Analysis of Organisational Structures and Environmental Factors

The provided document is an analysis of organisational structures and environmental factors that impact an organisation's activities. It discusses the importance of various functions such as HR, finance, and marketing in achieving goals. The study also uses SWOT, PESTLE, and Porter's 5 forces analysis to determine factors and their strengths and weaknesses for being in a competitive market.

Business and the business
environment

Table of Contents
INTRODUCTION...........................................................................................................................1
SECTION 1......................................................................................................................................1
Different types of organisations..................................................................................................1
Size and scope of different types of organisations......................................................................2
Organisation structures and functions ........................................................................................4
SECTION 2......................................................................................................................................5
PESTLE analysis and their impact upon the business operations...............................................5
SWOT analysis & Porter's 5 forces analysis that impacts on decision making process.............7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
A business can be defined as an occupation that includes commercial activities of earning
money and serving people by selling and buying products. Business environment is an
environment that includes all internal and external environmental factors that may have impact
on business activities. This study is divided into 2 parts. The first parts is essay which will show
about the importance of different types of organisations like private sector, public sector and
voluntary sector. Different types of organisation from different sectors have different
organisational structures, according to size and scope that helps them in achieving their
determined goals (Hamilton and Webster, 2018). This essay will also show about importance of
organisational functions and their relation with objectives. The 2nd is report that will cover and
show various internal and external factors which have impacts on UK retail markets such as
TESCO, mark & Spencers etc. with the help of PESTLE and SWOT analysis it determines
negative and positive impacts of various factors in order to take corrective actions.. Further this
report will show Porter's 5 forces analysis that help them in analysing about their competition
level and market position.
SECTION 1
Different types of organisations
There are various types of organisations from different sectors such as sole proprietors,
partnership and corporation which may be small size, medium size and large scale industries. All
these type of organisations can be private sectors organisation and public sector organisation. In
spite of private and public there is Non Governmental and NGOs whose main purpose is to
serve people and not to earn money. Some example of private, public and non Governmental
organisations are as follows:
LEGO: LEGO is a private sector company whose headquarter is in Billund, Denmark. It
is famous for its manufacture of plastic Lego brand special toys. This company was founded by
Ole Kirk in Christiansen in 1932 (Rehse, Dadashnia and Fettke, 2018).
Bank of England: It is the central bank of UK & a model on which most modern central
bank have been based and was established on 27 July 1694. It became independent public
organisation in 1998 (Burnham, 2017).
1

OXFAM: OXFAM is a confederation of 20 independent charitable organisations that
focus on the relief of global poverty. It was founded in 1942 whose headquarter is in Nairobi,
Kenya (Hajnal, 2018).
Basis Lego Bank of England OXFAM
Type Private or profit Public or non profit Voluntary or NGO
Purpose LEGO is privately
held company whose
main purpose is to
inspire & develop
children in order to
enhance critical
thinking skills for
making the future of
play. It also wants to
create a new and
unique ways of
playing with special
featured toys.
This bank became
public in 1998.The
main aim of this
central bank of UK is
to offer and maintain
monetary & financial
stability of United
Kingdom.
The main aim of
Oxfam's programmes
is to address the main
causes of global
poverty and then
resolve them. It works
for developing those
structures which
directly benefit people
who are facing the
realities of poverty &
injustice.
Legal structure LEGO has an
executive team that is
made up of 12
members & 1 board of
director. It has
responsibilities of
making company's
strategies.
This public Bank
consists of 1 court of
director with 5
executive members.
This board has the
responsibility to set
organisational
strategies for making
accurate decisions.
Oxfam's 48 trustees
are wholly responsible
in law for the charity
and assisting them.
Dr. Dhananjayan
Sriskandarajah is a
CEO of OXFAM.
2

Size and scope of different types of organisations
Employees Businesses % of total businesses % of total private
employment
Small (10-49 employees) 177,950
businesses in
UK
14.30% 17.30%
Micro (1-9 employees) 1022695 82.30% 19.20%
Medium (50-249 employees) 29750 2.40% 14.50%
Large ( above 250) 6455 0.50% 48.60%
Small or private: Sole proprietorship is a first type of company that is counted in small
businesses as it is owned by a single owner. Private sector consists of all organisations whose
main aim is to earn money and that are controlled by private individuals. Some examples of
private sector organisations in UK includes Asda, Tesco, LEGO etc. They have legal authority to
interfere in external environment which can be done by implementing taxes policies. In context
of size and scope Lego consists of 19,000 employees at different locations in total 42 offices. An
approximant revenue of this company is 37.9 billion Kr in 2016.
Pubic organisation: Public sector consists those organisations who are operate and
owned by the government. Organisations of this sector has preliminary aim of providing the best
quality services at all levels to the people. In this sector, Government take all the major
decisions of business (Regnier, 2017). Foe example, Bank of England of UK that is wholly
owned by the government. In context of size and scope, it consists of around 1,400 employees at
different locations. It has estimated the revenue of around £403,000,000,000.
Non-governmental organisation: Voluntary sector organisations is very similar to
public companies but they have different purpose as to provide only social services without
making profits. For example, Oxfam that spends 25% of its funds on wages. It has been stated
that last year this charity spent £103m that includes £700,000 on pay & benefits for 7 top staff. It
had over 1,200 shops worldwide in which more than half of them were in the UK.
3

Organisation structures and functions
Accordingly to the size of companies, there are different types of structures which they
follow. Some examples of organisational structures of private, public and non-governmental
organisations are as follows:
LEGO: This privately hold company consist of complex business structure. This private
company follow flat organisational structure. This structure is helpful for the company as it
supports them in making accurate decision making process. Due to this structure, company
manage their all the processes in an effective manner because all the members of functional units
have responsibility to let their manager know about their performance. It also improves their
communication level and coordination among all the departments that ease them in achieving
their organisational goals.
Bank of England: It is publically help company that follow functional organisation
structure as it depends on their size and scope. It is large scale organisation so it is important for
them to divide their employees into a group on the basis of their skills ans knowledge. All the
employees of a particular group are being allocated tasks according to their skills. It is also
beneficial for them because all employees are responsible to do all the given tasks in an effective
manner and improve their performance.
OXFAM: It is a charity that has an executive board. It follows geographical structure
because this charity team work around the world. It has various functional units such as:
customer service, administration, finance, human resource etc. This charity is run by a
chairwoman who is in charge of a number of trustees that is responsible for making the best and
accurate decisions of the company. It is also uses hierarchical structures that make them able in
managing all the processes in an effective manner (Yang and et.al., 2016).
Complexities in global organisation structure
Due to global organisational structure, an organisation has to face various problems. In
this type of structure they have power distance and inequality by which people feel
uncomfortable with uncertainties. The main and biggest problem in global organisational
structure is coordination and ineffective communication. It has various functional units at
different locations and posses multiple stakeholders which make difficulties to operate
effectively.
Organisational Functions and their relation with objectives
4

Each type of organisations have some functions that play and important role. They help
the company in achievement of goals and vision effectively. All organisational functions have
interrelation with each other and beneficial for manager.
Marketing and sales: It is one of the most important part of the business operations. It
helps manager of the company to interact with customers and develop relationship with them. It
has the main responsibility of delivering a string brand image of the company. It does all the
promoting and brand developing activities and has interrelationship with sales and production
department as they provide all the necessary data to that department.
HR and operations: Human resources is other main element of any type of company. It
close;y work with operations and finance department for achieving the common goal as to satisfy
all the needs of customers and employees by managing cost. They utilize all the organisational
resources in an effect6ive manner (Noe and et.al., 2017). HRM plays various functions including
recruiting, hiring, motivating and developing employees. HR department has responsibility of
managing their employees effectively by fulfilling their needs and demands. They also provide
training to their workers towards achieving organisational goals.
Financing: Finance department is all responsible for preparing budget for all functional
unit. They controls various expenditures of an organisation and managing investment process of
the company. This department is also interrelated with other departments as better financing help
the company to manage cash flows by recording all the business transactions. It is also
responsible for maintaining finance performance of an organisation in order to generate and
maximizing profits.
SECTION 2
PESTLE analysis and their impact upon the business operations
There are various external factors that impacts and influences business activities and
operations in positive as well as in negative manner. This effective tool or PESTLE analysis
helps them in analysing unpredictable environmental factors that may affects its performance and
activities.
Political factors: Tesco operates in various countries around the world like Hungary,
Japan, Thailand, Asia, so legislative conditions of tall these countries have various impacts on it.
Government is now putting pressure to retail sector to provide job opportunities to employees
5

including maximum wages, flexible working to highly skilled employees in context of
employment legislation. It becomes bind to follow alls the rules and regulations implemented by
the government. Due to changes in the policies of government, Tesco plc also have to make
changes on their strategies and decisions that can increases their costs.
Social: There are some factors related to social like increasing changes in the needs and
demands of society, education level of particular society have major impacts on the cooking and
eating habits of them. There are some favourable conditions that impacts on the supermarket in a
positive manner such as education level of people. If people of the particular society are educated
then it can find the best and skilled employees that can help them in achieving their goals. Tesco
is increasing and investing in food business so it is important for them to provide the best and
healthy food materials as every people and customers are becoming more health conscious. By
following all the guidelines related to food and beverages, it can make itself able to compete in
the market (Widya Yudha, Tjahjono and Kolios, 2018).
Economic: Demands and prices of products and services that Tesco Plc provides its all
depends on the economic factors such as inflation rates, interest rates and unemployment level.
Favourable economic conditions impact on the activities of Tesco in a positive manner. On the
other hand unfavourable conditions impacts on its activities and decisions in a negative manner.
Merger of Asda and Sainsbury's are now creating a biggest supermarket group that are also
contributing in economy. It is a big threat for Tesco as it squeezes on its margins & also loss of
market shares.
Technological: Tesco is more investing in bringing new technologies in its business as
retail sector industries and super markets of UK are more investing in technologies for being in a
competition and for satisfying all the needs of customers. Tesco is using new machines and
equipments like food processor, microwave etc. It is beneficial for them as it saves their time and
also can change the cooking habits. On the other hand it can impact in a negative manner also
because it decreases manpower so it directly impacts on unemployment rate. It also requires to
provide training to their new employees in order to make them able and increasing a better
understanding related technologies. It increases their overall costs which is not good for the
company.
Environmental: This factor also impact on the activities and operations of supermarkets.
Tesco is now more becoming environmental conscious so it tries to satisfy environmental needs.
6

For satisfying this it encourages its customers to shop and buy at Tesco.com. Its van driver is
also using fuel saving routes. In addition they collect plastic bags from recycle them in order to
increase loyalty and strong relationship with customers. The increasing in ethically conscious
customers also impact on the activities and operations of Tesco. They put pressure on tehm to
reduce pollution and follow all the guidelines and investing in equipments that reduce pollution
and waste can increase their cost.
Legal: In context of legal factors, it can be said that Tesco has been in controversies due
to not following labour and employees laws. Employees of Tesco Plc took a legal action against
manager and employers because they discriminated their workers on the basis of age and gender.
It impacted on this supermarket in a negative manner as it decreases its brand image and
reputation. So it is very important for all retail sector industries to follow all the rules and
regulations (Wood, Wrigley and Coe, 2016). If it follows all the rules then it can increase its
customer loyalty and employees retention. By following all the rules it can also increase its brand
image and profitability.
SWOT analysis & Porter's 5 forces analysis that impacts on decision making process
There are large industries and various retail supermarkets in United Kingdom that are
increasing competition level. For being in the competition it is important for them to do SWOT
analysis. It helps them in analysing their strengths and weaknesses for improving their efficiency
and performance level in the market. SWOT analysis of Tesco is described as follow:
Strengths
 The main strengths of Tesco retail supermarket of UK is it provides more then 743K jobs
opportunities for employees that helps in generating economy of the UK.
 It has other strength is it is the most profitable supermarket in the world.
 It uses the best marketing strategies and expertise in research and development.
It has launched its club-card as the best tool in multiple levels. It increases employees retention
level and also help them improving relationship with its existing as well as with its new
customers. Tesco also has strong property portfolio that increases its overall value and reputation
(Bohari, Hin and Fuad, 2017). It also owns 53% of its all retail space as it operates in 7817 shops
around the world.
Weaknesses
7

 The main weaknesses of this supermarket is it is highly dependent on Europe & UK for
its profitability and are not spending its time and resources on developing the other
markets.
 Its some buyouts were costly as they did not match with other competitors and its ethics
such as Nobbies garden Centre, Giraffe restaurants etc.
It has been involved in many cases due to not following laws and regulations. It showed its
incorrect accounting including over statement of commercial income by GBP 208 million in
2017. Due to this false accounting its financial performance and profits are profoundly affected.
Opportunities
 It has opportunity of increasing premium range products.
 It is increasing and upgrading its online shopping and also offers home delivery services
of its products.
Tesco retail supermarket has recently announced and introduced its new discount store with the
name Jacks that has shown a significant growth. It is the big opportunity for Tesco as it can
compete with Aldi and Lidl. It can also have opportunity by more focusing and upgrading its
online shopping business and home delivery services.
Threats
 There are various developing and developed supermarkets in UK like Sainsbury's, Asda
that are increasing competition for Tesco.
 The other threat for this from economic crisis that impacts on its operational efficiency &
performance level.
It is facing various problems due to its stakeholders pressure that are related to corporate social
responsibility. Increasing wages and labour rates also put pressure on its decision making process
as it can decreases its sales and profitability.
Interrelationship
There is an interrelationship between internal factors and external factors. The main
strength of Tesco is it uses the best technologies and focus on improving its activities and
technological factors also put pressure on them to invest in technologies. So it can be said that
there is an interrelationship between both factors. Weakness of Tesco is its some of the products
and buyouts are costly and it can be interrelated with social factors as society trends and needs of
particular products can increase the demand of a particular products that can also increase their
8

sales. Environmental factors also put pressure them to stop and reduce pollution and Tesco is
more focusing on using this type of equipments so both are interelated.
Porter's 5 forces
This is other main tool that help Tesco in order to analyse competition level and its
current position in the market.
Bargaining power of buyers: Customers and buyers play a significant role as they have
power to increase as well as decrease prices of products and services which supermarkets offer
them. Customers want to purchase good quality products at affordable prices they have power of
bargaining. Due to this power, Tesco has to provide discount to them and offer them products at
lower prices in order to being in a competition and for maintaining customer relationship. It can
decrease their sales.
Bargaining power of suppliers: Suppliers take undue advantages of their dominant
position in retail sector. They have the power to increase and decrease their prices on supplying
products. Suppliers decreases the margin on products which Tesco can earn in the market. Due to
this power also they have to face various problems.
Threats from competitors: There is an increasing rivalry among competitors in retail
sectors. In UK there are various developed supermarkets such as Asda, Mark & Spencer's that
put pressure on Tesco to bring new and innovative products. It also increasing competition level
that is a threat for the supermarket (Mathooko and Ogutu, 2015).
Threats from substitute products: If the products that have the similar characteristics
of products that Tesco offer and fulfil all the needs of customers that time it can also decrease the
sales and profits of retail sector industries. Substitute products with the same features have
significant impact on the profitability of Tesco.
Threats from new entrants: New entrants in supermarket and retail sector also try to
bring innovative ways of performing activities so it can also decrease the sales and profitability
of existing supermarkets and Tesco. They attract Customers by the new ways and strategies and
this is also a big threat for Tesco plc.
CONCLUSION
From the above study it has been concluded that all types of companies like small,
medium, large from different sectors like private, public and voluntary sector played an
9

important role in generating economy. According to the size and scope of this organisations they
followed different organisational structures that helped them in achieving their goals in an
effective manner. It has also shown the importance of various functions like HR, finance and
marketing that also supported manager of an organisation to satisfy all the needs of employees
and customers by providing the best quality products. Above study also stated that internal and
external environmental factors impacted on the activities of different types of organisations in
positive as well as negative manner. With the help of SWOT, PESTLE and Porter's 5 forces
analysis, an organisation determined factors and their strengths and weaknesses for being in a
competitive market for becoming a market leader.
10

REFERENCES
Books and journals
Bohari, A.M., Hin, C.W. and Fuad, N., 2017. The competitiveness of halal food industry in
Malaysia: A SWOT-ICT analysis. Geografia-Malaysian Journal of Society and
Space. 9(1).
Burnham, P., 2017. The Alternative Externalisation Strategy, Operational Independence and the
Bank of England. Parliamentary Affairs. 70(1). pp.173-189.
Hajnal, P.I., 2018. Oxfam International. In Civil society in the information age (pp. 57-66).
Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other
factors that influence the choice of response strategies adopted by public universities in
Kenya. International Journal of Educational Management. 29(3). pp.334-354.
Noe, R.A. and et.al., 2017. Human resource management: Gaining a competitive advantage.
New York, NY: McGraw-Hill Education.
Regnier, P., 2017. Small and Medium Enterprises in Distress: Thailand, the East Asian Crisis
and Beyond: Thailand, the East Asian Crisis and Beyond. Routledge.
Rehse, J.R., Dadashnia, S. and Fettke, P., 2018. Business process management for Industry 4.0–
Three application cases in the DFKI-Smart-Lego-Factory. it-Information
Technology. 60(3). pp.133-141.
Widya Yudha, S., Tjahjono, B. and Kolios, A., 2018. A PESTLE policy mapping and
stakeholder analysis of Indonesia’s fossil fuel energy industry. Energies. 11(5). p.1272.
Wood, S., Wrigley, N. and Coe, N.M., 2016. Capital discipline and financial market relations in
retail globalization: insights from the case of Tesco plc. Journal of Economic
Geography. 17(1). pp.31-57.
Yang, Z. and et.al., 2016. Hierarchical attention networks for document classification.
In Proceedings of the 2016 Conference of the North American Chapter of the
Association for Computational Linguistics: Human Language Technologies (pp. 1480-
1489).
11