Business Environment and Globalization

This assignment requires students to analyze the complex business environment in the context of globalization. Students are tasked with applying the PESTLE framework to identify macro-environmental factors influencing businesses. Further analysis involves evaluating critical success factors (CSFs) for businesses operating globally, supported by relevant case studies.

Business and The Business Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Different types of organisations and their purpose...........................................................3
P2 Size and scope of different types of organisations............................................................5
TASK 2............................................................................................................................................7
P3 Relationship between different organisational functions..................................................7
TASK 3............................................................................................................................................9
P4 Positive and negative impact of macro environment on business environment...............9
TASK 4..........................................................................................................................................11
P5 Internal and external analysis of ZARA to identify their strengths and weaknesses......11
P6 Strengths and weaknesses of external macro factors......................................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................16

INTRODUCTION
Business environment refers to accumulation of external and internal factors like
customers’ needs and expectations, employees, management, supply and demand, economic
changes, market trends, social trends, etc. These factors have specific impact on functioning of
organisation and decision-making process (Business environment, 2018). In present report,
ZARA is considered in private sector, NHS in public sector and Oxfam in voluntary sector
organisation. Size, scope and purpose are discussed, strengths, weaknesses and interrelation with
macro factors are provided. Furthermore, PESTLE and SWOT analysis has been done.
TASK 1
P1 Different types of organisations and their purpose.
Private organisation
It is referred to as sector which is run by franchises, individuals and by partnership rather
than by government. ZARA is an apparel retailer which is headquartered in Arteixo, Spain. It
owns brands like Inditex group, Bershka, Oysho, Uterque and many more. It was founded in
2002.
Purpose
ZARA is a Spanish fast-fashion retailer organisation. Their purpose is to bring
charismatic and amenable fashion sense and enhance quality of their customer's services
(Chetwood and et. al, 2014). For this they have included RFID (radio frequency identification
technology), making usage of cutting-edge systems for tracking location of garments and make
them available to customers rapidly. ZARA follow functional structure which help them in
effectively manage and maintain business operations and functions in better manner.
Legal Structure
Legal Structure of private organisation is shown below:

 Partnership: It is defined as unification of different people who starts a business together.
Agreement is signed by all partners which is referred to as deed of partnership. Example
can be doctors, advocates, etc.
 Sole proprietorship: It is defined as sector in which individuals runs their business
individually and are responsible for every profit or loss incurred within organisation.
Example is hairdressers, market traders, newsagents, etc.
ZARA is under sole proprietorship in which they run business operations in smooth
manner and gain high income and profitability.
Stakeholders
Amancio Ortega Gaona is founder and former chairman of ZARA.
Public organisation
These sectors or organisations are possessed and regulated by government. NHS
(National Health Service), is a public organisation. It was founded in 1948 with a purpose that
services must be universal and must be delivered for free.
Purpose
Motive of NHS is to acknowledge need of every individual and provide high standards of
professionalism and excellence. Their motive is to provide healthy lives to maximum number of
people.
Legal structure
It is necessary for all organisations, it is shown below:
 State Government: There is constructive sharing of political and legal rights between
national and state authorities. They have rights to make formal decision without taking
preceding permission from central government.
 Local Government: They includes local governance authority who basically operates all
their duties, functions from regional and local level
 Central Government: Within UK, they have rights to formulate decisions related with
security of people from terror attacks, distribution of budgets related with treasury and
security of nation.
The legal structure of NHS is Central government where they are take decisions related to
business operations and its functions.
Stakeholders

Key stakeholders of NHS are Local healthcare providers, Healthcare service providers, Higher
education institutions, centre for workforce intelligence.
Voluntary organisation - These are sectors which operates to provide services to society for
their welfare (Crane and Matten, 2016). It is basically a non-profit and non-government
organisation which provides social services and tends to raise standards of living. Oxfam was
founded in 1942 and is headquartered in Oxfam International, Oxford, England. It is a non-profit
organisation.
Purpose
Oxfam is alliance of 20 independent charitable organisations. They focus on reduction of
poverty. Their purpose is to aid people when local capacity is insufficient for assisting
individuals.
Legal Structure
 Trust: It is built to pull off money and property effectively for a specified purpose. With
respect to this structure, conventional relationship is established between beneficiaries
and donor of property or money. Trust ensures confidentiality, integrity and coherence
(Gharajedaghi, 2011).
 Company limited by Guarantee: It is isolated legal identity which comprises of
Memorandum of Association and Article of Association. It has limited liabilities which
ensures that their members are secured.
 Associations: It is a community of tiny groups who works together on agreed goals which
are non-profitable.
The legal structure of Oxfam voluntary is trust through which they are offer services to
country people.
P2 Size and scope of different types of organisations.
Private Organisation
ZARA is a retail organisation which deals in accessories and clothing. Amancio Ortega
and Rosalia Mera founded it in 1975. They own different clothing brands like Uterque, ZARA
Home, Bershka and many others.
 Product & Services: ZARA delivers their services in clothing sector for women, men and
also for kids. Their products are based on latest trends. They make new products
available within market, twice a week.

 Size and Scope: ZARA has acquired different brands and they provide their services in
multiple countries. They are operating in around 7,475 stores worldwide. The market
share of this organisation is around 34.5% and they are expand their business in another
nation.
 Vision: ZARA is aiming to become number one fashion retailer within world. For this
they provide their customers with exclusive fashion choice with a faster turnover of new
stock (Gilboy, 2016).
 Mission: ZARA's mission statement states that, world is becoming smaller and they
(ZARA) want that every individual must dress in class, style and experience different
designs every week. They want that their customers must be up to date with latest
fashion, trends and provide them with best clothing experience.
Public Organisation
NHS in Scotland, England and Wales is related to HSC (Health and Social Care).
 Product & Services: NHS provides services in urgent and emergency care, hospitals,
dentists, pharmacies, mental health services, sexual health services, opticians and
healthcare services while moving or visiting England.
 Size and scope: It comprise of around 1.4 million employees. They provide basic medical
services and facilities to people. They convey health related information and data for
development of society. They allocate budgets and funds for health care. They are try to
expand their business operation in different countries such as London, Switzerland and
other places.
 Vision: NHS aspires to enable individuals to live healthier and more independent lives by
providing high quality unlined care to all. They aspire to excel in health care by quality
service delivery and performance (Kian Chong, Shafaghi and Leing Tan, 2011).
 Mission: NHS aims to deliver effective and efficient health care services to all
individuals with respect to desired policies and standards which are equitable, affordable,
accessible and sustainable.
Voluntary Organisation
Oxfam (Oxford Committee for Famine Relief) is a charitable organisation. This organisation is
involved in raising of funds and provide relief materials to affected people like clothing, food,
books and many other.

 Product and Services: They offer humanitarian services to drought prone areas. They
aim to provide high living standards to people and remove poverty from world. They
render their services and products like handicrafts, clothing, and food in fair trade
(Kaufmann, Kraay and Mastruzzi, 2011).
 Size and Scope: They constitutes of 20 charitable organisations which are independent.
They are focussed to provide food to amend dearth. The market share of this organisation
is around 32.9%.
 Vision: They wanted eliminate poverty from world. They (Oxfam) wants world where
each individual is treated equally, valued and influence decisions which can have
significant impact on lives.
 Mission: They want to build ever lasting solution to problem of poverty. They work to
obviate poverty globally, nationally and locally.
TASK 2
P3 Relationship between different organisational functions.
An organisation comprises of various departments for accomplishing their objectives and
goals. Within ZARA there are different departments who work in collaboration with each other
to enhance productivity of organisation. The company follow functional structure which help
them in managing and maintaining business operations in better manner. Each department have
their own duties and responsibilities but their objective is same i.e. to intensify their services and
remain competitive within market. Relationship between different departments of ZARA is
shown below:
 Human resource Department: Major responsibilities of this department is to hire and
recruit individuals who possess certain skills set based on requirement of organisation.
Within ZARA, this department is connected with other departments also (Li and et. al.,
2011). They build effective communication with every department, so that they can
analyse their needs and fulfil them. HR department also ensures that training and
development is provided to individuals based on latest technologies and skills, thus
enhance their capabilities in Finance and IT. Finance department provides them budget to
carry out their functioning smoothly and in sequential way. This will aid ZARA to amend
their productivity level and maintain a competitive place within market. Marketing play

an important role in recruiting skilled and qualified employees who have ability to
managing business operations and functions. HR manager appoint capable workers who
have skill to work hard in order to reach with set organisational goals and targets.
 Marketing department: This department formulates the strategies and tries to find out
locations where they can have large number of customers so that organisation can
generate high revenue. Within ZARA, marketing department works in collaboration with
finance department for seeking funds of market research and activities, with HR
department to ensure training of marketing team, etc. (López-Gamero, Molina-Azorín
and Claver-Cortés, 2011). Finance department of ZARA provides them satisfactory
budget so that they can carry out their functioning either related with promotions or
market research effectively. HR department provides them with qualified and skilled
labour. With the help of this department, company can easily analyse their customers
needs and wants and also satisfy their requirement as per their demand. This will help in
gaining attention of large number of buyers which easily attain desired objectives.
 Sales department: This department focus to enhance their customer base. They are
engaged in increasing revenue of organisation. Marketing department formulates
strategies and sales department executes those strategies to attract customers. Apart from
this, Finance department also generates a great revenue as services and products offered
by organisation are sold. With the help of this division, respective firm can easily sale
different types of goods and services in order to fulfil their needs and requirements. This
will lead towards gaining high income and profitability in effective manner.
 Research and development department: This department research market and
customers so that ZARA can enhance their sales. Apart from this they find innovative
ideas to enhance quality of their products depending upon needs of their customer's. This
department aids production department to design unique products. Hence, affecting the
sales department as they will be able to sell a greater number of products. By this they
can meet their targets and gain more competitive vantage within market. Marketing
department play essential role in research and development field because this will help
them in analysing customers needs as per this they are distribute desired commodities.
These departments work as a single unit within ZARA to improve and increase
profitability. Managers of ZARA must formulate certain policies and strategies so that if any

situation related with conflicts or anything else occur within organisation, then they do not have
impact on performance and organisation. This will aid ZARA to maximise effectiveness of their
employees and profitability respectively (Meiners, Ringleb and Edwards, 2014).
TASK 3
P4 Positive and negative impact of macro environment on business environment.
Political Factor: These are different regulations and laws which are essential for an
organisation to follow. By this they ensure that they perform their activities and functions in
ethical and legal manner. Government of UK has set certain laws like free-trade zone, UK
corporate governance code, union directives and many others. These laws will aid organisations
who are working within UK to carry out their operations and functions in legal and ethical
manner. Performance of organisation is impacted when there is alteration in laws and policies
made by UK government. These changes can be with respect to currency control and import
quotas. There are some political changes which directly affect on ZARA business operation such
as change of government party. Due to this, new party develop new rules and regulations so that
firm need to adopt such changes in the organisation.
Economic Factor: These factors comprises of exchange rates, labour cost, taxation
policies and monetary policies. All these factors have direct or indirect impact on performance of
organisation (Sekaran and Bougie, 2016). An example can be considered with respect to ZARA
to further understand this, if cost of raw materials is increased then this will lead to maximised
financial burden for business. Enhanced economic activities leads to high quality services as well
as growth.
Positive Impact:
Relaxations are provided by UK government, to sell their services and products in
affordable manner which will help them to enhance productivity and profitability. An example
can be taken, if there is increase in production cost, then financial burden will be increased this
will have positive impact on ZARA as they will tend to use their resources more effectively by
which their services will be improvised.
Negative Impact:
Situations such as tax rates and rise in interest can adversely impact functioning and
various operations of organisation. This can even lead organisation to lose their market shares

and stability. During recession time period, company face issues and problems which directly
affect on business sales and profitability. Example can be illustrated to understand negative
impact of economic factors on ZARA. If there is increase in inflation rate then this means brand
may not be economical by public.
Social Factor: These factors include beliefs of society with respect to culture. It is
essential for ZARA to find out preferences and taste of customers while they are designing their
services and products. They need to identify this factor to ensure that their products will be
acceptable within market. The focus of ZARA is to enhance their sales and have effective
outcomes by considering values and beliefs of society (Saleem, 2017). The firm considers needs
to shoppers to serve satisfactory services like Discount and offers, clothing in variety sizes, etc. It
is essential for ZARA to follow certain activities which are related with customers. If they do not
do so then there will be decline in demand of their services and products.
Technological Factor: These factors comprises of change in technologies, styles, fashion
preferences and trends within world. ZARA has opted for innovative and latest technological
measures within their organisation to enhance their results. It deals with clothing and accessories,
when they will go for latest tools and technologies, they can make their work faster as well as
they can have innovative changes in their designs. This will lead ZARA to gain maximum
output. Implementation of technologies and tools can be very costly and they need to invest lot in
training of their employees (Tayur, Ganeshan and Magazine, 2012).
Legal Factor: It is essential for every organisation to follow all regulations and rule to
carry out their functioning in ethical and legal manner. ZARA is working worldwide, for this
they need to make sure that they abide all the laws formulated by government. There are various
legislations which create negative and positive impact on business operations such as Equality
Act, Maximum Wage Act and Anti discrimination Act.
Positive Impact:
ZARA implements all laws which are formulated by government of UK. These laws
include medical benefits, equal pay and employment safety for benefits of their employees. This
will ensure loyalty of employees towards their organisation, in short it will lead to enhancement
in profitability and productivity of organisation. Equality Act help in developing equality among

employees and company manager that will reduces the burden over one person. All the workers
are gain equal benefits as per their need and requirements within ZARA.
Negative Impact:
Various laws are made by government of UK, which are necessary for ZARA to follow
as a private organisation. This will lead to creation of hindrance in every activity and processing
and functioning of organisation will slow down. This will have negative impact on growth of
organisation. Anti discrimination Act create negative impact on respective business operations in
order to divide unequal work among all the employees which reduces their motivation level.
Environmental Factor: This include availability and efficiency of risk of exposure, current and
future compliance and availability of raw materials. These factors have direct or indirect impact
on organisation. ZARA can make essential alterations in their services and products by usage of
eco- friendly raw material. This will provide effective benefits to organisation by strengthening
and saving their cost within market (Türetken and et. al., 2011). The major environmental
limitation to Zara is seasonal changes and restriction like winters rule in European countries
which restricts innovating in clothing with regard to global fashion trends.
Illustration 1: PESTLE Analysis, 2019
(Source: PESTLE Analysis, 2019)

TASK 4
P5 Internal and external analysis of ZARA to identify their strengths and weaknesses.
ZARA is a multinational clothing sector that engage in manufacturing and selling of
fashion clothing for men, children, women and teenagers. Company is operating their business
operations in more than 62 countries and have 4500 stores worldwide. Mentioned below there
are SWOT analysis of company have been done in descriptive manner which will help company
to identify their strength and weak and overcome them in subsequent way:

STRENGTH WEAKNESSES
 ZARA have collaborated with different
brands to produce qualitative services
and products.
 ZARA have opted for different
strategies which are related with
pricing, this ensures sustainability of
organisation.
 They have adopted latest technological
trends which aids them provide their
using online means. This attracts
customers from different locations.
 ZARA follows all the legal laws which
are set by government of UK, this aids
them to carry out their functions
effectively (Vaiman, Sigurjonsson and
Davidsson, 2011).
 Th firm complies with CSR regulations
which supports firm in managing
customer as well employees
satisfaction.
 ZARA lacks choices of their products
which can give competitors support
within market.
 ZARA do not spend more on
advertising strategies which means that
less customers know about services
and products they are being offering.
 Organisation structure is harmonious
with present business model which
means they are limited with expansion
in alternative product segments.
OPPORTUNITIES THREATS
 By decreasing cost of transportation
cost, they can bring down cost of their
products by which they can boost
profitability of organisation.
 ZARA needs to enable credit at low
interest rate to customers, this will
bring stability within market.
 High end fashion merchandiser are
major threats to ZARA.
 Alterations in customers buying
behaviour which leads to switching.
 Enhancement in technologies can be a
serious threat to ZARA (Crane and
Matten, 2016).

 There are different global markets
which ZARA can explore.
H&M is largest global clothing retailer with around 2300 stores and is working in
approximately 45 countries. It is one of the largest competitor to ZARA. H&M offers trendy and
quality clothes at reasonable prices. H&M provides services in many complimentary businesses
which provides them with high flexibility and control. But when its weaknesses are seen then
they go for buying ample stocks which leads to overstocking and when prices are lowered then
reasonable prices then they have to suffer a loss. In this case ZARA gains advantage as they
provide services on the basis of demands of their services, they do not overstock their
warehouses.
P6 Strengths and weaknesses of external macro factors.
It is essential for organisation to determine strengths and weaknesses to perform
effectively. This will aid them to overcome weaknesses and do alterations in their policies so that
they can ensure growth. Certain factors affect functionalities of organisation both in positive and
negative aspect. ZARA aims at providing new design within their products to their customer's.
Interrelation between strengths and weaknesses with macro factors.
Political instability occurs due to new regulations and rules which have significant effect
on organisations (Kian Chong, Shafaghi and Leing Tan, 2011). However, ZARA abides all the
laws made by government of United Kingdom. This aids them to carry out their operations
without any limitations from government. On the other hand, it can be argued that regulations
and laws are changing within UK after Brexit. This will hamper performance of ZARA as they
need to create new strategies which needs lot of time. There are different laws which promote
stability that includes maximum wages act, Anti discrimination act, Equality Act and so more.
These are such lwas which help company in maintaining and managing stability in better way.
Economic includes interest rates, taxation policies, borrowing rates and lending rates.
ZARA has executed various pricing strategies and made sure that they follow all the legal laws.
Reduction in borrowing from government of UK helps ZARA to execute their imports and
exports in efficient manner. They have collaborated with other brands to ensure high services.
Alterations in economy and interest rates of UK has created assorted hindrance and have affected

growth of ZARA. Due to this organisation has faced various issues. Lower economic activity
will reduces the purchasing power of the customers who start cutting costs and are forced to do
it.
Social factors are related with beliefs of people in terms of society and culture. Aim of
ZARA is to enhance standards of living. Tis is managed by strength of firm of which is focused
on enhancing image of brand in global market as they take in account values and beliefs of
customers. However, ZARA operates worldwide with around 7,475 stores. As every country has
their own climatic conditions then different problems will be created for them either related with
resources or raw materials.
Technical deals with enhancement in tools and technologies. ZARA has opted for
accepting payment by online methods or by cards (Chetwood and et. al, 2014). This will aid
ZARA to sell their services and products without wasting time. They can give customers
different discounts and generate high profits. High investment is required when alterations are
made in technologies. They must make sure that personal details of customers are secure as they
have opted for online payments. They need to ensure that servers of organisation are secure and
are not hacked (Vaiman, Sigurjonsson and Davidsson, 2011).
Legal factors:
Strength: ZARA follows all the policies build by UK government. This help them in
expansion of their business in different cities of UK without falling into legal issues. Some of the
legal changes are helpful for ZARA in dealing and managing business operations in external
environment.
Weaknesses: ZARA needs to alter their internal working structure as per laws made by
different countries. This needs lots of alterations in their policies which is time consuming. There
are various legal changes which create issues for the company in order to ban material that are
used for developing cosmetic products.
For managing control over environmental concerns different waste management policies
which helps them to make sure that they are not hampering environment and causing any kind of
pollution. The focus of firm is on complying with socially responsible practices which aid the
business in managing stability.

CONCLUSION
From above report, it can be concluded that business environment is combination of
internal and external factors which have strong impact on organisation. It is necessary for
organisation to consider all these factors to ensure that they are operating effectively. Private,
public and voluntary organisations are three types of business sectors. They have their own legal
structure and their own functioning. Different departments are present within organisation which
works in collaboration with each other to enhance profitability and productivity. They need to
make and follow strategies so that situations like conflicts do not arise within organisation.
PESTLE and SWOT analysis is done to identify strengths and weaknesses so that productive
outcome can be achieved.

REFERENCES
Books and Journals
Chetwood, M. K. and et. al, 2014. Transforming a legacy IT infrastructure into an on-demand
operating environment. U.S. Patent 8,775,232.
Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and
sustainability in the age of globalization. Oxford University Press.
Gharajedaghi, J., 2011. Systems thinking: Managing chaos and complexity: A platform for
designing business architecture. Elsevier.
Gilboy, G. J., 2016. The myth behind China's miracle. In SEEKING CHANGES: The Economic
Development in Contemporary China (pp. 1-16).
Kian Chong, W., Shafaghi, M. and Leing Tan, B., 2011. Development of a business-to-business
critical success factors (B2B CSFs) framework for Chinese SMEs. Marketing
Intelligence & Planning. 29(5). pp.517-533.
Kaufmann, D., Kraay, A. and Mastruzzi, M., 2011. The worldwide governance indicators:
methodology and analytical issues. Hague Journal on the Rule of Law. 3(2). pp.220-
246.
Li, Q. and et. al., 2011. Towards the business–information technology alignment in cloud
computing environment: anapproach based on collaboration points and agents.
International Journal of Computer Integrated Manufacturing, 24(11) pp.1038-1057.
López-Gamero, M. D., Molina-Azorín, J. F. and Claver-Cortés, E., 2011. Environmental
uncertainty and environmental management perception: A multiple case study. Journal
of Business Research. 64(4). pp.427-435.
Meiners, R. E., Ringleb, A. H. and Edwards, F. L., 2014. The legal environment of business.
Cengage Learning.
Sekaran, U. and Bougie, R., 2016. Research methods for business: A skill building approach.
John Wiley & Sons.
Saleem, M. A., 2017. The impact of socio-economic factors on small business success.
Geografia-Malaysian Journal of Society and Space. 8(1).
Tayur, S., Ganeshan, R. and Magazine, M. eds., 2012. Quantitative models for supply chain
management (Vol. 17). Springer Science & Business Media.
Türetken, O., and et. al., 2011, June. Enforcing compliance on business processes through the
use of patterns. In ECIS (p. 5).
Vaiman, V., Sigurjonsson, T. O. and Davidsson, P. A., 2011. Weak business culture as an
antecedent of economic crisis: The case of Iceland. Journal of Business Ethics. 98(2).
pp.259-272.
Online
Business environment. 2018. [Online]. Available through:
<http://www.investorwords.com/19252/business_environment.html>.