Business and the Business Environment

This document provides an overview of the business environment, including the types and purposes of organisations. It explains the relationship between different organisational functions and how they link to organisational objectives and structure. It also identifies the positive and negative impacts of the macro environment on business operations. The document focuses on TESCO as a case study.

BUSINESS AND THE
BUSINESS
ENVIRONMENT
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Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Explain different types and purposes of organisations..........................................................3
P2 Explain the size and scope of a range of different types of organisations.............................4
TASK 2............................................................................................................................................6
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure.......................................................................................6
TASK 3 ...........................................................................................................................................7
P4 Identify the positive and negative impacts the macro environment has upon business
operations....................................................................................................................................7
TASK 4............................................................................................................................................9
P5 Explain internal and external analysis of organisation in order to identify strengths and
weaknesses..................................................................................................................................9
P6 Interrelation of strength and weakness with the external macro factors..............................10
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business Environment is a combination of the external and internal environmental factors
like customers, suppliers, stakeholders, government and economic conditions and all the factors
affected directly by business decisions. Business Environment helps in assessing and analysing
the market and helps them in making strategies. TESCO is chosen as a base organisation for this
report as the operations of the company are vast and have a global business (Gaganis, Pasiouras,
and Voulgari, 2019). They have functions in different markets so little alteration is required for
the business to operates and it will impact the profits of the business. The report focuses on
different type and purposes of the organisations like private, public, voluntary and legal and the
relationship of different functions and structure of the organisation. It also helps to identity the
size and scope of a range of different types of organisations. The internal and external analysis
will further help in understanding the strength and weaknesses and their impact on businesses.
TASK 1
P1 Explain different types and purposes of organisations.
To help organisations defines the role of responsibilities, it is important that companies
understand what type of organisations is best to achieve the business objective.
Types of organisations
Private Sector Organisation- The companies in private sector run for profits and they
are owned and operated by individuals, partners or agencies. TESCO is the private organisation
of UK and they are operating in the retail sector (Eling and Schaper, 2017).
 Sole Proprietor- The organisation is owned and operated by the owner and he will have
the profits.
 Partnership- The organisation is owned by two or more people and they will divide the
work.
 Private limited- The organisation is a having a board of people and they are have limited
operations.
 Public limited- The organisation has a limited liability and the people are included and
they have shares.
 Purpose- TESCO is the biggest private sector organisation of UK where they focus on
providing groceries at affordable prices and giving customers experience in the retail.
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In the context of TESCO, it is a limited company owned and operated by investors and
shareholders.
Public Sector Organisation- The companies in public sector are owned by government,
agencies and organisations who focus on serving the societies. Profits are not there main
objectives. NHS (National Health Services) are owned by government and they provide free
health services to the people.
 Purpose- NHS (National Health Services) are funded by welfare department of UK.
They focus on providing good healthcare to the people who cannot afford it.
NHS(National Health Service) is owned and operated by the heath and welfare department of
UK and headed by the Secretory of State of health and social care. It is a statutory corporation
which is operated by government.
Voluntary Organisations- These organisations do not have a hierarchy and are non-
profit organisations or civil societies which are formed to help the society. OXFAM, is a non-
profitable organisation of UK which is formed by 20 charitable organisations to remove poverty.
 Purpose- OXFAM is working to help the people in meeting their basic needs. Their
main focus is making the society poverty free.
Oxfam is a limited liability company, formed by trustees. They have a staff who is
responsible to remove the poverty. They have a management under sub management (Huang-
Horowitz, 2015).
P2 Explain the size and scope of a range of different types of organisations.
TESCO was founded in 1919 in London (Prajogo and Oke, 2016). It is a multinational
company which is in private sector and have stores in various countries.
 Vision of Tesco- Tesco aims to become the most valued organisation to its customers,
stakeholders and the communities it serve to.
 Mission of Tesco- They want to maintain the long term relationship with its customers
by focussing on value propositions.
 Size of Tesco- Tesco has stores in many countries and the size of the operations depends
on the number of employees and the stores they have. There are more than 7000 stores of
Tesco which are operated by 5 lakh employee (11 astonishing facts and figures that show
how Tesco dominates Britain and the world, 2020).
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 Scope of Tesco- The scope of Tesco is the extent to which products and services of
companies are sold to. It has a market in Europe and Asia and planning to move to the
healthcare industry.
 Legal Structure- There are various organisations in private sector and it choice of it
depends on the role of responsibilities of an organisation. Sole Trader is the easiest form
where businesses operate by an individual on the other hand when there are two or more
people operating a business it come in partnership. In limited liability partnership, they
have limited operations to an extend of their investment. Limited company is a separate
legal entity.
NHS(National Health Services) is the biggest public sector organisation which provides
free health care facilities to the people of UK. They help the society by providing them better
options.
 Vision of NHS- The objective of NHS is to provide healthcare to the people so that they
can have a good life and they can afford it.
 Mission of NHS- It is the mission of NHS to provide a quality treatment to the people
and they can get equal facilities.
 Size of NHS- The role of NHS and the quality it serves to people is extensive. It has
wider operations and is a trusted organisation as the impact is delivered to the people of
UK. They deliver their service to 190 authorities and have a staff of 2 lakh employees
(Key facts and figures about the NHS, 2020).
 Scope of NHS- NHS is free to a point that it can benefit to the society. They focus on
giving facilities to the people of UK and other benefits relating healthcare.
 Legal Structure- There are various types of public sectors organisations and the oldest is
departmental undertaking which is operated by the ministry or by a minister like railway.
Statutory corporations are funded by government and come in the special act of
parliament or by central or state government. In government companies, 51% paid up
capital is by the government.
OXFAM is formed by 20 independent charitable organisations. They are working for
removing poverty from the society and providing a just and fair environment to the people of UK
to maintain equality.
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 Vision of OXFAM- To provide the people with healthy environment so that they can get
a just and sustainable environment.
 Mission of OXFAM- The mission of Oxfam is clear and precise which is to provide
quality by removing poverty and make a reliable world for the people to fulfil their basic
requirement.
 Size of OXFAM- The reach of Oxfam is world wide with serving to the people to make
them self sufficient. They provide their service in 90 countries with 10000 employees and
50000 volunteers (NGO profile: Oxfam International, 2020).
 Scope of OXFAM- The scope of Oxfam is to extend the operations in order to make
everybody stay healthy and get the opportunity to have a healthy eating habits.
 Legal Structure- A group of people come together to solve a purpose is a type of
unincorporated association. A trust is formed to solve the money related problems of land
and property. A limited liability company has a separate legal entity and have people
working for them.
TASK 2
P3 Explain the relationship between different organisational functions and how they link to
organisational objectives and structure
The success of an organisation is based on the performance of the various departments. If
the departments are inter-related, they will perform their best to achieve the goal of their
department and the goal of an organisation
The inter-relation between of marketing and finance departments
 The role of finance department is to provides funds and allocate it to other departments.
Marketing department on the other hand makes strategies for organisations which help
them in their business functions. The management of finance is important as each
department requires amount which requires fund which makes them building activities.
Designing various promotional strategies to give visibility is a task of the marketing
managers (Nguimkeu, 2016 ).
 In the context of Tesco like any other organisation as the budget of the promotional
activities is allotted by the finance department in order to plan the activities.
The inter-relation between of operations and production department
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 The operations departments plays an important role as it manages all the back end
processes of the organisation and makes it easy for other departments to function well.
Without operations department, organisations will not have any support and the achieving
the common goal would be difficult whereas production department manages the delivery
of right quantity of products with the right quality.
 In the context of Tesco, Operations and production department works together as they
provide fast delivery so they need to manage the product's demand and supply so that
they do not loose a customer because the product is not available.
The inter-relation between of human resource and sales department
 Human resource of any company finds the best fit of the organisation and people defines
the quality of work in any organisation and they are the best resource of any organisation
whereas sales are the end result of all the work and its productivity can be measured. The
role of sales department is to give the maximum profitability.
 In the context of Tesco, the human resources are important as the operations of the
business is large which requires proper training and development. The sales is achieved
as the people of this organisation understood the business goal.
TASK 3
P4 Identify the positive and negative impacts the macro environment has upon business
operations.
PESTEL analysis helps to identify factors which impacts decisions of the organisation.
They are important to understand as organisations make strategies and they affect businesses
(Reeves, Levin and Ueda, 2016).
Political Factors- These factors are important to organisations when they have
operations in many countries. The organisations have to make import and exports and have to
pay taxes like custom duty, excise duty, etc.
 Positive impact- The political conditions of UK helps Tesco in taking decisions like
investment and expansion.
 Negative impact- The wars affects the businesses and their functions. Tesco's business
can be affected by political factors.
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Economical Factors- There are factors which affects buying power of the customers like
inflation rates, direct taxes, interest rates, etc. The companies have to make strategies according
to these factors.
 Positive impact- Tesco is making profits in UK as the economic factors affecting their
business is favourable. They are able to generate employment opportunities for the
people.
 Negative impact- The cost of labour is high in UK because of its economic conditions. It
is affecting their revenue and profits (Hillary, 2017).
Social factors- Social environment has a great impact on the decisions of the
organisation. These factors include the buying habits, education, and the family structure of the
economy.
 Positive impact- Social factors help Tesco in increasing their customers and their
operations. These factors help them in making strategies.
 Negative impact- Tesco has to do CSR activities to help the societies which affects their
profits by they have to do it for the people.
Technological factors- The macro environmental factors are affected by the technology
as thy are dynamic and affects the decisions of the organisations. The companies can innovate
their bussiness processes with the technology and can increase their profits (Saleh and Watson,
2017).
 Positive impact- They help Tesco in innovating their products and services. The business
goal is to provide customer experience and it can be achieved which the help of
technology.
 Negative impact- Tesco has to involve cost when they are innovating their products
according to the competitors. They have to invest in promotions and make strategies for
it.
Environmental factors- The businesses are using the resources of the society and have
to make strategies as these resources are important. They need to make strategies so that it do not
affect the society and companies can increase their profits.
 Positive impact- The customers of Tesco feel that the products are of good quality and it
is safe to purchase from it. They consider that environment should be clean where the
businesses are operating.
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 Negative impact- The companies have to invest in making environment safe for the
customers. Tesco has to provide a customer experience by giving them good products.
Legal factors- The companies are concern about their brand and its privacy. The
competitors and other factors affects the businesses. They need to keep their business safe as
they need to make strategies for it.
 Positive impact- Tesco's businesses are effective because they have legal forces which
protects the operations of the businesses. They make them increasing their profits and
making strategies for the business (Saleh and Watson, 2017).
 Negative impact- They affect the profits of an organisation as it makes the business
processes complex and management has to make strategies for it.
TASK 4
P5 Explain internal and external analysis of organisation in order to identify strengths and
weaknesses.
The SWOT analysis involve external and internal environment situations which effects
the operations of business. SWOT analysis is the study of various factors which determine the
strengths, weaknesses, opportunities and threats which company need to consider in carrying out
its business operations. SWOT analysis of Tesco is as follow-
Strengths
 The company is dealing in wide range of products and services and evaluating market
trends and using latest industry trends which is providing competitive advantage to the
company. The company is studying and identifying the customer preferences and taste
and accordingly making changes in its product range.
 One of the greatest strength of company that it has positive and strong brand image in the
market which helps in attracting new customers towards them.
 The company is having unique range of products and services which is differentiating it
from other companies (Sodeyfi, 2016).
 TESCO is one of the leading company which provides almost all type of grocery, beauty
and fashionable clothing range .
 The company is able to provide and maintain high level of customer satisfaction by its
good quality products and services.
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Weaknesses
 The company is facing problem in credit rates as its credit rates are falling in market
which is leading to weakened the company's position.
 Along with this the company is involved in some legal problems due to which they are
paying penalties to government for the wrong practices and research.
Opportunities
 Technology is upgrading with this changing environment and company can take the
advantage of this advance technology by providing online shopping facilitates to the
customers (Saura, Palos-Sanchez and Correia, 2019).
 Tesco is already operating at large scale where as still there is scope for it to expand its
business and this can be done with help of merger and acquisition practices.
Threat
 One of the biggest threat which company is facing in marketplace is of competition level
that is day by day the competition level is increasing due to the establishment of new
companies. This factor is effecting the business of company as they are facing downfall
in its profitability margin.
 Where as, the changes and advancement in the government rules and regulation may
effect the functioning of the business.
P6 Interrelation of strength and weakness with the external macro factors.
Below is listed interrelation between strengths and weaknesses of macro environment:
Basis Political Social Economical
Strength Tesco adheres to all
the applicable laws,
rules and regulations
developed by the
government. It helps
them perform
effectively in a law
abiding manner.
Tesco derives its
resources from society
and believes in giving
them back in the form
of quality service,
opportunities and
development options.
Tesco maintains an
efficient cost labour
analysis to maximise
its profit in comparison
to competitors. Cost
optimisation helps
company in
maintaining its
sustainable growth
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rate.
Weakness Business policies
changes with the
change in government.
This instability affects
business operations
and can hamper
growth of company
(Katz and Green,
2018).
Customer choices are
changing and are
moving towards
healthy options. It
requires major shift in
functionality of Tesco.
Tesco ensures to
maintain all kinds of
necessary formalities
to keep business
growth sustainable.
But sometimes
uncertain business
conditions leaves
management of Tesco
in lurch.
Basis Technological Environmental Legal
Strength Tesco constantly
improves its
technology in order to
give its customer new
and enjoyable
experience of
associating with it. It
helps in forming
lasting relationship
with customers.
Tesco is well known to
ensure that it
maintains environment
friendly practises and
that it works in
harmony with
environmental
practices prescribed by
government.
Tesco follows all the
business, labour and
other legal practices
aplicable to it.
Weakness To give its customer a
continuous experience
of innovative
technologies, Tesco
has to regularly
undergo research and
development. It lays a
huge impact on
Some environmental
practices comes in
close conflict with the
desired business
operations for Tesco.
It has a negative
effective on company's
goodwill as well as
Few legal formalities
contradict with
business practices of
Tesco which
negatively affects its
business and working
environment.
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finance of business
(Beatty, Samuelson,
and Abril, 2018).
operations.
CONCLUSION
From the above study it has been concluded that business environment effects the overall
operations of the organisation in various ways. In this report, the three type of organisations that
is public, private and volunteer are identified along with their size, scope and legal structure
which every organisation follow differently that is structure of organisations differs. The SWOT
analysis is carried out in order to identify the various factors which has impact on the
performance of business. In addition to this, the interrelation of strengths and weaknesses is
conducted with external macro factors. It has been concluded that organisation is taking
measures in accordance with the current situations in order to achieve its desire goals and
objectives.
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REFERENCES
Books and Journals
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Eling, M. and Schaper, P., 2017. Under pressure: how the business environment affects
productivity and efficiency of European life insurance companies. European Journal of
Operational Research. 258(3). pp.1082-1094.
Huang-Horowitz, N.C., 2015. Public relations in the small business environment: Creating
identity and building reputation. Public Relations Review. 41(3). pp.345-353.
Prajogo, D.I. and Oke, A., 2016. Human capital, service innovation advantage, and business
performance. International Journal of Operations & Production Management.
Nguimkeu, P., 2016. Some effects of business environment on retail firms. Applied Economics.
48(18). pp.1647-1654.
Reeves, M., Levin, S. and Ueda, D., 2016. The biology of corporate survival: Natural ecosystems
hold surprising lessons for business. Harvard Business Review. 94(1-2). pp.46-56.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Saleh, A. and Watson, R., 2017. Business excellence in a volatile, uncertain, complex and
ambiguous environment (BEVUCA). The TQM Journal.
Sodeyfi, S., 2016. Review of literature on the nexus of financial leverage, product quality, &
business conditions. Journal of Economic & Management Perspectives. 10(2). pp.146-
150.
Saura, J.R., Palos-Sanchez, P.R. and Correia, M.B., 2019. Digital marketing strategies based on
the e-business model: Literature review and future directions. In Organizational
Transformation and Managing Innovation in the Fourth Industrial Revolution (pp. 86-
103). IGI Global.
Katz, J.A. and Green, R.P., 2018. Entrepreneurial small business. McGraw-Hill Education,.
Beatty, J.F., Samuelson, S.S. and Abril, P., 2018. Business law and the legal environment.
Cengage Learning.
Online
11 astonishing facts and figures that show how Tesco dominates Britain and the world. 2020.
[Online]. Available through:<https://www.businessinsider.in/finance/11-astonishing-
facts-and-figures-that-show-how-Tesco-dominates-Britain-and-the-world/articleshow/
47011002.cms>
Key facts and figures about the NHS. 2020. [Online]. Available
through:<https://www.kingsfund.org.uk/audio-video/key-facts-figures-nhs>
NGO profile: Oxfam International. 2020. [Online]. Available
through:<https://www.reutersevents.com/sustainability/stakeholder-engagement/ngo-
profile-oxfam-international>
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