Business and the Business Environment

This document discusses the purpose and types of organizations, the size and scope of organizations, and the interrelationship of different departments in an organization. It also explores the positive and negative impact of the macro environment on organizations and includes a PESTLE analysis and SWOT analysis of Sainsbury's, a leading supermarket chain in the UK.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
PART 1............................................................................................................................................3
1) Purpose & types of organisation.............................................................................................3
2) Size & scope of the organisation............................................................................................5
3) Organisation structure & Functions........................................................................................7
PART 2............................................................................................................................................8
1)Positive and negative impact of the macro environment.........................................................8
2) SWOT analysis.....................................................................................................................10
3) Interrelation of strength & weakness with macro factors...................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is defined as collection of internal & external elements such as
customer requirements & expectations, client, employees, owners, government, suppliers,
technology, market trends and many more. Along with this, there are numerous activities that is
decided as well as implemented by government which includes exchange rates, tax rates,
governmental policies and so on (Belás, 2015). It is determined that business environment assist
optimum utilization of resources due to which companies gain higher growth as well as
development which in turn affect on their overall performance in a positive manner. In the
present report, TESCO is taken into consideration which is a private company. It is a largest
supermarket chain in UK which was established in the year 1919. It has superstore, forecourt
shop, convenience shop which offers different variety of high quality products. In case of public
organisation, National Health Service is chosen which was established in the year 1948. It is a
publicly funded healthcare system which aim is to provide health care to people. The voluntary
organisation that is taken into consideration is Oxfam. The objective of company is to decline
poverty level and improve the conditions of societies. The report involves the difference among
profit, public and non- profit organisation along with their purpose, legal structure and products
& services. In addition to this, size & scope of these organisations is given. Later, it covers an
interrelationship among different departments of an organisation.
MAIN BODY
PART 1
1) Purpose & types of organisation
Public organisation: This type of organisation is totally owned as well as controlled by
the government of a country (Dahles and Susilowati, 2015). National Health service is chosen in
the present report. The organisation was established in year 1948 with an aim to give free and
best health service to people.
Purpose: The major purpose NHS is to give best health service to people living in the
country. It provide best service to patients in order to improve health conditions of their patient.
Legal Structure: In context to NHS, all the decisions of public organisation is taken by
central and state government. Thus, all the decisions is followed by higher authorities and

employees of National Health service in order to perform activities in a smooth and effective
manner.
Product & services : NHS provide different health service to the individuals prevailing in
country. The organisation give comprehensive & free service to people in order to improve
health and mental conditions of people. Along with this, the other services given by NHS is
primary care, cancer, emergency care, mental health and so on (Falkner, 2017).
Private organisation: This organisation involves sole proprietorship, partnership or an agency
which main aim is to earn higher profits. TESCO is a private organisation that offers high quality
grocery items and home essentials in market. It is the biggest supermarket and present in more
than 15 countries. The company have huge funds due to which they are capable to manage their
operations in an effective manner.
Purpose: The company was established in order to offer grocery products to customers at
lower rates which help them to increase their level of sales and profit. Along with this, the
purpose of TESCO is to generate higher profits and gain the leading position in the retail sector.
` Legal structure: In context to private organisation, the legal structure is totally depend on
higher authorities & CEO of the company. They have the rights to take decision regarding which
laws as well as legislations is followed by the company. With reference to TESCO, its BOD and
higher authorities take decisions that is communicated to all the staff members. This decisions
affect on overall functions and operations of company.
Products & Service: TESCO offers different range of goods that is merchandise as well
as grocery product in market. The company provides its product by using medium such as
hypermarket, superstore, supermarket and convenience shops (Gaganis, Pasiouras and Voulgari,
2019). The major goods of TESCO involves clothing , food & beverages and so on. In addition
to this, company also provide home delivery of their products on time to their customers.
Voluntary organisation: It is refer as a group of people who start working together for a
common goal or purpose. This organisation is not controlled or managed by government. Oxfam
which is a voluntary organisation was established in the year 1942. along with this, more than 20
independent charitable trust is associated with Oxfam.
Purpose: one of the main objective of the organisation is to remove poverty from the
country. Their purpose is to raise living standard of people or to improve their status in society

(Hamilton and Webster, 2018). In order to bring this change, Oxfam organises various programs
and took effective decision which assist them to improve conditions of society.
Legal Structure: Oxfam is a voluntary organisation so all the decision regarding laws and
policies is taken by the trustees of organisation. They take decisions which is goof for the society
as well as for their employees.
Products & Service: The company have volunteers which help organisation to decline
poverty level and increase their living standards. Along with this, the company tries to bring long
term development in societies that leads to welfare of societies. Oxfam is a part of global
movement change that motivate people to raise voice and secure their future.
2) Size & scope of the organisation
Private organisation- TESCO
Size & Scope: TESCO have a broad scope as it offers quality goods as well as service to
its customers. At present, the company operates in more than 15 countries have around 7000
stores globally. The reason of success of TESCO is its talented and effective 50,000 employees.
The operating profit of TESCO at present is 2.20 billion pounds which is 7% higher from the last
year (Hillary, 2017). It offers products in market at lower rates which attract large number of
customers prevailing in market and help company to sustain in market for longer time period and
achieve higher growth rapidly and effectively.
Mission and vision: The mission statement of company is “ To give best experience to
customers by providing high quality products and services”. The vision of TESCO is “ To be the
first preference of customers and gain leading position in retail sector”.
Private organisation- National Health Service
Size & Scope: NHS have a wide scope as organisation is decided to raise the number of
medical employers that is from 7000 to 14000 by the year 2030. At present the company have
more than 18,000 staff members and its global revenue of the last year is $540 billion. The
company provide its services in more than 7 countries and is planning to expand its operations in
other countries also.
Vision & Mission: The vision of National Health service is to improve health conditions
as well as lifestyle of people whereas the mission of NHS is to provide quality service to each
and every patient visit in hospitals.
Voluntary organisation- Oxfam

Size & Scope: Oxfam has a vast scope as the organisation work for the welfare of people.
It is associated with around 20 charitable trust and is planning to add more (Huang-Horowitz,
2015). The higher authorities develop effective strategies and take better decisions which is
beneficial for the poor people prevailing in societies.
Vision & Mission: The vision statement of Oxfam is “ To make world free from
poverty”. The mission of company is to provide justice to people so that they cab treated equally
regards their gender, colour and so on. The higher authorities of organisation is align with local
as well as global partners in order to fight against discrimination and raise living standard of
people.
Differences among Micro, small and large enterprises
Basis Small Enterprises Medium Enterprises Large Enterprises
Number of employees This enterprises
consist of less than 10
people who perform
activities in proper
manner.
The total number of
employees vary in
medium enterprises is
between 50 to 249
staff members.
In large enterprises,
there is more than 250
employees working in
the organisation.
Decision making The decision making
of small enterprises is
in the hands of
manager of the
enterprises and they
did not take time to
take decisions.
Herein, the decision is
taken by higher
authorities and
stakeholders of the
enterprises.
Board of directors,
higher authorities,
chief executives take
decision regarding
enterprises and they
take time in order to
take better decision.
Purpose The purpose of small
enterprise is to fulfil
their basic needs and
the needs of family
too.
The purpose of
medium enterprises is
to increase their living
standard and to earn
profits.
The major purpose of
large enterprise is to
expand their
operations and
generate higher profits.

3) Organisation structure & Functions
In every organisation, there is different departments who perform various business
activities in a proper and effective manner. The function involves finance, marketing, HR, IT,
customer service and so on (Jenkins and Williamson, 2015) (Ketata, Sofka and Grimpe, 2015).
In relation to TESCO, it is a multinational retail organisation and has presence in more than 12
countries. The company have various departments and are interrelated with each other which
assist organisation to attain their desired goals within time frame. The functions of organisation
along with their interrelatedness to other departments is described below:
Illustration 1: Organisational Structure
(Source: Organisational Structure, 2019)
Sales & Marketing Department: The marketing department of company promote and
create awareness of product and service in market. The sales department of TESCO sells product
and take feedback from customer which assist marketing department to develop strategies
accordingly that leads to increase in sales and profitability of company. This interrelation assist
TESCO to attain their overall objectives within specified time frame.

Human Resource & IT department: Human resource department plays vital role in every
organisation as they recruit the effective employee for the company. Along with this, HR
department provides training & development session to subordinates that increases the level of
skills and knowledge of employees (Liu, 2017). IT department of TESCO provides new as well
as updated software to HR department which help them to easily maintain records and evaluate
performance of employees whereas HR department provide talented & skilled staff members to
IT department. This interrelationship will help TESCO to raise their productivity level which in
turn increases profit of the company.
Marketing & Finance department: The marketing department of a company develop
advertising strategies, conducts loyalty programs in order to attract large number of customers
and enhance their level of sales. In order to perform all this activities in an effective manner,
finance department of TESCO ensures availability of funds (Lu, Wang and Xu, 2019). Thus, it is
important for higher authorities of the company to focus on maintaining effective relationship
among this departments as it will assist company to raise sales and gain higher profits in a
effective manner.
From the above discussion, it is determined that there is inter-relationship among all the
departments of TESCO. It is important for company to ensure that there should be proper
communication among this department as it will help organisation to increases productivity and
gain competitive advantage at market which in turn raise sales as well as profitability of TESCO.
PART 2
INTRODUCTION
For the present study, Sinasbury's is chosen as a base company. It is the second largest
supermarket chain of UK which was established in year 1869. Moreover, In the second part of
report, PESTLE framework and SWOT analysis is discuss in order to know the affect of macro
as well as micro factors on the decision making and objectives of an organisation.

P4 Positive and negative impact of the macro environment
Sainsbury's is second largest supermarket of UK who deals in grocery store and generic
product retailer. It was established in 1869 by John james Sainsbury's at London. This
organisation operates their business activities and function all over the world. The business
environment of organisation is affected by various internal as well as external factor. Micro
environment includes those factor which is controllable by the company whereas macro
environment is uncontrollable by management team of business organisation. Sainsbury's adopt
PESTLE analysis for assess impact of such factor on the performance of company which is
mentioned below:
Political Factor: Herein, Political factor includes rules, regulations, government policy,
laws, taxation policy, labour law and restrictions and many more. All these factors imposes
positive as well as negative impact on the working of organisation. In discourse to Sansbury's, it
is second largest company who operates across worldwide such as UK and London. If there is a
change in taxation and government policies of the country thus it imposes direct impact on sales
as well as profitability of the company. Change in law affect the overall activities and
functionality of Sainsbury's in order to execute their work in ethical manner.
Positive impact: Due to stability of political condition of UK thus it imposes positive
impact on overall profitability of Sainsbury's
Negative impact: Due to worldwide wars and terrorist attack which imposes negative
impact on activities as well as functions of the company.
Economic Factor: Economic factor plays an essential role in the organisation. It involves
deflation as well as inflation rates which imposes direct impact on sales and profitability of the
business organisation. In context of Sainsbury's, the economic position of UK is strong thus it
will create more and more income for business organisation in order to gain competitive
advantage in the marketplace. In assistance of this, the company offer employment opportunities
which assists in accelerating standard of living of employees.
Positive impact: The economic condition of UK is strong so helps Sainsbury's to
generate more and more income. In addition to this, it offers job opportunities to individual that
helps in increasing their standard of living
Negative impact:Due to increase in labour cost imposes negative impact on sales and
profitability of Sainsbury's as well as increasing labour turnover ratio.

Social factor: These factors involves age, income, demographics and regions that affect
sales as well as profitability of business organisation. It is important for company to produce
goods according to the needs and wants of consumer. In reference of Sainsbury's, the supervisor
manufacture those goods that helps in satisfying the needs and demands of customer. It creates
good brand image as well as reputation of the company in competitive environment.
Positive impact: The social factor helps in satisfying the needs of customer thus it helps
company in creating good brand image of the company.
Negative impact: Herein, sometimes it forces the company to use CSR policy that
negatively affect the functionality of the organisation.
Technological factor: In present context, Technology plays a very crucial role in order
to accelerate productivity as well as profitability of the organisation. In context of Sainsbury's,
the supervisor of company adopt latest technology in order to achieve competitive advantage in
the marketplace. It is very important for manager to give training session to employees in order
to use advanced technology that helps in decreasing the wastage of work.
Positive impact: Due to use of latest technology, Sainsbury's provides innovative and
good quality products and services to its customer in order to create more income for the
business organisation.
Negative impact: On the other hand, the implementation cost of advanced technology is
very high that imposes negative impact on profitability of company.
Legal Factor: There are different rules, laws, regulations and legislation that affect the
operation of business organisation. In context of Sainsbury's, the supervisor execute these laws
and legislations inside the organisation thus it provides safety and security to the employees
working in the company.
Positive impact: Herein, the laws and legislation comply within the organisation thus it
helps in improving the performance of employees .
Negative impact: Legal restrictions creates difficulties that imposes negative impact on
profitability of the organisation.
Environmental factor: The business which perform their operations and functions
towards the interest of society get assistance from government authorities. In context of

Sainsbury's, supervisor use such type of technology that provide the product and services which
will best fit to the needs of society.
Positive impact: Sainsbury's provides secure environment in order to attract customers
for purchasing goods and services.
Negative impact: On the other side, the cost of implementation of Eco friendly
technology is very high thus it imposes negative impact on profitability of the business
organisation.
2) SWOT analysis of Sainsbury's
Strength: The company follow low cost strategy which assist them to retain more
number of customers and earn higher profits. The another strength of company is its market
presence as it provide high quality product as well as service to customer which raise the level of
customer base of Sainsbury's and affect positively on its performance level in market.
Weaknesses: The increase in competition level lower down the profit margin of
company that affect negatively on overall performance and market share of Sainsbury's. Regular
downfall of credit ratings affect on the brand image of Sainsbury's in a negative manner.
Opportunities: The company have the opportunity to enter into villages as nowadays
urban people is also to purchases branded products. Sainsbury's have the opportunity to
introduce online shopping concept and raise their level of sales. The company can enter into
other market segment and can increase its market presence which in turn increases market share
of Sainsbury's.
Threats: The major competitors of Sainsbury are Lidl, Asda and Aldi that declines profit
level Sainsbury's. Change in laws & legislations might influence on the business activities due to
which it is not able to attain objectives in a specific time frame. For example, after Brexut the
policies and laws of UK government is changed and in order to follow this it occur cost to the
company which impact negatively on profit level of company.
3) Interrelation of strength & weakness with macro factors.
Basis Political Economical Social
Strength The higher authorities
of Sainsbury's follows
all the laws in order to
The company pay fair
wages to labour which
enhance their
Sainsbury's offers
products in market
after analysing the

carry out task in a
smooth and proper
manner.
productivity level that
leads to attainment of
goals of Sainsbury's.
needs of customers so
that they can satisfy
customer and gain
their objectives.
Weakness Change in policies
incurs cost to company
which affect
negatively on the
overall profits of
Sainsbury's.
The economic
conditions of UK
negatively affect on
overall performance of
Sainsbury's.
Nowadays, people are
more concerned
towards health which
is considered as a
weakness of
Sainsbury's.
Basis Technological Environmental Legal
Strength By the assistance of
innovative technology,
Sainsbury's provide
quality and on time
goods as well as
service to customers.
The company adopt
eco friendly
techniques in order to
decline the level of
pollution and protect
environment.
The company follows
all laws and policies
that increases its brand
image in market.
Weakness Rapidly changes in
technology decline the
revenue level of
Sainsbury's(Wood and
Logsdon, 2017).
The managers of
Sainsbury's did not
follow all
environmental laws
that affect negatively
on brand image of
Sainsbury's.
Change in legislations
and the company is
facing legal issues due
to which it paid
penalties which affect
on overall profits of
Sainsbury's.
CONCLUSION
From the above study, it has been analysed that Business Environment influence on the
productivity as well as performance of company. The purpose and scope of public, private and
voluntary organisations is totally different from one another. PESTLE analysis is adopted by

company in order to analyse affect on macro environmental factors on performance of an
organisation. Moreover, SWOT analysis is used by company in order to identify and its strength
and weakness and to gain insight about the micro environmental factors on performance of an
association.

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