Business and Business Environment: A Comprehensive Analysis of Public, Private, and Voluntary Sectors

This report delves into the intricacies of the business environment, examining the distinct characteristics of public, private, and voluntary sector organizations. It explores the size, scope, purpose, and legal structures of these entities, using real-world examples like Network Rail (public), Tesco (private), and Cancer Research UK (voluntary). The report further analyzes the relationship between organizational functions and their impact on objectives and structure, highlighting the interconnectedness of departments within Tesco. A comprehensive PESTLE analysis of Tesco reveals the positive and negative impacts of the macro environment on its operations, while a SWOT analysis identifies its strengths, weaknesses, opportunities, and threats. The report concludes by examining the interplay between internal and external factors, demonstrating how they influence the company's performance.

BUSINESS AND BUISNESS ENVIRONEMENT
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Table of Contents
Introduction...................................................................................................................3
LO1...............................................................................................................................4
P1: Explain different types and purposes of organisations; public, private and
voluntary sectors and legal structures..........................................................................4
P2: Explain the size and scope of a range of different types of organisations............6
LO2...............................................................................................................................8
P3: Explain the relationship between different organisational functions and how they
link to organisational objectives and structure.............................................................8
LO 3............................................................................................................................11
P4: Identify the positive and negative impacts the macro environment has upon
business operations, supported by specific examples...............................................11
LO4.............................................................................................................................14
P5: Conduct internal and external analysis of specific organisations in order to
identify strengths and weaknesses............................................................................14
P6: Explain how strengths and weaknesses interrelate with external macro factors 16
Conclusion..................................................................................................................17
Reference List.............................................................................................................18
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Introduction
Business environment is the sum total of all activities that affect this business. These
factors can be both micro and macro – internal and external and can have immense
impact on the success of the business. This study of the nature of business and
business environment is imperative understanding the viability of the business, its
performance and chances of surviving in the market.
The chosen companies for the three sectors are: Network Rail, UK (public sector),
Tesco, UK (private sector) and Cancer Research, UK (voluntary sector. This report
will shed light on scope, range, purpose and legal structures of three types of
business organisations – public, private and voluntary sectors. It will highlight the
organisational structure of a UK based organisation in the retail sector and focus on
the interconnectedness of its different departments. Size, scope, purpose and legal
structure of these will be assessed. Finally, a correlation of both these factors will be
drawn to arrive at the strength and weakness of the company.
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LO1
P1: Explain different types and purposes of organisations; public, private and
voluntary sectors and legal structures.
Business organisations are divided under several broad heads depending on the
nature, purpose, size and scope of the business.
Broadly, organisations can be divided into three sectors – public, private and
voluntary. Based on the purpose and services that these companies offer they can
be categorised as profit and non profit making organisations. The legal structure
depends on the size and nature of a company.
3 Types of Business Organisations:
Public Sector companies are those that are owned, managed and operated by the
government of a country, with a purpose to offer basic goods or services, primarily
in the defence, transport, health and education and social welfare sectors.
(Bouckaert et al.,2016).
Network Rail, UK is one such public sector company, which owns and operates
British railways and develops the national time-table.
Purpose: The Company maintains and develops 20,000 track-miles, 30,000 bridges,
tunnels and viaducts. Its operates in collaboration with Britain’s private train
operating companies (Network Rail, 2018)
Legal structure – The Company is classified as “public sector body” and is an “arms
length public body” of the Depart of Transport, UK. It has no shareholders and the
revenue is reinvested in railways. (Network Rail, 2018).
Private Sector companies are non-governmental ventures and are operated by
individuals or companies. These organisations enter the business ecosystem to
make a profit and its contribution in a country’s economy is almost always the
largest. Such companies are not controlled by the government Purpose – Most
business organisations belong in this sector and these companies provide a wide
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range of products and services across a number of industries and cater to a vast
base of consumers ( Wever and Kebel, 2016)
Legal Structure of Tesco, UK - This is a public limited company in the retail
industry with a board of directors and an executive committee, which is the final
decision-making body of the organisation. The company shares are offered to the
public to raise capital and are registered in the London Stock Exchange (Tesco Plc ,
2018) .
Voluntary Sector companies operate with an intention of social welfare and
benefitting the under privileged sections of the society. Often referred to as the third
sector, the companies can be formed by unions, groups or individuals who
voluntarily enter into an agreement to serve the welfare of the society ( Bagott and
Jones , 2014)
Purpose – These are non –profit making bodies, operating individually or in groups ,
with or without government aids.
Cancer Research, UK is a voluntary organisation, involved in research in cancer
and spreading awareness among the public about the latest information on cancer.
Legal Structure – It is a limited guarantee company and is a registered charity in UK,
Wales, Scotland and Isle of Man( Cancer Reserach UK, 2018)
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P2: Explain the size and scope of a range of different types of organisations.
Size, scope and range of service offered by the organisation determines its business
goals, objectives and strategies. Separate strategies are applied to attain different
business goals.
Size, Scope and Range of Private Sector Companies: In 2017, the number of
companies and public corporations in UK had risen representing 70.7% of the
country’s business. The fall out of this was a gradual fall in the number of sole
proprietorship and partnership enterprises (ons.gov.uk, 2018).
For private sector companies, the scope of raising capital is more through the sale of
company shares to the public. These organisations also enjoy the favour of the
financial institutions, as the possibility of return on investment is higher here. Often
large is size, private sector companies dominate the market with low production
costs, gaining the economy scale.
Tesco, UK is a public limited company and one of the leading retail chains in the
world market. The company was founded by John Cohen and has been in the retail
business since 1919. Its employee strength stands at 444,000 today with an
extensive global footprint of 6553 outlets with 3400 stores in UK. It has garnered
revenue of £ 57.5 billion in 2017 and net income is £ 54 million representing 27.8%
of the UK grocery market share (Tesco Plc , 2018)
It caters to millions of customers through its extensive range of products and
services in food, clothing, health and financial segments. It is a customer-focused
group and keeps all its activities centred around enhancing c customer convenience
and experience. The company is extremely active in its promotion and had entered
the loyalty card market early. Its Clubcard, a customer loyalty card, introduced in
1994 is used by 17 million users in UK.
The company has failed in its operations in US and Japan and has been boggled
with legal war and this has influenced its brand image. Its competitors include, ASDA
and Sainsbury.
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Size, Scope and Range of Public Sector : Non-profit making and government
sector organisations made 3.8% of the total business, which was same as last year.
This sector has employed over 5.36 million people in UK in 2018. This is one sector,
which is often overlooked by investors, is one of the safest as the risk of bad debt is
minimal. A sector with diverse requirements, it supports the small and medium
enterprises. Also, the sector has continuous work flow due to the essential nature of
service that run irrespective of economic conditions (Storey, 2016)
Network Rail, UK - This is a public sector body which has employed 36,600 people
and supports another 1,17,750 jobs in the country. Its expenditure on 3435 small and
medium enterprises in 2016-17 has been 7 billion pounds. It spends 100 million
pounds in the development of UK railways.
Size, Scope and Range of Voluntary Sector: Cancer Research, UK, is charitable
organisation aimed at disseminating latest cancer related research and funds over
4000 scientists, doctors and nurses engaged in the field of research. It has spent
474 million pounds in 2017 on charitable activities ( Cancer Research UK, 2017).
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LO2
P3: Explain the relationship between different organisational functions and
how they link to organisational objectives and structure.
Business functions constitute of core activities and processes that operate within the
managerial or departmental positions of the company.
Tesco Structure: The company follows a hierarchical structure, with a corporate
governing body, a top level, mid level and entry level management. There is a
managerial hierarchy at the store level with each store having its own departmental
managers.
Figure 1: Organisational Structure of Tesco at Store Level
(Source: : Dudovskiy, 2018)
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Figure 2: Organisations Structure of Tesco at the Corporate level
(Source: Dudovskiy, 2018)
Organisation Units: The effective interplay of all these functional units in Tesco is
directly related to the goals, objectives and strategies, which are profitability, cost
effective productivity and quality and customer satisfaction.
The typical organisational units of Tesco run under the following departments:
 Human Resource
 Operations (Production, procurement, logistics)
 Accounting & Finance
 Marketing and Customer Service
 Research and Development
 Legal
Human Resource: This department over sees and manages the recruitment
process, training and arresting turnover rate of the company. It is involved in the
welfare of the employees and supervises that the respective departmental heads
maintain the work culture of the company (Drucker, 2017). In Tesco, there is
personal and direct interaction between customers and employee at the stores and
online. Human Resource ensures that all employees are satisfied so that they serve
customer better. Its role is crucial in the success of all the other departments as
skilled recruitment ensures effective human talent output, which is directly related to
the corporate image and success.
Operations – It aligns the different functions in the company towards effective
operations. Its effective plans and processes are relevant to and directly affects the
functioning of other departments. For a retailer like Tesco, having an integrated and
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systematic operations is imperative to achieve the company’s larger business
objectives of quality, cost effectiveness and productivity(Friesen, et al. 2012)
Accounting & Finance: This department keeps the transaction records, draws
financial reports and statements and supervising payrolls. It prepares management
accounting information and analyse the reports to predict costs and revenue of the
company.
Marketing - The is concerned with orienting all members of Tesco towards market
and customers. It is engaged in research and development to ensure correct
prediction of customer preference. The department is concerned with maintaining the
brand and corporate image of the company and also with keeping the customer
satisfied with its bonuses and loyalty schemes . The marketing strategies have a
direct impact on the sale strategy and sales figures and revenue of the company
(Drucker, 2017).
Research and Development: This department carries out timely market research
to maintain relevance of the company’s products in the market. It works with
marketing department to draw upon its strategies and plans. It is also concerned with
developing the improvement of products and services in accordance with the market
research.
Legal - This department ensures that no activities within the organisation or by its
competitors tamper the brand image of the company. It is concerned with taking
timely and stringent legal steps in case of any infringement of regulations occur. It
also safely takes the company to the shore in case it is embroiled in long legal wars
with government or competition.
Tesco’s success lies in the collaborative work environment that it has established.
This interconnectedness, a result of communication, stringent operations processes
and upbeat marketing has been pivotal to its performance .
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LO 3
P4: Identify the positive and negative impacts the macro environment has
upon business operations, supported by specific examples.
Changing customer demands, technological innovations and environmental issues
and political scenario of Britain and world economy situation have influenced the
business of Tesco,UK. The company has been forced to align to these new
situations at the external level. Each of these, political, economical, social,
technological and legal and environemental factors have had both negative and
positive impact on the company. These are discussed below:
Element Positive Impact Negative Impact
Political – Britain is
undergoing deep political
and social upheaval owing
to Brexit with strong
implications on businesses
and economy of the
country. New migrant laws
and regulations and UK’s
lack of clarity on
environmental schemes
too, are likely to an impact
retailers.
Local governments insist
on local employment
 Fair Trade Policy of
the European
Commission has
had appositive
impact on procuring
raw material at a
low cost. It has
brought down
production cost for
the company.
 Depreciating value
of Sterling Pound
has decreased the
purchasing powers
of consumers
affecting low sales
figures
 New taxes imposed
by local
governments on the
retail sector has
diminished profit
margins
 International
business has been
negatively affected
due to global
uncertainities
 Company has to
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restructure its
recruitment process
Economic – Brexit with its
share of uncertainties
have unsettled the
economy of the country in
terms of per capita
income, purchasing power
  This had negatively
influenced sales
and profit
 Shifted focus to
promote value
brands rather than
luxurious ones,
affecting revenue
Socio- cultural –
Customer Trends are
changing across Britain.
Customers are becoming
health conscious. They
have shifted to bulk
shopping
 Adhering to the
European
Commission’s
stipulation on use of
salt in packaged
food, introduction of
recycled packaging
and animal welfare
measures have
boosted corporate
image
 The company had
to reshape its
inventory strategies
to offer more non
food items
 Introduction of
organic products
too have an impact
on inventory and
waste control
measures
influencing
production costs
Technological - Britain’s
customers are preferring
online shopping. Rising
concern on security of
digital payment also
plague the consumers
 The company has
spruced its online
presence through
tesco.com thereby
increasing reach
and customer base
 Constant change in
online space in
terms competitions
activities forcing
Tesco to offer
spend on
innovations
Legal – Retails in Britain
has to comply with anti-
trust regulations,
 Compliance with
environmental
regulations boosted
 Recent legal war
with Anti Fraud
officeof Britain has
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consumers rights,
environmental factors and
health and safety
standards
its corporate image tainted its image
and cost the
company as out of
court settlement
Environmental – Strict
laws exist in Britain and
Europe
 Adhereing to laws
helps compant to
spruce corporate
social responsibility
 Remodelling salt
reduced food items,
introduce recycling
packaging all
impact cost of
manufacturing
 
Table 1: PESTLE Analysis of Tesco, UK
(Source: Created by learner)
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LO4
P5: Conduct internal and external analysis of specific organisations in order to
identify strengths and weaknesses.
A SWOT analysis of Tesco will highlight the internal factors that are influencing
buinsess at the company. This will help evaluate the situation the company is in , in
terms of its strengths, weaknesses, threats and opportunities.
Strengths
 The company enjoys high brand
value across the globe by focusing
on quality and value
 Extensive Reach – it has an
extensive global footprint. Its has
a wide customer base through
effective marketing strategies
 Enormous range of products
catering to the huge cross-
sectional
customer base
Opportunities
 With the growth in retail sector,
the company has opportunities to
expand to newer territories
 New scopes of technological
innovation to boost on line sales,
better customer experience and
increase productivity
 Further increase on line shopping
experience by enhancing
customer experience and
convenience
Weakness
 The company suffers intense
market rivalry
 Manufacturing technologies have
been rendered outdated impacting
sales
 Failed attempts at
internationalisation in US and
Japan
Threats
 Highly competitive grocery market
with many players
 It is often forced to enter into
pricing warfare with ASDA or
Sainsbury
Table 2: SWOT Analysis of Tesco, UK
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(Source: Created by learner)
The above table indicates that Tesco is addressing all its challenges with effective
management decisions and strategies. However, newer opportunities lie ahead for
the company to increase its revenue and boost its overall performance.
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P6: Explain how strengths and weaknesses interrelate with external macro
factors
The internal and external factors play in tandem to affect the performance of the
company. Evaluating these factors in an interlinked manner will throw better light on
areas in which the company is facing serious challenges.
Strengths - The strength of Tesco has been identified to be high brand image,
extensive customer reach and enormous product line. All these factors are
dependent on and influenced by the macro-economic factors of the organisation.
The company’s image is the result of its incessant and relevant communication of its
values and proposition, which fits the social fabric of the country.
The economic and political situation like stability, purchasing power and per capita
income has a direct influence on company’s revenue in terms of sales figures and
increasing market reach. With falling buying capacity, the sales of the company will
fall. Any political instability will inhibit the spending power and buying patterns of a
company, which in turn influences its performance. This case intensifies in Tesco as
it is trying to internationalise and diversify (Hamilton and Webster, 2015).
Weaknesses - The company suffers intense market rivalry as one of its weakness. It
has been facing challenges in term of upgrading its manufacturing processes. It has
failed its expansion attempts in US and Japan. Evaluating these weaknesses, will
highlight how these are interconnected with the external factors and how these two
influence revenue and other key performance parameters ( Kew and Stredwick,
2017). Technological factors have impacted its manufacturing units and forced to the
company to upgrade it. This has cost implications and affected profit margins.
Increasing cost of raw material in different markets across the globe increase
production costs; lack of infrastructure and falling profitability hamper the company’s
expansion plans and thus impede evenue scale-up. It is thus evident that macro and
micro factors are interrelated in influencing the performance of the company.
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Conclusion
Business is an economic system where goods or service is exchanged against
monetary transactions. Depending upon the size, nature, purpose and scope of
businesses, these are divided into various sectors like public, private and voluntary
sectors. Understanding business environment and the various micro and macro
factors that influence this environment is important in determining show far the
business will be able to survive in the market.
This study discussed the types, size and scope of different business organisations
and their legal structures. It also highlights the interconnectedness of various
functional units of the organisation and how this influences overall company
performance. In the course of this study a pestle and swot analysis has been
attempted to understand the factors that impact the company’s productivity,
customer base and satisfaction index. It can be concluded that several factors like
effective collaborative functionality across all units, are at play, which determine the
objectives of the company and impact its performance.
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