Positive and Negative Impacts of Macro Environment on Business Operations

This report discusses the positive and negative impacts of macro environment on the operations of ASDA stores Ltd and BBC. It includes a PESTEL analysis to evaluate the political, economic, social, technological, environmental, and legal factors affecting the organizations. The report highlights the challenges and opportunities faced by both organizations in the current business environment.

Business and business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
LO 1.................................................................................................................................................1
P1) Different types and purposes of organisations with their legal structures.......................1
P2) Size and scope of different types of organisations...........................................................3
LO 2.................................................................................................................................................5
P3) Interrelationship of various organisational functions......................................................5
PART B ...........................................................................................................................................7
LO 3.................................................................................................................................................7
P4) The positive and negative impacts of macro environment on business operations.........7
LO 4...............................................................................................................................................11
P5) Internal and external analysis to identify strengths and weakness ...............................11
P6) Interrelation of strengths and weaknesses with external macro factors .......................13
CONCLUSION .............................................................................................................................14
REFERENCES .............................................................................................................................16

INTRODUCTION
Business environment basically represent or indicate a sum total of all the internal and
external factors that act as force and exert significant amount of pressure and have impact on the
operations and functions of an organisation (Nikitina and Lapiņa, 2019). The main factors
included in business environment of a company are its employees, owners, suppliers, customers
desires and expectations, supply and demand, management, activities of government, political
influence, innovation and advancement in technology, social and market trends, clients, business
associates and partners, economic changes and all other related parties that have significant
influence and effect on business activities and on which the overall performance, success and
growth of a firm depends.
For this assignment and report based on business and business environment two
organisations are selected from two different sectors of economies. The first chosen company is
ASDA stores Ltd which is a privately owned organisation. Another selected organisation is BBC
which is public sector organisation. In this assignment the positive and negative influence of
macro environment is included with the help of PESTEL analysis. Apart from this, a SWOT
analysis is also there to identify the internal strengths and weakness of the organisations. At last,
an interrelation between internal strengths and weakness and factors of macro environment is
also included in this report.
PART A
LO 1
P1) Different types and purposes of organisations with their legal structures
In a country's economic framework various kinds of businesses exist who operates and
functions in the environment so as to earn profits, create employment opportunities, contribute
towards country's GDP, bring innovative products and services in the country either to earn
profits or to provide social welfare etc. Following are some types of businesses that exist in UK:
Basis For Profit (Private
sector)
Not for profit (Public sector) NGOs (Voluntary)
Purpose These organisations are
owned and operated by
These organisations are
owned by the citizens of the
These organisations are
run by a group of people
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government with the
purpose of providing
welfare services to the
citizens without the aim
of earning profits (Al-
Mutairi, Connerton and
Dingwall, 2015).
country with the main aim of
earning profits by providing
the desired goods and
services to the customers.
who voluntarily take up
the duty of providing
welfare services and
goods to the society so
that the upliftment of
society can be done.
Example BBC ASDA Cancer Research UK
Legal
structure
There are three legal
structures of public
sector:
Central government:
They collect funds from
public of nation through
income tax.
Local government: These
collect funds from
community charges.
State government: They
collect fund from state
taxes.
BBC is a central
government run
organisation.
The legal structures of
private sectors are:
Sole traders: They are the
people who run and operate
their business in their
individual capacity like taxi
drivers, grocery store owners
etc.
Partnership: These are
operated by two or more
people based on partnership
deed in which the allocation
of profits and losses are
clearly mentioned along with
their roles.
Private limited companies:
These are the companies in
which the liabilities of all the
stakeholders are limited
either by the value of shares
or by guarantee.
The legal structure of
voluntary organisations
are :
Trust: This is not a legal
entity and the members
work based on trust
among themselves.
Unincorporated
association: These are
established to achieve a
specific task like clubs,
societies etc.
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Micro, small and medium sized enterprises
Basis Micro Small Medium
Purpose They employ less than 10
employees and have a
turnover of up to €2
million with a sole purpose
of earning a living for
family members (Johnson,
2015).
They employ up to 50
employees and have a
turnover of €10 million
with a purpose of
employing some number of
people so that competition
can be dealt with in
regional area.
They employ up to 250
employees and have a
turnover of €50 million
with an aim of
competing in the local
markets.
Objectives They aim at running
business so that enough
profits can be earned for
well-being of family.
They aim at expanding
business in regional area.
They aim at establishing
medium level business
in local area.
Supply of
goods and
services
They are able to supply
goods and services to a
small population of limited
region.
They supply to regional and
nearby regions.
They deal with local
areas.
P2) Size and scope of different types of organisations
Large, medium and small organisations
Basis Large Medium Small
Objectives The main objective of
these organisation is to
earn huge profits and
expand their businesses
globally (Kim and et. al.,
2015).
They aim at expanding
their business in local
areas so that they can
earn more profits to
further invest in business.
They aim at earning a
living for the family of
the owner.
Market There are 8000 large There are about 5.7 There are about 5.82
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share businesses in UK. million medium sized
businesses in UK.
million small businesses
in UK.
Growth and
sustainability
The growth and
sustainability of these
businesses is low as they
have already expanded
themselves according to
their potential.
Their growth potential is
high as they have great
opportunities where they
can expand their
business.
Their growth potential is
low due to the lack of
fund required for
expanding their
business.
Global growth and development of transnational, international and global organisations
Basis Transnational International Global
Meaning They have investments in
foreign countries and
although they have central
corporate facilities to take
decisions they have given
right to all the foreign
units for decision-making
(Ramli and Twaha, 2015).
These businesses import
and export in foreign
markets and have no
investments in foreign
markets.
They market their
products with the same
brand image in all the
markets.
Global
growth and
development
They have high potential
to grow in foreign market
as every unit is given the
right to make decisions
which make the process
faster and easier.
They can only grow in
markets where trade tariffs
are favourable for the
country to which company
belongs.
They can grow in
restricted area due to
centralised process of
decision-making.
Franchising, joint venture and licensing
Franchising Joint Venture Licensing
It is a business expansion In this two or more businesses In this a company gives
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strategy in which an
organisation can give license
to other organisation to use
its know how, methods,
brand image etc. so as to
attract customers to the
expanded business chain.
agree to pool their resources so that
they can operate the business by
sharing the profits and losses and
the governance.
permission to other
company to manufacture a
product or service in return
of a specified payment.
Stakeholders expectations
Stakeholders Expectations from the organisations
Customers The customers expect that the goods and services that are provided to them
are of good quality and ensure their safety and security while usage. Also
they expect that the prices they haver to give produces the desired value
(Zahari and Romli, 2019).
Suppliers The expectation of suppliers is that they can increase their profits by
supplying raw materials to the company. Also they expect to trade at fair
prices.
Shareholders They expect high rate of returns on their investments along with following
ethical practices by the company.
Society They expect that welfare of all the members of the society can be achieved
by the business activities.
LO 2
P3) Interrelationship of various organisational functions
In an organisation various functional departments work together in a coordinated manner
so that the goals and objectives of business can be achieved. Interrelationship of all these
departments is important in ASDA so that the tasks can be completed in a timely manner which
will help it in achieving its goals. Interrelationship between marketing and finance: Marketing department helps in
building strong and long-term relations with customers by marketing about the ASDA's
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brand which helps it in attracting customers and increasing the revenue of company. This
helps the finance department in making financial statements. The finance department on
the other hand allocates budget or the marketing department of company. Interrelationship between finance and operations: The operations department depend on
finance department for availability of funds for purchasing of raw materials. Finance
department depend on operations as the efficiency of operations help in increasing
company sales and earning revenue so that financial statements can be made.
 Interrelationship between human resource and marketing: Talented and skilled human
resources can be attracted by branding about the company on the other hand human
resources of ASDA help in making policies so that the marketing of company can be
efficiently done (Jaber and et. al., 2015).
The interrelationship among all the departments is thus important as all the departments
depend on each other for the achievement of a particular task. This helps in linking their
activities so that a flow of information can be maintained which help in completion of task in the
manner desired. ASDA needs to interrelate all its departments so that the company can attract
more customers which can help in increasing its sales making it a leading retail market in the
world.
Organisational structures
There are various organisational structures which are followed in organisations which
helps in performance of the work and maintains the flow of information in the company through
which goals of the company can be achieved. Functional organisational structure: In this the workers are grouped in departments
based on their skills and knowledge so that functional units can be made like marketing,
HR, finance etc. Divisional organisational structure: This structure helps in splitting the employees into
segments according to particular product, service or market so that specialisation of
employees can be achieved in their respective segments.
 Matrix organisational structure: In this structure the employees have reporting relations
with more than one manager. This structure has less number of levels between employees
and managers which makes the decision-making efficient and also help in including all
the employees in this process so that efficient decisions can be made.
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ASDA follows matrix organisational structure which helps in making the decision-
making process efficient so that the growth and development of the company in competitive
market can be achieved. This also help in achievement of the goals and objectives of the
company in a timely manner.
PART B
LO 3
P4) The positive and negative impacts of macro environment on business operations
Micro environment basically includes the external factors that prevail and exists in overall
business environment and creates significant effect on the functioning and operations of a
business (Shu, Jain and Liang, 2019). ASDA stores ltd is a British supermarket retailer founded
in 1949 and is privately owned organisation having its headquarter in England, United Kingdom.
On the other hand, BBC (British Broadcasting Corporation) is a public owned British services
and news broadcaster and having its headquarter in Westminster, London, UK. To evaluate the
effect and positive and adverse impacts of various macro environment factors use of PESTEL
analysis is made by both ASDA stores Ltd and BBC a detail of which is provided below:
PESTEL analysis
It is the most commonly used strategic business tool used by various organisations to
evaluate, discover, track and effectively organise macro factors of economy that create
significant effect and impact on their business operations and make them aware about the
existing threats and opportunity of business environment (Khatun and Miah, 2019). A
description about all the factors of important factors of macro environment is provided below in
context of ASDA stores ltd and BBC:
Political factors
This factor is an indicator of level of government intervention and interference in the
business operations and includes various polices and strategies formed and developed by
centrally elected political party and all other political authorities of the nation. The main policies
formed by political leaders of UK are related with tax policy, trade restrictions and barriers and
other national and international tariffs and restrictions (Tura, Keränen and Patala, 2019). Mainly
the political environment and frameworks are stable that creates many opportunities for both
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ASDA and BBC. But, currently the Brexit issue (withdrawal of the United Kingdom from the
European Union) has created many problems like migration of labours which created many
problems for both the organisations (Economic effects of Brexit, 2019). ASDA is facing an issue
of high labour turnover due to Brexit which is affecting its operations adversely. On the other
hand BBC is also facing an issue of high taxation policy and being a public owned organisation
in stability in political factors is negatively affecting its day to day operation as political parties
are having great influence on BBC and government dictate what operations and services are
allowed for BBC and what not. Foreign trade policies of UK has created a significant effect upon
BBC as it basically deals in television and mass media sector as the distribution and distribution
of sales and content takes place both inside and outside the UK. The various policies of
government are affecting content of BBC, advertising space and price, etc.
Economical factors
The factors included in economic environment are mainly associated with growth rate,
inflation, recession, bank rate, level of demand, purchasing power and disposable income of
consumer, etc. Thus, directly or indirectly affect the operations and business activities. Basically
UK is having a stable and fast growing economy which yields better profit and sales revenue to
both ASDA and BBC, but a little recession is faced by in UK because of Brexit issue which has
reduced the purchasing power and demand of consumers (Zwikael and Smyrk, 2019). This has
created pressure on ASDA to make changes in its business strategies so that prices can be
reduced. The various interest rate and inflation rate affects the disposable income and purchasing
power of customers and also affects the prices and rates of advertisement which crates significant
impact on sales revenue and profit of BBC. Beside this, increasing competition in economic
environment of ASDA has increased force on the conservative authorities of ASDA to convey a
stricter attack to competition to convey the large companies under control.
Social factors
These factors are mainly concerned with mind set and behaviour of society on which the
buying interest and attitude of consumers and their taste and preference depends. The social
environment of a nation includes values of society, their perception, preferences and behaviour
on which the trend and demand depends. A research conducted on population of UK has
reflected that Britain’s population is aging and majority of individuals are aged which has
created an issue for ASDA and BBC as they need to pay a large amount as pension to their
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retired employees (Singh, 2019). The ageing population has also created an impact on demand
for example; demand for sheltered adjustment and medical specialties have increased which
creates a chance for ASDA to improve their sales through providing these items. Beside this, the
perceptive of society of UK is more focused on healthy lifestyle which has created an
opportunity for ASDA to provide more items which facilitates better health. On the other hand,
aging population of UK has created a pressure on BBC to make their TV channels more adaptive
and its content and programmes should be according to the preference and taste of population.
The growth in single person households and working women in UK has also influenced and
effect the assortment of programmes and films offered by BBC.
Technological factors
These factors are mainly related with the automation, technical initiative and other
technological aspects like improvement in R&D and rate of technical change. UK is having
highly educated people who are fond and addictive of using latest technology (Sousa and Rocha,
2019). Thus, technological environment creates a significant effect on business operation of both
ASDA and BBC as technological shift is directly related with cost of operations, quality of
product and services and lead to effective innovation. All the supermarkets of ASDA are
constantly making efforts to make use of technology for improving their services and sales
through making use of superfast broadband and mobile apps together with click and collect
delivery services to provide maximum convince to its customer and to boost its sales. Thus,
technology has crested positive outcomes for ASDA. Beside this, technology has created an
opportunity for ASDA as lead to improvement in its product portfolio through introducing new
product types like mobile phones, MP3 players and many more innovative technological
products to attract a wider section of society. Technological advancement has also lead to
improvement in efficiency in stock control through providing facility of bar coding and also lead
to cost reduction through providing more efficient way of operations through self scanning of
products. Technological improvement has also created better opportunity for BBC through
providing better coverage across the world with the increase in the use of internet (Ali, Islam and
Rahman, 2019). With the use of technical advancement and innovation BBC has enhanced its
website and makes it more interactive and easy to use which is currently viewed by more than 25
million individuals in a week. Thus, technological environment of UK is cresting positive
outcomes for both ASDA and BBC but the random innovation and changes has also created a
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threat of creating continuous improvement in its technology to make balance with latest trend
which is a costly and complex process.
Environmental factors
In this factor of PESTEL analysis ecological and other environmental factors like
climate, weather, atmosphere, etc. The society and government of UK are becoming very
protective and conservative towards environment thus, this factor is exerting a pressure on both
the ASDA and BBC to adopt and make use of eco friendly operations and products to create in
goodwill and better image in eyes of customers. ASDA is trying to make all possible efforts for
green economy, pollution control, and management of hazardous waste and providing healthy
and environmental friendly products. Beside this, ASDA‘s shops are eco-friendly, 40 % more
energy efficient and emits 50 % less C dioxide than a standard new physique shop which attracts
more customers for this organisation (Pestel Analysis –ASDA, 2019). BBC is also having
strategies to reduce carbon emission and also make use of cables and other radio signals and
technology that should not create any hazardous or negative impact on environment (Hamilton
and Webster, 2018). The head office of BBC is supported by rainwater harvesting system and
water saving toilets to conserve and save water. Disposable cups are also not permitted in the
office and they have a centralised recycling point for waste. Beside this, energy saving lightning
and the use of fair trade products are also made by BBC to facilitate conservation of
environment. The BBC feels responsible towards its environment and makes efforts to provide
fair and ethically correct services to the communities by respecting cultural diversity and also
generate awareness about environment and the global urge to protect the environment through its
content which get displayed over its channel. Thus, both the organisation is making efforts for
protection of environment which sometimes proves costly but lead to better atmosphere and crate
good image of these organisations in eyes of customer which is overall beneficial for them.
Legal factors
These factors are mainly concerned with legal laws and acts which include consumer law,
discrimination law, employment acts, health and safety law, antitrust law, etc. Which aim at
creating a much safe and better environment for consumers and employees of organisation thus,
create significant effect on operations of organisations (Beatty, Samuelson and Abril, 2018).
With advancement of technology many cyber crimes and digital threats are increased in society
thus, strict laws are made by government of UK regarding all misleading activity of any
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organisations. It created an adverse situation and pressure on ASDA to have strong security
measures to safeguard the information about its consumer making online payments and sharing
other personal information with them. Legal factor is also creating some issues for BBC as many
laws and cats are made to keep a check and control on the programmes shown by BBC or any
other network over the various channels (Ayios, 2018). Thus, it become necessary for both
ASDA and BBC to follow all legal provisions to safeguard them form future claims and legal
consequences.
Thus, from the PESTEL analysis of both the organisations it can be concluded that macro
factors are effecting operations of the ASDA and BBC in both negative and positive way. Legal,
political and environmental factors are creating pressure on organisations while social,
technological and economical factors are creating better opportunity through enhancing their
product portfolio and services with the facility of internet and online shopping.
LO 4
P5) Internal and external analysis to identify strengths and weakness
Use of SWOT analysis is made by ASDA and BBC to identify its internal strengths and
weakness a description of which is provided below
SWOT analysis of ASDA
Strengths Weakness
 The greatest strength of ASDA is it
provides a huge range of products and
services to its customers which include
George clothing, Asda mobile, chilled
foods, ambient products, etc (SWOT
Analysis of ASDA, 2019).
 ASDA is having a vast and very effective
and extensive distribution channels with
more than 25 distribution channels across
different location on UK.
 The excellent marketing campaigns are
also a vital strength of ASDA that aim at
 The biggest weakness of ASDA
is it is having limited global
presence as compared with most
of its competitors that reduces its
market share and sales revenue.
 Many legal consequences are
faced by ASDA regarding dairy
price fixing, false advertisings
and horse meat scandal which is
created a negative impact on the
image of ASDA in its target
market.
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properly projecting its services and also
delight its customers. Apart from this
good relations with customers is also
maintain by ASDA through social
networking sites.
 Efforts are also made by ASDA for
having better sustainability in its
operations to reduce negative impact of
their operations on environment.
Opportunities Threat
 ASDA is having an opportunity for
expansion into new domains like in
jewellery, pharmacy, photo department,
etc to have better customer base.
 The perspective of customer is bending
towards online shopping thus, ASDA is
having an opportunity to get better use of
technology to provide better services and
effective and secure online shopping
methods.
 Cut throat competition from
other retailers and constant price
cut through its competitors and
increase in number of online
retailers are creating threat for
ASDA ( Kopnina and Blewitt,
2018).
 Continuous changes in
government policies and legal
laws are also creating a threat for
ASDA.
SWOT analysis of BBC
Strengths Weakness
 BBC is the oldest national broadcasting
organisation of UK thus having strength of
old reputation and loyalty of customers
which helps in its constant growth.
 Continuous efforts are made by BBC to
have updated and new programmes and
authentic content to attract and retain more
 High operating cost is the
biggest weakness of BBC.
 Got criticism for having biased
opinions and also blamed for
raising and digging controversial
issues.
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customers.
 Use of advanced marketing strategies. Give
tough competition to its customers through
making use of effective marketing
strategies thus having strong brand image
(Kasemsap, 2018).
 Deals in a large number of services and
product which includes broadcasting, web
portals, radio, televisions and other online
media.
 Get the advantage of first mover through
introducing and adopting latest technology.
Opportunities Threat
 BBC is having an opportunity to enter
entertainment sector and conduct fashion
and other entertainment programmes to
attract young generation. Health
programmes can also be introduced by
BBC to attract aged and health conscious
clients.
 Having an opportunity to expand its
business operations to new heights through
joint partnership with other satellite
channel.
 A huge level of competition is
faced by BBC from its rivals
like CNN and many more
(Khatun and Miah, 2019).
P6) Interrelation of strengths and weaknesses with external macro factors
A better interrelation between external macro factors and internal strengths and weakness of
an organisation lead to better ad effective decision making through creating a balance an
coordination between strength and existing opportunity in the business environment so that best
efforts can be made to garb that opportunity (Boone and et.al., 2019). Apart from this,
collaboration between internal weakness and strength with external environment also makes
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company aware about existing threat so that timely actions can be taken to reduce the adverse
impact of weakness and threats.
In case of ASDA, it is evaluated through analysis of its macro factor that huge opportunity
are there for online shopping and latest techniques are also introduced into the market thus,
timely efforts and use of its strength is made by ASDA to grab this opportunity trough enhancing
and focusing on its capability of introducing better and advance technology to provide effective
modes of online shopping to its customers. Apart from this, the legal external factor has revealed
that many strict laws are made for protection of customers interest and saving them from false
advertising. If timely steps are taken by the ASDA on these legal laws than it can safeguard itself
from the various claims and suits filed against him regarding misleading advertisement and sell
of bad quality meat. Thus, it can be evaluated that interrelation among strengths and weaknesses
with external macro factors is beneficial for ASDA through making it able to grab the existing
opportunity and also lead to elimination of threat through effective decision making on the basis
of its own internal strength and existing situation. In case of BBC, a collaboration and
interconnection among strengths and weaknesses with external macro factors also yield better
result through making it aware about current trends and behaviour of customers taste and
preference so that suitable programmes can be launched and broadcast as per the desire of target
market (Yamamoto and Zhi, 2019). Use of latest technology can be made by BBC to solve its
issue of high operating cost and use of internet has provided it better reach to its customers.
Thus, an interrelation between strengths and weaknesses of an organisation with external macro
factors is beneficial and lead to better growth and achievement of objectives.
CONCLUSION
From the above report it can be concluded that use of PESTEL analysis is made by
organisations to evaluate various factors of its macro environment to analyze its positive and
negative impact on business operation. The legal factors create consequence and threat for an
organisation while technological factors yield better opportunity through increasing cost
efficiency of operations. It can also be summarised that use of SWOT analysis is made by firms
to evaluate and identify its internal strengths and weakness. Finally it has been concluded that an
interrelation among external factors and internal strengths and weakness lead to better decision
making.
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