Business and the Business Environment Report

This report analyzes the business environment, exploring different types of organizations like NHS, Marks & Spencer, and Al-Khair Foundation. It examines their purposes, legal structures, and the impact of macro-environmental factors using PESTLE and SWOT analysis. The report also explores organizational structures, functions, and their relationship to overall mission and objectives.

Business and the Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY…………………………………………………………………………………….1
PART - 1…………………………………………………………………………………………2
PART - 2…………………………………………………………………………………………..3
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is defined as the total of all external and internal factors which are
creating either positive or negative impact on the functioning of business and its operations.
Business gets affected by both the micro as well as the macro environmental factors prevailing in
the surrounding of the company. The present report will discuss about the various types of
business organisations viz. are public, private and voluntary sectors along with their purposes
and legal structures. The report will also shed light on size and scope of different types of
organisations and the interrelationships among different organisational functions. Further, the
report will discuss advantages and disadvantages of interrelationships between organisational
functions and its impact on organisational structure. At last, the report will define all the positive
and negative impacts of macro environment on business operations along with the PESTLE
analysis. Also, with the help of SWOT analysis all the strengths and weaknesses interrelated with
external macro factors will be define.
MAIN BODY
Part 1 – Essay (LO 1 & LO 2)
Different types of organisations and their differences.
Business organisation is considered as an entity which is formed or organised
with the purpose, objective or aim of carrying on a trading or commercial business
activity for earning profit and acquiring of market share at large. The organisation
selected is NHS (National Health Service) which is a national health care system
funded by public enterprise. The different types of business organisation include
Profit Company, Not for profit organisation and Non-governmental organisation.
Basis Profit Company Not for profit
organisation
Non governmental
organisation
Meaning A company which is
set up by two or
more person having
common objective
and with the
A business
organisation which
is organised for
providing goods and
services to the
The non
governmental
organisation is those
business enterprises
which are formed by
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purpose of earning
maximum profit
amount. Marks and
Spencer is one the
profit making
organisation in UK.
citizens, people of
the country without
a motive of earning
profit from them.
Al-Khair
Foundation is one of
the not for profit
organisation in UK.
the general people
conducting its
business operations
autonomously of
government. One of
the UK NGO is Save
the Children UK.
Objective One of the most
important objective
of every company is
to provide customer
satisfaction and earn
maximum profit as
well (Bouckaert,
Peters and Verhoest,
2016).
Not for profit
organisation aims is
to promote the work
of art, literature,
commerce etc. It
focuses on
promoting the
research and
development
functions as well.
The main objective
of this organisation
is to work towards
the benefit, social
well fare of the
society at large. Its
emphasizes towards
the betterment of the
economy as well as
society by bringing
awareness among
people related to
rights of human
being, woman
empowerment etc.
Business purpose and supply of goods and services of different business organisations.
1. Profit Company – Marks and Spencer is one of the British multinational retailers
headquartered in Westminster, London. It is engaged in the business of selling cloths,
home products and luxury food products. Mark and Spencer main objective is to regain
their market position and leadership in the field of clothing and luxury food. Also, it
focus is to achieve transparency in their scale and authority into the superior quality,
value and appeal. The Mission statement of Mark and Spencer is to make inspirational
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quality and its accessible to public at large. Mark and Spencer emphasizes on Values,
Quality Service, innovation and trust among its customer.
2. Not for Profit organisation - Al-Khair Foundation. It is UK’s international NGO
which is providing humanitarian support, international development, emergency aid
and disaster relief. The business purpose of Al-Khair Foundation is to provide
support to all the victims during the event of emergencies and disasters. This
organisation helps people by dispatching their relief teams so as to assess the current
situation and thereby provide vital support and delivery of the necessary aid grants in
the form of essentials viz. water, food, shelter and medication to the survivors and
disaster affected people (Kozubíková, Homolka and Kristalas, 2017). It also
emphasises on issues such as unemployment, women empowerment, domestic
violence etc.
3. Non governmental organisation – Save the Children UK is an international charity
enterprise of UK conducting its business operations in 60 countries across the globe.
This business organisation deals in the issues and illegal practices affecting children.
The aim of this business organisation is to provide protection, health, education and
rights related to the children. The amount of money or fund collected by this
organisation are used for helping children in recovering from the suffering because of
the natural disaster, country attacks because of conflicts.
Size and scope of the organisations
The revenue of Marks and Spencer is around £10,698.2 million till 2018. It is conducting
its business operations in 1463 location around the world with 80,787 numbers of employees till
2018 (Bentley-Goode, Omer and Twedt, 2017). Al-Khair Foundation is an international Muslim
aid NGO which is the third largest Muslim charity in the UK. The motto of this business
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organisation is 'Balance without Compromise'. The overall revenue income made by the Al-
Khair Foundation is 21.4 million in the year 2014 (Al – Khair Foundation Wikipedia, 2019).
Save the children UK established in year 1919 with objective of improving the lives of children
by providing facilities related to better education, health care and emergency aid in case of
natural disasters, country war and other conflicts. This business organisation has incurred
expenditure of approx £371 million out of £408 million in its charitable activities.
Micro Enterprise Small Enterprise Medium Enterprise Large Enterprise
Micro enterprise are
those business
enterprises which is
having
1. 10 or less
number of
employees in
its business;
2. Annual
turnover is less
than £2
million.
Small business
enterprise are those
business enterprises
which is having
1. More than 10
but less than
50 number of
employees in
its business;
2. Annual
turnover is
more than £2
million but
less than £10
million.
Medium size business
enterprise are those
business enterprises
which is having
1. More than 50
but less than
250 number of
employees in
its business;
2. Annual
turnover is
more than £10
million but
less than £50
million.
Large business
enterprise are those
enterprises which is
employing more than
250 employees and
having annual
turnover of more than
£50 million
(Reinhardt and et.al.,
2017).
Market share, profit share, growth and sustainability.
Market share depicts the overall percentage which an industry is having in the market's total
sales over a specified period of time. Market share is defined as the proportion of total sales
which the company is having in particular market and time. With the help of market share,
company is able to assess its business as well as market position in comparison with the
competitor’s market position. Market share helps in determining the customer satisfaction as
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well as the profitability scenario of the company. Company is able to assess its business worth
and share value.
Profit share is a business practice in which a company shares the part or portion of its profit of a
definite time period with its shareholders in form of return on their money invested in the
company.
Growth refers to the level of increase in sales revenue for a definite time period. The growth is
measured in form of profit or revenue amount.
Sustainability means a business process which can be maintained either at a certain level or rate.
Sustainable development is the development function which is capable of satisfying or meeting
the needs of the present generation without creating adverse impact on the ability of future
generations to meet their own requirements & needs.
3) Organisation structures and functions
The Organisation structure of a company defines the process or mechanisms of how the business
activities, business operations are organised, controlled and directed toward the successful
attainment of the business organization goals and objectives. Activities which can be directed
include task & resource allocation, coordination, communication and supervision. The structure
of organization should be flexible, innovative and effective which can help in seeking the
competitive advantage.
The organisational structure of National Health Service is Hierarchical in nature. This type of
organisation structure is adopted by business organisation because of rigid and complex business
operations, functions. Thus, NHS follows a hierarchical organizational structure and all the job
positions, responsibilities and roles are divided into different parts so as to ensure smooth
functioning of business.
Scope of operations – National Health Service is a business enterprise dealing in the national
health care system which is funded publicly. The main objective of NHS is to provide an
innovative, better and good healthcare services to all the citizens across the globe regardless of
wealth. It also emphasizes on rendering of healthcare services to all the legal English residents.
NHS has initiated an approach of delivering health care services in which most of the services
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are free at the point of use. Services like of emergency treatment, infectious diseases treatment
are offered free of cost for everyone considering the visitors also.
(Source: Organisational Structure, 2019)
Complexities of transnational, international and global organisation structures.
Transnational organisation structure – Transnational organisation structure help the company
on maintaining the relations in form of contacts, agreements, coalitions and interactions across
the boundaries of the state which are not being controlled under the central foreign policy
departments of the government. The main drawback faced by company in implementing or
following this type of organisation structure is that it is a difficult procedure in case of setting
priorities for employees fluctuating between competing projects.
International organisation structure – Organisation structure at the international level depicts
the management functions taking placed in the business enterprises. It is associated with the
monitoring, coordination, communication, development of the business strategies and plans
which supports the business goals and objectives (Bentley-Goode, Omer and Twedt, 2017). This
structure leads to increase in the skills, capabilities, motivation of the employees and their
willing participation and involvement in the decision making process. On the other side it results
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in creation of confusion, ambiguity and frustration in the employees if the reporting lines or map
are unclear.
Global organisation structure – This type of business organisation basically deals with the
business operations and functions at the global level or by considering its business operations
and divisional area across the globe. The division structures in the global areas are considered for
business operations by controlling the functions in geographical areas rather than emphasising on
a particular product basis. The main complexity in this type of organisation structure is that it
leads to rise in competition between the divisions of organisation.
How functions relate to overall organisation mission and objectives.
Different functional areas of the business organisation work towards the successful attainment of
business goals, missions and objectives. Proper communication between the functional as well as
divisional department helps company in carrying on their business operation smoothly and
effectively. These functional units help company in maximizing their profit margin with
minimum business operational cost along with focusing on increasing the customer satisfaction
and retention base.
1. Production – This department of company emphasises on the manufacturing as well as
production function. It determines the quantity or units which have to be produced for
meeting the customer demand. It ensures that manufacturing run smoothly in a cost
effective manner which strives towards attainment of business goals.
2. Marketing – Marketing department is considered as one of the most important function
which supports company in increasing its market profits and sales. The promotional and
advertisement activities of business products and services should be done efficiently so
that customer becomes aware about the upcoming features of product and services.
3. Finance – Financial aspect of company monitors the proper procurement and utilisation
of its business as well as financial resources (Deasy and et.al., 2016). Company should
formulate sound investment strategies related to the business fund allocation so that it is
able to achieve its business missions and objectives.
4. Human Resource – This functional department focuses on the adoption of new,
innovative and better improved technological factors, business procedures, operating
systems. It ensures recruitment and selection of right candidate for the job post which
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lead towards successful accomplishment of business goals by developing relevant and
required business plans and policies.
PART – 2 (LO 3 & LO 4)
a. PESTEL MODEL.
With the help of PESTEL Analysis model, company is able to assess all the macro
environmental factors which are going to create impact on the business operations as well
functioning of the company. PESTEL Model studies all the Political, Economic, Socio cultural,
Technological, Legal and Environmental factors.
In the political aspect, it is studied that how the political environment, behaviours,
attitudes of political parties & their course of action or movements create adverse effect on the
business operations of UK retail sector companies. It also depicts the influence of government
on the taxation policies or participation in trading agreements (Widya Yudha, Tjahjono and
Kolios, 2018).
The economic factor lays emphasis on the growth rate of economy, employment and
unemployment level, interest rates and monetary policies, rates of exchange & inflation which
always varies from one country to another and limits the UK retail company from expanding
its business operations economically.
The Socio cultural point identifies the society culture in which an organization is
operating. It considers demographics, age & wealth distribution, population growth rates, level
of education, living conditions etc. which are likely to have influencing impact on the working
of UK Retail sector companies. These factors assess the impact of macro environmental and
business factor of the company.
Technological factor focus is on the adoption of new and better improved technology so as
to increase the production function and improve the level of employment in the company.
Company having technological development in relation to digital and internet related areas
motivates the employees to perform better (Sammut ‐ Bonnici and Galea, 2015).
The Environmental factor basically studies the impacts of both the micro as well as
macro environmental factors such as sustainable utilisation of limited natural resources, proper
disposal of waste and recycling procedures. These factors help UK retail sector companies in
conducting its business operation in a sustainable and cost effective manner.
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b. SWOT ANALYSIS OF MARKS AND SPENCER
SWOT analysis is a strategy method used for an organisation to analyze four factors
namely Strengths, Weaknesses, Opportunities and Threats that could have an impact on the
project planning. It is often included by the organisation at the start of the project to discover
opportunities for success and to highlight potential threats.
Strengths:
1. Innovative Ideas: M&S has successful track of creating new products every year with its
great innovation and creativity. People’s high spirit towards innovation, out of box
thinking and thrive for excellence are one of the greatest strength of the company.
2. Diversity: The company promotes the diversity and it shows in their work culture.
Marks and Spencer has its offices and showroom around the world. The employees
working in the company belong to different religion and genders. This gives company a
benefit to understand interests of customer better.
Weaknesses:
1. Low Customer Satisfaction: Company has always shown low satisfaction rate in terms of
the return policy of any product and the in-store experience of any customer. This has
given a outcome of customer preferring other brands over M&S.
2. Failure to make a presence in Foreign Markets: Clothes in Marks and Spencer are highly
influenced with the western style. This has failed to bring in much attention from Asian
countries where more traditional styles are preferred.
Opportunities:
1. Digital Marketing: With the world moving towards a digital era, company has a great
opportunity to promote and sell its products online, launch online campaigns to drive in
more customers.
2. Being Vegan: Being vegan is the latest trend in the market. With the company doing
good in providing vegetarian and organic food, it could focus more on the increasing
food demand of vegan people.
Threats:
1. Marks & Spencer could suffer serious threats from the strengthening of local distributors.
This could result in paying higher margins (Abdel-Basset, Mohamed and Smarandache,
2018).
2. One of the major threats for Marks & Spencer is product imitation and generating a low
quality version of it in the local market by competitors.
3. Because of conducting its business operation across the globe, it is highly exposed to and
gets affected by the fluctuating trend in the currency markets of different countries, which
limits the company from making investment decision.
PORTER’S FIVE FORCES ANALYSIS
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Porter’s Five Forces is a powerful strategic model for assessing the organisation’s
position in the market and analyzing the profit area in the underlying industry. It helps
companies for doing strategic planning and searching for long term profitability.
Threats of New Entrants - New entrants in the market comes with high spirit of
bringing innovation, switching to smarter ways of doing things which creates high degree
of threats to the existing company. This brings in the attention of the young generation
and thus creating pressure on Marks & Spencer. Low price strategy and offers also
creates numerous challenges for the company.
In order to avoid such threats, company should invest more in research and development
and should come up with new products periodically. This strategy not only keeps old
customer but also brings new customers.
Power of Suppliers - The raw materials for any company comes from a number of
suppliers. This supplier controls the cost of input for a company and therefore affecting
the margins. If the number of suppliers is less, company becomes more dependent on the
suppliers and thus decreasing the chances to switch for low input costs. Thus giving high
power to suppliers, to charge for their inputs. To control such situations, company should
develop suppliers who solely depend on them.
Company could also do some experiment by using different materials. In case if material
for one goes up, company would always have option to switch to other material.
Power of Buyers - Buyers are always in the search for great discount, offers and paying
as less as possible. This is always a pressure point for Marks & Spencer and affects the
profitability when seen in the long run. To reduce such customer’s demands, company
should launch new products frequently. This would divert the customer towards new
product and thus limiting the discounts (Reinhardt and et.al., 2017).
Threats of Substitute Products or Services - When a similar product or services in the
market provides more effective offers to the customer and meets their needs, the
profitability of the company gets affected. Mark & Spencer should do more research on
understanding the interest and needs of the customer and could provide goal towards
providing better services which would attract customers.
Competition in the Industry - When there are large number of competitors in the
market providing same services and products, there is a large risk in profitability for the
company to go down. To tackle such situations, company should focus on providing
better services than the competitors. ASDA and Tesco are competing in the UK market as
both are supermarket conducting retailing business of foods, clothes, groceries. In August
2015, Tesco was market leader in U.K. grocery by acquiring 28.4% market share whereas
ASDA had only 17% market share (Who are Tesco’ main competitors?. 2019).
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CONCLUSION
From the above report it can be concluded that business environment creates both
positive as well as negative impact on the functioning of business operations, processes and
organisational procedures. The report has discussed that an individual can start its business in
form of different business organisation structure. Further, it has disclosed analysis model used by
company for improving its business operations, profitability and performance level in the market.
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Who are Tesco’ main competitors?. 2019. [Online]. Available through: <
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