Positive and Negative Impact of Macro Environment on Business Operations

This article discusses the positive and negative impact of the macro environment on the operations of a business. It explores how political, economic, social, technological, environmental, and legal factors can affect the performance of a business. Understanding these factors is crucial for businesses to adapt and thrive in a changing environment.

Business
and
Business Environment

Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Different types and purpose of organisation; private, public, legal and voluntary sectors....1
P2 Explain the size and scope of different types of companies...................................................2
LO2..................................................................................................................................................4
P3 Explain the relationship between organisation function and their link with organisation
structure.......................................................................................................................................4
LO3..................................................................................................................................................5
P4 The positive and negative impact of the macro environment in operations of the business.. 5
LO4..................................................................................................................................................8
P5 Conduct the internal and external analysis to identify the strength and weakness................8
P6 Explain how internal strength and weakness affect the external factors................................9
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment refers to the combination of internal and external forces which
influences the operation of the organisation. The study of business environment is necessary for
any organisation to gain competitive advantage in the industry (What Is Business Environment? -
Definition & Factors, 2019). This report will be based on the three types of organisation which
are voluntary, public and private and the chosen organisation for the same are Oxfam, Tesco and
NHS. Their nature, scope and purpose will be defined and the inter relation of the different
departments. The strength and weakness of the two different organisation is to be explaining
with the specified examples. This report will also include the effect of external factor on
operation and its positive and negative impacts on the company which will be public and private
enterprises. The internal strength and weakness of the external factor will be included in this
report and it will be based on the private company that is Tesco.
LO1
P1 Different types and purpose of organisation; private, public, legal and voluntary sectors.
The organisation became a necessary for the economic growth as well as employment of
the nation. It is major responsibility of the business to provide satisfaction to the customer's by
providing goods and services according to their needs and preference. In customer's context all
organisation has various purpose. The various purpose, objectives of different types of
organisation are given as follows: -
Private organisation: These are owned and control by two or more than two directors
such organisations are also known as non-government organisations. So all these organisation
needs to follow all the rules and regulation which are established by government otherwise that
firm will liable for the huge fines and charges. The main motive of private organisation is to earn
revenue by identifying different needs of the customer's. E.g. are Sainsbury, Tesco and many
others (Adomako and Danso, 2014).
Sole proprietorship: It refers to firm where the business is owned and run by individual
entity. In this individual entity and the business are considered same there is no separation in
these two also that person is liable for all the losses which occurred in the business and also gain
all the revenue of the business.

Legal structure: In this individual entity which operate the business is liable for all the
losses and debts and also gain all the profit of the business.
Partnership: Partnership refers to where business is wholly owned and run by the two
or more than two persons. It is an agreement between partners which includes all the terms and
conditions regarding the profit sharing and liabilities of the partners.
Legal structure: In this all the terms and condition regarding the liabilities and profit
sharing are written in the agreements with the signature of partners.
Public organisation: public organisation includes those organisations which owned and
run by the government. The main motive of such kind of organisations is welfare of the society.
These kind of organisation has limited liability and in this 51% shares of the company are hold
by government only and the other 49% by shareholders. For e.g. nationalised banks, hospitals,
schools etc.
Legal structure: In this whole business is run according to the rules and regulation of the
government because these firm are owned and controlled by government without the motive of
profit earning (Bouwman and et. al., 2012).
Volunteering organisations: These organisations are formed by different groups linked
together for the welfare of the society. These such organisations are run by individual without
any pay. Any legal forms are not required to run these kind of organisation like any group which
have their conman objective about raising awareness about cleanliness of the city.
Legal structure: The all terms and conditions which are adopted by the organisation is
totally based upon the type of legal structure which is chosen by the enterprise. In these includes
all the trust and social enterprise which have limited liability.
P2 Explain the size and scope of different types of companies.
There are various types of organisation run at the market and these enterprises have their various
scope, size and purpose which are as follows-
Public organisation-NHS
National health service is a social welfare organisation which provides health related
services to the common people and it is owned and controlled by the government. It provides
various services like optical care, dental care and other health related services to the citizens of
the country for the purpose of social well fare.

Size- It provide various employment opportunities for more than 1.6 million people and it
has almost 2165043 health related sectors which provides free service to the customers and also
has 691000 nurses to provide best service to the patients.
Scope: This organisation provides best services to the customers of UK at minimum as
well as free of cost. National health service also provides service to the large numbers of
customers so it has very broad scope in the UK.
Purpose: This organisation is set up for the welfare of the society and people of the
country. The main motive of NHS to join maximum numbers of people in their health camps and
programs to provide better service to the patients (Buxel, Esenduran and Griffin, 2015).
Private organisation- Tesco
Tesco is well known brand among the customers for multinational groceries. Tesco
produces diversified products which includes clothing, toys, books, furniture and many others.
Tesco attracts large number of customers because of its varieties of product offering.
Size: Tesco offers various range of products which includes books, clothing, toys etc. and
also owned more than 800 shops and 40 supermarkets in north England. It operates in all over
the world almost more than 11 countries.
Scope: Tesco serves almost all over the world by providing varieties of the products
under one supermarket. It has very wide scope because it provides various range of products
according to needs and demand of the customers.
Purpose: The main purpose of Tesco is serve the qualitative products to the customers so
this will create brand loyalty and also increases brand image of the company. It provides huge
varieties of products and services from insurance to household, groceries and clothing sector.
Volunteering organisation- Oxfam
It is a charitable organisation which is focusing on poverty of the nation. The various
initiatives are taken by the Oxfam to remove poverty of the nation. It was constituted in 1942 and
organise various kinds of programs to reduce the poverty and injustice activities (Clarke,
Tamaschke and Liesch, 2013).
Size- It has various charity shops in whole of the world which provides products that
donated by the public like books, toys, clothing, food etc.

Scope- The Oxfam spread all over the world to reduce injustice and level of poverty of
the country by various campaign. The Oxfam committee manage all the distribution of donated
cloths and other things at the world level.
Purpose- The main purpose of Oxfam is to reduce injustice and poverty of the nation.
So Oxfam provides various items to the poor people which are donated through charity.
LO2
P3 Explain the relationship between organisation function and their link with organisation
structure.
To run the business very smoothly it is very necessary for the organisation to work
effectively by interlink different function of the organisation. These all function are performing
their duties more effectively and organisation can easily achieve their goals and target by proper
and effective inter-relation between various department of the company. Such type of inter-
relation between different departments of organisation is necessary for the success of Tesco
(García-Peñalvo and et. al., 2014).
The inter relation between different departments are described as follows-
Finance department with human resource department: - Finance department of the
company is focuses of the funds allocation to the different departments to perform various
activities of the organisation. Whereas human resource department of the company hire skilled
and knowledgeable for the particular vacant job of the organisation. So HR department of Tesco
recruit skilled manpower for the day to day activities of the organisation and finance department
provides required fund to perform recruitment and selection procedure. So inter-relation between
these two department is necessary to perform various activities of organisation effectively.
Marketing department with production department: - Marketing department of the
organisation provides information related to the taste and preference of the customer's by
analysing marketplace. And production department produces products according to the taste and
preference of the customers by the help of marketing department. So Tesco marketing
department helps the production department by analysing various needs and demand of the
customers as well as what kind of improvement they want in particular product. This information
helps the production department to serve customers better (Jeston, 2014).

Sales department with research and development department:- Sales department of
the company mainly focuses on the sales of the products of the company. So Tesco sales
department focuses to increase the sales of the products of the company which is possible with
the help of research and development department. Because this R&D department identifies the
area in which demand of the particular product is high through analysing marketplace. This helps
the sales department of Tesco to increase the sales of the company by promoting and selling its
product in that area. So there must be effective inter-relation between these two department for
the success of the company.
Relation of these organisation function to organisation structure-
Tesco is using hierarchical structure in their company which is focuses on the various
department of the company. It is a functional structure and it is used by company because Tesco
presents in all over the world and it is not possible for the one individual to keep eye on every
department presents at a global level. This structure is applied by Tesco because through it
customers get the proper care and satisfaction from the business and it is very helpful for the
Tesco to meet its objectives and aims.
LO3
P4 The positive and negative impact of the macro environment in operations of the business.
Tesco is involved in diversified areas which includes toys, books, software, electronics,
furniture, clothing and many others. Tesco deals with the numbers of products which is a great
opportunity for the company to grow fast by providing various goods and services to the
customer's according to their needs and preference. To identify such kind of opportunities in the
marketplace it is necessary to analyse the external environment to grow more (Khilji, 2012).
Political factors: This is a retailing companies which operates all over the world. So all
political factors affect the performance of the Tesco which includes financial instability, tax rates
and many other.
 Positive: Financial stability of the country increase the productivity as well as growth of
the company.
 Negative: Increase in tax rate on various supermarkets will affect the decision making of
Tesco.

Economic factors: These factors include interest rate, inflation rate, exchange rate etc.
All the economic factors directly affect the individual purchasing behaviour
 Positive: At the time of recession customers prefer homemade food rather than eating
outside so it is an opportunity for the Tesco to increase grocery output.
 Negative: Fluctuations in exchange rate effect the overall performance of the Tesco and
its profitability also.
Social factors: Social factors includes shared values and beliefs of the individual which
plays an important role to identify various needs and preference of the individual person. It
includes lifestyle, culture, sociological factors and many others (Palepu and Healy, 2013).
 Positive: People are health conscious in nowadays so Tesco organic food boost the
profitability of the Tesco.
 Negative: Frequently changing taste and preference of the customers become major
problem to serve customer in a better way.
Technological factors: The technological advancement is become great opportunity for
the Tesco. This increases the overall profitability as well as growth of the organisation by
adopting various new and innovative techniques.
 Positive: New and innovative technologies boost the competitive edge and profitability
of Tesco.
 Negative: Frequent change in technologies are very difficult for the Tesco to adopt due to
huge cost.
Environmental factors: It includes various factors such as change in climate, weather,
laws and regulation regarding environment and many others which effect the performance of the
organisation (Payonk, Lyashenko and Kvilinskyi, 2015).
 Positive: Tesco motivate the customers towards direct website shopping in which at the
time of delivery van driver collect the unwanted plastic bags to recycle them which
increases its brand image.
 Negative: These factors are not allowed the Tesco to focus on its main area.
Legal factors: All specific rules and regular which effect the overall performance as well
operations of the organisation. In these legal factors includes health and safety law,
discrimination law, patents and copyright law etc.

 Positive: Specific laws protect the interest of the employees which boost their
satisfaction level.
 Negative: These laws include various complicated formalities that must be completed by
every organisation.
NHS- There are various external environmental factors which affect the overall performance of
the company and to control these factors are very difficult for the company. These factors are:
Political factors: It includes change in government, tax rates, financial stability etc.
 Positive: Stable government in UK is a positive factor for the NHS because it will lead
smooth and effective organisational performance.
 Negative: financial instability in the nation effects quality of decision-making as well as
performance of the organisation.
Economic factors: It includes various economic factors which affect the business such as
inflation rate, exchange rate, interest rate etc.
 Positive: NHS provides services at reasonable cost or free cost which attracts large
number of customer's.
 Negative: Increase in such types of rates decrease the level or numbers of upcoming
customers and quality of decisions also.
Social factors: It includes culture, lifestyle, beliefs, values of the individual which effects
purchasing power of the customers (Singh, 2012).
 Positive: Raising awareness about the health increases the number of customers for the
NHS.
 Negative: People wants qualitative services so they prefer other best organisation for the
health service rather than NHS.
Technological factors: Technological advancement effects the quality of decision
making as well as performance of the organisation.
 Positive: Improved and innovative technology helps NHS to serve the customers in a
better and effective way.
 Negative: Continuous change in technology will increase the cost for the NHS.
Environmental factors: It includes all the factors such as weather, climate and many
more which affect the decision-making and performance of the company (Šoltés and Štofková,
2016).

 Positive: raising awareness regarding environment among customer's increasing the
various opportunities like eco-friendly products and many more.
 Negative: Change is climate and weather affect the overall performance of the
organisation in a negative way.
Legal factors: The legal forces include all the legal laws and rules which effect the
organisation positively as well as negatively.
 Positive: If the tax and duties are decrease then it is beneficial for the NHS.
 Negative: Rapidly changing rules and regulation also burden for the NHS at the time of
completion complex formalities.
LO4
P5 Conduct the internal and external analysis to identify the strength and weakness.
SWOT analysis of Tesco are as follows:
Strength Weaknesses
 It is one of the biggest grocery retailer
in all over the UK.
 Availability of various products as well
as market is one of the great strength
for the Tesco.
 Tesco operations are failed in various
areas such as japan and US.
 There are various fines are charged on
the Tesco due to some accounting
scandals.
Opportunities Treats
 Increasing online users also become
one of great opportunity for Tesco to
spread its business through online
medium.
 In some countries Tesco is not
performing well so it opportunities for
joint venture.
 Raising competitors such as Walmart
and many other will become a great
threat for the Tesco.
 It only depends on the UK marketplace
rather than expanding its market which
is treat for the Tesco.
SWOT analysis of NHS are as follows:
Strength Weaknesses

 NHS has good reputation among the
customer's in over the world is one of
the biggest strength for the
organisation.
 The good vision of NHS and its best
leadership is also strength for the
organisation.
 Lack of fund is a weakness for the NHS
because fund is required to maintain
infrastructure and other things.
 Low availability of beds at the time of
emergency.
Opportunities Threats
 NHS continuous building current
performance is one of the great
opportunity for the NHS to grow more.
 Building relationships with many
others primary and secondary cares.
 It is very difficult for the NHS to
maintain and provides various services
at all the sits.
 Changing government or legal rule and
regulation is a threat for the NHS.
Influence of SWOT analysis on decision-making
The SWOT analysis is performed by the company to identify different internal strength
and weakness and outside opportunities and threats. The all internal strength and weakness of the
company is controlled by the organisation whereas all the opportunities and threats are not able
to controlled by the organisation. Once all the strength of the company is identified then it is easy
for the company to take proper and effective decision as well as implement the various strategies
properly. The Tesco and NHS needs to take appropriate decisions to remove all the weaknesses
of the company and improve its productivity. And the opportunities are the chance for the NHS
and Tesco to grow more in the existing market so company needs to grab all the opportunities
which are presents in the marketplace and overcome with all the treats for the success.
P6 Explain how internal strength and weakness affect the external factors.
All these external environment factors affect the overall performance of the organisation
and by analysing these factors company identify various strength and weaknesses which are very
useful for the company to make is more effective. The description of strength and weaknesses
are as follows:-

Political factors- The main factor which is considered by the company is political
stability. This factor is responsible for the functional and operational changes.
 Strength- As Tesco is globally spread company so if the tax rate is low then it is very
beneficial for the company to grow more.
 Weaknesses- The continuous change in government policies will affect the function as
well as operations of Tesco as it is deal with the world wide level so it will become hard
for the company to keep them updated.
Economic factors: These are the factors which mainly concern by the Tesco which
includes demand, price, leverage costs etc. These factors affect the purchasing behaviour of the
individual.
 Positive: The Tesco is mainly focuses on the economic factors which increase its overall
performance and productivity of the Tesco.
 Negative: Increase in exchange rate of the nation affects the total price which is charged
on the particular product due to fluctuations in exchange rates of the nation.
Social factors: It includes individual beliefs, behaviour, attitude and many others which
affect the overall behaviour of the individual as well as operations of the company (Tretyak,
Weck and Ivanova, 2013).
 Positive: The company respect the individual religion, value and beliefs which helps the
company to retain the employees for a longer period of time.
 Negative: The existence of various employees and their different culture and values
becomes difficult for the organisation at the time of consideration.
Technological factors: It includes all factors that is related with innovation and
operations that is performed by organisation through using technology. It includes to pertain
factors to find out favourable and unfavourable conditions.
 Positive: Tesco is a multi-national organisation which is operating their business's at
global level. So technology factor helps them to complete their work within minimum
time period.
 Negative- Tesco need to invest huge finance for purchasing new and update technology
this will increase production cost for organisation. Therefore it negatively impact on goal
of organisation.

CONCLUSION
From the above report it can be concluded that there are various enterprise private, public
and volunteering and all these organisation has various purpose, size and scope. The inter-
relation between different department of the organisation is done for the smooth functioning as
well as growth of the Tesco. The various external environment factors helps the business to
identify the positive and negative impact on the Tesco. The various strength and weakness are
identified which presents in the internal environment of the organisation to take appropriate and
valuable decision for Tesco towards its success.

REFERENCES
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Online
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valuable decision for the tesco towards its success.