Business and business Environment : Jack Cohen

Business and business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
L O 1................................................................................................................................................3
P1) Types and purposes of organizations...............................................................................3
P2) Size and importance of different types of organizations.................................................5
L O 2................................................................................................................................................6
P3) Relationship between various functions of the organization...........................................6
L O 3................................................................................................................................................8
P4) Impact of the macro environment....................................................................................8
LO4................................................................................................................................................10
P5) Internal and external analysis of organization...............................................................10
P6) Interrelationship between macro and micro environment.............................................11
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................13

INTRODUCTION
Business refers to the process of developing products or offering the services to the
customers with an aim of maximizing the revenue and profits. Business environment refers to the
environment that consists of internal as well as external factors that directly or indirectly impacts
the operations of the business. Micro environment involves factors inside the firm and macro
environment includes factors that exists outside the company. Example – government rules and
regulations, demand of customer's, competition in the market, changes in technology etc. The
Report is based on Tesco Plc. Tesco is a multinational retail company that belongs to Retail
Industry of UK. Firm was founded by Jack Cohen in year 1919. Headquarter of Tesco is located
in England, UK. It offers a wide range of products and services to the customers. Tesco operates
a chain of convenience shops, Supermarkets, Superstores and Hypermarkets in various countries
like Poland Thailand, Hungary etc. It also controls various subsidiaries like Tesco Bank, Tesco
Stores Ltd., Booker Group etc. The Report will explain various types of firms, their size and
importance, relationship between different departments of organization. Further, it will describe
the impact of macro and micro environment on the business and the relationship between
strengths, weakness and macro environment factors.
MAIN BODY
L O 1
P1) Types and purposes of organizations.
Organisation can be referred to as group of people working together for achieving same
objectives. The different types of enterprises can be categorized into following these are public,
private and voluntary. Each and every business venture have unique legal structure and are
established for accomplishing specific objectives. Private organization can further categorize into
following these are sole proprietorship, partnership as well as corporative enterprise (Begg, Van
der Woerd and Levy, 2018). Sole proprietorship is recognized to be as a firm which is owned as
well as managed by an individual. Partnership firm is owned, controlled as well as managed by
two or more people. Corporative firm is a type of organization in which people are provided with
an authority to act as single entity. Example of private, public and voluntary enterprises are :
Lego: It is a private enterprise which sells plastic toys. An organization is located in Denmark.

Bank of England : It is basically a central bank located ion England. Business entity was
founded in july 24 and in year 1694. Bank of England is basically a public enterprise. Business
operation of firm is controlled as well as managed by Treasury Solicitor. An organization offer
financial services and support to people. Headquarter of enterprises is located in London. This
bank controls as well as manage the business activities of other small banks. Business entity has
capital reserves of 403 billion £. It is among one of the oldest Central bank in the world. Bank of
England is basically independent public firm (Chaskin and Greenberg,2015.). In addition to this,
an organization has an authority to develop their own monetary policy. It is bank which issues
currency or notes. Bank of England distribute money among other small bank in the country.
UNICEF: It is also recognized to be as United nation children emergency fund. UNICEF is
voluntary firm which was established in year 1946. It is the business venture which is established
with the objective of providing the welfare to children s as well as women.
Basis Lego Bank of England UNICEF
Type Private Public Voluntary or fund
Intention Lego is a private
enterprise which
manufactures as well
as sells plastic toy.
The key purpose of an
organisation is to earn
high profit as well as
revenue.
The main objective
of this enterprise is to
bring economic
stability in the
country.
Intention of
Volauntary
organisation is to
provide food as well
as health care related
services to women as
well as children.
Legal structure Lego comprises
group of twelve
people in executive
leadership team. It is
the team which is
mainly responsible for
There are basically
five executive
directors those who
are accountable for
making important
business decisions.
These firm consists
of 36 members
working at executive
board who are mainly
responsible for
directing as well as

formulation as well as
implementation of
business strategy
(Hamilton and
Webster, 2018. ).
controlling business.
P2) Size and importance of different types of organizations.
Size -
Lego is a large size company that manufactures toys of Lego brand and operates many
retail stores. In year 2015, total sales of the organization was US$2.1 billion. In year 2017, Lego
is operating approximately 42 offices. Company offers the products to customer's through
Supermarkets, chains at national level, speciality shops and through department stores etc.
Company also sell the products through official shops of Lego. Firm operates the business
together with its subsidiaries at different locations in the world such as UK, Australia, Canada,
Singapore, Japan, Switzerland etc (Knight, C. and Gitterman, 2018).
The scope of Bank of England is vast. It offers the services of wholesale banking to
Government of UK as well as to central banks overseas and also provide services to companies
of other financial sector. On an average, bank settle the payment of around £500 billion that is
approximately one third part of Gross Domestic Product of UK ((Fairfield, 2016)).
Objectives -
One of the major aim of Lego is to influence the children to develop their thinking in
creative way. To recognize their potential for developing the future.
There are two major objectives of Bank of England that are financial stability and
monetary stability of the country.
Revenue -
The total revenue of Lego has increased from past years. In year 2016 the amount of total
sales of the business was 5.1 billion euros. The firm was topped the list of toy firms in the world
in terms of revenue. In year 2017, sales revenue has decreased up to 4.7 billion euros.
The net operating income of Bank of England in year 2017 is £619 million. Whereas, in
year 2018, it was £771 million. Total deposits from Central Banks in year 2017 was £15,809
million. Whereas, in year 2018, it was £15,094 million (Bah, E.H. and Fang, 2015).

L O 2
P3) Relationship between various functions of the organization.
Organizational functions refers to various activities of the firm that are performed by
employees in different departments. All the functions of the firm helps to achieve aims and
objectives. There are various types of organization such as production, purchase, finance,
marketing, Human Resource etc. In Tesco employees that different levels are responsible to
perform various functions and all these are interrelated with each other. These are as follows -
Marketing -
Marketing refers to the process of influencing and attracting targeted segment of
customers towards the products or services of the company. Marketing Manager of the firm uses
various tools and techniques for effective marketing of the goods or services of the organization.
Marketing department of Tesco helps to provide information to production department of the
firm regarding change in the demands of buyers. Information helps to produce goods and
services for customers (Camilleri, 2018).
Finance -
Finance is an important resource that is required to perform all the activities of the firm.
Finance department of Tesco plays a major role in preparing budgets, financial statements etc. It
helps to raise funds from various sources like banks etc. Budgets prepared by the department
helps other departments of Tesco to manage the cost of purchase and production of goods or
services.
Human Resource -
Human Resource Department of Tesco is responsible to perform various functions for
managing the human resource of the company. It plays an important role in recruiting personnels
for other departments like finance, purchase etc. Other departments also help Human Resource
Department to perform managerial functions.
Production -
Production refers to producing goods to satisfy needs of customers. Marketing
department provides information about demands of target customers on the basis of which it
produces the goods. Purchase department also helps production department by purchasing raw
material.
Advantage -

Major benefit of interrelationship between different functions is that, it helps the
employees to achieve aims and objectives of the firm.
Disadvantage -
Major disadvantage is that there may arise the possibility of miscommunication between
different departments. There may be chances of lack of proper coordination and cooperation
between staff members.
Organizational Structure -
The structure of any organization defines the different types of activities that are to be
perform by human resource of the company. It also includes information regarding the tasks
employees are required to perform, it defines the reporting relationship between workers and
management of the firm (Van Wormer, K. and Besthorn, 2017). Tesco is following the
functional organizational structure -
Functional organization structure -
It is one of the common type of organization structure. Under functional organizational
structure all the activities of the firm are divided into different groups. Each group is depended
on a particular function such as marketing, Human Resource, purchase etc. The relationship of
reporting will be based on each department.
Various functions of different departments and organizational structure of Tesco both
influences each other. Each department is consisted of different function. Functional
organizational structure offers various benefits to Tesco such as it supports the workers to
concentrate on achieving mission of the firm, it provides a clear line of authority and
responsibility (Young-Hyman, 2017).

L O 3
P4) Impact of the macro environment.
Business Environment refers to the sum total of internal and external factors that can
affect the operations of the business. It consists of micro and macro environment.
Macro environment -
Macro environment consist of external factors that exists outside the organization and
indirectly impacts the performance, decision-making process of management and strategies of
the firm. They are not specifically related with a particular firm but affects all the business
groups. It includes various factors like social, environmental, technological, political and
economical etc (Fairfield, 2016).
PESTLE Analysis -
It is a tool that firm uses to determine the different types of external factors that are
existing outside the business and it cannot be fully controlled by the management. Tesco will use
this framework to evaluate positive and negative impact of macro environment factors on the
working of the firm. These are as follows -
Figure 1 : Functional Organization Structure
Source : Functional Organization Structure, 2015

Political -
It includes factors like rules and regulations of the Government of the country, policy of
authorities in respect of tax rate etc. 'Rate of tax which is also called Tesco Tax' has also created
an impact on the profitability of the company.
For Example - Brexit is one of the major factor that has affect the price of the goods that
company is offering to its customers.
Economical -
It includes factors such as level of economic development of the country, rate of inflation,
demand and supply of goods and services etc. All these factors may also affect the business of
Tesco. For Example - In year 2018, Government of UK has increased the wage rate for labour
by 4.4%. This decision has increased the cost of operations of the firm. Therefore, Tesco should
also concentrate on cost of borrowed funds. So that, it will not impact the financial position of
the firm (Sandhu, S. and Kulik, 2018).
Social -
Social environment consist of factors like values of people, demographic trends, lifestyle
etc. Changes in taste and preference, trends of shopping among buyers may also positively or
negatively impacts the business of the company. For Example - Nowadays consumers are
becoming more health conscious. Therefore, Tesco should offer organic products. This will help
to improve the sales and profits of the firm. Nowadays, customers were preferred to buy all the
products at one place. Therefore, firm should consider the preference of customers to increase
the sales.
Technological -
Technological factors includes rate of change in technology, advancement in tools and
techniques for producing and distributing goods and services to the customers. For Example -
Tesco has launched an app that is PayQwid to provide flexibility to customers for making
payment of goods they have purchased.
Legal -
It includes factors such as legal laws of Government, laws regarding data protection,
Intellectual Property Rights etc. For Example - 'Sugar Tax' introduced by the Government that
regulates the sugar content in products. Firm will require to comply these regulations while
producing its products.

Environmental -
It includes the laws and regulations of the Government to promote the protection of
environment. Every organization have to comply these regulations while performing different
activities. For Example – Tesco has developed a website called tesco.com that helps to motivate
consumers to purchase goods from this website. It helps the firm to collect the plastic bags
directly from buyers and resulted in environment protection (Burton, R.M. and Obel, 2018).
L O 4
P5) Internal and external analysis of organization.
Internal analysis refers to evaluating the factors that are existing inside the firm that are
known as strengths and weaknesses of the company. It helps the firm to determine the core
competencies of the business, to evaluate competitive viability of firm in the market, cost
position etc. External analysis refers to evaluating the factors that are existing outside the
organization these are opportunities and threats that are existing in external environment (Islam,
F.R. and Mamun, 2017). The analysis will help the firm to know whether there is opportunity of
growth and expansion of the business. Tesco will conduct SWOT Analysis to determine internal
and external factors that can impact the operations of the firm.
SWOT Analysis -
It is a tool that management of the firm uses for evaluating internal strengths and
weaknesses as well as to identify external opportunities and threats. SWOT analysis will help
Tesco to determine how various factors are affecting decision-making of the firm. The tool will
provide information to the company that will support in matching the resources of firm with
strengths. So that, it will gain competitive advantage over competitors (Kapur, 2016).
Strengths – Strengths are the factors that helps the firm to gain competitive advantage over other
firms. Example of strengths can be patent rights, reputation of firm etc. Strengths of Tesco are -
 One of the major strength of Tesco is that it is among of top 10 biggest retail companies
of UK. It offers a wide range of products and services under different categories such as
clothing, grocery items, financial services etc. Tesco has dominated the Market of UK with 4% in year 2018.
Weaknesses – Weaknesses are the factors that creates disadvantage for the business. Example of
weakness can be high cost etc. Weaknesses of Tesco are -

 In year 2017, Tesco has shown wrong amount of profits that is misappropriation of the
profits due to which management has to pay huge amount of penalty to Government. Company follows low cost strategy that has created negative impact on the profits of the
organization (Camillus, 2016).
Opportunities -
These are favourable things that company should grab to take its advantage. Example of
opportunity can be advancement in technology etc. Opportunities that are available to Tesco are -
 Tesco has already launched the business of Jacks. There is an opportunity for the
company to make efforts for expansion of Jacks. So that, it will help Tesco to compete
with other big retail brands such as Sainsbury, Aldi etc.
 Firm is having opportunity to enter into strategic alliance with other companies. This will
help Tesco to offer more products and services to the customers (Chang, 2016). It should include organic products in its existing range of products. This will help to
attract more customers.
Threats -
These are unfavourable things that can cause trouble for the company. Example of threats
can changes in rules and regulations of authorities etc. Threats to Tesco are -
 Tesco is already facing strong competition from other Retail firms such as Arcadia
Group. For Example – Merger of J. Sainsbury and Asda has increased the intensity of
competition for Tesco.
 If, Tesco does not make efforts and fail to offer organic products to existing and potential
buyers in that case, it will lose its loyal customers to other firms (Erasmus, Strydom, J.W.
and Rudansky-Kloppers, 2016).
 Rules and regulations of the Government, economic crisis may also impact the operations
of chain of Stores such as Supermarkets, Superstores, Convenience stores etc. that Tesco
is operating in various countries.
P6) Interrelationship between macro and micro environment.
Macro environment involves the forces and factors that exists outside the business.
Whereas, strengths and weaknesses are the factors that exists inside the firm. Strengths and

weaknesses of the company helps to reduce the negative impact of external factors as well as
also help to get benefit of positive change in these factors.
Strengths and weaknesses of an organization are directly linked with macro environment
factors that are existing in external environment outside the business such as social,
technological, political, economical etc (Charter, 2017). The way in which a firm deals with
macro environment factors and forced depends upon the strengths and weaknesses of the
company. External factors are analysed by the Manager of firm with the help of PESTLE
analysis. Internal factors are identified and evaluated by the firm with the help of SWOT
analysis. The way in which macro environment factors and strengths, weaknesses of the firm are
interrelated with each other is as follows -
Economic environment of Tesco is consisted of factors like rate of inflation, taxation rate,
purchasing power of buyers etc. If, the firm is having huge financial resources in that case,
operations of Tesco will not be affected by adverse impact of increase in rate of inflation in the
country. Also the low cost strategy that Tesco is following will also not be affected by rate of tax
or rate of inflation.
Political environment includes various factors like rules and regulations of the
Government, political stability etc. If, Tesco is having skilled and talented human resource such
as employees, Manager etc. then firm will be able to easily comply the laws, regulations of the
Government. Such as 'Tesco Tax' etc (Burstein, 2019).
Social environment is another external factor that involves change in demands of
customers, increase in awareness of people towards organic food etc. Tesco should have strong
research and development team that will help the firm to determine demands of customers. On
the basis of this, firm will be able to grab the opportunity by offering organic food items to the
buyers.
Technological environment consist of rate of change in technology for producing and
distributing goods and services of the firm. Tesco has already launched different websites for
delivering products and services to the buyers. Firm must have adequate financial resources and
skilled human resource for effective implementation of new tools and techniques in the business.
This will help Tesco to improve current level of sales and profitability of the organization.
Environmental factor is another major factor that can impact the business of an
organization. It includes rules and regulations of Government that aims to promote

environmental protection. These forces are also related with strengths and weaknesses of the
firm. If, Tesco is not having adequate resources in that case it will not be able to use effective
methods and techniques for protecting the environment. Tesco is already launched a website
called tesco.com to support environment protection by collecting waste plastic bags from
customers. Strengths of the firm like technology, human resource etc. will play an important role
in using renewable and conventional sources of energy and to recycle the packing of goods that
firm is offering to the customers (Bah, E.H. and Fang, 2015).
CONCLUSION
The Report has outlined that Public organizations are operated and controlled by
Government for the welfare of people. Major aim of private firms is to maximize the profits.
Lego operates its business along with various subsidiaries across the world. Further, Report has
described various functions that are performed in Tesco and all these are interrelated with each
other that helps to achieve the objectives of company. Tesco uses PESTLE analysis to determine
positive and negative impact of macro environment on the business and SWOT analysis to
evaluate strengths and weaknesses of the firm. Strengths and weaknesses that exists in Micro
environment of the organization are directly related with factors that exists in macro environment
outside the business.
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Chang, J.F., 2016. Business process management systems: strategy and implementation.
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Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
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Online -
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