Business Environment Analysis

This assignment requires you to analyze a given business environment using several analytical tools. You will conduct a PESTLE analysis to identify political, economic, social, technological, legal, and environmental factors impacting the business. Furthermore, you'll perform a SWOT analysis to evaluate the organization's strengths, weaknesses, opportunities, and threats. Finally, you'll delve into case studies to understand how businesses navigate these complex environments.

BUSINESS
AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Explain different types of organisation..................................................................................1
P2 Size and scope of different types of organisation..................................................................1
M1 Structure, size and scope effects business objectives...........................................................1
D1 Complexities of different kinds of business structures and interrelationship with
organisational function................................................................................................................2
TASK 2............................................................................................................................................2
P3 Relation among different organisational functions and their linkage with firm's objectives.
.....................................................................................................................................................2
M2 Advantage and disadvantage of interrelationship between different organisational
function.......................................................................................................................................4
TASK 3............................................................................................................................................5
P4 Positive and negative impact macro environment has upon business operations..................5
M3 PESTLE model to support analysis of impact of macro factors...........................................7
D2 Critical evaluation of Impact of macro and micro factors on business operations...............8
TASK 4............................................................................................................................................8
P5 Internal and external analysis to know the firm's strength and weaknesses..........................8
P6 Interrelation of strength and weakness with macro factors...................................................9
M4 SWOT analysis of HSBC...................................................................................................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
In today's world of industrialised society, term business is considered as a set of activities
such as marketing, producing, purchase, sales of products and services. These activities are being
performed so as to get monetary benefit. On the other hand external and internal conditions in
which companies are performing its above mentioned activities is known as environment.
External as well as internal factors have impact on industry as well as firm's operation and its
revenue generation (Bryman and Bell, 2015). Here to understand environment prevailing in
England for business operations we take the example of One of the largest Bank in private sector
named as HSBC. It was founded back in the year 1865 and right now has 85000 workers under
it. To understand the condition of public sector companies Bank of England is taken as example
which was founded in 1694 and was nationalised in 1946. This report showcases environment
that is prevailing in UK and its effect on business operations and decision making process of
different kinds (having different size, scope and type) of organisation. It also gives idea about the
stakeholders influence in firm's operation.
TASK 1
P1 Explain different types of organisation.
Covered in PPT.
P2 Size and scope of different types of organisation.
Covered in PPT.
M1 Structure, size and scope effects business objectives.
Being in the category of Private banks, it serves general public with the goal of making
maximum profit. Any Private firm has to design its structure that it can have high speed decision
making process. In order to achieve this process lies in the hands of very few officials. Since the
company do not have to think about welfare of the people as much as public sector companies
has to so its policy making process also become faster (Cai and Yang, 2014). Whereas public
sector companies has more responsibility in the society and hence they involve a larger set of
people or government for their policy and decision making process, this slows down the process.
Both public and private sector companies are big so they have to make business
objectives citing that so many stakeholders will be effected in the process. Larger public sector
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firms have larger responsibility in the company as they have crucial role in stabilising the
economy. Both firms have larger scope of making profits by expanding in new kinds of
businesses hence shapes business objectives.
The size of the company plays a decisive role in making their objectives as well as
achieving it. As the larger size means large amount of resources which ultimately will lead to
achieving business objectives carefully.
If there is less scope for any company then achieving its objectives becomes more
difficult. Scopes provides the opportunities utilising which the ultimate objective of the company
can be achieved.
As illustrated above structure helps in smooth working of the company and hence assist
firm in achieving business objectives in a proper way. The better the orientation of HSBC
organisational structure better the wo5rk performance and hence better achieving of business
objectives.
D1 Complexities of different kinds of business structures and interrelationship with
organisational function.
There are various kinds of complexities that are attached with different business
structures. As per the view point of Chow and et. al, (2011) about private sector firms they need
to have simpler design so that decision and policy making processes becomes faster whereas
public sector firms have to include government hence the system becomes complex and has to
sort out many kinds of issues related to public interest. On the other hand Commander and
Svejnar, (2011) says that different structures have diverse relationship with each other when
talking about functional units. Human resource, marketing, finance altogether plays an essential
role in firm's growth. Each functional unit has verified role in any kind of firm. In private firms
flow of information is faster due to its simplicity of structure while public structures are
generally messy. HSBC has developed its interrelationship in a proper form. As these structural
complexities in private banks will lead to slow processes in organisational functions.
TASK 2
P3 Relation among different organisational functions and their linkage with firm's objectives.
In any kind of firm whether public, private or voluntary have different organisational
functions namely information and technology department, finance, marketing, sales, human
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resource etc. Every functional unit has a defined set of responsibilities but still their relationship
plays an important role in taking companies forward and achieving organisational objectives.
Human resource has crucial role in functioning of every other department. Effective utilisation of
other resources depends on their skills. HRM department selects and recruits candidate for other
functional units and also trains them as per the requirement. In HSBC operations customer
satisfaction is more important than in Bank of England so these private banks have to do
continues recruitments. In banking sector excellent communication skills, technological use and
client handling behaviour needs to present in their employees. Finance is the lifeline of business
operations in any functional unit. It provides assistance to activities of other units. They work in
collaboration with other functional unit so as to make unnecessary cost cuts without
compromising with quality of products or services that is being produced. For example finance
department works hand in hand with sales and marketing department in HSBC so increase the
revenue from the services provided by HSBC bank. Production department is responsible for
maintaining demand and supply chain that leads to higher profits and hence achieving business
objectives in a sustainable manner. For this purpose it has work with other functional units so as
to produce best quality products which will give competitive edge over others. Sales department
helps production department in maintaining demand and supply gap. Research & development
department and production unit works with each other to produce products as per market demand
which is gathered by marketing team. In banking sector R and D helps in designing of new
schemes for the coming years of its operation. Sales and marketing unit works with every other
department so as to make plans and policies that will lead company to future growth by attracting
more customers towards firms products and services. In the banking sector marketing team
interacts to the clients understands their needs and then after other departments develops banking
policies and make plans for them. In private firms like HSBC marketing plays more essential
role than in the public sector companies as they have to attract large number of customers and
generating faith in their minds so that customer bench of theirs gets increased. (Craig and
Campbell, 2012). Even the most precious products or services are unable to produce so much
output if marketing has been poor. Information and communication department has its
relationship with every other department. It helps other departments in setting up most efficient
communication mechanism so that flow of information can be smooth. It helps marketing
department in interacting with customers for solving their queries with the help of modern
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methods of communication like mails or SMS. In banks such as HSBC the use of IT technology
for their operations are increasing. In each of these departments the higher officials are
responsible decision making process as well as managing different kind of resources that will be
needed for their operations. Each of the above mentioned departments work cohesively so that
the speed of their work process increases.
M2 Advantage and disadvantage of interrelationship between different organisational function.
Interrelationship within different functional units helps company in achieving its target in
an efficient manner (Govindasamy and et. al., 2011). But there are certain disadvantages that are
also attached with this interrelationship apart from the positive aspects and that too with every
type of firm.
Advantages of interrelationship:
 It assists to achieve objectives within set time frame.
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Source 1: Operational functions

 It describes clear line of control of every department while working with other
departments.
These advantages are showcasing that interrelationships helps in proper achievement of
objectives set by HSBC. Not only achieving them but also decreasing the time that will be
needed in their achievement.
Disadvantages are as follows:
 Autonomy of each functional unit gets endangered.
 Decision making process slows down as they take involvement of every other functional
units.
These disadvantages slows down the growth process of banks and hence signifies the
reasons why interrelationship must be managed.
TASK 3
P4 Positive and negative impact macro environment has upon business operations.
Macro environment has both positive and negative impact on the business operations as
they are highly sensitive towards external factors. Macro factors has higher impact in strategic
decision making that is important for future growth of the firm (Herbst and Merz, 2011). Each
factor has positive as well as negative impact and it depends on size and scope of the
organisation. Pestle analysis is important in this regard. To understand this certain factors each of
theirs positive and negative impact has been highlighted. and its impact are as follows:
 Political factor
Positive impact
 Both the bank depends on the monetary and financial policies set up by the government
hence increasing interest rates is highly beneficial for this sector.
 After Brexit which is one of the major political decisions it is estimated that banks like
HSBC will have to give more loans to investors as they will need it.
Negative impact
 In the unstable political environment prevailing in various parts of the world has made it
difficult for the multinational banks to operate smoothly as many financial and taxation
ties are breaking in between them (Klapper, Lewin and Delgado, 2011).
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 Political clashes between different sovereign states leads to difficulty in banking
operations.
Economical factor
Positive impact
 Strong economies are helping bank in providing them financial aid when they are facing
loses due to larger debt failures.
 Foreign direct investment percentage in banking sectors have increased in various parts
of the world which has created the scope of expansion for the banks like HSBC.
Negative impact
 Fluctuating economical growth in many parts of Europe has restricted investors from
taking loans that is effecting the revenue generation of the bank.
 Due to decisions like Brexit investors have put their projects on hold in order to
understand the new trade rules and its impact on the UK economy.
 Case of Greece's bankruptcy has threatened bank in giving higher amount of loans.
Social
Positive impact
 People are moving towards formal structure of economy which has helped banks like
HSBC in attracting large number of customers.
 People have generated faith in private companies and hence banks like HSBC is able to
make more customers.
Negative impact
 Changing social behaviours have impacted the style of banking in UK and other parts of
the world.
 Multi lingual banking assistance is still not have been promoted hence a large part of the
society is unable to understand banking procedures.
Technological
Positive impact
 Use of technology has helped banks in reaching to larger part of the society using online
mediums like websites or social media.
 Use of Mobile banking Apps have made banking procedures easier and faster.
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 There are large amount of data that is generated in banking procedures throughout the
day all needs to maintained which can be efficiently done using modern age of
technological innovations (Siewiorek and et. al., 2012).
Negative impact
 More use of technology has posed a threat of data loses that can be highly crucial for the
company.
 More use of technological means for banking operations can lead to phishing which can
be loss for both individuals and banks.
 Cyber attacks on banks have increased in past few years on the banks of UK.
Legal
Positive impact
 These laws safe guards the business interests of every stakeholders as finance is a higher
matter of concern for any individual. Like it saves individuals from any frauds.
Negative impact
 This factor have increased the complexities of banking operations (Srdjevic, Bajcetic and
Srdjevic, 2012).
 For private banks especially multinational following these legalities have slowed down
their business operations.
Environmental
Positive impact
 Use of virtual money has been promoted throughout the world so as to reduce the use of
papers and plastic notes.
Negative impact:
 Use of alternative environment friendly methods for banking is costly and needs
investment.
M3 PESTLE model to support analysis of impact of macro factors
PESTLE model helps to understand the impact of macro factors on the business
operations. Citing the above mentioned positive and negative impact model is showcased below:
 Political: Government decides interest rates, reverse repo rates and other banking norms
and hence has high influence on the banking operations whether it is private, public or
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Voluntary sector banks. The banking policies made by the government impacts the
growth of the banks.
 Economical: Strength of economy decides smoothness of operations of any kind of firm.
Banks needs financial aids from government at the time of crisis otherwise whole system
will fall down which can only be provided if the country has stable economy (Welford,
2013). HSBC will have to encounter the the economic conditions that is present in the
coming future especially the impacts after Brexit on the UK economy.
 Social: As per the increasing demand of society to lift their livelihood they need loans
which is promoting the business of banks like HSBC. These banks are not very much
effected by social factors but they have certain responsibilities such as reducing the
unemployment which needs to be fulfilled.
 Technological: Every firm needs to use advanced technological equipments for there
business operations as they make them faster which ultimately will help in surviving in
competitive business environment.
 Legal: In the Banking sector many legalities are involved in its operations in order to
safeguard their interests. Loan debts and their retrievals is under the guidance of legal
laws. HSBC needs to manage the business such that it complies with the fore coming
laws related to banking sector.
 Environmental: Governments around the world is forcing the firms to opt the business
methods that are more Environment friendly. As far as HSBC is concerned there is not
much impact on the business operations due to this factor.
D2 Critical evaluation of Impact of macro and micro factors on business operations.
Environment in which business is being operating not only depends on only micro factors
but also depends on macro factors. They both influence the business operations in the same
manner. Aterido, Hallward-Driemeier and Pagés, (2011) says the impact of micro factors can be
reduced by making small structural changes and adding more number of investors as per
requirement. Like HSBC needs to critically utilise its resources so that there is no difference
between what actually being achieved and what was proposed on paper. On the other hand André
Cavalcante, (2013) states dealing with external factor is little bit difficult as their cause is not in
the hands of company and have to make effective strategical changes so as to encounter these
problems. In order to ensure sustainable growth both these factors needs to be tackled properly.
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TASK 4
P5 Internal and external analysis to know the firm's strength and weaknesses
There are several micro as well as macro factors that poses threat for smooth operations
of the HSBC. Both types of organisations have strengths and weaknesses.
Internal strength of HSBC bank:
 It has higher amount of deposit ratio and revenue base which facilitates company in
maintaining its credits at the times when there is economical crisis in the market. It was
illustrated in the year 2009.
 HSBC has large set of skilled employees that helps in taking this firm to new heights by
delivering services in a best possible manner and hence achieving customer satisfaction.
 Strong management helps in making decision and its implementation smoother.
 This company is using modern methods of technological ways in its business operations.
 Due to its economy of scale and its successful operations from past several years have
increased the faith in the minds of people (Wheelen and Hunger, 2011).
Internal weaknesses
 It has implemented Islamic law in banking system, this policy has reduced the margin of
profit for cited organisation.
 This company have employees whose salary is on the upper side, which has made
company to make cost cuts in various other operations.
External strength of HSBC:
 This bank is financially strong and hence needs very less support from government in
financial matters which saves its autonomy and can functions independently.
 Larger customer base is present with this firm that ultimately helps company in growing
at larger pace and making maximum profits every year. They also make positive
suggestions to other people which helps in expanding HSBC market base.
External weaknesses
 It has made many pacts with small enterprises which can sometimes leads to reputation
failure due to their unethical activities.
 People have more faith on public sector banks than on the private sector banks like
HSBC which makes its growth rate slower.
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 Company suffered a lot of loss due financial instability in the European economy and
After Brexit this impact is estimated to be more.
P6 Interrelation of strength and weakness with macro factors
HSBC is one of the biggest bank in terms of its size and its operational functional units.
They have large number of stake holders that are directly or indirectly dependent on each other.
For any company future plans needs to be made as per its strengths and weaknesses which
ultimately depends on the macro factors. Impact of external environment cannot be neglected.
Political policies and decisions such as Brexit has added in both ways in strength as well as
weakness. Strength of the company can get demolished if any political decision goes against the
banking procedures of the company (Wild, Wild and Han, 2014). Strong management is a
trademark of HSBC which is influenced by the society demands and legal boundaries. HSBC has
its name in the market so it has to follow legal laws more carefully so that it remains the same
way. HSBC is having larger customer base but they are not bounded to stick to the firm. Use of
technology has made things easier for the company and has added as a strength for the company.
Technology has made storing and managing data easier as well as helped to make banking
procedures less tedious and faster.
While evaluating the impact of macro factors on the weakness of the company it is
needed to understand the fact that any company uses its strength to encounter these external
factors. Due to its operation in multiple countries HSBC needs to make political alliances with
government and also understand the economical condition of the company.
M4 SWOT analysis of HSBC
Strength:
 High credit balance helps it in situations of economic instabilities.
 Brand name is providing edge over new entrants and other competitors.
 Bank is operational in distinct part of the world hence covers a large part of the market.
Weaknesses
 Its collaboration with smaller financial enterprises leads to loses in many areas.
 HSBC has announced layoffs in order to reduce its costing, but it has sent negative
opinion about the firm in stake holder's mind (Wozniakiewicz and et. al., 2011).
Opportunities
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 It has a large capital base which can help company in expanding into new areas of
business.
 Its positioning is in many parts of the world which helps to tackle loses if made in any
part of the world.
Threats
 Brexit poses a threat for the company if UK government did not negotiated with EU on
the matter of free trade.
 Financial instability in many parts of the world has threatened company in its smooth
operations.
CONCLUSION
From the above mentioned report it can be understood that business is a set of activities
done so as to get monetary benefits. These are impacted by the environment around it containing
many internal as well as external factors. There are three types of organisation public, private
and voluntary having different structure size and scope and are designed according to its purpose
it need to be served. There are various functional units in an organisation and their
interrelationship helps in smooth functioning of the organisations. External and internal factors
have impact on the strength and weakness of the firm.
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Online
SWOT Example (Strengths, Weaknesses, Opportunities, Threats). 2017.[Online]. Available
through<https://www.thebalance.com/swot-example-strengths-weaknesses-
opportunities-threats-2947985>. [Accessed on 13th September 2017].
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