Business Environment Analysis

The assignment requires a detailed examination of the business environment, its features, importance, objectives, and Porter's model. Students are expected to analyze the various aspects of the business environment and provide insights into how it influences firm performance and strategy. The document includes references from books, journals, and online sources, providing a comprehensive overview of the topic.

Business and
Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various types and purpose of organisation with legal structures..........................................1
P2 Scope and size of various type of enterprises........................................................................2
TASK 2............................................................................................................................................3
P3 Relationship between various organisational function and link with organisational
objectives.....................................................................................................................................3
TASK 3............................................................................................................................................5
P4 Positive and negative impact of macro environment upon business operations....................5
TASK 4............................................................................................................................................6
P5 Internal and external analysis of organisation to determine strengths and weakness............6
SWOT analysis................................................................................................................................6
P6 Interrelationship of strengths and weakness with macro factor.............................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Business environment is known as a collection of all entities, individuals and other
factors which may or may not be in the control of enterprise but can affect growth, performance,
profitability and survival of enterprise (Chavis, Klapper and Love, 2011). Every enterprise
execute its operations and operate in different environment. Actions and decisions of enterprise
get affected by the environment and also affect the environment. One of the main feature of
business environment is that it is dynamic, complex and uncertain. Internal and external are the
two major component of business environment. ASDA, chain of supermarket based in UK is
consider in this report for study. Various type of organisation with their legal structure, scope
and size is all given in this. Further, relationship between various function of an organisation and
its link with organisational objectives is all mentioned in this report. In addition to this, internal
analysis of firm and interrelationship between strengths of enterprise and macro elements of
environment is all included in this report.
TASK 1
P1 Various types and purpose of organisation with legal structures
Private enterprise: These are one of the most popular type of firm exist in business
environment. These firms can issue stock and have shareholders but shares of these firms can not
be trade on public exchanges. ASDA a British Supermarket retailer based in UK is an example
of this.
Purpose: Purpose of firm is to manufacture and offer featured goods to its customers and
increase its market share.
Legal structure of private enterprise: Partnership: Under this, two or more than two firms start working together to achieve set
mutual goals. To work in an effective manner and to attain set objectives, all partners
sign on a written paper known as partnership deed which consists information about the
percentage of profit, roles and responsibility of every partner (Chow and et. al., 2012).
One of the main advantage of this is that it help in reduce the grounds of conflict. Sole proprietorship: Under this, a single individual carry out business process with the
aim of generate large profits. Owner is the one which take all decisions and also bear all
profits and loss.
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 Limited companies: This is another type of private organisation which is classifies into
two parts known as limited by guarantee or limited by shares.
Public organisation: These are the firms whose main aim remain to raise the standard of
individuals living in society and are mainly control by the government which reduce the chances
of malpractices and improve ethics (Commander and Svejnar, 2011). Crown prosecution
services is an example of public enterprise based in United Kingdom. Company work criminal
indictment in England. Today more that 6000 representatives of firms are there. Various
functions are perform by entity to reduce the crime offense exist in community in order to create
a supporting environment in which every individual can live happily.
Purpose: Main purpose of firm is to develop and provide a legal structure to all criminal
agencies who do investigation. This support them in find an effective solution so better
environment can be created and promoted.
Legal structure of Public enterprise: Central government: This is the apex body which formulate rules and regulations for
local and state government and at the same time examine their activities. State government: This government provide its basic support to central government to
implement its various activities. Local government: This handle the day to day activities of public firms.
Voluntary organisation: These type of organisations work with the profit of social
development. It also known as not for profit organisation. One of the main objective of this
enterprise is to raise standard of living of companies. British Heart Foundation is an example of
this (Cuervo‐Cazurra, 2011). It is charity based organisation which work to solve the heart
problems that help in provide care to various individuals.
Purpose: Only purpose of this firm is to resolve and provide an effective solution of heart
problem present in society. Different type of research is carry out by enterprise to provide
healthy and effective solution of the problem.
P2 Scope and size of various type of enterprises
Various type of firms operate in a business environment and it is very essential for them
to first understand their purpose so they can work accordingly and can attain its set objectives.
Every firm has its own size and scope of operations which can be understood by the following
points:
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Crown prosecution services: Products and services: Firm give suggestion related with the criminal offense. Company
present the cases of clients in court. Mission and vision: Crown prosecution work with the vision of provide prosecution by
Witness. Size and objectives: This firm is not big in size and company is situated in England.
British Heart Foundation: Products and services: Various research are carry out by entity in order to complete all
business activities in an effective manner. Mission and vision: Mission Statement of enterprise highlight to deal with heart related
issues. Objectives: Company operate and provide its various services in various areas of UK.
ASDA Products and services: Different type of products such as grocery products, home
products and financial services are offer by entity to generate large amount of profit. Mission and vision: Mission of firm is to provide quality products to its customers at
affordable prices in order to capture a larger market share.
 Objectives: Sustain in market for a long time period is long term objective of company.
TASK 2
P3 Relationship between various organisational function and link with organisational objectives
A business organisation is know as a mix of various departments that perform different
functions to serve its customers. It is very important for firm to use effective communication
channels as this help in bring cooperation among various department and increase effectiveness
of business activity (Deasy and et. al., 2016). Functions perform by business is get affected by
the main objective of company and the structure follow by it. Mainly all functions perform by a
business enterprise get affected by each other so it very important that effective communication
should be there among manager of all department. Relationship between different organisation
function can be understood by the following points: Human resource department: This is known as one of the most significant department of
a business enterprise because functions such as recruitment and selection of employees is
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carry out by this department. Manager identify and examine the skills of applicants
before take a final decision of recruitment (Drucker, 2017). It is very important that there
should be proper communication between manager of marketing and human resource
department as with this marketing manager can make manager of HR department aware
about the skills require to be in an individual to perform a specific job. With this,
organisation can recruit best candidate and at the same time can perform all job role in
an effective manner. Research and development department: This department of enterprise carry out different
type of research to collect information about the needs and wants of customers. One of
the main benefit of carry out research is that it make the manager aware about the trends
exist in market and this provide guidance to manager to take decision (Hair and et. al.,
2015). It is very important for manager of research and development department to make
the managers of other department aware about the tastes and preferences of customers so
firm can manufacture products as per their requirements and company can retain
customers for a long time period.
 Finance department: This is another most significant department of enterprise in which
manager prepare budgets and allocate funds to other department as per their needs and
requirements. It is very important that manager of this department should be aware about
the funds require by other department as this help in allocate funds. Lack of funds create
delays and issues in attain end objective so adequate amount of funds should be allocate
to every department so entity can get desired outcome.
Various type of organisation structure can be understood by the following points: Functional structure: This type of structure is set up in a way that each portion of
enterprise is grouped as per its purpose (Hamilton and Webster, 2015). This type of
organisation structure is well for small business under which every department depend on
the talent, skills and knowledge of staff members. Divisional structure: This structure is used in big firms that operate on an large level and
have separate small companies within the umbrella group in order to cover the various
type of market and products. As each division can operate independently so this structure
help in achieve expertise (Hillary, 2017). Sometimes this type of organisation structure
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become cumbersome because workers do work together. This structure is costly due to its
scope and size.
 Matrix structure: This type of organisation structure is mainly used in multinational
companies. It create power struggles because various areas of enterprise will have a dual
management due to working of managers on same level and covering same managerial
territory.
TASK 3
P4 Positive and negative impact of macro environment upon business operations
Business environment is dynamic and complex one, in order to operate in market in an
effective manner and attain set goal and objectives, it is very essential for manager of ASDA to
carry out analysis of this (Hilton and Platt, 2013). One of the main benefit of this is that it help
enterprise in respond to the changes that take place in external environment and all this help
firm in maintain its market share. With help of this company can offer featured products to its
customers and can retain them for a long time period. Changes that take place in business
environment affect business and its operation in both positive and negative manner so it is very
essential for manager to examine this. Political, economic, social, technological, legal and
environmental all are the major external factors and its positive and negative impact is all given
in following points: Political factors: This consists policies and strategies develop by government to control
actions and decision taken by businesses, this help in maintain economic growth of
nation. Excise duty, import and export policy taxation rate all come under this.
Positive impact: In order to positive impact of this factor, it is very essential for ASDA to first
identify and examine the political stability in nation in which company wants to expand its
operations.
Negative impact: In a situation of government instability where all policies and rate of taxes
change on a fast speed it become difficult for firm to attain its set objective. Legal factors: This is known as one of the most significant factor of PESTLE analysis as
this indicate the laws, rules and regulations that is very important for a business
enterprise to follow.
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Positive impact: When firm make policies after examine the policies given by legal bodies then
it help in attain set goal and objectives in an effective manner (Klapper, Lewin and Delgado,
2011). It also help in create and maintain a positive image in society.
Negative impact: When company does not follow the legal rules and policies then it give rise to
a legal action and at the same time hamper the image of company. Technological factors: This aspect indicate the technology utilise by firm to carry out its
business activities.
Positive impact: In order to get positive results, it is very essential ASDA to use updated
technology as this not only decrease business cost but at the same time provide various positive
benefits.
Negative impact: When changes take place in technology on frequent basis then it become costly
for firm to replace it with old one. Economic factor: This element of macro environment indicate the rate of inflation and
deflation exist in market (Prajogo, 2016). Other factors such as exchange rate, GDP and
purchasing power of customers is also come in this.
Positive impact: When company expand its business operations in developed countries then it
help help firm in achieve growth.
Negative impact: When changes take place in all these rates then it become difficult for firm to
generate more number of profits. Social factors: This factor cover the elements such as tastes, preferences, culture and
religion of individuals.
Positive impact: It is very essential for enterprise to consider the needs of customers in order to
offer them featured products.
Negative impact: When changes arise in needs of customers on frequent basis then it become
difficult for firm to survive in market.
TASK 4
P5 Internal and external analysis of organisation to determine strengths and weakness
SWOT analysis
SWOT analysis is a strategic planning tool used to evaluate Strengths, Weaknesses,
Opportunities and Threats of an company. It help ASDA in determining factors that assists firm
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in accomplishing its objectives and obstacles that may arise during operations that need attention
to achieve desire results.
SWOT analysis of ASDA:-
Basis Positive Factor Negative Factors
Internal Factors Strengths
 ASDA has built a culture
among distributor and dealers
where they provide training to
sales team to explain customer
so that they can extract
maximum benefit out of
product (Savrul, Incekara and
Sener, 2014.).
 It has 140,000 employees
working at over 500 stores.
 ASDA maintain relation with
customer as it keep in touch
with them via social media, ask
them for feedback and solve
their issues.
 It has developed high skilled
workforce by providing
training and learning programs
to its employees.
 ASDA integrated
complimentary firm through
mergers and acquisitions that
help in improving its operations
and to build an reliable supply
chain.
 It maintain quality of product
Weaknesses
 Lack of technological
advancement, company
need to invest more in new
technologies to expand its
operation in different
geographies .
 The profitability ratio and
Net contribution of ASDA
are below the industry
average.
 It has limited global
presence as compare to
other competitors.
 ASDA is not generating
much revenue as it uses
lowest price campaign.
 It does not have smaller
supermarkets such as
TESCO.
 There are gaps in the
product range sold by
company which provides
an opportunity to new
competitors to enter in the
market.
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with lower prices.
 ASDA has an successful track
record in entering in new
market and in developing new
products- product innovation.
 Beside claiming to be on
2nd position in UK, its
operating profit is
depreciating year by year.
External Factors Opportunities
 Stable free cash flow provides
opportunities to invest in new
technologies as well as in new
product segments.
 Changing demand of consumer
open up new market for ASDA
to build new revenue stream by
diversifying into new product
category.
 With the increase in customer
spending and economical
growth after years of recession
provides an opportunity for
ASDA to increase its share in
market.
 ASDA has positive impact on
customer because it provide
different quality item at low
price which provide
opportunity to expand its
business by increasing number
of stores.
Threats
 Rise in price of raw
material affect the
profitability of company.
 As ASDA is operating in
numerous countries it is
exposed to risk of currency
rate fluctuation.
 ASDA may exposed to
various liability claims that
require changes in policies
in those marketplace as
different countries have
different liability laws.
 Unskilled workforce in
certain global market
represent a threat to steady
growth of profit for ASDA
in those markets.
 Price war with other
competitor retail chain
brand.
 ASDA has the greater
competitors like
Sainsbury's as market share
of Sainsbury's is 16.5%
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which is not far from
ASDA's market share
which is 16.8%.
P6 Interrelationship of strengths and weakness with macro factor
Internal and external factors are to be considered by the company so that company can
easily attract many users. Strengths and weakness can be relate to the external macro factors so
that they can easily capture many users (Siewiorek and et. al., 2012). Through this firm, can
easily earn more revenues and thus it can maintain good image. Relationship of strengths and
weakness with strengths of Asda are:
Political: This is the factor which involves creating of many rulers and regulations so that
they can easily survive in market. Asda tries to maintain good relationship and it is the biggest
strength for the company. This helps the firm in company in earning of more profits and hence it
can easily survive in the market. Through this they can easily reduce the weakness.
Economic: In this company can easily create various policies and plans so that it can
easily attract many users. It can create various policies and plans so that such as creating plans
and selling product at lower cost of there is inflation. Hence Asda can earn their revenues.
Social: In this company can directly earns more revenues through fulfilling of all needs
and wants of all people. Thus it can deliver superior quality of products at a lower costs and thus
it can easily maintain good position in the market. Thus it is the biggest strength which can
directly increase the revenues of firm.
Technological: In this company can use advanced techniques so that it can maintain good
position in the market. Due to heavy competition company can easily adopt various techniques
and hence it can easily capture minds of all people (Zott, Amit and Massa, 2011). The company
can generate more revenues and hence it can maintain good image in market and thus it can give
strong competition to other firms.
CONCLUSION
From the above given project report, it can be summarised that for attain set goals and to
increase the number of its profits, it is very essential for a business enterprise to identify and
examine the factors of business environment. This help in manager in formulate better policies
and at the same time help respond to the changes that take place in environment. PESTLE and
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SWOT analysis are the tools that can be utilise by manager of Sainsbury to carry out internal and
external analysis. Changes that take place in business environment affect the firm and its actions
both in positive and negative manner so it is very important for a business enterprise to carry out
environment analysis.
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REFERENCES
Books and Journalss
Chavis, L. W., Klapper, L. F. and Love, I., 2011. The impact of the business environment on
young firm financing. The world bank economic review.25(3). pp.486-507.
Chow, A. T and et. al., 2012. Computer readable medium with embedded instructions for
providing communication services between a broadband network and an enterprise
wireless communication platform within a residential or business environment. U.S.
Patent 8,155,155.
Commander, S. and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Cuervo‐Cazurra, A., 2011. Global strategy and global business environment: the direct and
indirect influences of the home country on a firm's global strategy. Global Strategy
Journal. 1(3‐4). pp.382-386.
Deasy, S and et. al., 2016. Controlling use of a business environment on a mobile device. U.S.
Patent 9,247,042.
Drucker, P. F., 2017. The Theory of the Business (Harvard Business Review Classics). Harvard
Business Press.
Hair Jr, J. F and et. al., 2015. Essentials of business research methods. Routledge.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press, USA.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Hilton, R. W. and Platt, D. E., 2013. Managerial accounting: creating value in a dynamic
business environment. McGraw-Hill Education.
Klapper, L., Lewin, A. and Delgado, J. M. Q., 2011. The impact of the business environment on
the business creation process. In Entrepreneurship and Economic Development (pp.
108-123). Palgrave Macmillan, London.
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.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a
globalizing business environment. Procedia-Social and Behavioral Sciences. 150.
pp.35-45.
Siewiorek, A and et. al., 2012. Learning leadership skills in a simulated business environment.
Computers & Education. 58(1). pp.121-135.
Zott, C., Amit, R. and Massa, L., 2011. The business model: recent developments and future
research. Journal of management. 37(4). pp.1019-1042.
Online
Business Environment. 2017[Online]. Available
through:<https://www.slideshare.net/NikhilSoares/business-environment-
featuresmeaningimportanceobjectives-porters-model>
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