down which shows negative factor. For further analysis on interrelation of
strengths and weaknesses of macro environment factor, PEST analyse has done in following
manner: -
Political factors: As Associated British Foods Plc sells its commodities in various
countries therefore, it is necessary to follow all rules and regulations made by governmental
bodies of those nations.
 Strength: The main strength of following legislations is to run business in an appropriate
and smooth manner. Weakness: But it will affect on strategies and policies of business in a wider manner
which reflects negative impact of this factor.
Economic factors: It includes various elements like exchange rates of currency, trading
laws, financial crises and more.
 Strength: Creating modification in strategies and polices, organisational system and
other on regular basis aid a firm in generating high profitability of business (Tayur,
Ganeshan and Magazine, 2012). Weakness: But it requires much time and money for creating changes to meet
requirement of marketplace
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Social factors: Under this section, it is necessary for enterprises to use CSR activities at
workplace and provide welfare to employees as well as societies associated with them.
 Strength:This would help in improving brand image of company at marketplace and
gaining attention of customers in a larger manner. Weakness: But if they not follow the same then whole process goes in negative way.
Technological factors: For completing demand of customers on time it is essential for
enterprises to introduce latest technologies in production.
 Strength: It will help in obtaining better outcomes as well as providing high services at
market place (Saleem, 2017).
 Weakness: For this process, it is essential for such companies to provide necessary
training to employees so that they can work in required manner.
CONCLUSION
From this mentioned project, it has concluded that business environment constitutes
various factors which create much impact on performance and operational activities of a firm in
both positive and negative manner. Therefore, before formulating proper strategies and policies it
is necessary for companies to analyse impact of such elements. It will aid them to run business in
a proper manner. In addition to this, present report has shown various aspects of organisations
through they are differentiated like size, scope, purpose and legal structure as well as how much
they contribute in enhancing economy of a nation.
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Zsambok, C.E. and Klein, G. eds., 2014. Naturalistic decision making. Psychology Press.
Online
Business environment. 2018. [Online]. Available through:
<http://www.investorwords.com/19252/business_environment.html>.
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