Analysis of External and Internal Factors

The provided assignment is an analysis of external and internal factors that affect businesses. It uses the SWOT (Strengths, Weaknesses, Opportunities, Threats) framework to analyze internal factors and the PESTLE (Political, Economic, Social, Technological, Legal, Environmental) framework to analyze external factors. The document also discusses how these frameworks can be used to identify opportunities and threats for businesses. It concludes that understanding external and internal factors is crucial for businesses to make informed decisions and adapt to changing environments.

Business and Business
Environment

INTRODUCTION.....................................................................................................................................3
TASK 1....................................................................................................................................................3
P1 Different types and purpose of organisation................................................................................3
P2 Size and Scope of different Types of Organisation........................................................................5
TASK 2....................................................................................................................................................6
P3 Relationship between functions of different departments in an organisation and manner in
which they link to organisation structure and objective....................................................................6
TASK 3....................................................................................................................................................7
P4 Positive and negative aspects of macro environment..................................................................7
TASK 4..................................................................................................................................................10
P5 Internal and external analysis of specific organisation in order to identify strengths and
weaknesses......................................................................................................................................10
P6 Strengths and weaknesses interrelate with external macro factors...........................................11
CONCLUSION.......................................................................................................................................12
REFERENCES........................................................................................................................................14

INTRODUCTION
Business Environment is a combination of different types of internal and external elements that
may not be controlled by business organisations but put deep impact on organisation growth,
productivity, profitability and performance (Anıl and Ficici, 2017). Internal factors that may affect
functioning of business organisations are suppliers, customers, employees, shareholders while
external elements include governmental rules and regulations, technological factors, economic
conditions and competitors’. Present case study has been conducted on Sainsbury’s which is one of
the leading chains of supermarket headquartered in London, EC1, and United Kingdom. Company
was founded in the year 1869 by John James Sainsbury and perform their business services in
relating sector. In this report discussions have been made on size and scope of different
organisational structure along with their legal construction. In addition to this, interrelationships in
between different departmental heads of company with their functions are included in this report.
Lastly, SWOT and PESTAL analyses of different macro factors is done in order to evaluate strength
and weakness.
TASK 1
P1 Different types and purpose of organisation
There are so many different types of organisations performing their business activities in three
different sectors namely, public, private and voluntary sector. All these organisations work with a
motive to satisfy essential needs of consumers and gain strong earnings simultaneously. Along with
this, effective functioning of these organisations results in high end revenue generation for a country
government which results in gaining high rate of GDP. In this present scenario, a report is required to
present before shareholders of Sainsbury’s in an Annual General Meeting in order to explain
different types of organisational structure. By doing this, company is effectively planning to expand
their value distribution and supply chain of networks. Mentioned below there are some basic
different public, private, voluntary organisation along with their essentials:
Public Organisation:
Organisations working in public sector are wholly or partially owned and controlled by
government. These organisations mainly run their business activities in order to provide welfare to

society rather than a perspective to earn profit. Public sector organisations offer wide range of
services includes health care services, education services, transportation, communication and
infrastructural services. In relation to this, Crown Prosecution Services situated in Wales and England
offer their services related to providing legal advices to police and other investigative agencies that is
mainly related to criminal prosecutions.
Purpose: Crown Prosecution Service (CPS) is mainly a principle prosecution agency headed by
Director of Public Prosecutions. CPS was founded in the year 1986 with a core purpose that is to find
actual criminal offence on an individual. Agency is situated in England and Wales and works with a
motive to render effective legal advices to police and other investigative agencies.
Legal Structure: Organisation running their business services in public sector are owned and
controlled by government and other related institutions. Further, government structure is mainly
segregated into three different layers that include local, state and national government sector. Public
organisations legal structure is mainly depend on particular type of government managing, running
and controlling it.
State Government: Organisation working under this structure are wholly and partially owned
and controlled by authorities of state government.
Local Government: Companies running their business services in this structure is
administrated and managed by local government.
Central Government: This is an organisation in which major share are authority of controlling
and managing is done by central government authorities.
Private Organisation:
Organisations performing their business functions in private sector are owned, managed and
controlled by sole personnel, group of person, companies and other related financial institutions.
Companies running their services in this sector have a main motive that is to earn more and more
profit (Toedt, 2014). In order to start a private organisation effective and proper organisational
structure is formulated and further formative operations are conducted in order to earn a base of loyal
customers. In relation to this, Sainsbury’s which a second largest and leading chain of supermarkets
situated in United Kingdom offer wide range of services through superstore, convenience shop,
hypermarket and forecourt shop. Company perform their services in relating industry.
Purpose: Sainsbury’s one of the largest UK based retailer and financial provider organisation run
their business functions with a purpose to review their supply chain and expand their services into
other alternative sources within and outside UK. Company is effectively purposed to offer food and
drink deliveries to their store. Along with this, Sainsbury’s planning to hire British Staff in order to
secure their labour supply in effective way.
Legal Structure: Legal structure of private organisations is described below in brief:
Sole Proprietorship: Organisations running their business functions in this sector are fully
owned, managed and controlled by a sole individual. In this types of business structure there is no
formal and legal distinctions in between owner and a government authority.
Partnership: When two or more than person come together to run a business in a combined
manner is termed as partnership. It is mainly a formal written agreement in between two parties where

they make certain agreement over share of profit and loss in business. Companies working as a
partnership have a common motive that is to earn more and more profit while serving people.
Company: It is type of organisation in which there is not offering of shares done by
individuals to public through a medium of Initial Public Offer. Companies performing their functions
in this sector run their business activities with a motive to earn large amount of profit.
Voluntary Organisation:
Organisations running their business functions in Voluntary sector are mainly owned and
controlled by group of individuals. Main motive to run activities in this sector is to provide welfare
services to community and society. In relation to this, Oxfam which is a combination of 20 individual
charitable organisations conduct their services with a same purpose that is to offer different types of
non profitable services to population. There are various types of organisations that are included in
Oxfam confederation that include, religious cooperation’s, trade unions, foundations, charitable
organisations, foundations and other non-profitable organisations.
Purpose: Charitable organisation like Oxfam performs their functions with a purpose to eradicate
poverty from all around the world and raise living standards of individuals.
Legal Structure: Voluntary organisation legal structure is mentioned below:
Unincorporated Organisation: It is a form of organisation in which a group of individuals
sign an agreement to work together in a combine way. They perform their activities other than a
reason to earn profit. In Unincorporated organisation members are duly responsible for any kind of
obligation.
Trust: It is a form of voluntary organisation, in which there is a formal agreement in between
two individuals in which a person provide former rights of a property or a fund to trustee.
Limited Organisation: In this form of voluntary organisation, there is limitation on number of
members and their holding of shares in an organisation.
P2 Size and Scope of different Types of Organisation
There are different types of organisations perform their functions within three organisational
heads namely public, private and voluntary (Otoo and Drechsel, 2018). Each and every organisation
has different set of size and scope as to conduct their business operations within governmental
structural framework. Mentioned below there are different size and scope of various organisations
described:
Public Organisation: Organisations that are owned, managed and controlled by government entities
are known as public organisations. Crown Prosecution Services (CPS) situated in England and Wales
is a non-ministerial department offering their legal advices to police and other investigative agencies
if formative way. Mentioned below there is a size and scope of CPS:
Size: Crown Prosecution Services perform their administrative services in the region of
England and Wales with a common motive to bring right individual in right criminal prosecuting. CPS

organisational structure includes overall number of 14 teams working in a supervision of Chief
Crown Prosecutor. Agency employs more than 6000 individuals in their organisational structure.
Scope: Crown Prosecution Services perform their services in effective manner and has a
scope to take advantage of digitalisation in their functions in order to ensure fast flow of in
formations and related data in both internal and external structure of organisation.
Private Organisation: Organisations those who are owned and controlled by an individual or a group
of individual counted under private organisations. These organisations basically have less
intervention form government authorities. Sainsbury’s is one of the UK leading supermarket chain
with holding more than 16.9% shares in supermarket sector. Company is engage in the services that
are being offered through the medium of Superstore, Supermarket and more.
Size: Sainsbury’s offer their supermarket services in all over the world with having more than
186,900 employees and estimated number of 1415 shops around the world. Company offer wide
range of services, through the medium of supermarkets and superstores as to gain more loyalty
from their consumers. Company offer their services in effective way and gained more approximate
amount of 518 million Euro as an operating income.
Scope: Sainsbury’s hire potential and competent employees who have effective skill to raise
standard of company in terms of delivering extensive range of services. Their employees have
formative communication skills and can speak in 50 different languages residing in 24 different time
zones. Sainsbury’s perform their services with a scope to expand their services and reach out to
those consumers which is yet not reached by company.
Voluntary Organisation: These types of organisations are managed by certain group of individuals
who willingly come together for a common accomplishment of goal. Oxfam is a formal association of
independent charitable organisations who work together for a purpose to erase poverty from all
around the world and effectively raise living standards of individuals.
Size: Oxfam is working in a collaborative manner with other independent charitable
organisations. Organisation is proving their welfare services in around 14 different countries. They
perform their services with a motive to eradicate poverty and other related issue from all around the
world. There are numerous numbers of volunteers working with Oxfam as to provide welfare
services to people and uplift living standards of population.
Scope: Oxfam can provide their humanly welfare services in other regions of globe where
they haven’t reached yet.
TASK 2
P3 Relationship between functions of different departments in an organisation and manner in
which they link to organisation structure and objective
In order to perform business functions in smooth and effective way it is essential for an
organisation to ensure that effective coordination and relation is prevailed in their working
structure. It helps them to maintain a smooth and effective interrelation with each of their
departmental units and formulates steady growth (Charfeddine, 2016). For this managers of

Sainsbury’s properly ensure that goals and objectives are clearly defined to each of their individuals
so to accomplish organisational predefined goals in effective manner. Mentioned below there is an
interrelationship in between departmental units of Sainsbury’s:
Illustration 1: Organisational Structure
(Source: Organisational Structure, 2019)
Human Resource and Finance Department:
Human resource department of Sainsbury;s have authority and responsibility to hire
potential individuals in effective candidates for each or their departmental units. HR department of
company is accountable to recruit skilled and knowledgeable candidates who can effectively
showcase their talent in organisation with an ease. Along with this, it is important for HR managers
of company to raise skills of their existing employees by providing them required training and update
them about latest technology that has been using by company. In order to accomplish this target in
effective manner there is a requirement of fund that can only be sourced after the evaluation done
by organisation finance department. While HR department, provide skilled and talented workforce
that can help finance department to deliver qualitative services. This interrelationship benefits
Sainsbury’s to expand their services in food and drink sectors in effective way and serve their
consumers with great quality by ensuring high profitability rate for company.
Research and Development and Production Department:
Research and development department of Sainsbury’s is one of the most important
departmental units have responsibility to ascertain actual needs and preferences of consumers.
Research and Development department of company aid production department by providing them
knowledge that is related to current behaviour of consumers and latest technology. This will benefit

production department to update their production process by using innovative technology and gain
more competitive edge in market. While on the other hand, production department in return helps
R&D department by offering them information related to any kind of required changes in product
and services. This interrelationship benefits Sainsbury’s to improve their process if production by
strengthening company technological measure. This will help them to gain more competitive
advantages against their competitors and acquire large share in marketplace.
With the interrelationship in each of their departmental units Sainsbury’s can effectively
raise performance level of their employees and ensure stable growth of company. Along with this
interrelationship benefits company to analyse necessary related gaps and fill them in accurate given
time in order to strengthen organisation internal working structure and gain more competitive
advantages against their competitors.
TASK 3
P4 Positive and negative aspects of macro environment
Siansbury’s is second largest super market chain of UK, therefore it is very much
important for them to study the impact of both internal and external factors which can affect
the operations of their organisation. Following are the positive and negative impacts of macro
environment on their functionality:-
1. Political: Political factors are concerned with the political conditions of a nation, it is very
important for Siansbury’s to study the political conditions of the nation in which they are
performing their operation. This will lead them in gaining the complete information about
the government policies, which can affect their functionality (Charfeddine, 2016). This will
also help them in making their strategies according to them, so that they do not get fix any
problem associated with them. Beneath are the positive and negative impact of political
factors which can affect Siansbury’s :
 Positive: The political condition of UK is very much stable and they also have
very good policies for organisations who want to expand their business in
different parts of countries. These will helpSiansbury’s in getting some additional
benefits from government in their taxation, so that they can provide products at
lower cost.
 Negative: The trend of online marketing is very much popular and government of
UK have very attractive policies for them, which can help them in developing
their business in environment of UK.
2. Economical : This is one of the most important external factor, which is not in control of
any organisation and also can affect the performance and profitability of them (Toedt,

2014). Siansbury’s use to perform their functionality in the business environment of UK,
and it is very important for their analyst to understand the economic conditions of nation.
This will help them in making strategies which can lead them to gain some additional
profits and also in moving with conditions of nation.
 Positive : The economic condition of UK is very much stable and it is very
pleasant for Siansbury’s to perform their functionality and also help in developing
their business.
 Negative : There are several factors which are unstable in market like, rates pf raw
material and transportation which will lead in creating problem.
3. Social :This the factor in which organisation like, Siansbury’s have to study the issues
related to society. This include change in trend and demands of customers along with
other condition like, demographic i.e. population, occupation, age etc.
 Positive : Proper study of this factor help them in gaining appropriate detail of
new trends towards which customers are going, so that they can make change
according to it. Along with this, it also help in gaining about the quantity of
products in which it is required to deliver
 Negative : The change in trends and customer’s demand will leads in huge loss to
organisation, as older products get obsolete and customers do not need them any
more.
4. Technological : This is very important for analysts ofSiansbury’s to study the new
technologies which can help their organisation in improving the functionality and also
their profitability. This also help them in improving the customer experience and
decreasing the cost of their revenue.
 Positive : This can helpSiansbury’s in introducing the technologies which can
improve the operationally of their organisation. This also help them in reducing
the cost of their functions and maintaining the resources.
 Negative : This can increase the maintenance cost of organisation and also lead to
distribution in employees related to working with new technology.
5. Legal : This is very important for an organisation like Siansbury’s to study the legal
factors of nation, so that they can make their strategies according to them. Study of this
factor will lead them in reducing the conflicts related to legal issues, otherwise
organisation can face several problems which can affect their financial conditions.
 Positive : This can help Siansbury’s in understanding the different legal factors of
UK, so that they can make their strategies according to it. This also helps them in

ensuring that they are following all the rules and regulations, so that their
customers can buy products with full faith (Oto and Drechsel, 2018).
 Negative : Breaking of any law in organisation will lead to several problems to
organisation like, penalties and can cause to damage in long term sustainability of
them.
6. Environmental : It is very important for an organisation like Siansbury’s to follow the
environmental rules and regulations of nation. This will help them in performing the
operations of them in a manner by which environment do not get affected.
 Positive : This help organisation to perform the activities in a manner in which
they do not harm the environment and also lead them in doing some additional
works which can make some contribution in welfare of environment.
 Negative : Ruining any law or regulation of environment legislation of nation can
lead to several problems to organisation like, cancelation of licence and financial
problems.
TASK 4
P5 Internal and external analysis of specific organisation in order to identify strengths and
weaknesses
SWOT analysis is one of the strongest tools which are used by analysts for identifying
the internal factors which can affect the functionality of organisation.Siansbury’s have to use
to this tool so that they can analyse their strengths, weaknesses, threats and opportunities.
SWOT analysis ofSiansbury’s is as follow:-
1. Strengths :Siansbury’s is one of the biggest super market chain of world and UK, this is
one of the most powerful strengths of them. As the employee strength of them is around
150,000 and which is a very healthy size of work force in an organisation. The leadership
team ofSiansbury’s is full of experience which help them in making effective strategies
for future. Along with this, the main strength of them is their effective and attractive
advertisement and promotional strategies used by them. There are about 400 super market
in all over UK and about 800 convenience store all around. Each and every store them in
full of about 30,000 products out of them 20% products are their own labelled.
2. Weaknesses : Siansbury’s, is very big organisation of UK and one of the biggest chain of
super market in world, therefore there business is depends on several factors which
increases their weaknesses.The main weaknesses of them is fluctuating rate of material

used by them and also the increasing rates of food products all around the world (Hussin,
2017). Along with this, change in policies by government of nation also cause huge
problem for them. Also the increasing competition is very big problem for them, as this
leads to decrease in profitability and market share of Siansbury’s.
3. Threats : As the business environment of UK is very friendly for businesses and they use
to provide several facilities to different organisations, so that they can invest there. This
has increases the threats of new entrance in market for Siansbury’s and also increase the
threat of tough competition. Also, there are several products product which are provided
by their competitors that are same and lower in price or can be same in price with more
qualities.
4. Opportunities : The major which analysts of Siansbury’s have to analyse is the
opportunities which are available in market for them so that they can increase their
profitability and market share. They can invest in some developing countries so that they
get chance to grow their business. Also they can make joint ventures with organisation
which are already very successful in a nation, so that they can get a strong start. Also they
can invest in installing automatic trailing machines which can work for 24 hours and can
provide products to their customer when they need. Also they can start their own online
stores and home delivery services, which can help them in contacting customers at huge
number.
From the above analysis, it is assumed that Siansbury’s is strong organisation and they
have several opportunities which they can grab to increase their profitability and market
share. Also they have strengths which can help them in attaining these opportunities, so that
they can get some additional competitive advantages in market. Along with this, there are
several weaknesses and threats for them on which they have to work and improve, so that
their performance gets enhanced.
P6 Strengths and weaknesses interrelate with external macro factors
Macro factors are the external factors which are not in control of any organisation but
they have power to influence the functionality of organisation (Charfeddine, 2016). These
include factors like political, economical, social, technological, legal, and environmental. For
Siansbury’s, it is very important for them to analyse the strengths and weaknesses of these
factors and also to interrelate them, so that they can make strategies according to them.
Following are the strengths and weaknesses of different external factors :-

1. Political
 Strengths : The major strength consider with factor is that strong relation between
different governmental bodies and semi governmental bodies with organisation.
Along with this, this also help organisation in performing their functions in
effective manner. This also can leadSiansbury’s in making positive roles in nation
by which they can improve their profitability.
 Weaknesses : Continuous change in policies of government also lead Siansbury’s
in several problems, and also can decrease the profitability of organisation. Also a
same change in policies related to taxation or any other important sector of
business can cause a huge financial loss to them.
2. Economical
 Strengths : It is very important for an organisation likeSiansbury’s, as economic
condition of a nation help them in deciding the price of their products and
commodities. Good economic conditions of a nation help them in introducing
several products which can increase their profitability.
 Weaknesses : Heavy fluctuating rate in economy can lead to huge loss for
organisation, as this decrease the stability of finance in operations ofSiansbury’s.
High fluctuation rate can increase the fear in employees that they can loss their
job.
3. Social
 Strengths : Social factors include preference of customers for different products,
change in taste, and change in purchasing pattern of customers can the
organisation likeSiansbury’s to make changes in their strategies and plans. This
also organisation to do work in welfare and betterment of nation.
 Weaknesses : Change in preference, taste and buying pattern of customers can
lead Siansbury’s in decreasing the morale of employees and organisation also
(Burayidi, 2013). This also affect their functions and behaviour.
4. Technological
 Strengths : Technological factor is one of the most important for an organisation
likeSiansbury’s, as this help them in make changes in their operations so that their
profitability get increased. This also help them in upgrading their resources so that
customer experience get improved.

 Weaknesses : This lead to increase the maintenance cost of organisation and also
increase the cost of their products by which the buying behaviour of customers
may get affected.
CONCLUSION
From the above report it has been concluded that, there are three main categories in
which organisations are divided in worldwide, these are public, private, and voluntary. It also
been analysed that the economic conditions and needs of every organisation are depends on
their size, scope, purpose and legal structure. Also an individual can perform their activities
in any sector where they want to do business. Also it is very important for an organisation to
analyse the external and internal factors which can affect their performance and profitability.
They can use SWOT for analysis of internal environment and for analysis of external
environment PESTLE can be used by them. Also it is required for them study the strengths
and weaknesses of external factor, so that they can know the manner in which external factors
are going to influence them.

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