Analysis of Business Environment for Companies

This assignment provides an in-depth analysis of the business environment, including different classification methods such as business size and type, economic agglomeration, job creation, and entrepreneurship. It also covers public relations in small businesses, the influence of the business environment on socio-economic performance, and the role of external environment and organizational culture in corporate entrepreneurship. Additionally, it touches on strategic fit between innovation strategies and business environment in delivering business performance.

Business and business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of organisations and their legal structure......................................................1
P2 Size and scope of various organizations................................................................................1
TASK 2............................................................................................................................................1
P3 Relationship between organisational functions and their linkage with objectives of
organisation.................................................................................................................................1
TASK 3............................................................................................................................................1
P4 Positive and negative impact of external environment on business operations.....................1
TASK 4............................................................................................................................................1
P5 Internal and external analysis of some specific organisations to identify strength and
weakness.....................................................................................................................................1
P6 How strength and weakness interrelate with external factors...............................................1
CONCLUSION................................................................................................................................1
REFERENCES................................................................................................................................2
Books and Journal............................................................................................................................2

INTRODUCTION
Business environment is known as surroundings of business which includes both external
as well as internal factors that affects functioning of business. It is essential to do proper analysis
and evaluation of market before starting business in those markets. The company considered in
this report are Tesco as a private organisation, National health service (NHS) as public
organisation and OXFAM as voluntary organisation. The following report discusses about
business environment and various factors that affect functioning and operations of the
companies. There is PESTLE analysis of one of the company and SWOT analysis of other two
companies. There is discussion on relationship between organisational functions. Also there is
discussion on positive and negative impact of external environment on business activities.
SWOT analysis of two companies is mentioned. At last, there is discussion on strength and
weakness of external analysis(Banica and Hagiu, 2015).
TASK 1
P1 Different types of organisations and their legal structure.
Within a business environment, there exist different kind of organisations that have varied legal
structures and purpose. Information about various kinds of business firms is given below:
Public organisation: A public sector involves both public enterprise and services which
is managed & owned by governmental authorities. These firms have the aim to provide good
facilities to local and regional people without charging them high amount. Profits and shares
earned by this sector are used to offer standardised services to common people. For example,
NHS.(Clarke and Xu, 2016).
Purpose: Main purpose of public sector firms is to offer high quality service to public so that
they can feel secure and safe while living in a region. Public services offered by these firms
involve governmental services like police, military, news, healthcare, educational and other
services.
Legal structure:
 Local government: This tier of government is authorised to manage small town and
cities. Their powers are limited and they care accountable to state government for their
work.

 State government: This governmental structure formulate regulations and laws for a
state and manage all the public activities within that region.
 Central government: It is the highest tier in governmental bodies. This government has
jurisdiction within whole nation and formulate regulations for state and local government.
Private organisation: This business sector includes firms that are run and managed by
private businessmen either as individual or in partnership with another business persons. One
example in this context is Tesco which is a UK based retailer offering grocery and other
household products to their customer base.
Purpose: Purpose of these firms is to earn high revenues and sales so that maximum profits can
be earned. This benefits these firms in gaining wide advantage over rival firms.
Legal structure:
 Sole proprietorship: In this legal structure, an individual runs and own business on
individual basis. All the business activities are carried out by a single person in order to
attain maximised profits. If these businesses face any loss, it will be faced by sole
proprietor only(Deasy and et.al 2016).
 Partnership: This is stated as an association of two or more than two people. This legal
structure have legal obligations similar with sole proprietorship but here, a contract is
signed by the partners which allow them to acknowledge their shares and profits within
business. If one partner do not follow contract terms, other partners can file a law suit
against them.
 Limited company: It is an organisation that is set up by a person to run their business.
Here, owner of business is not completely responsible for the business activities and
finances of firm will be separate from personal finances of business owner. These
companies can either public or private in nature. For example, Tesco.
Voluntary organisation: These business firms are basically a group of people which are
interested in serving people without any fees. For example, OXFAM which is a global company
which fights against poverty(Fabuš, 2017).
Purpose: Main aim of OXFAM is to provide social and welfare services to common people so
that they can live a comfortable and healthy life.
Legal structure:

 Trust: These firms are set up for management of property and money for a defined
purpose. These firms creates a relation among three parties which is money donor,
trustees and beneficiaries. Starting up a trust is a cheap and quick process. For instance,
OXFAM.
 Association: These companies are not legal entities but management committees that are
called as councils. In these organisations, different people works together to attain a
common goal.
Business environment include several type of firms. These companies are very different
in performing their business activities and main aim of these firms is to either earn maximised
profits or serve people for free so that they can live a comfortable life. Operating in a specific
region can make market saturated due to which earning high sales became difficult. To overcome
this issue, business firm operates in global manner so that they can serve more number of
customers and earn high profits. Due to this, growth in international business is increasing day
by day. In context with TESCO, company is operating globally and earns high revenues and
profits against rivals(Grigore and Drăgan, 2015).
P2 Explain the size and scope of a range of different types of organisations
There exist three type of firms i.e. voluntary, private and public firms that have different
size, scope, mission and objective. These aspects for Public, private and voluntary firms i.e.
NHS, TESCO and OXFAM respectively are stated below:
Public organisations: NHS is a public firm in UK which provides healthcare facilities and
emergency treatment to needy people without charging them high money.
 Products and services: Main services which are offered by NHS are critical medical
services, emergency treatments, dental care, eye care, ear tests to people in UK in free.
 Size and scope: NHS is one of the biggest public company which is employing more
than 1.5 million workers. Staff of company involves health visitors, dentists, doctors,
ambulance, nurses etc. Firm has high scope in UK and other regions as they offer free
medical services to local people without compromising with quality of services.
 Mission and vision: Mission of company is to increase their business operations in
global context so that every patient and needy people can get proper treatment
irrespective of their financial statement. Vision of company is to provide health benefits
and medical care to common people.

 Stakeholders: Main stakeholders of company are staff members of NHS, local bodies,
governmental officials and agencies.
 Private organisations: Tesco
 Products and services: It is a supermarket company hence they are dealing with all
grocery related products and various financial products also.
 Size and scope: There are approx 700 stores present all over world and they have 5 lacs
people employed in this company. company has a very wide scope as they belong to
supermarket industry which has a maximum growth potential.
 Mission and vision: Tesco has a vision that they want to be largest supermarket chains
of the world. And their mission is to become a cost leader and provide quality products to
their customers.
Stakeholders: Stakeholders of Tesco are executive officials, investors, board of
directors, shareholders, customers, employees etc.
 Voluntary organisations: Oxfam
 Products and services: This company deals with lifestyle products.
 Size and scope: There are 20 independent companies which are operating under Oxfam.
This has lead to wide scope for the company as they will be able to manage their future
course of actions.
 Mission and vision: Oxfam has a vision that they are able to reach maximum people and
satisfy their basic requirement. Company also has a mission that they want to affect
lifestyle of people in a positive way.
Stakeholders: Stakeholders for OXFAM are volunteers, local people, government,
investors, charity organisations etc.
TASK 2
P3 Relationship between organisational functions and their linkage with objectives of
organisation
Structure of a company is in a way that it helps it to achieve their laid objectives & goals.
There are four basic structures of company as discussed below:
Marketing and Finance:

Tesco is a company which belongs to supermarket industry of UK. Major function of this
department is to increase overall sales and profits of company. Accounting department is
basically responsible for preparing financial statements and further analysing it. This helps in
monitoring of sales trends and provides information which is used for expansion of business and
reduction in costs(Huang-Horowitz, 2015). There is a need that there is strong interrelation
maintained between these two most important departments of company, this will help them in
managing costs of business and at same time functions of marketing department will take place
without any interruptions.
HR and marketing:
Every company wants that there is competent employees so that they are able to
understand functions and their job in a proper way. This also reduces cost on part of company
which they otherwise have to incur in case employees require training on how to perform their
job. Recruiting of trained employees is function of HR department of every company. In context
of Tesco it is very important for their marketing department to effectively communicate with
human resource department related to their various requirements this will help them in doing
their human resource function according to that. This will help in saving lot of time and al
functions will be performed in an effective manner(Khan, and Quaddus, 2015).
Organisational structure
Tesco has implemented a Functional structure which means that they have made divisions
according to functions of company. Below this structure has been discussed with the help of a
flow chart which will help in understanding of this functional structure being followed in Tesco.

TASK 3
P4 Positive and negative impact of external environment on business operations
Tesco uses PESTLE approach to analyse various factors which are part of the external
environment and they help in internal management of functions of company.
 Political factor: There are some political factors which affect every company directly or
indirectly. Tesco is located in united kingdom, there are various legislations which are
bought by government. One such legislation recently introduced by UK government
related to control on Fat tax, as they want to control the problem of obesity which can
adversely affect the health of people of UK(Kolk, 2016).
 Economic factor: Economy of UK is recovering from the financial crisis which
occurred in the year 2008. now present situation is different as there is developed
economy now in UK. This has many positive benefits for company as they can get
benefits of a developed economy, such as there will be more personal disposable income
available with people which will help them in spending more. This will lead to increase
in overall sales of Tesco.
 Technological factor: Technology is most critical factor which plays role in overall
development of company. When there are many competitors emerging then technology

is a tool which can help companies in getting a competitive advantage. Tesco also has
adopted successfully the growing advancements in technology company has recently
improved their distribution service with the help[ of such usage of updated technology.
 Social factor: There has been increase in the life expectancy of people living in UK.
Social factor deals with people living in society such as there has been shift in preference
of people they are more focussing on trends of online shopping which helps them in
shopping at any time in comfort of their home. This has shifted focus of company
towards their online presence(Moroni, Arruda and Araujo, 2015).
 Legal factor: There are legal requirements which have to be compulsorily adhered by
companies operating in that country. Tesco is having a supermarket chain across
different parts of world. They are also dealing in various financial products such as loans,
credit cards, mortgages and savings. There are various financial cats which apply on
Tesco and they have to adhere to them while making policies related to their finanacial
products.
 Environmental factor: External environment is where every company has its operations
and they are functioning. This factor is having a very crucial role in functioning of Tesco.
Tesco is a company having concern for environment and they have always made efforts
that they are able to take measures in protecting and saving environment. Sustainable
development is a tool which is main focus of company as they want to minimize their
consumption of energy and at same time company always takes measures that they are
not emitting such gases which can harm the environment(Otache, and Mahmood, 2015).
P5 Internal and external analysis of some specific organisations to identify strength and
weakness
SWOT analysis of Tesco
Strength Weakness
 Tesco is a company which is having a  In year 20185 there has been decrease

global presence. They are present in
approximately 14 countries.
 There are stores of Tesco which are
growing in number as according to a
survey in 2008 there were 3,757 stores
and in present situation there are 6966
stores all over world.
 Tesco uses superior technology to
enhance the experience of their present
customers.
 Tesco has been successful in
maintaining a efficient network of
supply chain which has reduced their
cost and also there has been efficient
waste management system build up by
the company.
in the operating profit of Tesco by a 9%
number. This was because of the Brexit
referendum and this was the year of
worst performance of company.
 Tesco has been able to become a cost
leader but they have also face a
problem of reduced margins of profits
in recent years.

Opportunity Threat
 Tesco has been involved in making
strategies with different companies
which can help them in attracting
increase number of customers
 Tesco has opportunity they can plan
their expansion in countries such as
turkey, Indonesia and south korea.
 Present referendum of Brexit has
affected company in a way that that
many trade reforms formed by them
have been broken and their alliances
have also broken.
 Governmental regulations are
increasing and affecting Tesco as there
is increase pressure on company as it
has reduced operational efficiency of
Tesco.
SWOT analysis of Oxfam
Strength Weakness

 Oxfam is a company which is having
well defined goals and objectives, this
always proves very helpful in deciding
the direction of work to be done by
employees.
 Oxfam is having a strong global
presence, which helps them in having a
wide reach to maximum
customers(Virglerová, Dobeš and
Vojtovič, 2016).
 Company is not having a very high
brand recognition as they are having
online presence only.
 This brand is less preferred by people
who re looking for something
luxurious.
 This is voluntary organisation and they
are less preferred by people as there is
a perception that because they are not
earning profit then they might not
provide quality in their products this
affects overall sales of company.
Opportunity Threat
 Oxfam can increase their level of
operations by investing more on
marketing, promotional activities so
that they are able to create awareness
and persuade their target customers.
 Company have the opportunity to start
their physical stores so that they are
able to easily approach those segment
of customers who are looking for
physical presence of stores.
 Oxfam has low motivated workforce
which is a threat for company as there
can be increase in turnover of
employees.
 Oxfam has many competitors in market
which are offering quality products to
the same segment of customers, apart
from this there are also emerging
companies which is a big threat for
Oxfam.
TASK 4
P6 How strength and weakness interrelate with external factors
Basis Strengths Weaknesses
Political
Tesco is a brand which has
proper implementation of
Rules are very important to be
adhered, but this reduces

various governmental laws and
regulation.
flexibility in functioning of
company.
Economical
Tesco is a company whenever
they entered in countries
having high GDP growth this
lead to increase in sales of
company and they had
increased profits.
Tesco always focussed on
expansion, if any country has
low GDP and economic
growth then it will affect the
profitability of company.
Social Factor
Tesco as a supermarket brand
has always believed in
continuous basis of
improvement in their products
according to changing
preference of their target
customers(Sodeyfi, 2016).
Social factor is in relation to
customers behaviour which is
never constant they keep on
changing on continuous basis.
Technological
Tesco has becopme successful
in adoption of upgraded
technology, they are using
digital technology platforms
for marketing and promotion
of their products.
Tesco keeps on making
changes which leads to lot of
utilisation of time and
financial resources of
company.
Legal
Companies are always affected
by changing laws of every
country. Such regulations are
important from customers
point as they are able to trust
the brand(Prajogo, 2016).
Regulatory authorities keep on
changing laws of company
which leads to very frequent
amendments and disturbs all
laid policies of company.
Environmental
Management of Tesco has
focussed on sustainable
development this has helped in
Many times there is situation
for companies they have to
take care of lot of factors

building of brand image in
market.
which are related to
environmental. This imposes
lot of restrictions on company.
CONCLUSION
From the above discussion, it is concluded that business environment is an important
factor which affects all companies in some way or other. It is that factor which is present in the
external environment of company. There are major three basis on which companies are divided
that is public, private and voluntary. Also, there are several other criteria which are used to
classify companies based on their size, structure, scope and stakeholders. Such classifications are
helpful in knowing the scale of operations. There is analysis done on other basis also which
includes SWOT, PESTLE etc, which is very useful for companies in planing their future
strategies.

REFERENCES
Books and Journal
Banica, L. and Hagiu, A., 2015. Big data in business environment. Scientific Bulletin-Economic
Sciences, 14(1), pp.79-86.
Clarke, G., Li, Y. and Xu, L.C., 2016. Business environment, economic agglomeration and job
creation around the world. Applied Economics, 48(33), pp.3088-3103.
Deasy, S., Meyer, R., Newell, C., Emil, S.I.T., Wisner, P., Furodet, D., Gyuris, V. and Strudel,
F., VMware Inc, 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Fabuš, M., 2017. Current development of business environment in Slovakia and Czech Republic.
Grigore, A.M. and Drăgan, I.M., 2015. Entrepreneurship and its economical value in a very
dynamic business environment. Amfiteatru Economic Journal, 17(38), pp.120-132.
Huang-Horowitz, N.C., 2015. Public relations in the small business environment: Creating
identity and building reputation. Public Relations Review, 41(3), pp.345-353.
Khan, E.A. and Quaddus, M., 2015. Examining the influence of business environment on socio-
economic performance of informal microenterprises: content analysis and partial least square
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Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business, 51(1), pp.23-34.
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Otache, I. and Mahmood, R., 2015. Corporate entrepreneurship and business performance: the
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Prajogo, D.I., 2016. The strategic fit between innovation strategies and business environment in
delivering business performance. International Journal of Production Economics, 171, pp.241-
249.
Sodeyfi, S., 2016. Review of literature on the nexus of financial leverage, product quality, &
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Virglerová, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
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