Business and Business Environment INTRODUCTION 1 PART 11 1 2 2 3 4 CONCLUSION 10 12

Business and Business Environment INTRODUCTION 1 PART 11 1 1 2 2 3 4 PART 25 1 5 2 8 3 9 CONCLUSION Business environment is dynamic in nature and several changes take place which affect organisation directly as well as indirectly (Cosic, Shanks and Maynard,2015). Inthis assignment organisation selected in Zara which is an private sector company introduced in 1975 by Amancio Ortega, Rosalia Mera. This assignment is going to describe various types of organisations involved in business environment along with their purpose

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1..............................................................................................................................................1
2..............................................................................................................................................2
3..............................................................................................................................................4
PART 2............................................................................................................................................5
1..............................................................................................................................................5
2..............................................................................................................................................8
3..............................................................................................................................................9
CONCLUSION..............................................................................................................................10
.......................................................................................................................................................12

INTRODUCTION
Business environment is dynamic in nature and several changes take place which affect
organisation directly as well as indirectly (Cosic, Shanks and Maynard,2015). It is combination
of external and internal both factors which gives impact of working of companies. These two
factors work together for running business operations in better manner. In this assignment
organisation selected in Zara which is an private sector company introduced in 1975 by Amancio
Ortega, Rosalia Mera. Respective company is serving their offerings at global level as well as
products offerings by them are clothes and accessories. Furthermore, in the report apart from
private sector organisation voluntary and public will also be discussed. This assignment is going
going to describe various types of organisations involved in business environment along with
their purpose as well as legal structure. Respective assignment will going to discusses about the
different types of organisations along with their size and scope. It also explains the organisation
structure and functions along with PESTLE and SWOT analysis of UK retail sector. In the end,
Porter's Five Forces Model will conducted for competitive market analysis.
PART 1
1
In business environment there are different types of organisation i.e., public, private and
voluntary. Thus, every company have their own goals and objectives or purpose for which they
are performing their daily operations. Description of these organisation are as follows :-
Private limited – It is the type of small entities who have limits liabilities for
shareholders and number of shareholder will be approx. 50. Private limited companies have
restriction of trading their shares publicly. For illustration, Zara is the private sector company
who are dealing in accessories and clothes of men's, women's as well as children. Social factor
gives direct impact on the working of Zara because taste and preferences of customers as well as
market get easily change.
Types of private sector organisation
 Sole traders - They are individual person who manage activities of business by their own
and having separate identity from their company in legal term (Wach, 2015). Owner of
organisation is liable for losses, debt as well as for profit generated.

 Partnership – It is the most suitable way of introducing private organisation when their
will be less funds. Partnership firms have two or more than that partners who contributes
their money for starting business. Amount invested by them is known as capital and
every partner is responsible for profit and losses according to contribution made by them
Legal structure of Zara – It is a type of corporation in the country which that mostly employ
civil laws.
PLC (public limited company) – PLC is the company running by the government and
aim behind their operation is to supply goods and services for increasing living standards of
people and economic development. For instance, NICE is public sector company and they are
offering services related to health care for public (Fitó-Bertran, Hernández-Lara and
López,2015). Main basis behind providing services is to up-upliftment of UK population.
Political factor give direct impact on the working of NICE because simple modification result in
changing working style of company.
Types of public sector organisation
 Central government department – Organisations of particular state run by the central
government bodies. Local authorities – In particular nation, local authorities are those who control and
manage working of specific city organisations.
Legal structure of NICE – It is corporation owner whose ownership is dispersed within general
public within many share of stock that can be freely traded on stock exchnage as well as in over
the counter market.
Voluntary Sector: Such companies are also known as non-profit organisations because
they are working for welfare of society. Thus, Wellcome Trust is the voluntary sector
organisation of UK founded in 1936 by Sir Henry Wellcome them mainly focusing on
Biomedical Research.
Types of voluntary sector organisation
 Trust- There are few trustees who provide funds to voluntary sector organisation day to
day operations.
 Unincorporated association- they are the management committees of an organisation or
may be also named as council. Although, Unincorporated association don't have their
identity distinct from trustees.

 Others- Royal charter bodies, community and several others.
Legal structure of Wellcome - Legal structure of Wellcome is based on charity legal structure.
They work to help poor and needy ones by providing basic health care facilities to individual
person by taking charity.
2
Every organisation have their different scope, size, offerings, vision, mission,
stakeholders, structure and so on. Explanation of these are as follows in relation of different
organisations :-
Private limited – Organisation comes under Private sector having aim of profit
maximisation by fulfilling needs and wants of customers. They are restricted to trade their share
publicly and owner is liable for organisation profit and loss. Zara is the private sector
organisation. Background: Zara is introduced in 1975 by Amancio Ortega and Rosalia Mera.
Respective organisation is serving clothes and accessories of men's, women's as well as
children at worldwide level. Vision and Mission: To offer variety of fashion clothes and accessories by quick
turnover in stock as compare to other fashion retail organisation. Objectives: Objectives is to contribute in sustainable development of society by their
business model. Products : Respective company is dealing in clothing and accessories of men's, women's
as well as children. Size: Zara have approx. 7,475 stores at worldwide level and having revenue
approximately US$9 Billion per annum. Structure: Lean organisational structure is implemented by Zara which result in creating
more customers value with optimum utilisation of available resources. Scope - To expand the business in growing economy.
PLC (public limited company) - These companies are running by the government of
particular nation for providing better services to people and rise their living standards
(Sangari and Razmi,2015). For example, NICE ltd. Is the public sector organisation and it is
one of the largest technology enterprise in Israel. Background: NICE is founded in 1986 and its headquarters is in Ra'anana, Israel.

 Products and services: Company is offering business intelligence, Software, speech and
video analytics as well as business, IT consulting. Vision: Respective company wants to become most prestigious business firm by their
world class performance as well as through creating values for stakeholders. Mission: “ To be innovative and informative.” Size: According to the data of 2016, respective organisation have approx. 4,930 staff
members and their operating income is approx. $134.2 million as well as net income is $
116.9 million. Objectives: Company wants to be one of the leading firm for gaining public growth by
offering high quality of goods as well as services to customers. Scope - To make the business organisations (clients) digitalised.
 Structure: Matrix organisational structure is using by NICE Ltd.
Voluntary sector- These organisation work for their welfare of society with no motive of
profit maximisation. Welcome Trust is offering services related to biomedical research in UK
and it have approx. 2,057 personnels according to the data of 2017. Principles of Wellcome trust
is to improve health of their client for whom they are working.
 Vision- “To gain extra improvement in health of human beings and animal for whom
they are conducting biomedical research.”
 Mission- “To do work in such a way that no other can bring their brightest mind in the
field of biomedical research.”
 Scope – To improve health of people by providing them better services.
Size, scope and type of organisation linked with the objectives and products offering by
company (Beamish and Lupton, 2016). Voluntary organisation offer services for the welfare of
society, private sector is selling products for profit maximisation whereas, public companies are
offering goods with minimum price and welfare of people. Along with these, offering is related
to the objectives of organisation which they want to maximise.
There are several type of organisation structure and it is interrelated with organisational
function -
 Divisional structure- In this structure every organisational function have their own
divisions that is corresponds to product or geographies. It is interlinked with

organisational function because with this structure it become easy to perform functions in
better manner when task is divided according to structure.
 Line organisational structure- It is one of the simplest organisational structures and in this
authority flows from top to bottom. In this structure organisational function interrelated
to this because it help in performing activities within effective manner.
3
There are several functions performed within organisation and function of these is
interrelated with each other. In simple term, activities of each and every department is interlinked
with each other and assist in accomplishing goals as well as objectives. Within same manner
Zara also have different divisions which are interlinked with each other as well as with the
objectives of company. Explanation of these are as follows :- Finance department – Finance is backbone of organisation and it is not possible to
achieve day to day target of company without funds given by financial department (Boyd
and et.al., 2015). Thus, financial department of Zara is interlinked with production
division because for daily basis production there is requirement of funds allocated by
financial division. Along with this, finance division is related with marketing also
because it help in allocating funds of several promotional activities such as
advertisement, campaigns and so on. Human resource department – It is essential department of Zara because they manage
employees in better manner by making them satisfied. Within Zara human resource
department is interlinked with operations of each and every division because they manage
man power. That is essential for performing day to day activity of each and every
division. Thus, HR department is interlinked with marketing, production, distribution and
so on.
 Marketing department – It is the department which help Zara in promoting their products
within market. Marketing division is interlinked with production because they identify
current trend, needs and wants of customers which allow production division to produce
food in respective manner. Along with this, marketing department is related to the
finance also because there is requirement of funds for conducting daily basis activity and
these are allocated by finance division.

Interrelation within organisational function have advantages and disadvantages are as
follows:-
Advantages Disadvantages
 Help in doing work within effective
manner by interrelation of organisation
function with each other.
 There will be clear line of management
in company.
 Flow of information and
communication get affected because of
interrelation within organisational
functions.
 Changes of conflicts within company.
PART 2
1 PESTLE analysis
Factors of macro environment are external elements of business environment which gives
direct as well as indirect impact on organisation within both positive and negative manner. For
identifying these it is necessary for Zara to conduct PESTEL to identify its impact on
organisation. Explanation of these are as follows :-
Political Factors – It is related to the policies given by governmental bodies of particular nation
which includes legal as well as economical both aspects. Modification in this factor give wide
impact on Zara in positive and negative both manner are as follows-
Impact on ZARA
 Negative impact – Zara want to expand their business within several nations in which
policies of government affect operation of organisation in negative manner (Sousa and
Rocha, 2019). So it is necessary for company to have overall knowledge about expansion
before taking such steps.
 Positive impact – Political factor of European Union get change rarely as well as business
expansion in these nation will be good for Zara. Thus, expanding business in such
country will give positive impact on same organisation.
Impact on NICE
 Negative impact – Nice Ltd has great impact of political laws and stability which restricts
them to do transaction and exchange of goods and services worldwide which will
adversely affect their business

 Positive impact – If the company Nice Ltd has permission from government for free trade
across the globe which in turn will provide opportunities to expand business in other
countries.
Economic Factors – This factor include several factors such as inflation in growth of economy,
rate of exchange, taxation, rate of interest and many more. Modification in all these gives
negative as well as positive impact on Zara. It is important for Zara to known about the entire
system before expanding business in other nation. Respective company is expanding business in
the Europe Union because it is safe as well as prediction economic conditions. Fluctuating
economy have direct impact on the working of Zara. So it is important to evaluate economic
condition and currency rate before entering in new market area. Because of custom duties and
level of tariffs in several nations price of Zara product vary.
Impact on ZARA
 Negative impact – Negative effect has been emerges in economy in view of question with
little retailers in view of gigantic accessibility of items due of money effect of Brexit.
 Positive impact – In context of swelling obtaining intensity of human beings has been
increase because of expandable availability of assets.
Impact on NICE
 Negative impact – Increase in exchange rate, taxation policy will affect transaction of
Nice Ltd with other countries because it will incur loss for them. Positive impact – Increase in population will make Nice Ltd to produce more product
which will increase their sales and lead to higher profits.
Social Factors – This factor include changing trends within society and their impact on
customers need as well as wants. Customers are motivated towards online shopping due to
availability of stores sop it is important for Zara to bring their online stores. Zara is dealing in
several nation so it is important to offer product as per culture of different country.
Impact on ZARA
 Negative impact – Modification in social factors result in negative impact on the
operations of Zara. Because they have to manufacture clothes and accessories as per the
present demand of customers.

 Positive impact – Social factor gives positive impact on the Zara because they fulfil need
and want of customers which result in building up their loyalty and making satisfied (Liu
and et. al., 2016). All these help in generating profitability by increasing sales.
Impact on NICE
 Negative impact – If Nice Ltd focus only on profits and does not care about society then
it may loose their potential customers. Positive impact – Involvement in societies, communities help Nice Ltd to target their
customers and provide them goods and services as per their demands.
Technological factors – This factor is related with the advancement is technological factors as
well as its development which affect operations of Zara and their customers. Launching apps for
feasibility of customers. Zara has launch their smartphone shopping app which help customers in
purchasing products by clicking on them.
Impact on ZARA
 Negative impact – Implementation of latest or advanced technology result in extra cost
for Zara as well as it is not easy to instantly implement such technologies in business.
 Positive impact – Advancement is technology help Zara in bringing their online Apps
which result in increasing their sales and number of customers.
Impact on NICE
 Negative impact – If Nice Ltd does not make use of advance technology then it wont be
able to sustain its products for long in market place Positive impact - Using advance technology Nice Ltd will able to beat its competitors
and make good relationship with customers by providing them quality products
Environmental factors – This factor is related to environment and include factors related to it
such as global warming, natural calamities, greenhouse effect and so on. Within Asian nations
weather get modify rapidly thus people require clothes as per that atmosphere which enhance
sales and help in generating profit.
Impact on ZARA
 Negative impact – Natural disaster gives indirect but negative impact on the operations of
Zara. For example, natural calamities like earthquake in Japan give negative impact on
the supply chain as well as sales of company.

 Positive impact – Within Asian nations weather get modify rapidly thus people require
clothes as per that atmosphere which enhance sales and help in generating profit.
Impact on NICE
 Negative impact – There are some government environmental laws regarding production
of goods so if Nice Ltd follow all the laws then it will incur high cost for them to produce
product. Positive impact – If Nice Ltd produce goods natural then it will attract more customers
which it turn will increase their goodwill.
Legal Factors – This factor involves elements related to laws and legislations which have to be
follow by company working within business environment (Glen and et.al., 2015). Changes in
such factors give negative or positive impact on the working of company.
Impact on ZARA
 Negative impact – Every nation have their own corporate laws and legislations when
Zara is doing business in such nations have to modify their policies in that manner. Thus,
it result in negative impact to modify their policies as per conditions.
 Positive impact – It will be easy for Zara to do business expansion when they are
following all the legal policies.
Impact on NICE
 Negative impact – The rules and regulation of other countries may not allow transaction
of exchange of goods and services if Nice Ltd production does not follow their rules and
policies Positive impact – Aware about the laws and legislation of other countries business
becomes helpful for Nice Ltd to perform transaction with them.
Macro environmental factors-
 Policies and legal forces: As there is modification in these factors company have to
change their policies and make decision as per that. Technological factors: Advancement and changes in this factor result in impact on
decision making process (Buckley, 2017).
Micro environmental factors-
 Customers: Need and wants of customer gives direct impact on decision making of Zara.

 Competitors: According to competitors company have to take decision and make their
working policies.
2
Zara is retail industry company which is popular for their offerings as well as latest trends
followed by them. Thus, respective company have to conduct internal and external analysis.
With the assistance of SWOT analysis internal as well as external factors will be analyse because
strength and weakness are internal. Whereas, opportunity and threats are external (SWOT
analysis of Zara, 2019). Explanation of the same are mention below :-
Strength Weakness
 Zara is offering unique design
products to customers which easily
attract them.
 Respective organisation have their
strong presence at global level.
 Zara bring approx. 1000 new design
per year within market which is their
major strength.
 Zara keep very generalise collection of
products. They are not specialised in
any product or anything. It does not
focus on its any special product, this
can be reason of customer to shifts to
competitor.
 It is lacking in advertising. Zara does
not advertises its product on different
media. Advertisement can be costly but
it will leads to attract more customers
and can double its profits.
 Zara has not being able to tackle new
entrants challenges (Peltola and et.al.,
2016). There are many new company
with specialised products, high
competition may leads to low market
share.
Opportunity Threats
 Company can explore global market
for increasing market share (Rezaee,
2017). Decreasing cost of
transportation can be advantage for
 New entrant in market can be threat to
company. New company can providing
new and trendy fashion can be a major
threat to Zara. Customers can switch to

Zara because of lower shipping cost
can leads to explore new global
market.
 Online market and e-commerce is
gaining more importance and trendy
in today's marketing. It is an
opportunity for Zara to capture market
by online marketing and increase
supply of its products.
 Zara can also expand its business or
try new segments. Company can take
advantage of this opportunity by
expanding in those area where they
haven't work. Company can also
specialised in any products.
competitors will leads to low marketing
sharing.
 There are many fake and imitate Zara
products in market. Imitation of
product are of low quality and this will
build negative image of brand.
 New and innovative technology used
by rival company can be a threat to
company. Change in technology and
technology advancement can be
advantage for competitors company.
SWOT analysis gives direct impact on the decision making process of Zara because with
the assistance of respective tool company has analyses internal as well as external both factors.
As strength and weakness are internal factors as well as opportunity and threats are external
factors. After analysing all these in effective manner it become easy for manager of Zara to take
proper decision for them. Because all these gives direct and indirect impact on working of
business firms.
SWOT analysis of NICE:
Strength Weakness
 NICE Ltd. Takes first mover advantage
in introducing its product in the market
 Company has a strong brand through
which they are able to charge higher
prices as compared to its competitors.
 The company has good relations with
its customer which help them to
 Company lack in financial planning due
to which it is not able to face challenges
and lost the market share.
 NICE Ltd. Has to incur more cost in
building supply chain network.

increase their sales and sustain in the
competitive market.
 NICE Ltd has distribution network
across the globe through which they
can transport their products easily
Opportunities Threats
 The company has allowance from the
government for trade agreement and
use of advance technology in the new
market.
 Consistency in cash flow provides
company an opportunity to invest in
technology and produce new products.
 Change in the political factor can cause
company to do transaction across the
globe.
 Due to lack of skilled and talented
people company wont be able to earn
high margin of profits.
3
External environmental factors are beyond the control as they has direct impact upon the
decision making of firm. Such aspects can be interrelated to the strength and weakness of ZARA
in direct and indirect manner as:
Political factor: These factors are basically denotes the influence of governmental entities upon
the decision making of firm in respect of tax policies, direct trade, licensing practices and so on.
 Strength: For Zara, Political factors has works as an strength while firm operating
globally in different countries (Machmud and Sidharta, 2016).
 Weakness: If Zara doesn't make alliances with government and its policies then their
might be possibility of getting negative impact of it in decision making approaches.
Social factor: For an organisation it is required to analyse requirement and need of their
customer in order to providing them quality services easily. Through this firm can enhance its
market position. The impact of such factors can be:
 sonam.aStrength: Main objective of Zara is to provide quality services to their customer
through which they build a positive relation with them for a long run duration.

 Weakness: Sometimes drastic changes in the collection of Zara create less satisfied in
customer's mind as it also can be a unsatisfied approach of firm in respect of customers.
CONCLUSION
After going through the above assignment it has been summarised that, business
environment is dynamic in nature and several modification take within it which gives direct and
direct impact on the company. Thus, it is necessary for an organisation to analyse all these
factors before entering in new market. In addition to this, external factors are beyond the control
company whereas, internal can be controlled by business firms. Although, for identifying
external and internal factors company have to conduct SWOT and PESTEL.