Impact of Business Environment on Company Performance

The current study discusses the importance of understanding the business environment's effect on company performance. It covers various factors such as technology, customer retention, distribution problems, innovation strategies, and environmental considerations. The study also highlights the need for effective decision-making processes to overcome issues and run businesses effectively in a competitive marketplace.

BUSINESS AND
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
Activity 1.........................................................................................................................................1
Three different types of companies, their background, products, services, and size-scope........1
Interrelationships between different functions within business...................................................5
Activity 2.........................................................................................................................................8
PESTLE Model for TESCO.........................................................................................................8
SWOT analysis .........................................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is refers to the environment of company which get affected by
external and internal factors. Businesses environment is sum total of all persons, institutions and
another forces that are outside and control business companies. The present reports is based on
three different types of organizations, including their background information, services, products,
size, scope and other things (Prajogo, 2016). This report explain interrelation between different
functions of company and also clarify business objectives, mission and vision. The current study
justify disadvantage and advantage of interrelationships between many functions of organization
which impact on organizational structure. Furthermore, it explains PESTLE analysis and SWOT
analysis to identify TESCO capabilities or competences. It also clarifies Micro and macro factors
impact on decision making process of firm.
Activity 1
Three different types of companies, their background, products, services, and size-scope
Private organization-
The private firm is any corporation, partnership and agency that is not managed by public
body. It is the part of country economy that operated by person or individuals for making profit,
that is one of their main purpose of business. Private companies run their businesses individually
rather than government, most of the firms under private sector run with intention of increasing
profitability and enhance productivity.
Background, products and services, size and scope-
H&M is considered as private company, it is a Swedish international clothing retail
organization known for their work such as fast fashion clothing for women, men, children and
teenagers. The organization was founded by Erling Persson, he opened his first shop in Sweden,
the shop known as Hennes. Firm and their associated firms operate in 62 nations with over 4,500
stores and employed around 132,000 individual. H&M placed as the world second the biggest
clothing retailer, they have momentous online presence with online shopping avail in 33
countries. Company continually expand their business in many countries such as Europe and
start up to retail online (Deasy and et.al., 2016). H&M expand their business in Middle east and
Asia as well where they launch different concepts stores such as Weekday, COS, Monki etc. To
their work or good performance branding consultancy inter brand ranked organization as twenty-
first valuable international brand.
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Company offer their best services and products to its customers which makes them happy
and satisfy with the quality of goods. They manufacture clothes and fashion accessories for
women specially include handbags, hand fans, wallets, purses, shoes, hats, belts, muffs etc.
H&M foundation compass beyond H&M group value chain and complements their sustainability
work. Firm mission is to drive longer positive change and better living situations by investing in
communities, people and innovation ideas. Its vision is to provide the better quality products and
fulfill the needs to customers more and more. They want to expand their business in all over the
world which stated as business objective.
Organization and legal structure-
H&M is an independent legal entity with no straight links to H&M group, As for
company design, organization management is based on headquarter in Stockholm. Headquarter
is also locations of main departments involving procurement, design, finance, interior design and
business development, human resources, security and environment etc. company build their
office in more over 20 countries, firm take charge of each departments.
Stakeholders-
Stakeholders are different parties or group of people that have direct interest in affairs of
company. Owner, managers, workers, customers, government, communities are included in list
of H&M stakeholders.
Public organization-
Public companies are owned by the local and national government as well as state
government, public organizations work for customers satisfaction rather than making profit.
Background, products and services, size and scope-
TESCO is considered as public company, it is the British international groceries and
general merchandise retailer. Company is one of the third biggest retailer in the world measured
by gross profit and revenue. TESCO has shops in 7 countries across Europe, Asia etc, they
known as the leader of groceries market in UK. Firm is founded by Jack Cohen in 1919, he
expanded business rapidly more over than beginning and successfully opened 100 shops across
the country. Organization diversified into many areas such as, retailing of books, software,
clothing, financial services, petrol, toys, telecoms, electronics, furniture etc. At some extent tesco
re positioned themselves from being low market high volume low cost retailer, to designed to
garb the attention of social groups by offering goods ranging from low cost. This plan work
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successful as TESCO grow more and more and open 500 shops. They purchased 70 Williamson's
shops, 200 Harrow stores outlets, 97 Charles Phillips etc. company run their own supermarket,
hypermarket, convenience shop and superstore in many countries. They supply range of products
to their customers within affordable prices.
Organization and legal structure-
Company deals with another business by following the legal structure which is based on
government rules and regulations. They work under legal structure and also deal legal matters by
following all the rules. TESCO follows hierarchical organizational structure in their business,
they operate each of the level in their management. Company has tall structure, which shows that
firm is large and has different layers within hierarchy.
In TESCO firm structure, obligation and positions are divided into various parts to assure
work will be done smoothly and efficiently. Ones at top of business pyramid have supreme
authority and responsibilities. As discussed in above chart of organizational structure, Tesco lead
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Illustration 1: TESCO Organization structure
(Source: TESCO COMPANY ORGANISATIONAL STRUCTURE CHART, 2019)

or managed all the layers. All the managers of each level work and perform their duties
according to their roles and responsibilities.
TESCO mission is to make products that matters, better for customers and valuable for
them. Their mission, values and vision are operated and interrelated as entire shaping identity of
organization. It visions is to expand business and increase profit which used for satisfying
customers.
Stakeholders-
Customers, they purchase or buy products, owner, they invest money in business and
interested in getting profit from it. Employees, they give their time, efforts to make or build
strong or successful business.
Voluntary organizations-
Voluntary companies refers to firms whose main purpose is to create social affect rather
than profit. Save the children is considered as voluntary organization, save the children is
founded in UK in order to save or improve lives of children's through health care, better
education, economic opportunities, they provide emergency aid in war, natural disasters and
other conflicts in country. In addition, UK companies has 29 national save the children firms
who are part of save the children alliance, they work for non profit purpose. Company give their
services more than in 120 countries across the world. They promote policy modifications in
order to gain many rights for young people particularly by enforcing UN declaration of Rights of
Child.
The vision of Save the Children is to provide better care services to children's which
helps to development both spiritually and materially. Its mission is to spread their work across all
around the world which helps to improve the living standards of public by education.
Organization and legal structure-
Save the children is working under the voluntary sector which means that their working
level is made up of unpaid individual who are not interested in making money or profit they only
want to save the lives of children's. Four major components included in their organizational
structure such as, Board of directors, they are responsible for maintaining company on track to
fulfill their mission, Members, non profit companies does not have to many members or can
limit membership to people of board of directors. Members of this company usually meet once
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within a year for the purpose of annual meeting to elect directors. Volunteers, working stage of
save the children organization is made up of unpaid people.
Committees, government, Volunteers, members etc. are the stakeholders of save the
children firm.
Structure, scope, size of different companies does not link to business products,
objectives, services offered by organizations. For example, TESCO business structure is different
form Oxfam because they both work within different purpose, having different working styles
and operate business at different levels which is not possible to link up at any sides. Some
organizations purpose is only making profit, they mainly focus on increasing profitability and
productivity, and secondly focuses on customers' satisfaction. But on the others side few of the
organizations in UK perform well for improving the lives of people, without focusing on making
profit, they only work for well bigness of human life.
Company within hierarchical business structure face many problems, under this
structure employees suffer the most. Business is divided into many levels which creates
complexities or any conflict situations. Organization structure is depended on type of company
and their functions, because small size of firm has line structure which is simple, but large
companies business structure is large because of their size, scope and work, which create
difficulties for them. Within hierarchical structure level is divided into many partner in which
employees do not reach at that level for the purpose of solving their any issues, complexities
increases more and more. Workers will not be able to reach at the high authority easily, large
business structure consume a lot of time of staff which result shows as failure. Staff is divided
into different levels, all have their own roles and responsibilities. Tall structure of business is
very difficult to mange.
Interrelationships between different functions within business
In business there are many functions which are related with each other such as
production, marketing, sales, billing, research etc. organizational structure defines interactions
and relationship between parts of businesses.
Marketing with finance department- Finance department of any company are
responsible to manage their money or profit. They typically include organizing, planning,
accounting, auditing and controlling organizations finances. Financial department usually
produces firms financial statements and allow another department to work under the given
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budgets. They are mainly responsible for acquiring funds for company, plan for expenditures of
money on different assets (Bah and Fang, 2015). It is essential for company to have finance
section because they cover all the activities from basic bookkeeping to provide financial details
important to survival firm's. Marketing is one of the another functions of company which operate
each activities or functions of marketing within firm. Marketing department sets programs of
firm to increase sales via advertising and promotion. These includes direct advertising system
such as television, radio, marketing campaigns to attract people. Marketing section and finance
department both work closely. Finance department provide funds to company marketing sector
which helps to run their activities efficiently, they allow performing the best and promote
products and services of organization in marketplace.
Advantage- With the help of good funds marketing department make plans or the best
strategies for promoting service or goods better than the another. It impacts on firm structure, via
marketing company will be able to gain profit and generate high revenues as compare to other in
business world. Marketing is always seeking for better way to advertise business with confines
of organization budget.
Disadvantage- interrelationship of marketing ad financial department possess as
disadvantage. Finance department provide funds to marketing sector and order to make plans
under it, but marketing program of company required more funds to run their advertising plan. It
makes difficulties for both of them which affect on firm profit and productivity more and more.
Finance department have entire company brief they want that all the businesses operations
operate their functions within financial capabilities. They want that all the departments of
company work within its allocated budgets which some extent not possible.
HRM with marketing department- Human resource department or management is one
of the most important part or functions of company that deals with many issues or any conflict in
organization, and try to solve it as soon as possible to run business in market efficiently. They
make plans to enhance or maximize the performance of employees and all the staff members.
They are responsible for monitoring and overseeing workers benefits, staff recruitment,
development and training, performance appraisal, managing staff pay or benefits program. On
the other hand marketing department of firm make plans for advertising job vacancies
requirement in company, they help to garb the attention of people those who need job to fulfill
their dreams. If organization wants to attract profitable consumers to gain decent sales number,
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they have to hire talented or skilled people in workplace that helps to achieve their dreams and
business objectives. HRM and marketing department are interrelated with each other and work
via support.
Advantage- Marketing department helps human resource department via employer
marketing. Selling section make plans based on employee requirement in company which helps
to garb the attention of public. With the help of good strategies or marketing plans HRM gets the
most skilled and talented candidates, which contribute to gain competitive advantages.
Marketing department include all the policies and regulations in advertising plans which helps
person to chose the right job according to their qualification. Marketing department will work
closely with human resource management to assure that right staffing and skills levels are in
place to develop new products.
Disadvantage- But if marketing department do not mention what policies does company
carry in plans of employee marketing people feel less interested, they cannot find out the purpose
of business that is important to know for them. Inappropriate plan of employer marketing cannot
give positive outcomes which impact on business growth and success, it also effects company
market reputation. Marketing department always need to attract the right or talent people, but is
they do not so will directly impact on organization profitability.
Operations management production- OM is area of company management which
concerned with controlling and designing process of manufacture goods and redesigning
business each operations in production of services and products. It is an administration of
business activities to create high level of efficiency possible within organization. They make
plans who to manufacture goods, quality of products and assure that production process is
accomplished successful. Marketing department work or perform their work more closely with
operations management or production department. Marketing area make advertising and
promotion plans for particular goods and introduced it, in marketplace for increasing profit and
build brand reputation rather than the others.
Advantage- Marketing department helps to promote services and products of company in
market that garb the attention of customers and increase profit (Calabrese and et.al., 2018.). It
impacts on company structure in which they perform more and make effective plans that helps to
generate revenue.
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Disadvantage- Marketing is one of the first stage that introduced product in marketplace
in front of consumers, if marketing department will not work closely with production, it directly
affect organization financial budgets and decrease their reputation.
Activity 2
PESTLE Model for TESCO
Pestle model is framework that emphasis on understanding the impact of the macro
elements such as political, economic and others in an organisational context. It helps in analysing
and monitoring the external factors that has an influence on the working practices of Tesco
offices in all around the world to maintain the employees' engagement and the performance
management.
Political Factor: This factor is in struggling phase due to the Brexit and the bureaucracy
that has been practised at international markets. The management of Tesco has been affected by
the trade union activities along with the lobbying methods used by the home market. For
instance, the Chairman of Tesco stated that the focus is to maintain the negative implications on
the retail chain because of the EU referendum on the economy of the United Kingdom. In
addition to this, there were few changes made in the taxation system and this impacted the
supermarket themes of this company. This tax was popularly called as Tesco Tax. However, this
tax was utilised for the community benefits only through supporting the formation of centrers,
parks and other such learning and recreational structures to help the deprived people.
Economic factor- Demand for goods in market, profit of company, prices of products is
depended on economic factor such as inflation rates, interest, local unemployment levels, labour
cost etc. Any firms cannot have control on all these economic factors, but it reflects adverse
impact on company performance. Tesco is highly depended on labour of UK as they operate
business in that country. Sudden changes in Labour law make negative impact on organization
business which means that lobar market collapsed will greatly affect TESCO. Whereas, if
company pay wages to their workers according to lobar cost it helps to run business effectively.
If organization make some changes in their structure, they will beat their competitors in
marketplace, it affects positively.
Social factor- Customers shopping trend is constantly changed over time, people have
tough schedules and need same day and quick delivery with flexible products return policy,
consumer prefer one stop shopping. Changes in customer needs negatively affect on TESCO
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business and profit margin, but on other hand they can overcome within it via understanding
customers needs and provide better services of good quality products.
Technological Factor: Tesco has started using the digital marketing and other social
media platforms to gain the attention of its existing and potential customers as well. Their online
delivery system has become systematic and led to efficient delivery which has been a blessing
for their customers who has found this facility easier and quicker. Moreover, their self service
check out provision has impacted low costs in the labour and impacting their profit making
approaches. Whereas, the social media is faster, less complicated platform and has widespread
reach and thus, the marketing team is struggling in sending complete details through emails,
texts, using whatsapp and other such tools (Folarin and Hassan, 2015). Their website has become
customer friendly but needs proper security to introduce the free delivery services to the constant
customers with the development of safe payment methods. These impacted their revenues and
helped in gaining competitive advantages and paved the path of attaining the aim of fulfilling the
carbo footprint.
Legal factor- In businesses legal environment, do not undermine key areas where laws or
rules changes that impact TESCO businesses performance to achieve their objectives.
Government passes law in which each employee should have the rights to get the good pay or
wages according to their work (Aithal, 2016). It impacts on organization financial budgets
negatively, because they already make workers wages plans which need to change after passing
rules by government. But on the other side if firm provide staff equal pay or wages they can
retain with them for longer and build good relations.
Environmental Factor: This factor is important in linking the sustainability factor that
monitor the company's responsibilities in maintaining and safeguarding the surroundings. Here,
Corporate Social Responsibility of Tesco is a crucial element and which focuses on achieving the
carbon footprint by the year 2020 through adopting organic methods and proper waste
management procedures. The aim is to minimise the waste generation by bringing high levels of
social conscience among both the employees and the customers who are consuming their
products (Lin and Peng, 2018). Whereas, additionally, the purpose is to practice and implement
the environmental friendly operations to reduce the global warming impact and also proved
beneficial for the society on the whole. This means TESCO must start generating awareness
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among customers to donate a fixed amount to ban plastics and also give them training about
disposal of waste in proper and segregated manner between dry and wet type of wastes.
Micro and macro factors on decision making-
Political factor is consider as macro factor that affect on organization business procedure
the most, sudden changes in political things directly impact on TESCO business operations. In
which company has to take their decisions because it also affects decision making process as
well. Firm will need to make some changes in their businesses structure and operations function
according to government rules or policies which helps to run functions in many countries
effectively.
SWOT analysis
SWOT is one of the best strategic tool that helps to identify company weakness, strength,
opportunities, and threats. It helps to understand TESCO internal factors that impact on business
practices or activities.
Strength- TESCO is one of the biggest or leading grocery provider in UK, they supply
their quality products to customers via large chain of Supermarket in Britain. Company
dominates grocery retail of Britain with 4% of market share rather than the others. Organization
has thriving world presence with more than 6800 stores in 14 countries (Kara, 2018). Firm
diversification strategy proven to be quite successful for TESCO, it has range of clothing, home
ware, mobile phones business etc.
Weaknesses- TESCO is failed in Japaneses and American market which effect their
business and market reputation, which is one of its weakness. Failed operation of export forced
them to close stores in Japan. Company was charged with fines due to false accounting statement
and misrepresentation of profits that influence on profit margin.
Opportunities- Developing strategies of partnerships with another reputed firms offer an
excellent opportunity for TESCO, it will enable company to offer their products or services more
than now and attract customers more than the others. TESCO improve their reputation in market
after failed in Japan, so that they provide online shopping facilities to consumer which helps to
build their positive image and improve reputation.
Threats- With Britain no longer in UK, cost matters and trade deals has posed threat for
Company.
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Failed operations in Japan and America affect Tesco business functions and activities in
which company has to take decision for better outcomes. After failing in Japan expansion, firm
market reputation suffer, then management take decision and try to improve all the things. They
start online shopping websites for customers which helps to raise position of organization and
remove negative image in their minds.
Recommendation-
 To improve brand image in market, tesco management should make effective plans.
 To attract customers, they must create the best marketing plans.
CONCLUSION
The present report discuss about the three different types of companies and their
background or other informations, it includes TESCO, H&M and Save the children's. It has been
concluded that political, social, technological, legal and other factors affect business operations
negative and positive side that directly impact on profit margin. The current study discussed all
the information about company strength, weaknesses, opportunities and threats, and also discuss
who these factors affect on decision making process. In addition management make effective
plans to get overcome with any issues and run business effectively in marketplace.
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