Business and Business Environment Report

This report examines the business environment of Sainsbury's, a major UK retailer, analyzing different organizational structures, the interrelationship between departments, and the impact of Brexit on the company. It utilizes PESTLE and SWOT analysis to assess the external and internal factors influencing Sainsbury's decision-making and business objectives.

Business and business
environment

Table of Contents
Business and business environment ................................................................................................1
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Different types of the organizations............................................................................................1
TASK 2............................................................................................................................................4
Different organizational structure with in the organization........................................................4
Interrelationship between different departments.........................................................................5
TASK 3 ..........................................................................................................................................7
Impact of Brexit on Sainsbury's business with the use of Pestle tool.........................................7
TASK 4............................................................................................................................................9
SWOT analysis of Sainsbury following Brexit and the impact of various micro and macro
factors on the decision making and business objectives.............................................................9
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment refers to the combination of the various factors which affect the
operating system of the firm. It includes internal factors such as customer, supplier, marketing
intermediaries and public. It also involves external factors which influence the overall
performance of the firm like political, legal, technological, social and environmental
factors(Prajogo, 2016). Sainsbury is the large retailer and financial service provider company of
the United Kingdom. Report will present the different types of organisation firms and also
differentiate them with their legal structure, size and scope. In this we will also define the
interrelationship between various type of function in the organisation and also analyse how they
help in achieving the organisational goals. It also discussed the impacts of the Brexit on the
business operations of the Sainsbury. Assignment also evaluate the internal and external analysis
of the Sainsbury's company through the swot analysis.
TASK 1
Different types of the organisations
Sole trade
It refers to the business which is owned by the single person and it may have one or more
employees. In this the sole trader has the total control on the business operations.
The purpose of the sole trader is to create self employment services and provides the
goods and services directly to the consumers and increase the productivity as well as
profitability(Bakar and et.al., 2016.).
The legal structure of the sole trade: this business is starts by the initiative of a single person
and individual prepares the blueprints of the business and arrange the necessary finance. In some
cases a license competent authority is needed in some business such as chemist shop or any food
and beverage restaurant.
Size and scope of the sole trade: For example the Kurt Geiger is the sole trader of the British
footwear and accessories retailer. It operates it business in more 70 location across the world. It
expands their in business globally through providing tote bags and custom printed mugs to
consumers by ethically sources.
Small and medium size firms
Small and medium size business firms is owned by the more than one person and they are
the responsible for the profit and loss of the company.
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The main purpose of the Small and medium size business firm is to Maximize their
profitability and improve their current business operations as well as market share of the
enterprise(Hillary, 2017).
The legal structure of the Small and Medium size business firms, it can include less than 200
employees and there is direct managerial involvement by owners.
Size and scope: For example, Granite properties is the medium size organization firm. It is the
development and management company with more than 160 members across the five national
offices. Company can grow through its mixed-use environments which helps in providing better
services to customers.
Partnership Firm
It refers to the firm which is owned by two or more person with a view to earn profit. All
the partners of the company are personally liable for the profit and loss of the firm. In this the
profit distributed to partners according to the profit sharing ratio which is defines in the
partnership agreement(Jung, 2017.).
The purpose of partnership firms is to satisfy its consumers by providing high quality
products at the right time and on the right place and increase the customer loyalty which
ultimately results in the higher productivity and profitability.
Legal structure: Partnership firm can be formed under the partnership act of the united kingdom
which creates the partnership agreement in which all the rules and regulation, profit sharing ratio
and capital investment of the partners. In these partners are mutual agent. Partners of the firm are
equally responsible towards the firm according to the partnership agreement.
Size and scope: Arcadia group limited is the British multinational retailer company established
in UK. It has more than 2000 outlets in downtown and shopping centers across the country and
57 outlets located in the 11 countries worldwide which provides high quality components to
consumers. This company can expand their business at the global level through providing better
quality goods and services internationally to consumers.
Private organization
It is the important part of country economic system which is operates by the individuals
rather government. Organizations in the private sector have the more freedom to operate their
business in the market place.
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The purpose of the private sector firms is to crate the markets for achieving higher profit
and expand their business globally. The aim of the company is to maximize their profit through
improving productivity and services by implementing innovative and creative ideas in the
company(Pradhan and et.al., 2018).
Legal structure of the private sector firm: company have to complete many legal documents
which covers various details such as objective of the business, information about the registered
office, the amount of the capital which is raised from the sale of shares and the arrangement for
auditing accounts of the business. When all the documents are completed, they are sent to the
registrar office of the private company for final approval.
Size and scope: Marks and Spencer is the private sector firm which recognized as a major
British multinational retailer in the UK. It has 1463 stores across the 57 countries worldwide. It
can grow effectively through providing high quality clothing and home products to customers at
the international level.
Public limited firms
It involves business units which are owned by the government and run under the rules
and regulations of the central government. It has permission to issue the registered securities to
the public and it also trades at least one stock exchange market.
The main objective of public sector organization is to provide better quality goods and
services to consumers at the competitive price and earn the profit which is essential for survival
of business operations(Marginson, 2018).
Legal structure: it should have minimum 7 members and 3 boards of directors which is elected
by the shareholders and the company is completely headed by the board of directors. In this no
shareholder is individually liable for the payment.
Size and scope: Tesco is the public limited company and it is the British multinational
merchandise retailer in the UK. It has 6553 shops across the world which provides goods and
services internationally. As it is the largest retailer in the UK, now it plans to expand their
business in the US through increasing the brand value at the global market by providing better
goods and services to consumers at the effective price.
Voluntary firms
It refers to non profit organization which involves the group of people who has the
common interest and enter into an agreement to form a body to accomplish the objective.
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The main purpose of the voluntary organization is to benefit the and enrich the society,
often without profit motive with little or no government intervention. It protects the human
beings from the health issues and provides the various facilities to improve the working life of
the peoples(Jacklin, 2017).
The legal structure of the voluntary firm: This type of the organization is generally formed by
the little government intervention and the important element is Trust which is set up to manage
the money for clearly defines purpose. They establish a formal relationship between three parties
such as donors, trustee and beneficiaries.
Size and scope: Red cross is the voluntary organization established in the UK. It has 17 million
volunteers members and staff across the world. It protects life and health and to ensure the
respect of the human beings. It can promote its services though understanding, cooperation and
friendship among the all peoples.
Sainsbury's company can operates its business primarily with the small and medium size
enterprise for making strong distribution channel because it provides goods and services directly
to customers and helps in achieving the brand value of the company which creates the better
brand image of the company and also improve the productivity as well as profitability of the
company(Goffee and Scase, 2015).
TASK 2
Different organisational structure with in the organisation
The sainsbury follow the hierarchical organization structure in its food service companies
because there is a series of level of peoples and the level above control on each level.
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Illustration 1: Hierarchical organization structure of the Sainsbury

This hierarchical organization structure includes various department such as marketing,
finance, production and human resource management department which plays an important role
accomplishing the organizational goal effectively. Through this organization structure employees
can directly communicate with their immediate superior and with their subordinates which helps
in reducing the communication barrier in the Sainsbury's business firm and maintain the better
relationship among the different departments which minimize the conflicts between the various
functions of the company and improve the productivity of the enterprise(Maduenyi and et.al.,
2015).
If sainsbury’s company follow the functional organization structure which includes
various functions of the company such human resource, R&D, marketing and purchasing
department. All of these functions plays an important role in the achievement of the business
objective. Each of the functional level is managed by their separate managers. It contains same
specialize knowledge and skills of the employees in each functional department which helps the
sainsbury’s to run their business and earn high profit.
Interrelationship between different departments
All the department of the sainsbury’s plays an important role in the attainment of the
business objective of the firm. Organizational structure of the Sainsbury includes various
department which runs together to gain desired level of results such as marketing, finance,
human resource and production department and all of these have a separate roles and
responsibility but they can not run individually in the achievement of business goal of the
sainsbury’s(Lozano, Nummert and Ceulemans, 2016).
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Illustration 2: Sainsbury's functional organization structure

Marketing and finance department
Marketing department can not achieve desired level of result without help of the finance
department because marketing department need to work closely with the finance department to
ensuring that there is adequate budget to meet the needs for market research, promotion and
distribution of the product and services of the sainsbury’s company. The finance department
supports the marketing department with the statistics concerning the moderate prices that the
customer expect for a specific products and the finance department is recognized as the backbone
of the company in the eye of all marketers(Cacciolatti and Lee, 2016). If finance department
provides the proper financial services to the marketing department then they promote the goods
and services of the Sainsbury’s which increase the productivity as well as the profitability of the
company.
Marketing and Human resource department
The human resource department plays an important role in developing the accuracy of
any department and also helps in gathering experience through various training sessions. The
marketing and human resource department related to each other because Human resource
department provides the strong marketing team to the marketing department that is essential for
accomplishing the desired level of results of the sainsbury’s company. Good marketing team
helps in creating the better brand value of the company at the market place(Feng, Morgan and
Rego, 2015.).
Human resource and finance departments
Human resource and marketing can not live without each other because both the business
function have a common goal and dependent on one another for execution of major organization
strategies. The key responsibility of HR in the sainsbury’s company to make sure that firm has
resources with the right skills and knowledge in the right position. To achieve this objective, HR
is largely depends on the finance in terms of budget, new hiring activities and training sessions
for existing man power which increase the employee engagement(Eyring and Consuegra, 2017).
If sainsbury’s has the employees with better knowledge and skills it results in the higher
productivity and profitability of the firm through producing better quality products and services
to customers.
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Production and marketing department
Production and marketing department are the interrelated with each other the very great
extent because marketing department provides the various information in terms of various
requirement of consumers regarding the product quality and quantity through various tools such
as market research and surveys. With the help of this information production department produce
the product and services according to the need of the consumers which increase the interest of
consumers towards the Sainsbury company which helps in building better brand value of the
enterprise(Hempelmann and Engelen, 2015).
The organization structure provides the better way to all the departments of the Sainsbury
for effective communication and breaks the barrier of the communication among the various
departments such as human resource, marketing, finance and production department. It also
maintains the effective relationship between all this department which creates healthy working
environment at the work place and encourage the employees interest towards the
accomplishment of the business objective of the sainsbury’s enterprise.
TASK 3
Impact of Brexit on Sainsbury's business with the use of Pestle tool.
Pestle tool is used in order to understand the impact of Brexit on Sainsbury's business. It
would take into consideration various political, economical, social, technological, legal and
environmental factors of macro external environment which directly or indirectly affect the
working of the business in a favourable or unfavourable manner(Lancaster and Massingham,
2017). The impact of Brexit on Sainsbury's business is as follows:
Political – political factors are those factors which are influenced by the government or
their policies such as they include factors such as political stability or instability, political parties
policies, etc. when Britain left European union, political factors have negatively affected the
business of Sainsbury such as taxes were imposed on exporting the goods in any European union
country. Further, due to Brexit many people left their job which in turn created the demand to
hire new employees ; thus the company has to spend lot of amount on recruiting and selecting
new employees(Marginson, 2018.).
Similarly, like every coin has two sides; there are positive aspects associated with
negative. Political factors also had a positive impact on fostering the business of Sainsbury at the
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time of Brexit such as the political relations with Qatar improved which helped and fostered
trade in Qatar as well as Arabic countries.
Economical – these are one of the important factors of pestle analysis that need to be
studied efficiently as they are concerned with the economy. These factors include inflation rate,
exchange rate, interest rate, etc. At the time of Brexit economic factors were the major factors
which had a drastic impact on the working of Sainsbury.
Steep decline in the value of currency has affected the earning of the company
negatively. Apart from that, recession occurred in the economy which lead to people and
government both in debt and left with no money to buy the goods which in turn lead to decline in
the revenue of the company. Furthermore, staff turnover rate increased which hindered the
smooth running of the business.
Social – social factors are those factors which focus on the emerging trends by
identifying the customer needs and wants. These factors include changes in culture,
demographics, attitude and lifestyle. The major reason behind the survival of sainsbury even
after the Brexit was the correct identification of customer needs and wants(Marginson, 2018.).
For example: Sainsbury identified that now a days people are very health conscious and
prefer organic food. Hence, they come up with organic food items to fulfil the emerging needs
and increasing their revenue. Apart from that, company also adopted sustainable practices which
helped them in gaining the support of more customers as well as it improved their brand image.
Thus, by paying due attention on social factors Sainsbury was able to survive and grow after the
Brexit.
Technological – technological factors play a vital role on the smooth running of the
business. These factors include technological up-gradation, innovation, advancement in
technology, etc. At the time of Brexit, Sainsury used advance technology such as use of data
driven analytics so as to get deeper insight of the consumers. This has helped the company in
maintaining its revenue by retaining the existing customers and attracting new customers. This
has helped the company in finding out the latest customer need and wants and then to provide
them goods as per their choice or demand(Prajogo, 2016).
When it comes to technological factors of Sainsbury, it was found that they were in
favour of the company even at the time of Brexit. Sainsbury fostered its business on digital
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platform during the time of Brexit, which prevented the company from overcoming the problem
and continuing its operations smoothly as well as in expanding its operations at a global level.
Legal – legal factors are those factors which are concerned with statutory obligations on
the business firms. These factors include employment legislations, consumer laws, trade laws,
etc. legal factors have negatively affected the working of the Sainsbury during the Brexit as the
regulatory authorities usually used to consume lot of time in carrying out their actions which in
turn lead to delay in decision making process.
Environmental – it is very important for every company to take care of environmental
factors so as to gain the confidence of customers and to avoid complexities in working by
avoiding government restrictions. Environmental factors include climate, recycling procedure,
proper waste disposal, sustainability, etc(Lozano, Nummert and Ceulemans, 2016).
Sainsbury paid immense emphasis on environmental factors which in turn helped the
company in rising even at the time of Brexit such as the company reduced its operational waste
and focussed on recycling which not only helped the company in reducing its cost but also
helped in building strong image in the mind of customers which lead to attraction of more
customers.
Apart from this, the company reduced carbon emission. Even the company paid immense
attention on reducing the pollution so as to prevent the environment. Furthermore, the company
also adopted sustainable practices for producing and distributing its product which helped the
company in gaining limelight. Thus, environmental factors has positively affected the business of
Sainsbury at the time of Brexit.
Thus, all these 6 factors played a vital role and has impacted the working of Sainsbury either in
the positive manner or negative manner.
TASK 4
SWOT analysis of Sainsbury following Brexit and the impact of various micro and macro factors
on the decision making and business objectives.
SWOT analysis of Sainsbury following Brexit is as follows:
Strengths:
 Diversified working - Sainsbury has very strong market share in the supermarket
industry and has diversified working. It has around 30000 product lines existing in its
store at every point of time. Furthermore, it has diversified its operations from clothing,
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groceries, finance, energy and is even focussing on diversifying it further. This is one of
the most important reason behind company being able to survive and grow even after the
Brexit. This is the basic reason behind company being third largest retailer in
supermarket industry in UK(Prajogo, 2016).
 Strong balance sheet and consistent profit - the company has very strong balance
sheet. This is evident by the fact that even at the time of Brexit the balance sheet of the
company showed consistent profit. This was possible only because of the high brand
image of the company and loyalty of the customers. This helped the company is
maintaining strong balance sheet and consistent profits.
 Quality products – Company is known for providing quality goods which has helped the
company in maintaining and building brand image. The company has different
propositions of food comprising great quality. This is the basic reason why the revenue
and profits of the company is consistent even during the adverse situation of Brexit
because customers definitely prefer those products which are high in quality(Lancaster
and Massingham, 2017).
 Diverse employees - The company engages employees from diverse culture which in
turn has fostered diversity at workplace. This has helped in company in smooth running
of the business at the time of Brexit because due to Brexit the business of the company in
local market has suffered tremendously but because of the employees from diverse
culture company was able to run its business operations very efficiently in other cultures.
This was the major reason behind company being able to maintain its revenue and profits.
Weaknesses:
 Single operating market – major drawback of the company was that it operated in a
single market which has hampered the smooth running of the business after the Brexit.
After Brexit the major operating market of the company has been affected drastically and
the company didn't have the other operating market by which the company can overcome
the loopholes. Hence, this was the major weakness of the company.
 Low margin food business – the basic objective of Sainsbury is to provide food products
at reasonable prices so as to increase the sales. This objective has helped the company in
lot in maximising profits as well as customer satisfaction but during Brexit, sales of the
company reduced because of lower purchasing power of the customers. Hence, the
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company could not earn much because the profit margins were also very low(Hillary,
ed., 2017).
Opportunities:
 Global market expansion – at the time of Brexit, company had an opportunity to
increase its operations by working globally and having access to customers all over the
world by coming up with online collaborations. This would not only help the company in
increasing its revenue and profitability but will also contribute in increasing its brand
awareness.
 Advancement in technology – with the help of innovation, company would be able to
survive and grow even at the time of Brexit. For example: by investing huge amount in
research and development; company could use technology analytics to get deeper insight
of the customers which will further help them in identifying the needs and wants of the
customers and then producing the goods as per their desires(Ortega-Altamirano and et.al.,
2018.).
Threats:
 Price fall – major threat due to Brexit was the decline in prices because the value of the
currency fall drastically, this lead to the inflation. Thus, the company was under constant
threat to reduce the prices of its products.
 Intense competition – high competition exist in retail and supermarket segment. Thus,
after the Brexit, business of all the companies has suffered and hence their was cut throat
competition so as survive in this condition.
Impact of micro and macro factors on decision making and business objective
Micro factors - micro factors such as distribution channel had a major impact on the
decision making and achieving business objective. For example: the company has to take
decision regarding how to build strong distribution channel so that the customers have easy
access and could reach to the company anytime and anywhere at the time of requirement. For
this purpose, the company started operating on digital platform so that the business objective is
achieved effectively and efficiently(Lancaster and Massingham, 2017).
Macro factors – macro factor such as environmental factor played a vital role in
affecting the decision making of the company towards the attainment of business objective. For
example: if company has to achieve sustainability then it has to decided how to carry out its
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production processes which will reduce the waste so that their cost of raw material would also be
reduced which in turn would contribute in attainment of business objectives effectively and
efficiently.
CONCLUSION
From the above assignment, it has been summarised that the business of the company
was affected to a wide extent because of Brexit such as the decline in currency rate has
negatively affected the business of the company. While on the other hand, sustainable
environmental practices such as reduction in waste and establishment of recycling procedures
has helped the company a lot in surviving and growing in the adverse conditions. Further it was
found that the major strength of the company which helped it to survive even after the Brexit was
due to the reason that company employs diverse workforce. On the other hand, major weakness
was found that the company keeps low profit margin on its food products. Moreover, impact of
distribution channel on the business objective and decision making was discussed such as how to
collaborate for digital platform. Even the impact of macro factor that is environmental factor was
discussed regarding its impact on decision making and attainment of business objective.
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