Business and Business Environment: Analyzing the UK Supermarket Sector

This assignment explores the diverse types, sizes, and scopes of organizations, focusing on the UK supermarket sector. It delves into the interrelationship of various functions within an organization and their link to organizational structure. Using contemporary examples, the assignment demonstrates the positive and negative influences of the macro environment on business operations, employing the PESTEL model. It further analyzes the internal strengths and weaknesses of a specific UK supermarket through SWOT/TOWS and Porter's Five Forces analyses, highlighting the interrelationship between internal factors and external macro factors. The assignment concludes by emphasizing the importance of understanding the business environment for organizational success.

Business and Business Environment

Table of Contents
Introduction......................................................................................................................................3
LO1: Explain the different types, size and scope of organizations.................................................3
1) Different types of organizations. (P1).........................................................................................3
2) Size and scope of the organizations. (P2)....................................................................................7
LO2: Demonstrate the interrelationship of the various functions within an organization and how
they link to organizational structure................................................................................................8
3) Organization structures and functions (P3).................................................................................8
Part 2 – The UK Supermarket sector.............................................................................................10
LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations...........................................10
a) Using PESTEL model, identify the positive and negative impacts the macro environment has
upon the UK retail sector. (P4)......................................................................................................10
LO4: Determine the internal strengths and weaknesses of specific businesses and explain their
interrelationship with external macro factors................................................................................12
b) Conduct internal (SWOT/TOWS analysis) and external (Five forces model) analysis of a UK
Supermarket to identify its strengths and weaknesses. (P5)..........................................................12
c) Explain how strengths and weaknesses interrelate with external macro factors. (P6)..............14
Conclusion.....................................................................................................................................14
Reference List................................................................................................................................15

Introduction
Business marketers are highly concern about assessing the market potential of the business
through the analysis of the internal as well as external factors present in the business
environment, which are affecting the business. Further, the scope and business success also
depends upon the type, size and purpose of the business. Therefore, the organizations must
assess the feasibility of the organization type and scope, aligning with the purpose and the
environment, where the business is running. Business marketers use several key marketing and
management tools for assessing the business environment, including internal and external
factors, influencing the business growth and development. For instance, in order to assess the
external business environment, the marketer should consider the key factors like political,
economic, socio-cultural, legal, environmental and legal factors and their impact upon the
business; it would help the marketer to identify the key opportunities and threats for the
organization within the market, where the business is running. On the other hand, while
considering the internal environment, the organization should analyze the impact of key internal
factors like human resource, supplier, communication, interpersonal relationship, supply chain
etc, followed by identifying its strength and weaknesses. All these factors would be
demonstrated in the following assignment.
LO1: Explain the different types, size and scope of organizations
1) Different types of organizations. (P1)
 Differences between profit, not for profit and non-governmental organizations (NGOs)
 Business purpose and supply of goods and services
The business organizations differ significantly according to the legal structure, purpose and
supply of goods and services. According to the legal structures of the organizations,
TYPES PUBLIC PRIVATE VOLUNTARY
Definition The organizations are
owned by the
These organizations are
privately owned by non-
This business organizations
are usually operated by a

government agencies,
and the organizational
activities are controlled
by the government.
government marketers. One
or more people can share the
ownership through stocks.
group of people, who are
working in a collaborative
environment, to meet a
common goal, through
signing an agreement related
to the business objectives.
Purpose
.The key purpose of
this organization is to
offer public service and
working for social
welfare for the citizen
of the country.
The key purpose of these
business firms is to gain
financial profit through
business activities and gain
increased market share by
overwhelming the growing
competition in the market
Chelladurai et al,.2017).
The key purpose of this
business organization is to
increase the social economy,
in spite of focusing upon
individual organizational
profit.
Examples
Network Rail is a key
example of public
organization, which is
serving the UK citizen
by offering public
service related to
transport services.
Virgin Atlantic, European
metal recycling, Marks &
Spencer, Tesco, Sainsbury,
Asda etc. Are privately
owned companies, which
are continuously focusing
upon profit gain and
enhancing their market
shares in the business.
Welcome Trust is one of the
key organizations, which is
voluntary in nature. It is
world’s second largest trust,
which is serving the society
through biomedical research
facility provision.
TYPES For profit Not for profit NGOs
Definition A for profit organization
is usually privately owned
organizations, focusing
upon making profit from
the business.
These organizations are
dedicated to address a
social cause or advocate
for a shared point of
view.
Non-governmental
organizations are the non-
profit organizations, mostly
international organizations,
which are mostly activated in

“humanitarian, educational,
health care, public policy,
social, human rights,
environmental, and other
areas”
Purpose
The sole source of the
organization is to make
profit from the business
activities, earn high
revenue and gain
competitive advantage
over the others in the
business market, for
gaining maximum market
shares.
The key purpose of the
organization is to utilize the
surplus of earned revenue in
achieving the ultimate
objectives, instead of
distributing the revenue
within the shareholders,
leaders or other members
(Fehon and Garrard, 2017).
The key purpose of these
organizations is to serve the
society and ensure social
welfare.
Examples
Examples include Marks
& Spencer, Tesco,
Sainsbury, Asda etc.
NHS is a key example of
not-for-profit
organization serving the
society for health and
social care purpose.
One example of NGO is
4TheChildren in UK, which
is serving for the safety,
welfare and human rights of
children.
Based on ownership and supply of goods, the following types of organizations exist.

Figure: Ownership Patterns of organization
(Source: Rahimi and Gunlu, 2016)
Sole Proprietorship – This type of business is governed by a single person, owning the business,
the marketer is solely responsible for any business conflicts as well as success of the business. It
is the most easy business structure and the entire control of the business is maintained by the
owner.
Partnership – This type of businesses are owned by two or more owners. Thus, profit and loss in
the business would make all of them responsible for that. These businesses are safer than the sole
proprietorship, as the failure of monitory loss will be equally distributed among the owners.
Limited Liability Company – These companies are operated by the board of directors and
stockholders. In these companies, the owners usually represent the ownership through stock
shares of the company in market. There are two categories of LLC, the private limited company
and public limited company (Fehon and Garrard, 2017).
Cooperatives – In these types of organizations, the business is owned by a group of people, who
are working for and operating the business for gaining mutual benefits. Thus, profit and losses
are shared mutually among the members.

Franchise – This type of business represents the extension of pre-existing business, which is
owned by individual or a group of people. However, the business is controlled and directed by
the main company.
2) Size and scope of the organizations. (P2)
 Difference between micro, small, medium-size and large enterprises
 Market share, profit share, growth and sustainability
The size and scope of the business organizations differ significantly, which are thereby
determining the success, growth, market share, sustainability and profit margin of the business
organizations. These are discussed below.
Micro organizations – The micro businesses are businesses, which are employing a small
number of workers. These types of businesses are mainly family owned businesses. The total
number of micro organizations is not more than 9. The annual profit range of these types of
organizations is less than £1.7 million. The scope of growth is low for these organizations and
these organizations usually have little market share, as the key purpose of these organizations are
to make small profit, for supporting the owners’ life. The markers usually do not undertake risks
for boosting the business growth (Jegers and Verschueren, 2016).
Small organization – Small businesses are also privately owned organizations, operated by the
owners, either in sole proprietorship or partnership business structures. These organizations are
usually signifying the initial stages of the organizations, having small profit margin. These
organizations also have the key purpose of build brand awareness to sustain the business in the
competitive market. Usually, the employees’ strength of these organizations is not more than 50
employees in total. In this context, it is revealed that in terms of profit margin a, the annual profit
of these organizations are not more than £10 million, indicating little market share.
Medium organization – Medium sized organizations are owned either privately or publicly. The
financial profit of the organization can also be divided mutually, in case of voluntary medium
sized organizations, where the members are working for gaining a common business goal or
objective. The total employee strength of the medium size organization is in between 50 to 250
employees. In terms of financial status in the market, these types of organizations usually

maintain an annual turnover of less than or equals to £50 million. These organizations have
significant scope of developing its profit margin and size in near future. Further, these businesses
are usually at a sustained state with medium market share in the industry (Grobler et al., 2015).
Large organization – Large organizations in UK market are occupying the highest market share
in different industries. These organizations are usually renowned organization in the industry,
which could be public, private or voluntary organizations. Further, these organizations usually
have more than 250 staffs, along with distinct units of the organizations including operations,
finance, human resource, supply chain, customer service etc. The annual revenue of these
organizations usually estimated more than £50 million. These large sized organizations usually
enjoy all the benefits of partnership and corporations. In terms of sustainability, usually these
organizations have sustained the business in domestic market, some of which attempt to explore
the other markets through foreign entrance (Jenkins, 2017).
LO2: Demonstrate the interrelationship of the various functions within an organization
and how they link to organizational structure
3) Organization structures and functions (P3)
 Different kinds of structures relating to size and scope of operations
 Complexities of transnational, international and global organization structures
 How functions relate to overall organization mission and objectives
Organizations have several key business units, which contribute significantly to meet the overall
business objectives, while developing the organizational structure. The key organizational units
include “finance, human resource, operations, research and development, marketing, sales and
customer service”. All of these units are directly or indirectly linked and dependent upon each
other to successfully meet the organizational objectives and mission.
In this context, Marks & Spencer is a renowned retail organization in UK, which is meeting the
organizational goal by establishing the interrelationship among different organizational units.
The Research & Development unit of the organization attempts to find out the key market trends
and the current demands of the customers. these information is used by the marketing unit of the

organization, to devise such marketing strategies, which would help to grab attention of the
potential customers. Further, the R & D unit is sharing the market trends related information with
the operation and logistic units, which would shape the products or service features according to
the market demands, indicating a key relationship between these units. Moreover, the marketing
unit is playing a significant role in promoting sales (Spear et al., 2017). Therefore, it is also
evident that R & D activities are significantly influencing the retailers’ sales figures.
Marketing unit also represents a significant interrelationship with the finance department. For
instance, the marketing surveys conducted by the marketing unit of Marks & Spencer need the
approval from the financial department; whereas for preparing budget, data are collected from
the marketing unit by the sales team. It is also noteworthy that the financial forecasts are
dependent upon the marketing research by the marketing as well as the sales figures, which are
informed by the sales team of M & S to the finance team. In addition, while developing budget,
finance team communicates with all the units of M & S, in order to address the cost required to
meet the resource needs in each organizational units, as opined by Kadelbach (2017). Further,
the customer service unit documents customers’ feedbacks, which are shared with the marketing,
sales and logistic units, in order to modify the good or service flow as well as shaping
approaches to meet customers’ needs. As a result of the aforementioned interactions among these
units, the customers’ need is met, which further enhance the sales figure. Therefore, the
customers would be satisfied and loyal in one hand; whereas, on the other hand, the company’s
profit margin also increases, thereby meeting the organizational mission and objectives.

Part 2 – The UK Supermarket sector
LO3: Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations
a) Using PESTEL model, identify the positive and negative impacts the macro environment
has upon the UK retail sector. (P4)
PESTLE is a key market analysis tool used by the marketers for analyzing the macro
environment of the organization. It has been used in the following section, to understand the
impact of key macro environmental factors upon the UK retail sector.
Factors Analysis Positive Negative
Political It has been revealed
that the European
commission has
attempted to make the
trade agreements free,
which is influencing
several “geopolitical
unrest along with
global uncertainties”.
These factors
significantly affect the
sales and revenue of
the UK retail market
players (Sharma et al.,
2017).
The phenomenon does
not have positive
impact upon the
business.
As the product import
has been easy,
sourcing cost has been
submerged. The sales
of the company have
been reduced as a
consequence, which is
evident in last quarter
of 2016. As a result
of this, the company’s
growth slowed and its
attempt to expand the
business failed in
2016. M & S had to
close 12 stored in the
international
locations.
Economic Brexit has hit the
economic stability of
The impact is
certainly negative.
The economic
instability adversely

the country
significantly. In 2017,
UK has been listed in
the bottom rank in G7
list, which affected
the retail market also.
affected the growth of
one of the retail giant
of UK, M & S. The
overall sales of the
organization have
been sufficiently
hindered, which is
evident through 30%
decrease in sales
(Kramer, 2018).
Social The economic and
political instability of
the country
highlighted that the
social structure has
also been hit by the
consequences.
However, social
environment is still
having the capability
to adopt new
strategies for
modifying things.
Taking the advantage
of the adaptive social
structure of the
environment, M & S
can launch new and
more effective
services and products,
which would
overwhelm the other
constraint.
As the social structure
is still adaptive and
supportive for the
retail market, negative
impacts are not
evident.
Technological The technological
infrastructure of the
country is strong
enough to adopt and
nourish new
technologies in the
organization Turk
(2017).
Taking advantage of
the condition, the
company can
significantly make
partnership for
strengthening
security, risk and
compliance (Spear et
UK retail market is
continuously adopting
new technologies for
improving business
performance,
indicating no negative
impact.

al. 2017).
Legal Regulations and
legislations related to
market expansion, tax
policies, currency
change can affect the
industrial growth.
The organization has
the liberty to expand
its business as well as
modify its business
regulations according
to requirements.
The financial
disputes and Frascati
landlords is affecting
the business.
Environmental UK environmental
regulations are strict
enough to protect the
nation’s
environmental
sustainability and the
retail sector have to
follow these to sustain
the business.
Adhering to the laws
and regulations, the
organization is
offering
environmental
friendly and
sustainable products.
Further, fresh milk is
sourced from RSPCA,
assuring dairy firms
(Spear et al.,2017).
In some extent, the
strict environmental
regulations are
hindering
organizational
business expansion.
LO4: Determine the internal strengths and weaknesses of specific businesses and explain
their interrelationship with external macro factors
b) Conduct internal (SWOT/TOWS analysis) and external (Five forces model) analysis of a
UK Supermarket to identify its strengths and weaknesses. (P5)
In order to analyze the macro environment of the organization, the SWOT analysis and Porters’
five force analyses would be done in the following section.
Strength
 The organization has a high brand
recognition with a huge potential customer
Weakness
 Negative publicity in recent days have
affected the brand image significantly

base
 The high variety of product range is another
key strength, which is offering significant
competitive edge
 The brand has a strong focus upon enhancing
customer experience
 The e-commerce infrastructure is also strong
 The brand’s corporate social responsibility is
effective
 Financial performance of the organization is
decreasing
 Loss of customer confidence has been
resulted from frequent product recall
 Reliance on UK market highly, have
enhanced its vulnerability in the market
Opportunities
 Online presence is the key to shape its
market position
 Reshaping the clothing segment can facilitate
its financial performance
The brand can invest in developing Indian
market (Thornhill, 2017).
Threats
 Hard competition in UK food sector is a key
threat
 Changing trends in clothing sector is also
threatening the business
 Decrease of sterling is noteworthy in post-
Brexit period
Porters’ Five Force analysis
Threat to new entrants – There is high entry barrier in UK retail marker, as new marketers
would need high investment and market recognition to compete with retail giants like Marks &
Spencer. Thus, threat to new entrants is low for Marks & Spencer.
Threat to substitutes – The threat to substitute products for Marks & Spencer is high enough. It
is because, it is easy to copy designs for clothes. Although the company offers the food products
of high quality, the clothing segment faces high threat to substitutes.
Bargaining power of buyers – The bargaining power of buyers is significant in UK retail
market, which is considerable for the organization. In this context, the organization should focus
more on building customer loyalty and creating value for them (Spear et al., 2017).
Bargaining power of suppliers – The bargaining power of suppliers is low in UK retail market,
as competitive pressures have forced M & s to outsource materials and reduce the costs.

Competitive rivalry - In UK retail market, the competitive rivalry is significantly strong for the
business. It is because, M & S have to deal with significant competition from the other retail
giants including Sainsbury, Tesco, Zara clothing etc (Spear et al., 2017).
c) Explain how strengths and weaknesses interrelate with external macro factors. (P6)
There is significant relationship between the strength and weaknesses of the organization with
the external factors. For instance, the political and economic condition of UK is not stable, which
has negatively impacted upon the financial downturn of the organization. It is significantly
related to its weakness of financial performance, as highlighted in the SWOT analysis. On the
other hand, the PESTLE analysis revealed that technological condition is stable in UK, which is
reflecting in its strong e-commerce and communication technology related performance
(Brewster and Hegewisch, 2017).
Conclusion
Business organizations are running their businesses through different business environments,
which have significant impact upon the business growth, development and sustainability within
the growing market. In the above assignment, the key purpose was to assess the different types of
organizations based on size, scope, purpose as well as the scope of the business in the market,
where it is being operated. Further, the assignment has focused upon the analyzing the business
environment within which the selected super market is operating with the key market
environment analysis tools. In this context, Marks & Spencer, UK has been selected for
analyzing its business environment.

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