Business and Business Environment

This document discusses the purposes and forms of companies and legal structures. It explores the complexities of different types of business structures and their cultures. It also examines the interrelationship between different business functions and their connection with objectives, services, and products of the venture. Additionally, it analyzes the negative and positive impacts of external factors on business operations.

BUSINESS AND BUSINESS
ENVIRONMENT (UNIT-1)
1

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
. P1 Purposes and forms of companies and legal structures...................................................3
. P2 Complexities of different types of business structures and their cultures.......................6
LO 2.................................................................................................................................................7
P3 Interrelationship between different businesses functions and their interconnection with
objectives, services and products of venture..........................................................................7
LO 3.................................................................................................................................................9
P4 Negative and positive impacts of macro environment on business operations.................9
LO 4...............................................................................................................................................11
P 5. Carrying internal as well as external analysis of key organizations.............................11
P 6. Critically evaluating how strengths and weakness is associated with external macro
factors...................................................................................................................................14
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16
2

INTRODUCTION
Business environment comprises external and internal factors that affect existing business
activities and practices in negative or positive manner. It indicates aggregate sum of all
individuals and other forces that exist outside and inside of sectors and affect productivity of
companies. The current study will be based on three different sectors such as private, public and
voluntary. It will explain complexities of different forms of business structures and
interrelationship of varied organizational functions. Furthermore, this assignment will justify
negative and positive impact of factors upon decision making and business objectives of
companies and will also explore internal analysis of firms. This report will define connections of
strengths, weakness with internal analysis in context of organizations.
LO 1
P1 Purposes and forms of companies and legal structures
Types of business structures-
In the business world, there are different forms of companies accessible which can be
distinguished on basis of their size, scope, purpose and legal structure. There are some following
examples of different types of firms;
Public sectors-
This sector includes governmental services and public goods such as public transit, along
with health care. Companies working under this industry have plays vital role in growth of
economy and GDP (Athman, 2020). They keep a check on guidelines of restrictive and
Monopolistic trade practices. These organizations carry those activities and practices that cannot
be finance by private and those related to social or economic welfare. Public sector companies
can be considered as publicly listed organizations whose ownership is effectively organized via
shares of stock, intended to be freely traded among individual within stock exchange. These
firms were also formulate effective and wider working vision and formation of better working
parameters with excellent innovation among manufacturing of products or services.
SAINSBURY is considered as public sector Company, which falls under list of leading retailers
in UK (THE HISTORY OF SAINSBURY’S - TRYING SOMETHING NEW FOR 147 YEARS,
2020). SAINSBURY Plc, as name suggest is a public limited firm, therefore firm’s share are
bought by common people who are especially benefitted by its business performance and are
known as shareholders of organization.
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Purpose-
The purpose of SAINSBURY plc is to be the best and most trusted retailers in the whole
world. Management effort to help its consumers to save their money and live better.
Private sectors-
Companies operating their business under private sector contributed about three fourth of
nation’s national income. These firms also play important and helpful role to increase gross
domestic saving and gross domestic capital formations within economy (Osborne, 2018). Private
organizations are forms of businesses where shares are open for further investments to limited
shareholders who have all legal authority to take part in decisions making procedures within
organizations. Private firms do not trade their venture shards openly which make its market
position limited, they highly focused on innovation development which allow them to gain
attention of buyers and that can increase its profitability and productivity. John Lewis partnership
is one of the private companies within United Kingdom that operates its business across nation
and focuses for generating profit margin, sales and productivity than its competitors. They
concentrate on providing innovative goods and services to target customers.
Purpose-
The purpose of private firms like John Lewis partnership is to increase sales rather than
other brands, operating in same sectors since for so long. The goal of these companies is making
money and employs more applicants at workplaces than public sectors organizations who are
highly knowledgeable and talented.
Voluntary sectors-
It refers to companies whose primary objective or purpose is to create social affect more
than profit (Lee, 2020). Voluntary firms are another type of organizations who focuses on
development and improvement of society and better formation of its values by serving services
fundamentally into improving living standards of people especially women. Firms working and
managing their activities in voluntary sector are mainly focusing for developing new creative
things for people at valuable cost effective with least concentrate on increasing profits that make
them different from above types of companies. Due to lack of shares formation operating
fundamentals, Voluntary Company’s legal identity gets limited at some functional parameters.
British Red Cross is volunteer led movement that connects those who have kindness to share,
with individual who need it most. As voluntary company they aid local and other people across
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UK in crisis to make their life better. The people firm help can trust that management are
completely independent, neutral and impartial.
Purpose-
The purpose of voluntary companies is to mobilise power of humanity so that
communities & other people can prepare for, deal with and recover from a major disaster
summed up by band line refuse to avoid people in critical situations.
Legal structures-
Private limited organizations-
This is one of the most commonly used legal structures in the world of business, in which
organizations lies between owned public company and a joint venture. Firms with this legal
structure provide limited accountability or legal security for their varied shareholder. A private
limited enterprise is determined by business shares, directors etc. With this legal form, firms like
John Lewis partnership gain several pros for instance, private companies after obtaining license
of incorporate begin enterprise immediately & successfully. In these types of companies number
of shareholder or partners in any condition cannot be exceed over 50.
Sole traders-
It is another style of legal structure which is quite effortless to set up within overall
business. As a sole trader, companies will be officially responsible for everything of ventures;
they mostly take any decision in context of managing and operating their business in sector. The
reporting requirements with this legal form are less more than the other, as it defines its benefit.
Despite of advantage, sole trader comprise with some drawback such as limitless liability that
means all key assets of firms are at danger when decisions goes against plan.
Partnerships-
Third type of legal structures is partnerships that make firms able to manage their
operations within different states or countries by taking permission from other people. These
companies obey with and stick to partnership which allows management to take right judgement
after making discussion with shareholders. Like other form, with this structure firms can be
developed without official procedure. No formal or authorized agreements are required to be
prepared as need in case joint stock companies. While there is always probability of poor of
contract amongst partners.
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.P2 Complexities of different types of business structures and their cultures
In world of business, there are many companies operating their functions and operations
in varied sectors. There are few examples of these-
Complexities Private Public Voluntary
Size As private company
John Lewis
partnership size is
quite different from
companies of other
sectors such as public
and voluntary
(Sammour and et.al.,
2020). They had
employed or hire
more than 80,800
workers including
those working as part
of John Lewis
department outlets
and Waitrose grocery
shop operations. Size
of this company is
wider because has
more than 6 million
consumers.
Size of SAINSBURY
company is wide
because they operate
its business functions
across boundaries
(Durcan, 2016). It has
been analysed that
organization's has
total 631 outlets in
UK. At firm,
management is
managing the
performance of more
than 116,400
dedicated workers
who are serving over
than 18 million
consumers who shop
in SAINSBURY
stores.
Size of British red
cross as voluntary
company are restricted
where it was able to
comprehend that
purposeful scope of
developing different
functional innovation
within things are also
limited. British Red
cross is part of world'
biggest humanitarian
network, which has 17
million volunteers
across 191 nations.
Scope John Lewis
partnership is one of
the biggest employee
owned companies in
UK. Scope of this
brand is large as reach
SAINSBURY is well
known public firm
broadly having
excellent
infrastructure and
creativity
Organization within
world of business
concentrate on
generate better
working services for
society or community
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for effective creation
and higher further
investment
capabilities.
fundamentals among
products, which
Enlarge market
structure, stringent
working aspects and
bigger technical
exploration
parameters.
standards, better
working involvement
of creation but spread
being less however
keep scope limited in
context of working
paradigms.
Cultures The organizational
culture in private
sector is quite
beneficial for
everyone such as
workers and
company. They have
inclusive and
innovative culture.
In public company,
the culture of firms
defines its business
growth and ways
through which they
service its buyers. It
has an productive
culture.
Voluntary company’s
culture is quite
different from other,
organizational
cultures. As their
workers are full of
amazing, and minded
people who focused
on innovating new
things that can help
other.
LO 2
P3 Interrelationship between different businesses functions and their interconnection with
objectives, services and products of venture
Marketing interrelation with IT-
Marketing department within SAINSBURY or in other companies has always focused for
achieving business aims and objectives for which they work in partnership with other operational
functional departments (Quynh and et.al., 2020). They collaborate with Information technology
department to act effectively with advanced and latest technologies. This collaboration allows
marketing team to promote goods and services of firm in front of people successfully.
Information Technology department is able to resolve technical problems in current systems used
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at workplace or for consumers. Role of this function is to make marketing procedure simpler for
applicants by updating existing technologies at workplace.
Marketing and Production-
Both these operational units work effectively and together to drive chosen company at
global level by obtaining competitive advantages and achieving business aims and objectives.
For instance, marketing department in SAINSBURY can share information about needs and
preferences of customers with production section to allow them to manufacture goods
accordingly, which is actually very beneficial and essential for organization. The main role of
marketing department is to cater all data about buyer’s needs and market trends to production
function that can help manufacturing products and serving them in market accordingly. Products
manufacturing team then take all data to begin their work and give their best to satisfy buyers
after each purchase and that is the main objective of firm which can be achieved like this. Both
departments are related to SAINSBURY organizational structure because they work with each
department.
Marketing and consumer service department-
Customers are eager to even pay much than earlier prices for a better buyer’s service
experience and excellent quality products offered by companies. Both chosen departments by
working together effectively cater greater satisfaction to people. Marketing department after
reading consumers reviews and comments in regards to products or services inform other
department to solve target market problems by communicating with them.
Marketing and Human resource management-
HRM and marketing work together for increasing productivity level of companies like
SAINSBURY in effective manner which is the main objective of firm. Marketing department
collaborate with HRM because they hire skilled and talented workers for them which allow
marketing team and manager to promote items offered by SAINSBURY in market where they
want. Human resource manager analyse the needs of knowledgeable applicants in other
functional units like marketing and recruit or select candidates according to the requirements
which is very important for firm in term of maximizing their profitability & market share.
It has been analysed from above discussion that by working in partnership all department
cater several benefits to company in term of increasing their sales and profitability. Marketing,
IT, customer services and production are the main functions of SAINSBURY. They all are link
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to business objectives and products offered by SAINSBURY to its target market. For example,
marketing and other functional units by performing together allow company to achieve their set
goals and objectives as they can sell quality grocery and other items to people across nation
which turns into increasing profitability and sales even better than competitors in market. From
above analysis, it has been identified that through collaborative practices marketing and HRM
functions also contributes to achieve business objectives. For instance, when human resource
manager hire people for market they can support promotions functions and practices effectively
in term of generating products and brand awareness in market that drive many consumers
towards SAINSBURY.
LO 3
P4 Negative and positive impacts of external factors on operations of companies
PESTEL analysis-
External factors SAINSBURY John Lewis Partnership
Political factors Political instability, trade
policy, tax rates and other
elements, are included in list
of political factors. These
components directly affect
growth, success and current
business strategies of any
brand in UK market such as
SAINSBURY. In context of
firm, trade policy change can
put negative effect business
practices because chosen
company imports some
inventory from outsider
nations.
In regard to this company,
decreasing corporation tax
affects company growth in
positive manner. UK
government is taking decision
to decrease corporate tax from
30 to 28% that can aid John
Lewis partnership to increase
their profit margin in future.
Economic factors As worldwide economies have
been severely impacted by
pandemic named COVID-19,
Recent pandemic also impact
on this company as it affects
others. It gives chance to HRM
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it is expected individual
earning are goes too down and
many people lose their jobs in
several companies. This factor
affects SAINSBURY business
positively, as it permit human
resource manager to recruit
and hire local people who has
right skills and abilities and
able to work hard and always
contribute to make things
better. It require employment
plans.
to recruit people in company,
which turn into increasing
performance of John Lewis
partnership even better.
Social factors Changes in lifestyles of buyers
make change in their buying
behaviour which directly
impact on inventory
management and sales of
SAINSBURY as in negative
manner. When people demand
products according to lifestyle
and health habits it make
change in production and sales
activities of company that
impact negatively in term of
increasing level of hard work.
Consumers shifting
preferences correspond to
chance for firm. It put positive
impact on John Lewis
partnership sales and profit
margin because firm always
sell their products according to
the preferences of people by
conducting market research. It
allows them to know more
about like and dislikes of its
target market.
Technology factors Innovative headway put
positive effect on income and
shoppers experience of firm.
Company has profited
incredibly from this factor
Digital marketing development
is an example of technology
factor that impact chosen
brand business positively and
relations with several buyers.
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over years. They can pick up
consideration of new buyers
through advancing assistance
or items on the most recent
computerized promoting
instruments or stages,
particularly Instagram.
For example, with digital
marketing, workers can
provide better online shopping
experience to consumers, those
who are not able to go out of
shopping because of busy
work schedule.
Environmental factors In recent time, due to
environmental issues
government in all countries
and buyers demand to reduce
carbon foot print that can
affect operations management
of SAINSBURY in positive
manner. As firm to respond
this factor has taken a number
of actions and develop plans.
Customers demand for
environmental friendly raw
materials that make clothes
comfortable, this is an
environment factor. It put
positive impact on production
and marketing activities of
organization because
enterprise has been uses
chemical free things.
Legal factors Government regulations, rules,
policies or laws affect
SAINSBURY business
activities and existing
functions directly. For
example, laws related to
equality at workplace affect
current employment practices
of company in positive
manner as it guide them how
to create positive work culture
at workplace by providing fair
growth chances to workers.
National legislation drive
companies towards focusing
on health & safety in context
of production and consumers
rights of usual renewable
assets for manufacturing
apparel. This element affects
positively because firm follow
all the regulations and work
accordingly.
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LO 4
P 5. Carrying internal as well as external analysis of key organizations.
PESTLE analysis of SAINSBURY Company and John Lewis Partnership
Key political elements like political instability or stability, tax rates, trade policy, fiscal
policy, etc. directly impact the sales and growth of SAINSBURY Company. However, in case of
John Lewis Partnership decreases corporation tax is the political factors that influence company
growth positively. The impact of COVID -19 is severe on the economy and has affected the
performance and productivity of SAINSBURY Company and John Lewis Partnership. Changes
in lifestyles of buyers and change in buying behaviour patterns directly impact sales of
SAINSBURY in a negative manner. Technological advancement tends to put positive impact on
the revenue and consumers experience of Sainsbury Company and enhances the performance of
the company to a greater extent. Increase in online internet services has positive impact on John
Lewis partnership business and helps in building strong relations with consumers (Arion,
Muresan and Chiciudean, 2015). Consumers and government concern to reduce carbon foot print
tends to improve the operations of SAINSBURY positively. However, in case of John Lewis
Company, using environmental friendly raw materials for manufacturing clothes is useful in
improving the operations, performance and productivity of the company. Government
legislations and policies impact directly the operations of SAINSBURY Company. However, in
case of John Kewis Company, National legislation has harden for health and safety associated
with consumers rights and production of natural renewable resources for manufacturing apparel.
This eventually leads to greater sustainability and performance.
SWOT Analysis of Sainsbury Company
STRENGTH WEAKNESSES
The key strength of the Sainsbury company is
that it has high degree of understanding about
the buying behaviour of the customers.
Sainsbury company is one of the most
powerful retail brand. It has high reputation
and offers wide range of products. It also tends
to have extensive distribution network and
excellent marketing campaigns to establish
The major weakness associated with Sainsbury
company is that it has limited global presence
when compared with its own competitor is in
the retail market sector (Sivalingam, 2018).
Restricted entry to the business in country is
another major weakness for the company which
affects operations of the company.
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competitive positioning within the market.
OPPORTUNITY THREAT
The key opportunity with the company is that
it can expand its business to new domains and
areas for higher growth and sustainability of
the company. It also has an opportunity to
expand its business to new countries and attain
greater market share (SAINSBURY SWOT
Analysis / Matrix, 2020). Presence in the online
market impose greater opportunity for the
business to increase sales and attain higher
degree of profitability for the business.
The major threat to the business is price war
among various existing competitors within the
retail market. Large number of competitors
impose major threat on the operations of the
business. Government changing its policies is
also one of the major threat which affects the
operational efficiency of the company.
SWOT Analysis of John Lewis Partnership
STRENGTH WEAKNESSES
The major strength of this company is that it
comply with robust growth strategy which is
useful in increasing the operations and revenue
of the company. It also tends to have strong
online presence across the globe has wide
degree of reputation across various countries in
the eyes of customers. It has good brand image.
Also focuses on continuously establishing
strong customer relationship and also foster
growth. John Lewis company is a major player
when it comes to home care and financial
stability. It has a strong brand portfolio and
offers innovative range of new products in
different segments. It continuously focus on
innovation and creativity and helps in a
moving services of the customers and attain
The key weakness associated with the John
Lewis company is that it has absence in
international business experience and also lack
appropriate marketing strategy which
eventually hampers the performance and
productivity of the company. Another major
weakness is that, John Lewis company has lack
of competitive advantage (Arion, Muresan and
Chiciudean, 2015). The prices of the products
offered by the John Lewis company are
comparatively higher when compared with its
competitors.
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greater sustainability. It offers extensive range
and also has affective level of relationship with
the employers and employee.
OPPORTUNITY THREAT
John Lewis company has an opportunity to
increase And expand the market network in
order to reach more customers across the
globe. It eventually leads to higher degree of
sales and profitability for the John Lewis
company (Peace, 2016, March). Opening new
flagship store and increasing the product range
is useful for high degree of sustainability
growth for the business. Expanding business to
international market will help in increasing
market share and customer base of the
company. Development of unique selling
proposition is also one of the key significant
opportunity for the business. Development of
the new product means and formation of the
strategy set of partnership within the global
market is significant for attaining greater
opportunity and success for the business.
The major threat for the John Lewis company
is that it has negative effect of legal legislations
imposed by the government. So, emergence of
the new competitors who are offering same
range of products and accounted the price is
another major threat for the company (Cox,
2020).
P 6. Critically evaluating how strengths and weakness is associated with external macro factors.
In case of the John Lewis Company decreasing the corporation tax is one of the most
prominent measure or the political factor which can positively influence the growth of the
company at a greater scale. This increase their profitability and sales in future more than its
competitors (Arif and Hossin, 2016). This is one of the greatest strength for the company. As
economy is severely affected by COVID-19, it has resulted in lower earnings because of the
unemployment and salary cut downs. This eventually affects the working of both Sainsbury
Company and John Lewis Company. Slower growth in the economy and lower disposable
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income level of the consumers is one of the major weakness for the company. It leads to slushing
down of the profits and adversely influence the growth of the business negatively. Changes in
lifestyles of buyers results in change in the buying behaviour which have negative impact on the
business. The shift in the preference of the customers is an external macro- environment factor
which impose greater weakness on the functions of the Sainsbury Company. This leads to low
degree of sales and revenue for the company and hampers the business performance.
Technological advancement results in positive influence on revenue and consumers experience
of company and its business activities. This is considered to be as one of the major strength for
the company because it leads to greater operational efficiency and major strength for improving
the performance and productivity of the business. Internet services can be useful in providing
online shopping experience to people which leads to greater sustainability and efficiency (Arion,
Muresan and Chiciudean, 2015). Government changing its policies is considered to be as one of
the major concern which in turn largely affects the business operations and productivity.
Frequent change in the legal factors of the business is another macro – environmental factor
which affects the internal operations of the company. It impose greater weakness to continuously
comply with the changing factor. Non- compliance with the legislations impose business at a
greater risk. Using environmental friendly raw materials for manufacturing is a significant
environment factor which improves the functioning of the business and leads to greater
operational efficiency and goodwill for the company. High reputation of the company states that,
company has been using high degree of technology to improve the business operations.
TOWS matrix
Threat: It has negative effect of legal legislations imposed by the government.
Opportunity: Opening new flagship store and improving the product range is useful for high
degree of sustainability growth for the business.
Weakness: John Lewis company has lack of competitive advantage.
Strength: It comply with robust growth strategy which is useful in increasing the
operations.
CONCLUSION
It has been summarized that, Business environment comprises of both internal and external
factors which influence the working of the business. Private limited organization offers limited
liability or legal protection for their varied shareholder. Marketing department focuses on
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achieving business aims and objectives for which they work in collaboration with other
operational functional units. Political instability, trade policy, tax rates etc. are key political
factors which influence the working of the business. Technological advancement results in
positive influence on revenue and consumer’s experience of company and its business activities.
As economy is severely affected by COVID-19, it has resulted in lower earnings because of the
unemployment and salary cut downs. However, strengths and weakness is linked with external
macro factors which influence the working of business.
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REFERENCES
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innovation (pp. 1-6). Wageningen Academic Publishers.
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Sammour, A and et.al., 2020. Crafting the forever now: Corporate heritage brand innovation at
John Lewis Partnership. Strategic Change. 29(1). pp.115-126.
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Sivalingam, R., 2018. Strategic Management. Industry Analysis, Strategic Drift and Re-
Strategizing. GRIN Verlag.
THIRUVANANTHAPURAM, K., 2019. Differentiating the concept of internal marketing and
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SAINSBURY SWOT Analysis / Matrix. 2020. [ONLINE]. Available
through<http://fernfortuniversity.com/term-papers/swot/1433/1162-Sainsbury.php>
THE HISTORY OF SAINSBURY’S - TRYING SOMETHING NEW FOR 147 YEARS. 2020.
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something-new-for-147-years >
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