Business and the Business Environment

This document provides an overview of the business environment, including the types and purposes of organisations in the public, private, and voluntary sectors. It explains the size and scope of different organisations and the relationship between organisational functions and objectives. It also discusses the positive and negative impact of the macro environment on business operations.

Business and the
Business Environment

Contents
Contents......................................................................................................................................2
INTRODUCTION......................................................................................................................3
MAIN BODY.............................................................................................................................3
TASK 1......................................................................................................................................3
P1 Explain different types and purposes of organisations; public, private and voluntary
sectors and legal structures.....................................................................................................3
P2 Explain the size and scope of a range of different types of organisations........................4
TASK 3......................................................................................................................................5
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure..................................................................................5
TASK 4......................................................................................................................................7
P4 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations...................................7
TASK 4....................................................................................................................................10
P5 Conduct internal and external analysis of specific organisations in order to identify
strengths and weaknesses.....................................................................................................10
P6 Explain how strengths and weaknesses interrelate with external macro factors............11
CONCLUSION........................................................................................................................14
REFERENCE...........................................................................................................................14

INTRODUCTION
Business environment is a collection of all individuals or other factor. Under the
business environment studied about the external factor like economic factor, socio cultural
factor, government or legal factor, demographic factor, geophysical factor. The business
environment refers to the aspects of business unit which influence the activities and
determine its effectiveness. Business environment can be affected by external factors. These
factors can affect its performance, profit or growth. Business environment helps in order to
sustain and grow in line. Managers have control on over the internal business environment.
MAIN BODY
TASK 1
P1 Explain different types and purposes of organisations; public, private and
voluntary sectors and legal structures.
Organisation is a group of individuals they all have a particular goal. And they are
working together for achieving the goal. Without an efficient organisation management
cannot achieve the goal or target. It helps to management in performing their functions
smoothly (Akhtar and Sushil, 2018).
Private Sector Organisation
These organisations owned by individuals. These organisations are run by
individuals. Private sector organisations are part of economy. Private sector organisation has
a goal of money. It refers to citizen sector. Tesco PLC is a private sector organisation.
Purpose –

Private sector organisations purpose is maximising their profit. Purpose of private
sector organisation is providing employment.
Background – Tesco PLC is a British multinational groceries retail company.
Headquarters of Tesco in Welwyn garden city, England, United Kingdom. It was founded in
1919. It is founded by jack cohen.
Product or service offered – Tesco PLC grocery types offers financial services like
home loans, saving accounts, insurance and grocery product. It is a wholesaler of food.
Size – 4.5 lacs employees works in Tesco plc.
Public Sector Organisation
These organisations are owned by government. Public sector organisation is run by
government. BBC is a public sector organisation(Anderson and et. al., 2017).
Purpose –
Purpose of public sector organisation is maximising the public service or increase the
government services.
Background – it is founded in 1922. Its headquarter is in London, UK.
Product or service offered – BBC news, BBC news or sport.
Size – 35402 employees are working in BBC.
Voluntary
Voluntary organisation is owned by charities. Oxfam is a voluntary organisation.
Purpose –
Voluntary organisation purpose is identifying the need of social, groups, community. It
develops the society(Bedianashvili, 2016).
Background – it was founded in 1942. It has 19 charitable countries.
Product or service offered – books, sell goods and fair trade products.
Size - Oxfam have 10230 staff and 47097 volunteers.
P2 Explain the size and scope of a range of different types of organisations.
There are three types of organization. Public sector organization, private sector
organization, voluntary organization.
Public sector organization
In public sector organization is BBC. The British broadcasting corporation is a public
broadcaster. It’s headquarter in Westminster, London. BBC have many broadcasting
channels. BBC is a public broadcaster that is established by Royal Charter. BBC provides 10

national TV channels. It also has 10 national radio channels, and 40 local radio station. It
delivering the information in 42 languages. BBCs mission is creating the public interest and
provides high quality and distinctive outputs. And inform educate or entertain.
Private sector organization
Private sector organizations example is Tesco PLC. Tesco PLC is largest retailer
company. It is a seller of grocery, food or financial services like saving accounts, home loans,
insurance etc. Tesco have large number of employees. 743k employees are working in Tesco.
It is a UK based multinational retailer company. Tesco also have supermarket and online
stores in world. It has a famous supermarket in Ireland. Tesco was founded in 1919. it is
founded by Jack Cohen. It provides many types of services or goods. It has major products
like food, financial services, groceries. Tesco PLC is a private sector organisation. Tesco
creates strategies for the expansion of their business. It has many worldwide retail stores. It
has expanded their business by a combination of acquisition of new store or supermarket. It
has 6966 stores in worldwide (Eling and Schaper, 2017).
Voluntary organization
Voluntary organization example is Oxfam. Oxfam is a voluntary organization. It is an
international confederation of 17 independent working. It is working together in 94 countries.
It has 10230 staff and 47097 volunteers. It has various sources of funding. There is many
donors - UN, EU, Public donation. It is opened in 1948. it organises campaign for Women’s
rights; food for all, sustainable agriculture, climate change; health, education and aid; arms
control and people’s rights during times of conflict and disaster. Oxfam purpose is doing
charity for society. It is raising funds for people’s rights, health, education, climate change,
food and all.
TASK 3
P3 Explain the relationship between different organisational functions and how
they link to organisational objectives and structure.
Organizational Functions of Tesco
Organizational functions playing a vital role in every organization. Every organization
needs good and effective functions to execute task. Tesco Company organizational functions
are following effectively and every function sharing a good relationship with other function
of the organization. It is necessary to perform all the functions because all functions are

interrelated with each other. Relationship between different organisational functions is given
below:-
Marketing and Finance Function – Marketing function roles are very prominent in
organization. There are so many functional activities come under marketing functions such as
product, price, place, promotion, managing social media and conduct market research,
applied strategies. These all functions performed by marketing department and each and
every function mandatory for the welfare of Tesco. Financial department also manage all
financial activities of the company. In these activities finance department prepare budge of all
the department and focus on cost and margin. There is relationship between marketing
department and financial department. With the help of finance department all the marketing
activities, strategies and plans budget prepared. For the product, price, promotion , increase
the brand value and develop the product policies , finance department consider the cost and
profit margin and then prepare a budget and mention each and every small detail in it. Both
department connected with each other and communicate to know the current financial
position of the marketing department (Escaleras and Chiang, 2017).
Human resource and IT Function- Human resource is responsible to generate
employment for the individuals. There are many functions comes under human resource such
as recruitment, selection, training and development and orientation, etc. Tesco company HR
department perform all the function very effectively. With the help of HR function, company
easily select the right person for the right job role but this is all done smoothly with the help
of the IT department. Advance technology and effective applications helps HR department to
perform job without any hurdle. IT department play a very significant role to manage all the
functions of HR. So these functions are related with each other (Fleming, Lynch and Kelliher,
2016).
Production and Research & Development Function- company production function is
responsible for the new products of the company. The main concern of Tesco Company is to
focus on development of the products. Research and development function leads to do all the
market research activities in which it measures that how much customer like company
products and what the requirement of the customer. Production function get all the research
information from research and development function and then develop product according to
customer needs and wants so both functions all related with each other and helps to achieve
organizational objective.
Organizational structure followed by the Tesco

Each and every organization has own structure to manage all the activities inside the
organization. Organizational structure helps to maintain relationship between employees and
control all the activities, task, roles and responsibilities that organization provide all the
employees. Tesco is multinational retailer organization and it follows hierarchical
organizational structure. In this structure, all the roles, responsibilities and authority comes
under the top level management and ensure that all of them flow downward to the lower level
management. In Tesco Company, this structure centralizes all the duties, responsibilities and
powers from the top level so that all the activities follow systematically. The main advantage
of this structure is that all the job roles and obligations are distributed into many parts to
make sure that each and every task will be complete in fluently and effectively. In
hierarchical organizational structure every employees are very well aware about their work so
it helps to accomplish the entire objective of the company (Franklin and Marshall, 2019).
TASK 4
P4 Use contemporary examples to demonstrate both the positive and negative
influence/impact the macro environment has on business operations
Macro Environment
Macro environment includes many factors which helps in decision making, problem
solving and prepare strategies of the company. In external macro environment,
political, economic, social, technological, legal and environmental factors consider.
These factors are known as PESTLE model. Changes in customer priority and need,
changes is government policies, changes in social conditions , changes in interest
rate, changes in technologies are the example of the external macro environment
factors (Gaganis, Pasiouras and Voulgari, 2019).
Impact on Political Factors- Political factor leads to the changes in government and
legislative activities, plans, policies, act and regulations. Political factors are responsible to
affect the decisions of marketing and business. Tesco Company also influenced by some
political forces. It is a UK based company so home market is stable but other countries
market affected by the political forces.

 Positive – Government helps and provide low taxation rate and subsidies so it affects
positively on the Tesco company market.
 Negative – Tesco is multinational company and its market spread all over the world
so every country political situations is different. So company deal with every
countries political factor sometimes the situation is unfavorable so it gives negative
effect.
Impact on Economic Factors- In economic factors all the income and expenditure activities
comes. Economic factors are helpful to determine the profit of the particular products. In
these factors includes profit, revenue, sales and distribution. Tesco focusing on taxation
policies of every country so that Tesco get benefits from that country.
 Positive- Stable economic conditions give positive impact on the Tesco organization.
Stable economic factor generate more chances to enhance the business scope in the
market. Company main focus is to generate more profit with the help of cost
reductions and provide quality products in discounts and offers. It encourages
customer to stay loyal to Tesco and company earn well and give positive impact on
country economy.
 Negative- Economic factors and conditions are changing according to country. Some
country economic factors are stable for Tesco organization some country are unstable
because every country economic factors change so it gives negative impact on Tesco
organization.
Impact on Social Factors – Tesco market is larger and it’s important to pay attention on
social factors. Company social status also comes under social factor. Tesco
company running business internationally so all the products that are in demand
totally depend upon the social factors. Customer choice o product is socially
influenced (Gandhi, 2017).
 Positive- Company main target is customer and company prepare products according
to the customer’s needs values and taste preference so with the help of this factor
company demand and supply change. Social factor change the market scenario and
give positive impact on the customers. Distribute products according to customer
segmentation helps the Tesco to generate more opportunities.

 Negative- Social factors main focus is target market situation so every country market
scenario is different. Every target market customers values, needs and preference are
different so sometime its give negative impact on Tesco company.
Impact on Technological Factors – Technological factors are responsible for the welfare of
the organization. It generates many possibilities and helps to increase the large
number of customers. Technology attracts the customers (Luftman, J., 2003)
 Positive- In these factors, all the new and advanced technologies include Online
shopping and mobile online payment and delivery give positive impact of the Tesco
Company. Tesco includes RFID, and self-check system machine.
 Negative – Tesco is a big organization which diversified geographically. All
technological activities doing with the help of internet so Sometime internet network
found error and fluctuate so that situation it gives negative impact.
Impact on Legal Factors - Changes in the government’s procedures leads to legal factors.
In legal factors all the activities come under legal force. It is necessary to follow national
and international market law conditions (Ivanova and Makhnyreva, 2017).
 Positive- Tesco Company is following all the rules, regulations, policies and strategies
as per the legal norms so it gives positive impact on the company. Tesco give equal
pay to their employees whether they are men or women so it also creates positive
impact.
 Negative- Tesco market is diversifying globally so legal factors are vary according the
country. Every country shares different legal situations. In different areas, legal
factors create many hurdles for the launching of the new store and supermarket.
Impact on Environmental Factors- In environmental factors, all the natural and agricultural
based products includes. Tesco running many initiatives that helps to improve environmental
conditions.
 Positive- Tesco is using natural and agricultural based products to prepare company
products which are healthy and environment friendly. Some non renewable sources
also used by the Tesco which give positive impact on the growth of the company.
Tesco following remove and reduce usage of plastic for the welfare of the
environment.
 Negative- some people take seriously all the environmental factors which are good for
the society but some people not take seriously so it give negative impact.

TASK 4
P5 Conduct internal and external analysis of specific organisations in order to
identify strengths and weaknesses.
Swot analysis
It is an tool which helps in understand what is strength weakness opportunity or threats of an
organization. This analysis helps in making strategies for organization in the order of success. It is stands
for strength weakness opportunity or threats. It is develop a full awareness of all factors that are involves
in decision in decision making. There swot analysis is done in the context of Tesco PLC (Pilkova and
Holienka, 2018).
Strength
 Tesco PLC is a biggest grocery
retailer in UK. It has a great super
market chain.
 Tesco is big job creator firm. It has
743k employees in Europe.
 It has 3751 stores in 2008 now it
have 6966 store in world.
 It have efficient supply chain
network. It helps in enhance the
productivity or reduced the cost.
Weakness
 Tesco faced problems in 2017 due to
fraud trial and accounting scandal. It
charged with fines for false
accounting declaration.
 Tesco’s share prices fell down to 9%
due to worst performance of
company.
 Lost cost strategy is also reduced the
profit margin.
 Tesco faces high financial errors due
to high debit or credit card liability.
It affected the financial profit of
company.
Opportunities
 There is a opportunity for strategic
alliances with other brands and make
the strategies for the partnership with
big firms or other famous brands.
 Tesco stores are underperforming so
there is opportunity for joint venture
Threats
 UK and EU relation affected their
business. Interest rates are high of
UK.
 There are many supermarket giants
like wall-mart. Competitor affects the
market position of Tesco.

with local business or brand that
helps in expand to their business.
 There is a opportunity for growing or
updating their online stores or home
delivery facility.
 Opportunity for expansion their
business in other countries.
 Market recession also affects their
market of Tesco.
 The labor cost is increased because
of covid19 pandemic.
P6 Explain how strengths and weaknesses interrelate with external macro
factors.
External Macro environment
In this external macro environment, all the major factors are uncontrollable and affect
company decision making and influence on its performance and techniques. In external
macro factors includes political, economical, social, technological, legal and environmental
factors, these factors called as PESTLE factors. In Tesco Company, all the factors are playing
a dynamic role in all departments of the company. Macro environmental factors give directly
impact on consumer’s capability and their ability to deal with production, marketing, price
and sales (Rialp-Criado and Komochkova, 2017).
Political Factors
Tesco is a large organization which operates business all over the world. Tesco is a UK based
company and their political environment is stable because it is their home market. Political
factors affect the performance of the company. In these factors, acts, tax rates and stability
and legislations include.
 Strength- The main strength of this factor is that it diversified in most of the
countries so that its performance is mostly influenced by the legislative and political
condition of the countries. It provides multiple and flexible work opportunities all
over the world according to the person needs so it also considers the strength of the
Tesco.
 Weakness – Tesco is doing business all over the world so there are some political
factors which make company weak. Due to market and other political pressure few
retail formats in some countries not perform well as per the company expectation
because company did not do good market research.

Economical Factor
In Tesco Company, economic factors play a vital role. Labour costs, prices and profits
consider the prominent economic factors that affect al lot. Presence in global market and
diversification are two curtail strategies which help to achieve the organizational goal. For
economical benefits company focus on many taxation policies.
 Strength – Tesco is Europe’s biggest private company this company is economically
in strong position and it is leading the market shares that are also strength of the
company. Company strength gives the good impact on economical factors of the
company.
 Weakness- sometimes company leads few changes in the delivery model so extra cost
associated in redesigning the company so it comes under the weakness of this factor.
Tesco need to understand that price of the goods affects the sales so that time focuses
on economical factors.
Social Factor
Tesco continuously promoting all products with consider social factors of the market
environment. Tesco market spread all over the world so it’s necessary to focus on socially so
that Tesco product available in every single store in countries. The main concern of Tesco is
doing business for the benefits of the society.
 Strength - The main strength of Tesco is that it focuses on the different social and
cultural need of the customer with smoothly supply chain network. This is beneficial
for the company and it create company positive image socially. Company socially
doing well for the society and obtained many international awards.
 Weakness - In Tesco, company deal with social situations which make them weak.
Sometimes company perform poor operations in particular markets due to competitive
pressure. Sometime company also face some price war situations (Shageeva and et.
al., 2017).
Technological Factors
In this time technological advancement is necessary for every organization. With the help of
advance technology, Tesco achieve all the new opportunities to perform well and get
customer satisfaction.
 Strength- Tesco Company uses many advance technology to access easy shopping
and get good customer experience. Tesco is growing very fast in term of technology

and develop software and launch many apps like RFID- enabled barcode system to
automatically count the company product and also launched online mobile payment
application called as PayQwid. These technological factors come under big strength
of the Tesco.
 Weakness – Most of the time advance technology is good for the company and
customer but sometime it give adverse affect. With the help of internet all the
technological activities are taking place but sometime network become slowly. Tesco
is a large company so that Situation Company and customer both suffer so it becomes
weakness.
Legal Factors
Government rules and policies direct affect the performance of the Tesco Company. For
instance change price or increase or decrease price of the product without any notice.
 Strength –Tesco proper follow all legal factors and polices so as a result company get
high level of customer satisfaction. Customer feel secure because they know that
company is following all the legal procedure so that their products are good for them.
It becomes the strength of the company.
 Weakness –Sometime Tesco take random steps which become the reason of company
weakness for example Tesco changes clubcard without concern of the customers.
When customer aware about this then they became angry and that is not good step for
the company.
Environmental Factors
There are many environmental factors which give positive impact of Tesco. Tesco operating
business all over the world so every country have different environmental factors
which come need to deal with (Trad and Kalpić, 2017).
 Strength – Green environment and Eco – friendly products launched by Tesco for the
welfare of the environment and also use renewable source to consider environment
factors. These things are beneficial for the society (XU and CHEN, 2018).
 Weakness- Tesco deal with diversified market situation so every market condition
and environment is change so Tesco sometimes experience environmental issues.

CONCLUSION
The goal of this study is to show the different types of organization size, scope and purpose.
This study includes public, private and non profit organization. The outcome is that there is a
good relationship between all organizational functions and all functions contribute together to
accomplish the organizational objectives. Company proper follow hierarchical organizational
structure which divide all the functional activities according to departments from upward to
downward s it make easy for all the employees and all the duties and responsibilities assign
accordingly so company perform well and generate more profit. In this study, the main focus
on external macro environmental factors. With the help of PESTLE Model Company
performance increase and it also evaluate external factors which affect the business. There are
many positive and negative impact of macro environment which affect the business
operations of the company. In this study, also identify some strength and weakness of the
macro environment which helps in easily tackle all the upcoming opportunities and threats.
These factors give company competitive advantage and helps to analyse the situation of the
business from outside of the company.
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