(PDF) Business and Business Environment - assignment

Business and Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Different types of the organisational......................................................................................1
P2 Different types of organisation based on the size..................................................................2
M1 Link between the structure and size of organisation with the organisational objective.......3
TASK 2............................................................................................................................................3
P3 Relation between different organisational function and there link with organisational
objective......................................................................................................................................3
M2 Advantages and disadvantages of interrelation between organisation function...................4
D1 Different types of business structure and interrelationship of different organisational
function.......................................................................................................................................5
TASK 3............................................................................................................................................5
P4 Positive and negative impact of macro environment on the business...................................5
M3 Use of PESTLE to analyse macro environment...................................................................6
TASK 4............................................................................................................................................6
P5 Internal and external analysis of the company.......................................................................6
P6 Interrelation between the strength and weaknesses with the external macro factors.............7
M4 SWOT analysis and its influence on decision making.........................................................8
D2 Impact of micro and macro factor on business decision making and objectives..................8
CONCLUSION................................................................................................................................8
REFERENCES .............................................................................................................................10

INTRODUCTION
Business environment refers to the sum total of all the external and the internal factors
which influences the working and the structure of the business. TESCO is a British multinational
general merchandise and groceries retailer. It was founded in the year 1919 by Jack Cohen as a
group of market stalls. The report will discuss about the different types of the organisation based
on the status of the business that is whether public, private or voluntary. Further it will outline
the different types of organisation based on the size of the business. After that it will highlight
the relationship between the different organisational functions and there link with the
organisational objective. Further it will discuss the positive and negative impact of the macro
environment on the business with the help of PESTLE analysis. Further it will analyse the
internal and external strengths and the weaknesses of the organisation with help of the SWOT
analysis. At last it will outline the relationship between the organisation strength and weaknesses
with the external macro factors.
TASK 1
P1 Different types of the organisational
Organisation is a body which comprises of the group or association of people which have
accumulated for the fulfilment of a specific particular purpose or the objective (Anghelache,
Manole and Anghel, 2014). There may be different types of the organisation. Some of them are
as follows-
 Public company- These type of companies have membership open for the general
public. The minimum required number to form a public company is 7, and for the
maximum number of people there is no limit. These type of organisations involve not for
profit government owned companies which provides services solely for social purpose
for the betterment and upliftment of the society and it works with government control.
The main purpose of this type of organisation is to deliver public goods and the
governmental services like public infrastructure, public transport, military, police etc.
Public company taken here is TESCO plc. It is a British multinational general
merchandise and groceries retailer founded in 1919 by Jack Cohen as a group of market
stalls. The legal structure of this company is run by the Board of Directors and on behalf
of the shareholders the board of directors conducts an annual general meeting (AGM).

 Private companies- These companies are those type of companies whose articles of
association restricts the transferability of the shares to another and prevents the public at
large from subscribing to the general public. The main purpose of the private company is
to run the operations for making and earning profits. Here the company has a separate
legal identity from the owners and is run mostly by shareholders. These shareholders
must be a part of the business and in any circumstances can sold the share to the member
of the general public. Arcadia group is a British multinational retailing brand founded in
2002 dealing mainly in clothing, accessories and shoes. The legal structure of this type
consists of the separate legal entity which means the owner and company have different
identity and the shareholder has limited liability for in the company debt and losses
 Voluntary organisation- These type of companies are a voluntary association of people
who enters into an agreement voluntarily to form an organisation or a body to accomplish
a particular objective or a purpose (Kuratko, Hornsby and Covin, 2014). These are bodies
that carry out some social activities which are undertaken especially by some specified
non- profit or non- governmental enterprise. The main purpose of these kind of
companies is to enrich and benefit the society at large without any expectation of the
profits. Oxfam is the confederation of 20 independent charitable organisation founded in
1942 which focuses on the alleviation of the global poverty. The confederation is
supported by the Secretariat and the role of the secretariat is to provide coordination,
leadership facilitation to the confederation as a whole and also provides individual
support to the affiliates wherever necessary.
P2 Different types of organisation based on the size and scope
An organisation is a social unit or group of people who gathers together to structure and
manage the work and the activities to meet the individual needs and wants along with the
accomplishment of the collective purpose and the goals. There are many types of the
organisation classified on basis of some specific characteristic. Organisation on the basis of the
size of the organisation are as follows-
Public organisation- These are organisation that are generally operated and owned by the
government of the country and exist to provide services to its residents. The scope of public
sector flows from the policies and strategies governing the economic development and the
structure of the economic system of the country. These type of companies have membership

open for the general public. The size involves a requirement of 7 minimum number to form a
public company and for the maximum number of people there is no limit.
Private organisation- These are companies operated and owned by individuals and group of
entities and not by the government. The revenue and profits earned by the business are reinvested
into the business so as to ensure the sustenance of the business. The size includes minimum of
the two members and the maximum of the 200 members.
Voluntary organisation- It usually comprises of organisation whose aim and purpose is to
enrich and benefit the society without the motive of the profit earning. It includes all the
enterprises run for the upliftment of the society be it a non- profit organisation, third sector, civil
society, NGO 's, etc.
M1 Link between the structure and size of organisation with the organisational objective
There is a crucial role between the size of the organisation and the objectives and the
goals of the business. The objectives are defined and determined according to the size of the
organisation only. If the size of the organisation is small then the objective can be to grow the
business to large scale business. But if the business is already a large scale organisation then its
objective will not be to grow the business to large scale rather the objective then will be to
maintain and sustain that level of business.
TASK 2
P3 Relation between different organisational function and there link with organisational
objective
Organisational function or the business function refers to the core process or set of the
activities carried out within the different department of the company. Common function includes
marketing, finance, human resource, warehousing and storing, operations, productions etc. are
some functions which are common to every organisation (Eling and Schaper, 2017). Each and
every function needs to be carried on in harmony and with proper synchronisation because every
function is interrelated to one another. This inter relation can be understood in the following
points-
 Marketing with the finance function- There is a major relation between these two
functions. The finance is a function of TESCO which provides money to each and every
part of the organisation. Whereas marketing is the most expensive function because this

involves promoting the product which involves huge money flow. For this requirement of
money to be fulfilled the marketing function has to rely upon the finance function only.
 Information technology with research and development- The aim of the research and
development of TESCO is to improve the existing product and the services, creating new
and improved products, improvement in the technology and production methods etc. The
information technology function helps in getting the knowledge of all the up gradation in
the market and the environment in which the business exists and the environment which
affects the business working.
 Marketing with the human resource function- Every function needs manpower to
carry on the work of the organisation. All this manpower is recruited by the human
resource function. The marketing function also conveys the requirement of it to the
human resource function which then works according to the needs of the marketing
function (Paul, Yeates and Cadle, eds., 2014). They find and recruit those employees who
are possessing the specification and skills required by the marketing function.
 Marketing with operations and production- Marketing needs to closely work with the
production function to ensure that the product manufactured is according to the quality,
specification and the requirement of the consumers. The marketing function sets the
deadline of the production function.
Link of these functions with the organisational objectives
There is a close link between the organisational functions and the organisation objective
and aims. The organisation cannot work without any of these. Both these concepts are
interconnected with each other. If the objective is not set then there is no use of the
organisational functions. And if the objective are set but there are no functions to be performed
then there is no use of setting objective. Objectives are the end result for which the company is
run and the organisational function are the ways through which these objectives can be achieved.
M2 Advantages and disadvantages of interrelation between organisation function
Organisation function plays a very crucial role in any organisation. Without
organisational function any business cannot be run. But then also there are some advantages and
disadvantages in the interconnectedness of the organisational function. Proper working and
implementation of the organisational functions leads to the proper working and proper
coordination of all the departments of the organisation. There is harmony in the work of

everyone. But then also there is a major disadvantage of organisational function and that is the
interconnectedness of the different types of functions with one another. Because of
interconnection if one function is not performed well then the other function will also be not
performed well.
D1 Different types of business structure and interrelationship of different organisational function
There is a link between the business structure and the objectives and the goals of the
business. The objectives are defined and determined according to the structure of the
organisation only. If the structure of the organisation is sole proprietor then the objective can be
to grow the business and earn maximum profits because the sole proprietor is the only owner of
the profit. But if the business is partnership organisation then its objective will be to bring
together the skills and scarce resources so that the resources can be optimally used.
TASK 3
P4 Positive and negative impact of macro environment on the business
Macro environment consists of the external environmental factors which have a great
impact and influence on the success and growth of the business, strategies formulated for
running the business, the decision making process etc. These environment can be studied with
the help of PESTLE analysis (Chang, 2016). It is an analytical tool which is widely used in the
business world to find out the threats and the opportunities.
 Political factors- These factors include government rules and the regulations, changes in
political situations, tax rates, acts of the legislations etc. The company TESCO operates
in more than 12 countries including Asia and the Europe. As it operates in more than 12
countries so the company is exposed to many different types of the political systems
because every country has its own type of politics and the government.
Positive impact-
 favoured trading partner
 implementation of industrial safety regulations
Negative impact-
 more trade tariffs and more rules and regulation
 more legal framework for the contract enforcement

 Economic factors- These factors are of a major concern for TESCO because these
factors are going to influence the profits, demands, costs and the prices of the products
and the services of the company.
Positive impact-
 improved infrastructure quality in the retail industry
 more skilled and educated workforce available in the retail industry
Negative impact-
 unemployment rate is high
 also the inflation and the interest rate are high
 Social factors- This factor also plays a major role in affecting the business. It includes
health consciousness, age distribution, career attitudes etc. Because of the changing
attitude of people regarding the health consciousness has a positive impact because this
new development is an opportunity for the TESCO because now it can develop new
organic and health conscious foods and beverages into the market.
Positive impact-
 high class culture, power structure and hierarchy in the society
Negative impact-
 there is a great difference between the demographics and skill level of the population
 Technological factors- The changing trends in the advancement of the technology is
very fast and rapid. These technological changes affects the business both negatively and
positively if not responded properly. TESCO embraced and adopted changes in
technologies positively by adopting the latest technologies. It introduced RFID
technology to increase the in- store experience for the customer which automatically
counts the stock and removes it after the sales.
Positive impact-
 the company has adopted the recent technological developments
Negative impact-
 due to adoption of the technology the cost structure increases.
 Legal factors- Government policies and legislations directly impacts the performance of
the company TESCO. For the growth, the company must follow its conduct and

operations in accordance with the Food Retailing Commission (FRC) which is a strict
code of practice (O'Boyle, 2014).
Positive impact-
 implementation of a wide variety of law
Negative impact-
 same has a negative effect also because use of too many laws will become tough for the
company to comply with.
 Environmental factor- These factors have become important due to the increasing
pollution, scarcity of the raw material, doing business in sustainable and the ethical
manner. For improving the environment TESCO 's van drivers not only uses fuel saving
routes but also collects the unwanted plastic bags from the customers and recycle them.
Positive impact-
 waste management is applied in the consumer service sector
Negative impact-
 sudden and unpredictable changes in the climatic conditions and the weather.
M3 Use of PESTLE to analyse macro environment
PESTLE analysis is a tool which is used by the marketers and companies to monitor and
analyse all the macro environment factors which includes all the external factors which affects
the business working. These factors include external factors like political, economic, social,
technological, legal and the environmental factors. An organisation success is influenced by all
these factors so a thorough study of these factors is very necessary and this can be achieved with
the help of the PESTLE analysis.
TASK 4
P5 Internal and external analysis of the company
SWOT analysis is an analytical tool which is used to identify and analyse the internal and
external factors that affects and influences the organisation's viability.
Strengths- the strengths of the TESCO are as follows-
 The company has significant cash reserve and a wide range of property in the portfolio of
the company and provides a strong financial position.

 It has a considerable brand equity in its name with a global recognition and respect in
terms of the service, quality, selection etc.
Weaknesses- TESCO has the following weaknesses-
 Competitive pressures have led to the price wars that have diminished some of the retailer
profits (Brașoveanu and Bălu, 2014).
 Some of the retail formats in certain countries have not performed well as what was
expected suggesting that TESCO have not done much market research before marketing
the product.
Opportunities- there are certain opportunities lying for the TESCO to grab
 There are opportunities for strategic alliances with other brands and admired companies
to offer more products or attract more consumer in certain target markets.
 There is also significant opportunity to grow online shopping for TESCO as well as offer
its home delivery service to more areas.
Threats- the threats that may hamper the growth of the TESCO are
 Greater stakeholder pressures related to the social and environmental responsibility also
adversely affect the TESCO cost basis.
 Rising raw material cost are also threatening company's profitability
P6 Interrelation between the strength and weaknesses with the external macro factors
There is a strong and a close relationship between the internal strengths and the
weaknesses with the external macro factors which is the elements of the PESTLE. The
relationship between the strength and weakness with the macro environment is discussed in the
following points-
Strength with external macro environment
 it is not enough for the company to have significant cash reserve and a wide range of
property in the portfolio of the company and provides a strong financial position. But the
company must be able to able to maintain that much cash reserve. If there is changes in
the economic factor than it may decrease the cash reserve which may become a threat for
the company in the future.
Weakness with the external macro environment
 Some of the retail formats in certain countries have not performed well as what was
expected suggesting that TESCO have not done much market research before marketing

the product (Hamilton and Webster, 2018). This may be because of the fact that because
of the different cultures and thinking of the people and different social environment the
people of other countries may not have adopted these products.
So it is evident from the above two points that there is a link between the strength and the
weakness with the macro environment. The changes in the environment may convert a weakness
into the strength or vice versa.
M4 SWOT analysis and its influence on decision making
SWOT analysis is an analytical tool designed to check the strategic position of the
company. It helps in assessing the internal strengths and the weaknesses of the company and also
the opportunities lying in the market and the threats that can hamper the company from outside.
By knowing the strength and the weakness a company can easily takes the decision because it
knows what the company excels in and what the company lacks. Also by knowing the external
opportunities and the threats the company can before hand decide the way in which it can grab
the opportunity and the precautions which it can keep to face the threats from the external
environment.
D2 Impact of micro and macro factor on business decision making and objectives
The business does not works in the vacuum or isolation. Rather the business gets affected
with any little change in the environment whether micro or macro environment. If the
organisation makes any plan to update any change then it has to take into care both the micro and
macro environment (Hillary, ed., 2017). Changes in the micro and macro environment can either
positively or negatively affect the business objectives and the decision making.
CONCLUSION
Business environment refers to the combination of different types of the internal and the
external factors which influences and impacts the organisational working and operations. It is a
collection of all the individual, entities and other factors which may be or may not be under the
control of the company but affects the performance of the company. It was learned from the
report that there are different types of the organisation based on the status of the business that is
whether public, private or voluntary. Further it was analysed that there is a crucial relationship
between the different organisational functions and there is also a link between the organisational
objective and the organisational functions. Further it discussed about the positive and negative

impact of the macro environment on the business with the help of PESTLE analysis. Further it
analysed the internal and external strengths and the weaknesses of the organisation with help of
the SWOT analysis. At last the report gave details about the relationship between the
organisation strength and weaknesses with the external macro factors.

REFERENCES
Books and journals
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Cengage Learning.
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medium enterprises. Journal of knowledge Management, Economics and information
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Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
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O'Boyle, I., 2014. Determining best practice in performance monitoring and evaluation of sport
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Paul, D., Yeates, D. and Cadle, J. eds., 2014. Business analysis. BCS, The Chartered Institute for
IT.