Business and the Business Environment.

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
LO1..................................................................................................................................................1
P1 Discuss distinguish types, purpose and legal structure of public, private and voluntary
sectors.....................................................................................................................................1
P2 Illustrate size and scope of numerous types of organizations...........................................3
LO 2.................................................................................................................................................5
P3 Explain the relationships among numerous organisational functions and how attain firm's
objectives and structure..........................................................................................................5
P4 Application of PESTLE analysis for identifying positive and negative impact of macro
factors.....................................................................................................................................6
P5 Internal and external analysis............................................................................................7
P6 Inter relationship between macro factors and strengths and weakness.............................8
CONCLUSION................................................................................................................................9
REFERENCES................................................................................................................................1

INTRODUCTION
Business environment is described as sum total of all internal (employees, directors,
customers etc.) and external factors (political, social, technological etc.) which directly or
indirectly affect business in the open market place (Ayios, 2018). Scanning of business
environment is done in order to better tap the useful resources needed by the firm and then
converting into goods and services. This report is based on Tesco which is a leading retail
business in United Kingdom. It came into existence in the year 1919 by Jack Cohen. This
successfully company has opened its stores in other nation like Asia and Europe. This
assignment covers various types of public, private and voluntary sectors purposes size, scope and
legal structures. Relationship among organizational functions is studied in order to full-fill the
emerging needs of the customers. Macro environment positive and negative aspects is examined
in order to make improvements in the loop holes. SWOT and PESTEL analysis is conducted to
grow the business in other nation successfully. The strengths and weaknesses interrelated with
macro factors are evaluated to attain productive outcomes.
LO1
P1 Discuss distinguish types, purpose and legal structure of public, private and voluntary sectors.
In order to grow the business in the cut throat competitive world public, private and
voluntary sector contribute on their own level. All this sector work day and night to raise the
economy standards of the nation. All this three type of business are providing huge job
opportunities to a large section of the people and are directly or indirectly reducing employment
from the country (Fabus, 2018). They play a vital role in making the nation financially stable. By
this other businessman will be interested to expand their business in this particular nation as it is
financially strong. Public, private and voluntary sectors purpose and legal structure are explained
as under:
Elements Public sector Private sector Voluntary sector
Meaning Those organizations
which are owned,
managed and operated by
government. In this type
of organization works
Private sector are those
businesses which are
owned and managed by
individual or groups. All
the decisions for the
In society this type
of businesses is
mainly working for
the upliftment of the
community and their
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towards the upliftment
and welfare of the people
living in the nation.
businesses are taken by
the owner, director or
CEO of the company.
There is no role of
government in it.
people. They help
people in all possible
way to solve their
problems.
Purpose The purpose of this type
of enterprise is not to
generate huge revenue
instead to work for their
welfare. But in order to
run the public sector
business smoothly in the
open market place they
charge nominal fees from
the people.
Private sector main
purpose is to maximize
huge profit as compare to
rivalry. This type of
business mainly focusses
on meeting the needs and
demands of the customers
so that sales ratio can be
raised and revenue and
generated to a large
extent.
This types of
business are non-
profit firm whose
purpose is to serve
better for the society
people and to raise
their living
standards.
Examples In United Kingdom
Network Rail is the best
example of public sector.
They are held accountable
to look after the
maintenance of the Great
Britain railway network.
Hennes and Mauritz is a
multinational clothing
retail company. It is
widely well known for
fashionable clothing
which it offers to their
targeted customers across
the globe. It is one of the
private sector firm in UK
In United Kingdom
Cancer Research UK
is an awareness
charity who is well
known for
decreasing the
number of death
ratio caused by
cancer by making
people aware about
its symptoms.
Legal structures The legal structure of
public sector are:
Central government:
The legal structure of
private sector are as
follows:
The legal structure
of voluntary sector
are as follows:
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With the help of income
tax central government is
able to collect huge funds
from general public
(Geissdoerfer and Evans,
2018).
Local government:
Through council taxes
local government are able
to accumulate huge cash
amount.
State government: In this
case they hire or own
some of the businesses
which are not controlled
by central government or
they interfere in it.
Sole proprietorship: This
type of businesses are
owned and operated by
individual on small scale
like, taxi drivers, grocery
stores, Hair cut salon etc.
Partnership: In this case
with mutual
understanding contract is
signed in which ratio of
profit and loss is
mentioned.
Limited company: This
is a legal structure which
limits the liabilities of the
firm’s members in
relation to their
contribution.
Trust: It provide
services to the
people based on the
trust and faith of the
people though it is
not a legal entity.
Unincorporated
Association: Here,
group of people
come together
willingly to form
clubs and society in
order to meet the
particular purpose.
P2 Illustrate size and scope of numerous types of organizations.
In cut throat competitive world organisation need to expand their business so that they
can survive for longer time duration in the market. The size and scope of private, public and
voluntary organization in United Kingdom are discussed as under:
Hennes and Mauritz private sector business:
Vision: The vision statement of Hennes and Mauritz private sector is to operate the
business in such a way that it is sustainable in all aspects like, economically, socially and
environmentally (Hamad and El‐Gohary, 2018). Employees are motivated to perform the task
effectively so that productive outcomes can be attained easily.
Mission: The mission statement of Hennes and Mauritz is to offer high quality clothing
at best prices to their potential customers. By this set goals and objectives can be attained easily.
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Size and Scope: Hennes and Mauritz has five thousand stores across the globe and are
meeting the emerging needs and wants of the customers easily. The scope of this business is too
high as the demand for fashionable cloths are raising day by day. In today's world customers are
demand quality products as their disposable income has raised (Kaplan, 2019).
Business objectives: The objective of Hennes and Mauritz is to render trendy and
fashionable clothes to the customers according to the dynamic environment.
Products or services: Business provides trendy and high quality fashionable clothes to
the targeted customers and to raise their sales ratio as compare to the rivalry. By this maximum
profits can be earned easily.
Legal structure: Stefan Persson has owned Hennes and Mauritz and it is a public limited
firm in the global market.
Stakeholders: The different stakeholders of Hennes and Mauritz are, customers,
suppliers, government, directors, owners, managers and so on.
Network Rail is public sector business:
Vision: Network Rail vision statement is to provide safe and comfortable journey to the
travellers till they reach the final destination.
Mission: The mission statement of Network Rail is to increase their railway network
across United Kingdom and to provide safe railway services to the customers.
Size and Scope: Railway sector manage and handle around twenty one thousand miles of
track and forty thousand bridges and tunnels in England, Wlaes and Scotland. Network Railway
owns twenty five hundred railway stations and are successfully meeting their needs and wants.
Due to the increasing global warming there is need of more sustainable mode of transport which
formulate wider scope for Network Rail (Gray and Bebbington, 2019).
Business objectives: The objectives of the Network Rail is to provide safe railway
facilities to the travellers.
Products or services: Comfortable and safe railway services are provided to the general
public who uses it to reach out their destination.
Legal structure: Public firm's are funded and supported by central government so that
they can be operated easily.
Stakeholders: There are numerous stakeholders of Network rail which are, government,
external stakeholders, public and so on (Hamilton and Webster, 2018).
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Cancer Research UK is a Voluntary sector business:
Vision: To develop advanced therapies and medical facilities in order to reduce the death
ratio of people who are suffering from cancer. In order to meet the vision statement Cancer
Research UK is continuously conducting research and development work.
Mission: The mission statement of Cancer Research UK is to aware general public
regarding the symptoms of Cancer in the initial stage so that it can be cured easily.
Size and Scope: In United Kingdom this is the largest Cancer Research who is working
to save the lives of the cancer people as well as work to spread awareness regarding how to
identify it in the early stage. The scope of the Cancer Research is wide because they are working
to identify the root cause of the cancer as the number of cancer victim are raising day by day.
Business objectives: The business objectives of Cancer Research UK is to discover the
root cause of cancer and to frame tactics to overcome them in the early stage (Håkansson and
Ford, 2012).
Products or services: Radio therapy, chemotherapy and so on are services which are
provided to the cancer patient so that they can be cured easily.
Legal structure: Central government help this organization financially in very aspect.
Stakeholders: Some of the stakeholders of Cancer Research UK are, suppliers, cancer
patients, government etc. (Teece, 2018).
LO 2
P3 Explain the relationships among numerous organisational functions and how attain firm's
objectives and structure.
In the open market place business is able to attain the set standards because various
organizational functions have good and healthy relations with each other. By creating transparent
and healthy relations among the department tough benchmark can be formulated for others. The
relationships among numerous organisational functions are illustrated beneath:
 Interrelationship between marketing and sales department: Marketing department plays
a vital role in the growth and development of the business in the global market. This
division is accountable for building health relations with customers for long duration. By
this sales ratio of goods and services can be raised accordingly. Whereas sales department
focus on raising the sales of the product in order to maximize huge profit so that
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sufficient funds can be provide to the marketing department in order to conduct market
research. So it is very essential to build healthy relations with each other decisions for
better results (Hassanien and Dale, 2019). The sales department of Tesco enables them to
identify the needs of the customers and to serve them as per their requirements and
accordingly marketing department of Tesco formulate various strategies such as
promotional strategies that help sales department to approach the customers (Choo,
2018). Interrelationship between sales and finance department: Sales division is accountable to
uplift sales of the firm's product and services in order to gather huge profits. While,
Finance department assemble sufficient funds from various financial institutions like,
banks, friends, relatives and so on. Healthy relations should be there among sales and
finance department so that deficiency of funds does not occur and business activities are
performed smoothly. The sales department of Tesco determine the requirement of
changes within the marketing strategies of the company for creating awareness among the
customers and in this the finance department enables them by providing them the funds to
carry out their activities with the help of marketing department.
The structure that has been adopted by Tesco is hierarchical structure with the help of this they
can efficiently allocate their roles and responsibilities among their employees as per their
capabilities. This enables them to perform their roles efficiently and achieve the objectives of
Tesco with effective utilisation of the resources. Also with the help of this all the departments
and functions of the company can be integrated due to which the flow of communication and
information is efficient and this make the capable of taking better decisions and avoids chances
of redundancy of the activities (Sawhney, Verona and Prandelli, 2015).
LO3
P4 Application of PESTLE analysis for identifying positive and negative impact of macro factors
Analysis of external environment is important for large internation organisations as they
have to cope up with variety of challenges. Local service market is growing industry in UK and
Tesco can enter in this segment for increasing their total revenue. Below is PESTLE analysis of
British market:
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Political – Brexit brought political instability in the country and it is making a huge
negative impact on companies like Tesco as they are failing to make investment related plans for
long term. This reason is rapid changes in regular and post Brexit fear of uncertainty. Some
between treaties with Asian countries of UK have not changed in many years. Unchanged
regulation can allow Tesco to making long term plans regarding importing and exporting. This
will be positive for their business in forthcoming time (Tian and Malhotra, 2018).
Economical – Low inflation is a major positive for Tesco as it will increase demand of
their products and services. They will not face any major hindrance related to demand in initial
period if they start new operation. Although, low economic growth can make negative impact on
company’s business as they scope of growth will be very limited.
Social – UK has place in top 10 most educated population. This element is a positive
factor for Tesco as they can easily get good quality of human resource in less period of time.
Trends in marketplace are changing rapidly, this factor can create major issues for company in
upcoming time as it will force organisation to bring constant changes in their process. Negative
influence of this factor can create more challenge to the firm in initial stage.
Technological – Technological development is happening in every field and Tesco can
use latest technology for bring more efficiency in their new operations by using latest
technology. The negative factor attached with technology is that some of them are very
expensive and they can increase cost burden on organisation (Trisakhon and Peamchai, 2018).
Legal – Strict regulation are not good for business of Tesco as it increases company's
recurring expenses. In order to follow regulations relating to Maternity leaves and Minimum
wages act, company has to put additional efforts and it directly make a negative impact on their
profits. Stable domestic rules are a big positive for organisation as they allow firm to focus on
their core activity without creating any legal trouble. Making long term plans become easy for
company when government regulation remained unchanged for long period of time.
Environmental – Tesco is committed to reduce pollution and develop a sustainable
business. They are investing huge amount in reducing carbon emission so they can attain the
target of bringing down their carbon footprint by 50% by 2020. This decision is improving their
image in public and influencing their businesses in positive way. “Local or household services”
is a business where waste management is important. Tesco may face challenges regarding use
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proper dispose of waste as some material like plastic is not disposable. These minor but
important issues can make negative effect on company's business (Trad and Kalpić, 2019).
LO4
P5 Internal and external analysis
Tesco is an international organisation which is planning to operate in the services of
household in United Kingdom. In order to operate in the industry of household service such as
pest control, carpentering, electrician services, it is important for this organisation to consider its
internal and external environment. In order to conduct this assessment, SWOT analysis technique
is used. By mentioning the strengths and weaknesses of Tesco, internal analysis of this company
can be done. And by mentioning opportunities and threats of this company, external analysis of
this company can be done.
Strengths
Tesco is one of the largest chain of supermarkets in United Kingdom which has thousands of
regular customers. Using a sound brand image and ample regular customers, Tesco can easily
market their new operations to the potential customers without spending too much on
promotional activities (Hillary, 2017). Another strength of Tesco is its loyal customer base which
believes in the products and services of Tesco. This loyal customer base will be potential
customers of new operating unit of Tesco.
Weaknesses
Tesco currently deals in a retail industry which largely depends on the operations of selling
products of other brands. This company has no experience of providing household services
which can result in their weakness which can impact on customer satisfaction.
Opportunities
The industry which revolves around providing household services is at boom in the region
of United Kingdom. Every large organisation nowadays is intending to launch their own
subsidiary which can provide household services to the customers. In the scenario where the
industry of household services is at growing stage, it is a viable opportunity for Tesco to grow
their operations in this industry by which their brand equity can even be enhanced and they can
acquire customers due to their existing loyal customers (Lu, S, 2017).
Threats
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Threats are the elements which generate due to external environment in which an
organisation is currently operating. Tesco is a large scale organisation which is planning to
develop new operations in United Kingdom. UK is currently in a vulnerable position as the
organisations of this country has to pay high costs if they are procuring supplies from states of
Europe which is a result of BREXIT. In this situation, developing new operations in UK can be a
threat for Tesco.
Above SWOT analysis shows that Tesco is a powerful organisation which can rely to
develop their new operations in United Kingdom.
P6 Inter relationship between macro factors and strengths and weakness
Political factors – These are the factors which are associated with political stability in the
region in which Tesco is operating. UK is a developed country which is politically stable which
helps companies operating in UK to get benefitted with liberal trade policies. But on the other
hand, UK is currently facing trade issues with European union due to BREXIT which is a
weakness for Tesco (May, 2019).
Economic factors – These factors include interest rate, countries GDP, national income etc.
Tesco is operating in UK which has high GDP and high spending power of individuals which
allows them to earn appropriate revenues which is a strength for them. On the contrary, due to
BREXIT, UK has restricted its trade policies which has turned as a weakness for TESCO
(Painter-Morland, 2019).
Social factors – These factors are the tastes and preferences of the people of the UK’s
society. UK has a progressive society and the people residing into it has preferences of using
green and environment friendly products which is a strength for this company as they retail
ample green products. As operating in a society which changes rapidly can become a weakness
for Tesco.
Technological factors – These factors are related to technological advancements and
upgradation. Tesco uses latest technology when it comes to payment options and other
operations due to which they lead to satisfy their customers which is a strength of Tesco. But
continuous changing technology influences this company to regularly update their equipment
which require high cost which turns to be a weakness for the company (Somers, 2019).
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CONCLUSION
From the above report it can be concluded that business environment is the combination of
all external and internal factors which impacts an organisation both positively and negatively.
From the above report, it has been found that Tesco is a large scale organisation which has
potential to develop new operations in the region of United Kingdom.
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