Business Environment Analysis and Factors Influence

The given assignment delves into the critical role of business environment in markets, highlighting internal and external factors that influence organizations. It covers topics such as internal and external analysis, macro factors, and PESTEL analysis to help identify strengths, weaknesses, opportunities, and threats for companies.

BUSINESS
AND
BUSINESS ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
P1 Different types of organisation and it's purpose....................................................................1
P2 Size and Scope of different type of organisation...................................................................3
P3 Interrelation among different organisational department and their link................................5
P4 Positive and negative impact of macro environment upon business environment................6
P5 Internal and external analysis of McDonald to identify its strength and weakness...............8
P6 Interrelation of strength and weakness with macro environmental factor.............................9
CONCLUSION .............................................................................................................................11
REFERENCE ................................................................................................................................12

INTRODUCTION
Business environment is he combination of internal as well as external factors that
influence the environment of organisation. They will affect individually to the business and also
affect together to the business (Cavusgil, Ghauri and Akcal, 2012). These forces effect the
organisational ability which help them to maintain their relation with the customers. Business
activities done by the workers for the purpose of profit and it required suitable business
environment where operational functions done according to plan and meet with consumer's
demand. In the below report selected company McDonald’s, which is based on US. McDonald's
is the well known fast food company of America found in 1940 by Richard and Maurice
McDonald. In this report, topics going to be covered such as different types of organisation, it's
purpose, legal structure and their size and scope. Along with this, it includes the interrelationship
of functions in the organisation and business objective or structure. Further report is about
positive and negative impact of external factor on business and SWOT analysis of macro chosen
company with the external macro factors.
P1 Different types of organisation and it's purpose
Organisation is a legal entity which contains huge number of employees and every entity
have different purpose, objectives and legal structure according to it's types. Basically
organisations have three types such as public, private or voluntary company which is described
below:
Public company: Public companies are those which are listed with the Security
Exchange Commission (SEC) and they have authority to sell their shares between the general
public. Public company shares are openly traded in the capital market. Only those can be public
who have more than 500 shareholders or assets worth $10 million. Purpose of the company is to
sell their shares through stock exchange market. British Broadcasting Corporation (BBC) is the
UK based public company and it's focus to innovate new technology for the their clients. BBC
create the unique features for their 26 million users and it is the oldest broadcasting organisation
of the world. It is the largest broadcaster organisation in the world in terms of employees or it's
manpower. Royal Charter is the single responsible body who arrange all the regularities work
and government take regular review of this organisation (Ehret, Kashyap and Wirtz, 2013).
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Purpose: - Purpose of the BBC company to serve their services to the public and achieve core
business objectives such as educate people, provide accurate information, represent UK's culture
or it's value and entertain them.
Legal structure: -
 State government: Federal government take responsibility and it consist three branches
such as judicial, executive and legislative.
 Central government: In this legal structure authority and control have under central
government. They hold the whole power of regulatory in public sector organisation.
Private company: Those company which have private ownership is called private
company. They can issue share in the market but not in public exchange and not through Initial
Public Offer (IPO). In this company members have limited liability and number of shares also
limited. Public company's shares not treated the same as private company's shares. McDonald's is
the private sector company which is based in America and it produce fast food. It is introduced
as a family restaurant where customers can find delicious food for them. It found by the Richard
and Maurice McDonald in 1940. It's main aim to provide quality food for their customers in the
restaurant along with friendly environment and it's a social responsibility on McDonald's to serve
better services to their shareholders.
Purpose: - Company wanted to build trust between the customers so they can choose
McDonald's products at the top preference. This company wanted to become world's largest
franchisee through following work ethics and by fulfilling their social responsibility.
Legal structure: -
 Sole trader: - In this type of legal structure business have single owner who have all the
responsibility to handle he organisation single handedly. In the sole trader business,
person have unlimited liability means they have to bear all loss as well all the profit occur
in the business. It required less amount of capital for the business operations.
 Partnership: - In the partnership firm, two or more people work together to achieve their
common goal for the purpose of profit. In this legal structure each partner is applicable
for the profit as well as for loss (Greco, Baldissin and Nonino, 2013).
 Limited liability: - In this legal structure, organisation is separate from it's owner. It
means business members have limited liability so they bear loss according to it.
Remaining loss recover by he organisation not from the member;s personal assets.
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Voluntary company: It involves those person who come with their personal interest and
make an agreement to complete any specific task. Mostly it includes the workers union,
environmental groups who work in respect of save nature and it is also called non profit
organisation. They work for the welfare of people by their personal interest without any pressure
from others. Save the children (STC) is the international organisation which work for the
children and they promote rights and provide necessary help for the development of children as
well as country.
Purpose: - Purpose of the STC to encourage people regarding children's rights and make
them independent that will help them to build their own future. This organisation also provide
the basic facilities to the children such as health, food and education.
Legal structure: -
 Trust: - In this legal structure some people involve as a trustee they handle the
organisation. These members are the part of this organisation they are not separate from
the from the entity.
 Association: - In this structure, people work for the sociality without thinking of making
any profit and they come for the common objective and goals (Grover and Kohli, 2013).
P2 Size and Scope of different type of organisation
Size and scope of the business is different according the organisational type and it depend
upon the internal and external factors. Such as market share, work culture, numbers of
employees and size of the organisation.
Public company: - British Broadcasting Corporation
Background: British Broadcasting Corporation (BBC) is the trustworthy news channel
of the UK and it is funded by the government. It was founded in 1922 by the John Reith.
Size & Scope: It is a large size public sector company who innovate new technology for
their 26 million users and make it user friendly.
Product and services: BBC provide the news related to UK culture and also broadcast
some entertainment programs.
Mission and vision: Mission and vision of the company to provide accurate news or
information to the general public and Royal Charter set the public purpose for the BBC.
Objectives: Objective of the company is still same to educate, entertain and inform the
people.
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Stakeholders: Manager, owner, employees, supplier, consumers etc. are the stakeholders
of the BBC they have interest in each and every activity of the organisation (Hallward-Driemeier
and Pritchett, 2015) .
Private company: - McDonald's
Background: McDonald's is the fastest growing fast food company who have more than
500 restaurant across the globe.
Size & Scope: McDonald's is the large size private company and it's scope to become
world's largest food chain suppler. Company wanted to maintain their customer loyalty in respect
of providing quality product.
Product and services: McDonald's offer eatable products such as hamburgers,
cheeseburgers, Big Mac, variety of sandwiches and other fast food which is very popular in the
children.
Mission and vision: Mission of the company to make McDonald's as a favourite place to
eat. Vision of the company to provide best services to their customers so they back to this place
again and again.
Objectives: Objective of the McDonald's company to provide good quality product to the
customers and they wanted to serve the society and shareholders. Provide friendly environment
to their customers so they get back to this place.
Stakeholders: It include the various stakeholders such as employees, customers,
investors and communities.
Voluntary company: - Save the Children
Background: It is an international foundation which work for the children's right and
provide them proper education or health facility. It is founded by Eglantyne Jebb in 1919,
London UK.
Size & Scope: It is a large size non profit organisation which server across the world for
the welfare of children. Save the children organisation work with the local communities and
provide the healthcare, food and educational facilities.
Product and services: This organisation work in the field of motivating people to save
child and provide them better life in respect of education, food and place to live. Save he
children organisation make these children independent so they can build their own future
(Kapoor and Sherif, 2012).
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Mission and vision: Mission of the organisation to provide children's right and treat
them equal. Vision of the non profit organisation is to make them independent and society treat
provide the equality in respect of education.
Objectives: Objective of save the children organisation to enhance the standards of
living, provide proper education, health facilities, development of children etc.
Stakeholders: Government, trustees, employees and members are the stakeholders of the
Save the Children organisation.
P3 Interrelation among different organisational department and their link
An organisation consider on different types of business enterprises that includes number
of employees who are helping to complete task for accomplish organisational goals. For
instance, there is including finance, HR, operation and marketing department.
Different types of department and their interpretation
There are different type of department which is related to
Finance and marketing department – These both departments are important to every
business and it will manage to regulation of business operation in regular basis and their
activities are controlled by manger of finance. The main objective of McDonald to increase the
overall performance of the company according to business functions.
Advantages – It will help to provide to assist communication process to fill requirement
of finance department.
Disadvantages – Many times it will create misunderstand between both departments and
it will become reason of miscommunication.
HR and marketing – In this department including advertisement, promotion, products and
services and increase of number of scale. In the reference of McDonald they are mainly focusing
on improve production and consumer numbers.
Advantage – It will help to analysis of market trends and examine on the basis of
company.
Disadvantage – Due to insufficiency they can not analysis suitable and best candidates
for market analysis.
Operation and HR – There are first motive of this department to optimise all value
sources and manage to day to day activities. In McDonald operation department have to
examined duty of different products in the reference of market (Lee and et.al., 2015).
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Advantage – It will determine all roles, responsibilities and assignment of business to
create flow of information between several level of management.
Disadvantage – It is difficult to maintain all information and coordinate with all
departments.
P4 Positive and negative impact of macro environment upon business environment
In the manner to present business operation worldwide of McDonald, there is using
PESTLE framework to identity the external factor and their impact impact in the performance of
company.
Political factor – In this factor includes government stability/instability, tax policies,
special tariffs, defence expenditure and Size of government budgets. These factors directly
influence the operations of a company. In the case of McDonald the most significant political
external factors in the fast food restaurant chain industry environment are as follows -
 Governmental guidelines for health and diet
 Develop public health policies
Positive – Tesco's major operations take place in developed countries where government
continue stable due to which it earns huge profit.
Negative – It is America based company, then also government consolidated the
McDonald tax which is proposed by local council in order to avoid hike price.
Economical factor: Economical factor are again matter of concern exchange rates,
disposable income, economic growth, inflation rates and unemployment rates. There is economic
factors which are mainly impact on McDonald -
 Fast growth of developing countries
 Slow down of the Chinese economy
Positive – In developing contributories continue chain of McDonald and it will help to
maintain customer regarding to cost and price (Liu, 2013).
Negative – Changes in economic policies and up down in exchange rate affect to
development as well as their profitability.
Social factor: In this factor consider population growth rate, career attitudes, lifestyle
attitudes and age distribution. It is
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Positive – It is provided different types of meal according to purchasing power and
prepare according to customer taste and preference. It is provided option of customized in
different types of burger.
Negative – To continue in changing environment has to followed changes. Hence, the
company has taken much more time for select new ways to provide services of customer and it
will affect to decision making process.
Technological factor: In this factor refer technology incentives, Technological change,
R&D activity, technological awareness and technological change.
Positive – The company has taken feedback from their customer if they provided good
feedback so they are applying in their services and try to improve that. For maintain stock and
connect to customer they are using innovative technology which provide many option to
company as well as customers (Möller, 2013).
Negative – Therefore, Due website error and poor delivery services, customer are faced
many problems.
Environment factor: In this factor included that weather, environmental policies,
pressure from NGO's and climate changes.
Positive – In the regarding of environmental factor the company has following CSR
policies to encourage their prospects to shop from their websites and save fuel. They are
motivate to stop plastic bags and start to process of recycle in other terms. It will help to
accomplish sustainable achievement.
Negative – The company has faced many problems which is related to government and
other conditions.
Legal factors: According to this factor includes discrimination in laws, consumer
protection laws, copyright and patent laws and health and safety laws. If the McDonald follow
all rules and regulation according to laws so there is not problem created for them.
Positive – McDonald is performing their actions which is based on strict code and
practices of food retailing commission. Therefore, it is important to create big market trust for
their operations (Paul, Yeates and Cadle eds., 2014) .
Negative – In McDonald many times not following rules and regulations of particular
company and they are also mislead to their investor for accounting activities.
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P5 Internal and external analysis of McDonald to identify its strength and weakness
Swot analysis is an assessment tool which helps in identifying the strengths, weaknesses,
opportunities and threats of a company. It measures the company's ability to deal with the
business environment. It's first important to discuss the company's core strengths and weaknesses
and then move forward to defining the possibilities and threats. Often times, it can be used as a
overall business-strategy sessions for a specific segment like marketing, production or sales. The
four main elements of swot analysis for Mc Donald's are as follows:-
Strength
 Mc Donald's strengths is it's potential and ability. The wast size of Mc Donald's is one its
strengths. It also enjoys economies of scale as it provides good quality of food at much
cheaper prize.
 The areas where Mc Donald's excels at and how it differs from it's competitors is it's
market power over suppliers and competitors. It is one of the reputed brand in the market.
Weakness
 Mc Donald's disability or the fault which lies within the company is it's lack of PR
strategy. It has been highly criticized for promoting unhealthy eating habits (Schrader,
Freimann and Seuring, 2012) .
 High employment turnover caused a hindrance in the performance of the Mc Donald's.
Opportunity
 These are mostly depend on the external factors. Identification of opportunities at
appropriate time is crucial, like Mc Donald's has stepped into beverage industry with the
introduction of McCafe.
 New items such as artisan chicken sirloin burgers has also been introduced to it's menu.
This will work in favour of company's growth.
Threat
 It is the last element of swot analysis module which identifies the potential problems
which can occur in future and is a threat to company existence and growth.
 Mc Donald's is facing an economical threat fluctuations in foreign trade and recession
may affect the company's sales.
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Therefore, McDonald must do TOWS along with SWOT analysis for good understanding
and effective decision making process. There is TOWS is alternative method which provides
help to deal with weakness or threat of an organisation.
Strength and opportunity – Both are described the particular way for McDonald and it
is used by company to define their strength and weakness. In hence, For this process company
mostly using their core competencies such as financial resources achievement as opportunity
(Joint venture or alliance) to achieve the dominance in global market (Storey, 2016).
Strength and threat – Therefore, McDonald will take benefits of their strength in many
ways like global presence that help it is avoid its real or expected threat.
Weakness and opportunity – It is included all opportunity of company to come from
their weakness. It is also provided additional offers and home delivery option to their customer
for gain more profit from unprofitable business.
Weakness and threat - The main purpose of McDonald to achieve long term
competitive advantage. It is fulfilled when the company has minimised their weakness and try to
avoid external threat. Furthermore, if it set their price hight according to their rivalry so they are
losing their regular customers.
P6 Interrelation of strength and weakness with macro environmental factor
PESTLE analysis is a framework which is used to examine and display the macro
environmental factors for shows impact on the performance of an organisation. It is very
important tool when start new business and enter in foreign market.
Political factor – It is a part of macro economic factor and in this factor including which
is direct and indirect connected to political activities like government policy, tax policy of a
country, government intervention and political stability etc. These factors are affected to success
of the company (Tregear, R., 2015). Strength – Political stability motivate to company for establish their franchises in other
countries for earn more profit. There is provide employment opportunity to particular
country for diverse workforce.
 Weakness – It is difficult to follow all rule and regulation of particular country. In the
case of government follow new taxation policy so it will create problem for company and
they have to change their method for earning profit.
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Economic factor – In this factor includes purchasing power, income of consumer,
demand and supply of particular product in particular country, inflation rate, disposable income,
exchange rate. The global economy, local economies, regional economies impact on McDonald's
industry environment. Strength – There is opportunity of stable economic growth of particular country and it
help to increase the stability of its restaurant chain business. As a contributor US market
provide benefits of recovery and growth in European market.
 Weakness – Changes in policy and fluctuated time to time so it will affect to growth of
the company.
Social factor – It refers social conditions that support or limit McDonald's business.
These social trends impact on consumer behaviour as as well affect to macro environment of the
business in the terms of profitability. There is including factors are busy lifestyle in urban
environments, focus on healthy life style and improve cultural diversity. Strength – They are mainly focusing on health food who wants to become healthy so
they are trying their products.
 Weakness- It is increasing number of women who focused on health.
Technology factor – For PESTLE analysis show the impact of technologies and it will
related to trends for macro environment of companies. It is based on external analysis and there
is including technology trends and resources of the company, these are increasing sales through
mobile devices and also business automation (Trevino, L. K. and Nelson, K. A., 2016). Strength – Apply new technology due to improve customer services and attract new
customer for gain more profit.
 Weakness – For new technology expenses more money and it will affect to over all
system of the company.
Environmental factor – In this factor company has examined the influence of ecological
trends on consumers as well as business. In McDonald's business environment consider
following factors – Changes in climate conditions, improvement in sustainable business
strategies and Corporate social responsibility etc. Strength – It will try to deduct all dependency on natural resources and try to save
environment with their effort.
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 Weakness – It will pay much more tax on their products which is suffered in woide
range.
Legal factor – It states labour law, employment law, health and safety law, product
labelling, product safety and discrimination law etc. It is essential for a company to stay on rules
and regulations in global market. Strength- Due to policies of government there is providing low bargaining power and in
this sector has limited enter for new trader.
 Weakness – There is weakness of this powerful company to stay stable in competitive
market and it will provide competition and price war to decreased over all revenues
(vom Brocke, Zelt and Schmiedel, 2016).
CONCLUSION
It has been concluded that business environment plays very critical role in the market and
the factors influence the most such as internal and external factors. Internal a well external
analysis help the organisation to identify the company's strength and weakness whether is public,
private or voluntary type. Macro factor's help the organisation to overcome their problems and
PESTEL analysis identify the opportunities as well as threads for the companies.
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REFERENCE
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