Table of Contents INTRODUCTION...........................................................................................................................1 Activity 1.........................................................................................................................................1 An overview of various types of organisations and their legal structure....................................1 Comparison in different type of organisation.............................................................................2 ExplainingvariousfunctionsofTescoandevaluatinginterrelationshipbetweenthese functions and link to the objective and structure of business......................................................5 Advantages and disadvantages of the interrelationship of the function and their impact on organisational structure...............................................................................................................6 ACTIVITY 2....................................................................................................................................7 Identification of the various environmental factors using PESTLE analysis.............................7 SWOT analysis..........................................................................................................................10 Explaining how strength and weakness interrelates with external macro factors.....................12 CONCLUSION..............................................................................................................................12 REFERENCES..............................................................................................................................13
INTRODUCTION Business refers to the systematic organised efforts of enterprise to supply consumers with products and services for profit. Business environment refers to the surrounding of various forces that influence business operation, structure and function. Organisations are varies in size, as measured by the numbers of employees or by sales volume. The present study of Business and Business Environment is divided in two activities and the first activity aims to evaluate various type and purpose of organisations and their legal structure and the selected organisation is Tesco. Furthermore, it will explain the size and scope of the type of organisation. The study will also evaluate the relationship between different organisational function and will understand how they link to the objective and structure of business. Inthesecondpartthestudywilldiscussinfluencesinthebusinessbyvarious environmental factors, for that purpose PESTLE analysis will be done. Furthermore, the study will critically evaluate the micro and macro factors on decision making. Internal and external analysis of the business help in understanding the strength and weakness of Tesco. It will done through SWOT analysis. Activity 1 An overview of various types of organisations and their legal structure Public sector This organisational sector are also known as state sector that are mainly owned, managed and controlled by local and national government (Hall, Miller and Millar, 2016). The legal structureoftheorganisationsunderpublicsectorisownedandgovernedbynational government. Public organisations has share of 51% and the rest of 49% is in the hand of shareholder. Organisations operate in public sector are responsible to provide dividend on time to the shareholders. Private sector Private sector is that segment of business that has limited liabilities with private shares. This kind of organisations are privately owned by a group of business that are known as board or by an individual (Difference between Public sector and Private sector,2019). Private sector involves various type of businesses such as; sole proprietorship, partnership, small and medium 1
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size businesses, etc. The kind of businesses have separate legal identity. The private sector organisations are categories on the size of employees; micro, small, medium and large. Voluntary sector This sector also known as community sector that are established mainly to provide social services to the local community. Organisations under voluntary sector are; trust, NGOs, not for profit organisations, social welfare organisations, etc. The structure of law of this sector is incorporated by the norms and rules set by any constitution adopt the business. Comparison in different type of organisation Base of the comparison Public (NHS) Private (Tesco) Voluntary (Save the children) BackgroundNationalHealth service organisation is a public company and itisapublichealth serviceestablishedin UK. The company was formed in 1948. Tesco Plc. Is a British multinationalgrocery andgeneral merchandiseindustry establishinUK (Hamiltonand Webster,2018).The company was founded in1919byJack Cohen.Thecompany type of Tesco is public limited company. Save the children was establishedinUKin 1919toimprovethe lifeofchildrenby bettereconomic opportunities, education, health care, etc. This is a not-for profit organisation and fallsundervoluntary sector.Thetypeof company is registered companylimitedby guarantee. Products and servicesVariousservices offeredbyNHSare; nursing,emergency andprimarycare, mental health care, etc. Groceries,financial services,consumer goods,telecom, households,clothing, etc. Thisorganisation providebetter education,emergency aid in the disaster of nature,economic 2
opportunitytothe children(Hillary, 2017). SizeNHS operates mainly inUK,Scotland, NorthernIreland, Waleswiththe purposeofproviding public health services. Majorityofservices are given in UK by the company with around 1.3 million employees. Numberofpeople employedinthe company are 460,000, therevenueofthe companyis£57,491 million and operating incomeis£1,644 million. Thecompanyis establishedin29 countries.The company is non-profit organisation. So there is no specific income they run by trusts and fund and serve people worldwide. ScopeThescopeofthe organisation to provide health services to the local public of UK as well as in the world as well. Thescopeofthe companytoserve nationallyaswellas international consumerswith varioussegmentof business (Silva, 2017). Thescopeofthe organisation is to make betterlifeofevery child in the world. Vision and Mission and Business objective Vision of NHS is “to providingbetter servicesrelatedto health to all the people to give better value.” Missionofthe company is to provide qualityservices regardinghealthcare to everyone and every The vision of Tesco is “to broaden the scope oftheindustryto enableittodeliver strong sustainable long termgrowthand expandingthe business.” Themissionofthe company isto create VisionofSavethe Children is to create a world in which every child attains the right forprotection, survival,participation and development Missionofthe organisationisto inspirebreakthroughs 3
day.value for consumers to earntheirlifetime loyalty. in the way the world treats children and to achieveinstantand long lasting change in their lives. Other than that there are four types of business organisation; micro small, medium and large enterprises. Base of comparison MicroSmallMediumLarge MeaningMicro organisationsare the smallest term of businesses that consist fewer than 10employees. Theseare generallysmall shops that owned andrunby family.For example;Boss Brewing Company Smallbusinesses arealsofamily ownedbusiness generallythat consistlessthan 50 employees and morethan11 employees.For example;Costa Coffee in NEXT Mediumsize businessconsist morethan51 employeesand less than 250. For example; Captify. Largescale businessconsist morethan251 employees in the organisation.For example; McDonald Business objective The aim of micro businesses to get income to survive in the world and getnecessary thingssuchas; The aim of small business to make profit and to serve people in the city area. Theaimof mediumsize businessesto provideeffective servicestothe consumers at the The aim of large businesseseither tomakeprofit like;McDonald orimprovethe life of society like 4
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clothes, food, etc. andtoserve peopleinlocal areas. stateleveland make profit to get the luxury things. Savethe Children.They operate worldwide. Explaining various functions of Tesco and evaluating interrelationship between these functions and link to the objective and structure of business Organisational structure refers to the system that outlines all the activities in the business that are directed in order to achieve the objective of the company (Hall, Miller and Millar, 2016). Tesco has a fair structure of organisation that outlines roles and responsibilities, clear line of control and communication that are responsible for performing different functions with the aim to achieve the goal of company. Industry has hierarchical, that structured by top to low level position. Various functions of Tesco are; marketing and sales, Finance, Consumer services, distribution, etc. Board of Directors Chief executive Marketing manager Human Resource manager Sales manager Finance manager Advertisin g manager Industrial relation manager Regional manager Accountan t Along with the increasing risk and competition in the market, role of departments helps the company to maintain an appropriate position in the market. Marketing Marketing is one of the integral part of an organisation. The marketing function is interrelated with all the other department of Tesco. Marketing attract individuals towards the potential vacancies and allow HR to recruit people. The function of promotion depends on the 5
finance as all the liquidity in the specific activity are fulfilled and managed by the finance department (Hamilton and Webster, 2018). This function in the operation help Tesco and enable them to develop an interaction and relationship with the consumers and other businesses. Marketing is also responsible for delivering brand image of the company. For active participation related to different publicity action and interaction with consumers by utilising effective marketing methods and tools. Human Resource Human resource of Tesco are responsible to carry out strategic and effective management of the internal work procedure and utilising all the resources of business efficiently. Other than that they are also concern with effective recruitment so that they can able to hire the best skilled employees. Hiring right people at right position with right skills is add on to the benefit of the company and help in increasing productivity. Human resource is interrelated with all the other functions of Tesco (Hillary, 2017). Effective recruitment has positive effect on the operation of the company and thus productivity rises of the organisation. Finance The finance department specialise in managing money of the company and have control on the various expenses of Tesco and they responsibly manage whole investment process of the company. Along with it, finance is quite related with the usage of organisational resources for various operations. To meet the business objective, organisation need various people, strategies, changes, innovation that all are depends on the finance function of the industry. The finance team of Tesco is responsible for sourcing fund and further expanding the business operation. Operation This function of Tesco oversees the whole production process that responsible for bringing out efficient and smooth services with the aim to meet the need and expectation of potential consumers. All the process under this department depends on the HR and finance, where finance enable the department to having raw material for further process and human resource haveoperation manager is responsible to giving daily report to the finance manager of the company so that they can manage the expenditure (Hall, Miller and Millar, 2016). 6
Advantages and disadvantages of the interrelationship of the function and their impact on organisational structure Interrelationship of all the functions with each other have some positive effect as well as negative effect on the company and the operations. Advantages Business environment of Tesco is changing rapidly with innovation so it is essential for the industry to create interrelationship to create synergy. To effectively create synergy in Tesco allow various functions to share information and then collaborate with one another The most obvious advantage of interrelationship of various functional department is that grouping employees by specialisation to ensure a dependable level of the competence enable companytodevelopcross-functionalteamsthatarehighwithdiversityofexperiences, knowledge and expertise. All the functions work together towards achieving the organisational objective. The other advantage of the interrelationship is that in the company there are clear line of management that enhance the flow of management activity. Disadvantages The disadvantage of the interrelationship is that every employee in Tesco from different branch get to know the job role and responsibility of the other function. From this there are chances to misuse the information and can harm that branch. The other disadvantage of this is that it enhances competition among other functional department (Hamilton and Webster, 2018). This can lead the company to decrease in flexibility and innovation as various functional group in Tesco are not able to communicate more often. Impact on organisational structure This have positive effect on the Tesco's organisational structure. The company follows hierarchical but to enhance the collaboration in various functions the structure is changing from hierarchical to flat structure. In interrelationship all the functions have influences each other that have negative impact on the structure of business. 7
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ACTIVITY 2 Identification of the various environmental factors using PESTLE analysis There are many environmental factor that directly or indirectly affect the business and their operations(PESTLE Analysis,2017). Macro environmental factors refers to the external environment on which company have no control and affect business structure and operation. Political factor Political factor involves various regulations, rules and policies that formulated by the government that have direct and indirect affect on the Tesco's working environment such as; change in the regulations, taxes, etc. It can a positive opportunity for the business as by comply fair governmental regulations and restrictions, Tesco can enhance productivity, attract profit and achieve growth. On the other hand it negatively affect the company as increased tax rate will lead Tesco to raise their prices of its several products and services that will lower down the consumers purchase due to the increased political restriction on certain export of the material (Albers, Wohlgezogen and Zajac, 2016). Along with it, change in government policies affect the 8 Illustration1: PESTLE Analysis (Source:PESTLE Analysis,2017)
working environment of Tesco that will hinder their performance regarding the good and service production. Economic factor This factor is related to the economy of the country or a region where Tesco operates. Economic factor includes; interest rate, inflation rate, economic growth, exchange rate, income level of the population that has direct affect on the activities of Tesco. Stability of economy of UK is the positive point for Tesco as it helps the business to enhance their productivity and achieve economical growth in the region. On the other hand, decreased inflation rate after separation of UK and EU that called as Brexit will reduce the prices that offers by Tesco in order to attract more consumers towards their brand(Ansoff and et. al., 2018). It will also help in build strong relation with the consumers. Purchasing power and reduced demand of consumers of UK have negative effect on the business activity of Tesco they are require to change their product line and function and activity of the business. Fluctuation in exchange rate will hamper the operations and functions of Tesco. Socio-cultural factor The social and cultural factor is based on the values, attitudes, culture and preference and taste of the consumers or population of UK. Under this factor various elements such as; income level, age, population growth, etc. impact the business and their way of operation. Tesco have opportunity to provide as per the preference, taste and demand of the consumers that will help them in building effective consumer base through social media platform and other advertising technique to attract pool of potential client. Tesco utilise this factor as their opportunity. On the other hand neglecting fluctuating market trend affect performance of Tesco that will eventually decrease profitability and consumer that will reduce the brand image and revenue of Tesco (Gürel and Tat, 2017). Technological factor Thetechnologicalfactorisrelatedtoinnovationofproductsandusingvarious technologies in the marketing activities of the company. Adapting technological advancement improve the operational activities and increase consumer base. Tesco introduced a technology named as RFID in order to enhance in-store experience for the potential consumers. On the other hand if Tesco is unable to be with the changing trend in technology in compare to their competitors will affect the consumer retention as well as brand value(Hall, Miller and Millar, 9
2016). The technological factor help the company to implement their technological advancement to beat the immense competition in the market and make them enable to take effective decisions and develop strategies. Environmental factor The environmental factors are out of control of the business that include climate changes or fluctuation in natural resources that have negative impact on the organisation's existence. Tesco is consider as the responsible industry that is responsible towards the society and environment. They promote the awareness among the people that are working in the company to eliminate pollution by reducing waste(Hillary, 2017). The eco-friendly policies will help Tesco for the sustainable growth. On the other hand, some elements have negative impact on the company such as; changing strict rules and regulations by the government regarding the environment,scarcityriseinrawmaterialandresources.Theimmensepressurefrom government agencies will affect the operational function of Tesco. Also, they are committed to utilise renewable sources and generate 100% of its electricity by 2030. Tesco promise to reduce carbon footprint up-to 40% by 2020 that bring an immense change in the brand image that will beneficial for the organisation. Tesco is require to take decisions for their production and expansion by considering environmental laws mentioned by the government. Legal factor There are various laws, policies, regulations that can affect the consumer behaviour and business operation of Tesco. The country's laws and legislations have affect on the transportation of products, viability of markets, profit margins. Tesco is require to consider various law while operating such as; employment law, health and safety law, consumer law, etc. The international legislations has been complied by Tesco that makes easy for them to conduct global trade and various business activities(Prajogo, 2016). The taxation policies is raising in transportation that affect the profit margin of company while operating globally. On the other hand, Tesco had faced some legal issues that damage the brand image. For example; 17 workers of Tesco took a legal action in 2016 against employer as they face age and gender discrimination. They also faced legal action for misleading the investors and accounting fraud that broke down the consumer base. 10
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SWOT analysis This analysis enable organisation to have an understanding of internal environment that include strength, weakness, opportunities and threats. The SWOT analysis provide information that is beneficial in matching resources and capabilities of the company to the competitive environment. Strengths Tesco is one of the largest retail industry and it is on the third position in largest company across the world. The company is also listed on the London stock exchange. These are the biggest strength of the brand(Silva, 2017). They operate in different countries with effective technical skills that help in high profitability. Tesco invested more amount in T&D programmes that enable the industry with high talented,skilledandknowledgeableemployeesthatimproveproductivityand profitability of the organisation. The one of the biggest strength of the Tesco is that they provide high quality products and services and gain high experience and satisfaction that enable company to build a strong consumer base. Weaknesses One of the biggest weakness of Tesco is lack of R&D. It will affect market knowledge of Tesco, and limit their development of innovative products. There are many controversies that damage the brand name in the marketplace. Tesco has faced many controversies such as; Vacro and Weatherford for violating some of their patients. Opportunities Globalisation strategy brings opportunity for the industry as in the countries where Tesco is underperforming provide opportunity for joint venture(Albers, Wohlgezogen and Zajac, 2016). In the technological advancement world there is an opportunity for the industry to grow online business for the potential consumers. Developing strategic partnership with other reputed industries can offer an opportunity for Tesco that enable the company to provide more products and attract more customers. 11
Threats as the business of Tesco is at the international level that enhance the competition as well as for the company that is the intense threat for Tesco. The competition at global level may be able to offer products and services at lowest price in compare to Tesco that make pressure on the industry and can affect the function and operations. Government where the company operate develop and implement new environmental regulations that fluctuate according ecological kinetics affect Tesco negatively. Explaining how strength and weakness interrelates with external macro factors The internal environmental factor of Tesco is interrelated with the external environmental factor. The strength of the company is based on the positive impact of the macro environmental factor, whereas, negative impact on the factors appears as the weakness for the company(Ansoff and et. al., 2018). Strength and weakness are the opposite factor that provide power or weakens the organisation. The supporting factor and biggest strength of the company is political stability of UK that support the operational function and brand building in the marketplace as well as it ensures smooth functioning of the company. In the SWOT analysis strength of Tesco are linked with the technological, social, environmental. The main theme of business strategy in Tesco is customer behaviour. The company has concerned about the healthy food products. With the help of social environment strategy, the industry take advantage from the potential competitors and develop best strategy to provide quality services to the consumers. Political and economical environment are the main culprit for the weakness of Tesco(Hamilton and Webster, 2018). On the other hand, the economical environment in different countries, thus, Tesco have opportunity from the free global market in economical and political environment. CONCLUSION From the above study it has been evaluated that there are three major type of organisation and they operate with their own mission vision objective. Some business run for making profit andsomeforprovidingservicestotheconsumers.Italsohasbeenconcludedthat interrelationship between various functions of Tesco has been resulted as positive and negative as well and as well as it has negative and positive impact on the organisational structure. Along with it, it has also analysed from the PESTLE analysis that there are various elements that can be 12
improved by Tesco by proper development of strategies such as; technological and socio-cultural factors. By using SWOT analysis it has been understand that strength and weakness of Tesco is interrelated to the macro environmental factors. 13