Business and the Business Environment

This report provides an overview of the business environment, including different types of organizations, their purpose, goals, and services. It also discusses the size and scope of organizations, as well as their organizational structure and functions. Additionally, it analyzes the Pestle analysis of retail supermarkets and conducts SWOT and Porter's analysis on UK retail supermarkets.

BUSINESS AND THE BUSINESS
ENVIRONMENT

Table of Contents
INTORDUCTION.................................................................................................................................4
SECTION 1...........................................................................................................................................4
1) Different types of organisations, their purpose, goals and services............................................4
2) Size and scope of the organisations...........................................................................................5
3) Organization structure and functions.........................................................................................7
TASK 2.................................................................................................................................................8
a) Pestle analysis of retail supermarket..........................................................................................8
b) SWOT and Porter’s analysis on UK retail supermarket.............................................................9
CONCLUSION...................................................................................................................................12
REFERENCES....................................................................................................................................12

INTORDUCTION
The business environment is an integral part of effective and efficient business
management. This report describes various types of organizations as private, public and
voluntary organizations that will succeed in the environment. This report briefly illustrates
the gap between large, medium, small and micro enterprises. It also describe the
organizational structure, mission, goals and relationships between the functions of the
company. Finally, the impact of the Pestle analysis on the Sainsbury PLC activity and its
impact on supermarket decision making was demonstrated. It also illustrates the importance
of international trade and the impact of global factors on the nature of Sainsbury PLC's
globalization.
SECTION 1
1) Different types of organisations, their purpose, goals and services.
Business refers to the process of converting skills and materials based on customer
requests or providing services based on customer requests. Customers are very important
for the survival and prosperity of the organization. There are various types of
organizations, and especially all types of organizations are divided into three sectors:
public sector, private sector and voluntary sector organizations. The purpose of these
organizations is not the same (Chang, 2016). The public sector is owned by the
government and managed by the government for the population. People pay state taxes
and this money is used to finance most of the public sector. The main purpose of public
sector organizations is the provision of basic public services and the use of resources for
the benefit of society. National Health Services is one of the most popular public
organizations in the UK. National Health Service is treated as the largest publicly funded
health service in the world. With its development in 1948, he succeeded in creating the
most effective and comprehensive image of healthcare in the world. The purpose of the
NHS is to serve the nation for the benefit of the people. There is no profit motive; instead
the main purpose of its existence is the right to equal care and medical services. Patients
are very satisfied with NHS services. Private companies are owned and managed by
individuals. Examples of private sector companies include franchisees, companies,
partnerships and single traders. Achieve the goals of private sector organizations, grow
their business, increase their market share and increase sales. The aim of the organization

is only profit. Sainsbury is considered to be one of the best private global organizations.
Sainsbury began his journey in 1869 with John James Sainsbury and wife in London.
Although introduced as a small retail store, it is now the third largest retail chain in the
UK. Sainsbury operates more than 1,200 supermarkets with 165,000 employees
worldwide (Charter, 2017). Now Sainsbury is a UK registered company that serves a
variety of customers every day. Sainsbury's focus is on customer satisfaction and tried to
do the best opportunity to shop for their customers. Over the years, Sainsbury has focused
on creating loyal customers by serving customers at the right time. Volunteer groups do
not belong to individuals. Voluntary sector activities are involved in various organizations
such as charity, voluntary organizations and the business community. These organizations
are mainly non-profit and non-government organizations. Oxfam has been identified as a
volunteer organization popular in the UK. In most cases, they try to help certain people,
such as guide dogs, Oxfam etc. It has been noted that the public sector is directly
controlled by the government agencies. Therefore, this business is managed by various
types of organizations on behalf of citizens and their general welfare.
2) Size and scope of the organisations.
Large companies like National Health Services are independent companies managed
privately by owners, private owners or shareholders and have a large market share and
provide jobs for 250 employees or more. Statistics show that large companies make up
only 4% of the total sector of the company, but their annual turnover is above the
remaining 96% from small and medium enterprises. Large companies are very important
for the economic survival of any country which helps in sustaining their business, not
only because they generate more income, but also play an important role in the further
growth of the corporate sector. The big advantage of large companies rather than small
businesses is that large companies can easily raise money through shareholders compared
to small businesses. Small and large companies are usually different in terms of
resources, such as time for money, staffing, financing, and efficient use of these resources
(Deasy and et.al., 2016). This requires different management practices in large and small
businesses.
The usual definition of small and medium sized enterprises (SME’s) is any business
with fewer than 250 employees. There were 5.2 million SMEs in the UK in 2014, which
was over 99% of all business. Micro-businesses are business with 0-9 employees The
difference between SMEs and large companies is mainly based on impact fluctuations in

resources in income, budget and staff. At the macro level researchers have found that size
is important for social and environmental performance. SMEs like Sainsbury in the
wholesale trade, retail trade, and professional, scientific and technical services sectors
displayed broadly similar sustainable growth rates averaging 5 percent, 6 percent and 7
percent respectively. In addition, international trade facilitates capital transfers with
minimal costs, which leads to long-term sustainable business growth.
Small business depends on key factors such as total value, relative sector size, number
of employees, product value, annual turnover and net assets. Small businesses play an
important role in the country's economic stability by creating jobs and generating income.
Small businesses are easily established at low cost and with few government regulations.
Owner managers have a strong motivation to make business successful and rely on
personal efforts. Oxfam is an association of 20 independent charitable organizations and
comes under small enterprise dedicated to reducing global poverty. The company was
founded in 1942 and managed by Oxfam International. This is a large non-profit group
with a large number of operations. The Oxfam Behind the Brands campaign evaluates ten
of the biggest policies and practices of food and beverage companies in the fields of
social and economic justice and environmental sustainability. This campaign tells
consumers about what this improvement means for poor people in developing countries
who help produce the food and drinks they consume. Oxfam spends 25% of its wages and
operating expenses: Last year, the charity spent £ 103 million, including £ 700,000 in
salaries and benefits for seven senior civil servants (Prajogo, 2016).
Micro companies are usually defined as small companies with nine or fewer
employees and a balance or turnover of less than a certain amount for example 2 million
or 3 million pounds. It is believed that micro-enterprises improve the country's economy
by creating jobs, increasing income, increasing purchasing power, reducing costs and
increasing business convenience. They develop businesses only when things change in
their lives and they have to generate more income. Bellymose is a micro enterprise shop
near Yorkshire, where various types of fast food are offered. This business has only one
profit motive when serving close relative that without image or global brand. Therefore,
the purpose of the Bellymose store is to serve customers with food and to earn income by
selling food. Quality problems are not difficult here. As a street shop, there are too many
customers who can be served every day.

3) Organization structure and functions
Sainsbury PLC is the parent company, the third largest supermarket chain in the UK,
with 16.5% of supermarkets in the UK (Kolk, 2016). Sainsbury's organizational structure
is hierarchical, because there are a number of levels of people and controls for each level.
Each level is the upper level responsibility. Supplier Management Strategies are very
important for growing transnational organizations such as Sainsbury. The Sainsbury PLC
vision offers several unique properties that show that Sainsbury is the best health food. It
is honesty to offer quality products that create positive differences and job opportunities -
trusted traders where people like to work and shop. Sainsbury's mission is to be the first
choice for consumers who provide food that provides superior quality and service at
competitive prices, works faster, easier and together.
Functional reporting relationships build relationships between positions or
organizational units at various levels of management, based on the specific nature of
functions that are shared responsibility. In such situations - often referred to as indirect
reporting - a higher level position or unit provides functional guidance and support for
lower positions or units in the organizational structure (Analysis of Functional
Relationship, 2019).
Marketing and production have close connection between these two functions which
is important to improve organizational performance. To improve organizational
performance, the marketing and production functions must work together. The production
function focuses on creating new products, managing product quality and quantity, and
managing inventory. However, the marketing function focuses on satisfying customers
and meeting their needs. To increase profits and meet consumer needs, organizations
must work together between the functions of marketing and production and limit conflicts
between them.
Marketing and Customer service: Customers tend to like certain salespeople when they
buy products from the company. Profits with sellers have advantages, but also benefits,
for example, when a salesperson decides or is dismissed, the company must establish a
new relationship with the customer because the employee is no longer in the company.
Evidence of seller loyalty is, if the customer feels comfortable in the company, further
purchases are made and sales are increasing. Employees need to be trained to build this
type of customer relationship.

Finance and marketing: Finance and marketing are two pillars where companies depend
on their growth and profits. I think marketing and finance have no connection, because if
the company does not integrate finance and marketing, this is a big problem to achieve
excellent results for the company's future. Finance handles all financial aspects such as
profit, costs, project feasibility, revenue growth, year-end financial results and so on. ,
Data extraction, etc.
TASK 2
a) Pestle analysis of retail supermarket
All retailers work in a macro environment or outside influence that determines how the
company does business. The macroeconomic environment includes economic, technological,
public and government influences.
Political: Operating in a global environment with operations throughout the world,
performance of Sainsbury is very much influenced by the political and legal conditions of
these countries, including the European Union.
Economic: Economic factors influence Tesco because they tend to influence demand, costs,
costs and profits. One of the most influential factors in the economy is a high unemployment
rate, which reduces effective demand for many goods, which negatively affects the demand
needed to produce these goods.
Social: Sainsbury in the UK also focus on value-added products and services due to
demographic changes, such as aging of the population, increasing number of women, and
reducing home-based preparation. In addition, we are now focusing on: part of the business
mix, supply chain, and other operational enhancement labels that can lead to cost savings in
the business.
Technological: Technology is an important macroeconomic variable that has influenced the
development of many Sainsbury products. New technology benefits customers and
companies: Customer satisfaction increases because goods are easily accessible, services are
personalized, and shopping becomes more convenient food supply chain.
Environmental: There was increasing pressure on many companies and managers to
acknowledge their responsibilities to the community and act socially. The main social

problem that threatens food retailing is environmental protection, an important area where
businesses can act socially responsible (Hamilton and Webster, 2018).
Legal: Various state laws and directives have a direct impact on Sainsbury work. For
example, the Retail Food Committee (FRC) has proposed implementing enforcement laws to
ban many common practices, such as the obligation of suppliers to change prices negotiated
retroactively or without notice.
b) SWOT and Porter’s analysis on UK retail supermarket
Strengths in the SWOT analysis of Sainsbury
Applicable rights: From a small grocery store that operates with a limited range of products,
the brand expands to direct stores which will later become supermarkets that handle various
product categories that meet the daily needs of clients. The supermarket chain has become
one of the 4 largest supermarkets in the UK.
Weaknesses
Low margin: Given the increasing competition in retail and the added risk of online retailers,
most retailers lose volume. To make customers shop with them, Sainsbury seeks to cut costs
and reduce prices over unsustainable competition.
Opportunities
Village Growth: Days pass when no branded products are used in rural areas. Currently
branded products from all categories are mandatory for daily use in the village. This has led
to the growth of supermarket culture even in remote villages, an opportunity for all retailers.
Threats
Threats are environmental factors that can affect business growth. Some threats are:
Competition: Sainsbury's main competitors are Tesco, Aldi, Lidl and Asda.
Porter’ five forces on retail supermarket are as follows:
Threat of New Entrants

The UK food market is dominated mainly by several competitors, including the four
main brands Tesco, Asda, Sainsbury's and Safeway, which have a 70% market share, and
Somerfield, Waitrose and Budgens with the other 10%. Over the past 30 years, the food
market has become the dominant supermarket business (Hair Jr and et.al., 2015). Therefore,
there are currently strong barriers for new businesses that want to enter the food market. For
example, it is very difficult for newcomers to raise sufficient capital due to high fixed costs
and sophisticated supply chains.
Bargaining Power of Suppliers
This power is the power of suppliers, who may be affected by the main food chain
and fear of losing their business to large supermarkets. That is why the company strengthens
other leadership positions in stores such as Sainsbury and Asda to negotiate better advertising
prices from suppliers that cannot be reached by small retail chains. In turn, UK-based
suppliers are also threatened by the increasing ability of large retailers to buy their products
from abroad for a cheaper deal.
Bargaining Power of Customers
Porter has suggested that the more standardized or undifferentiated products, the
lower the turnover costs and the more energy available to buyers. The famous Sainsbury
Clubcard loyalty card continues to be the most successful Sainsbury customer retention
strategy, significantly increasing Sainsbury's profits. By satisfying customer needs,
personalizing services, ensuring lower prices, better choices and a constant stream of
promotions in stores, brands like Sainsbury can control and maintain their customer base.
Threat of Substitutes
Generic replacement can reduce the demand for a product because the risk of
consumers switching to alternatives. In the food industry, this can be seen as a product for
product or as a substitute for demand and increasingly weakened by new trends such as the
appearance of small retail chains. In this case, Tesco, Asda and Sainsbury tried to obtain
existing small businesses and find metro and business express in local cities and downtown.
Bargaining Power of Competitors
In the food industry, the size and dominance of large players, business size, retailer
concentration and the use of various formats, which are currently important features of this

sector, increased significantly. As mentioned earlier, the purchasing power of the food
industry is concentrated in a small number of retail buyers. It runs big in a mature and fair
market where strong growth and consumers are becoming increasingly sophisticated and
complex, because Sainsbury accumulates large amounts of user information that can be used
to communicate with users (Kljucnikov and et.al., 2016). One such innovation is the
development of various retail formats in response to changes in consumer behaviour.
The macro environment consists of all uncontrolled external factors that affect
business performance and influence planning and decision making. You need to recognize
trends and megatrends that characterize the current macro environment. Macro environmental
impact on Sainsbury's marketing decisions. Because the macroeconomic environment factors
always have an impact on the development and planning of companies, just as Sainsbury has
influenced or will influence macroeconomic factors in marketing decisions.
Social environment: The social and cultural environment is very important for retailers
because it directly impacts on customer understanding and its impact on customers. This is
not only about the market demographic structure, but also about how attitudes and opinions
are formed and how they develop.
Technological: Technological innovation and technological advancements have had a strong
impact on all areas of marketing. For example, computer technology revolutionizes product
design, equality control, material management and inventory, production of advertising
materials and other promotional materials, and management and analysis of customer
information.
Economic: The economic and competitive environment includes macroeconomic and
microeconomic conditions that affect certain market competitive structures, costs and
availability of money for investment in the stock market and new products.
Politics and legal: The political and legal environment includes foreign powers controlled by
the state, both domestic and European, local authorities or other regulators that focus on
regulation or trade. Some of the rules and regulations developed and implemented by the
authorities under this title have a power law while others are voluntary, such as the Code of
Ethics.

CONCLUSION
From the above report it had been summarized that business environment had many
forces that shape business and product lines. In this particular task, it describes various types
of organizations and their goals. The Sainsbury PLC business environment has been analyzed
based on a number of factors, including macro environment, and how the organizational
structure, vision and mission of Sainsbury are relevant here, along with the impact of the
cultural environment. It also illustrates the importance of international trade and the impact of
global factors on the nature of Sainsbury PLC's globalization. Finally, this shows how the
PESTLE model influences supermarket decisions. In conclusion, Sainsbury PLC's success
and sustainability is very dependent on the business environment.
REFERENCES
Books and Journals
Chang, J. F., 2016. Business process management systems: strategy and implementation.
Auerbach Publications.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Deasy, S. and et.al., 2016. Controlling use of a business environment on a mobile device.
U.S. Patent 9,247,042.
Erasmus, B., Strydom, J. W. and Rudansky-Kloppers, S. eds., 2016. Introduction to business
management. Oxford University Press Southern Africa.
Hair Jr, J.F. and et.al., 2015. Essentials of business research methods. Routledge.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford
University Press.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Kljucnikov, A. and et.al., 2016. The entreprenurial perception of SME business environment
quality in the Czech Republic. Journal of Competitiveness. 8(1).
Kolk, A., 2016. The social responsibility of international business: From ethics and the
environment to CSR and sustainable development. Journal of World Business. 51(1).
pp.23-34.
Prajogo, D. I., 2016. The strategic fit between innovation strategies and business environment
in delivering business performance. International Journal of Production Economics,
171. pp.241-249.
Online
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