Business and the Business Environment

This report is based on Asda. It is a British Company which deals in groceries and other consumer products. In this assignment, specific focus will be made on explanation of types, size and scope of firms, demonstration of interrelationship of functions.

Business and the
Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1: Types and purpose of organizations and legal structures......................................................1
P2: Size and scope of organizations.............................................................................................2
TASK 2............................................................................................................................................3
P3: Interrelationship between various functions..........................................................................3
TASK 3............................................................................................................................................5
P4: Impact of macro environment................................................................................................5
TASK 4............................................................................................................................................6
P5: Internal and External analysis................................................................................................6
P6: Interrelation of strengths and weaknesses with macro factors..............................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Business refers to different types of trading activities which are conducted within an
organization. These activities are aimed at earning higher level of profits in the future time
period. Business Environment is a combination of different types of external as well as internal
factors which create an influence on the overall level of operations (Abbas and Ul Hassan, 2017).
This report is based on Asda. It is a British Company which deals in groceries and other
consumer products. In this assignment, specific focus will be made on explanation of types, size
and scope of firms, demonstration of interrelationship of functions. Additionally, analysis of use
of examples for assessment of impact of environment on business operations and assessment of
strengths and weaknesses of business will be made as a part of this project.
TASK 1
P1: Types and purpose of organizations and legal structures
There are different types of firms which are present in the business environment of the
organizations. These are explained as follows-
Public sector organizations- These companies are owned fully by the government or
there is a partial share of government in these organizations (Akhtar and Sushil, 2018). They
provide different types of products and services to the customers in the market. They act in the
interest of the customers and provide value to the society. An example of these organizations is
Channel Four Television Corporation. It is a media company which is owned by the government.
Purpose- The purpose of these organizations is to ensure that the public is served in an
effective manner. They aim to ensure that they provide goods and services at reasonable rates to
the customers. Channel Four Television Corporation aims to provide entertainment and
information related services to the people so that they are able to ensure that they can stay
informed and updated about what is happening in the world.
Legal structure- In Channel Four Television Corporation, the legal structure of a
company is followed. Thus the rules and regulations of a company are followed by it and are
applicable on it. It maintains its legal structure by ensuring that these laws are followed in it. It
also needs to maintain its accounts according to the requirements of the law related to a
company.
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Private sector organizations- These firms are owned by the private sector and aim to
earn higher-level of profits in the future time period (Alaloul, Liew and Zawawi, 2017). They
provide goods and services to the customers in the market. For example- Asda is a private sector
company which deals in the supermarket sector.
Purpose- In these firms, the aim is to ensure that profits are earned by providing products
and services to the customers. The purpose of Asda is to provide products related to daily use to
them and the different types of services to help them in an effective manner.
Legal structure- The legal structure of Asda is of a company. Therefore here, it is
maintained by ensuring that the laws related to the companies are followed by its management
and the decisions are taken effectively in that manner. It is also required to ensure that the
obligations for it as per the laws for the companies are followed by it.
Voluntary sector organizations- These firms provide voluntary services to the various
people (Calabrese and et.al., 2018). The main aim of these companies is not to earn profits but to
ensure that they are able to serve the society in an effective manner. An example of these
organizations is British Heart Foundation. It provides funding services for healthcare facilities
related to heart diseases.
Purpose- In these companies, the aim is to provide services to the society without aiming
to earn profits. Thus the purpose of British Heart Foundation is to make sure that they are able to
provide appropriate funds which will help in serving people facing heart diseases.
Legal structure- In British Heart Foundation the legal structure of a Registered Charity
Organization is followed. Thus the rules and regulations for charity organizations are applicable
on it. Therefore here the Board of Trustees ensure that full compliance is done with these laws in
an effective manner to operate properly.
P2: Size and scope of organizations
There are various types of sizes which can be taken by the organizations for the purpose
of conducting their business activities (Daniluk, 2016). It is explained as follows-
Channel Four Television Corporation-
Size- It is a large-sized organization. It has various sources of funds which can be used by
it and also it has a large number of employees under it. Its large size ensures that it is able to use
its funds in a proper manner to achieve its various goals and objectives effectively and
efficiently.
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Scope- There are a range of products and services which are offered by the company
such as-
 It provides entertainment services to the people in the country by telecasting the different
types of TV shows.
 It provides the required information to the people by providing them with news and other
updates.
Asda-
Size- It is a large-sized organizations. It has a network of various stores spanning across
U.K. and all over the world in other countries. Its size ensures that it can handle its operations in
an effective manner.
Scope- The scope of the company in the terms of products and services is as follows-
 It provides the daily use products to the customers such as groceries and other goods
which they require for their day-to-day use.
 It provides home-delivery and other services to the customers so that products and
services are provided to them as per their needs and requirements.
British Heart Foundation-
Size- It is a large-sized organization which deals in voluntary sector. Thus it aims to
provide its services to the services without aiming to earn higher-level profits.
Scope- The scope of the firm is as follows-
 It offers various voluntary services in the society as per the needs and requirements of the
people.
 It helps those people who require these services and does not expects that it will earn
profits for providing them.
TASK 2
P3: Interrelationship between various functions
In an organization there are various types of functions such as Production, Finance, HR,
Sales and Marketing (Fabuš, 2017). These interrelationship between functions is explained as
follows-
Production with Finance- An organization is required to produce certain goods and
provide various services to the customers in the market (Gaganis, Pasiouras and Voulgari, 2019).
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Thus its production system is required to make sure that the various types of products are
produced effectively. Its relationship with Finance is due to the fact that production of goods
requires funds so that the right goods are provided to the customers. Thus in Asda the production
department requires that it is provided adequate help in the form of the required funds which
helps them to be able to carry out their activities in an effective manner. For the achievement of
organizational objectives it is required that a good coordination is there between the two which
will also be helpful in setting up of an appropriate structure.
Finance with Sales- Finance is an important function for the organizations because it
helps in providing the required funds for the different types of needs and requirements of the
firms (Gavurova and et.al., 2017). It is interrelated with Sales because funds are required to be
provided to ensure that proper revenues are generated in an effective manner. Thus in Asda this
sort of interrelationship is quite essential so that its managers are able to take appropriate
decisions for the future time period because by providing the required funds for making sales the
management will be able to ensure that they can effectively enhance their revenues. It is required
in achieving the organizational objectives because by setting the standards for sales the company
will be able to target enhancement of revenues. Also in a good organizational structure this
cooperation and coordination is quite essential.
HR with Marketing- HR is a function which helps by providing the required employees
as per the different needs and requirements of the organizations (Kim, 2016). Its interrelationship
with Marketing is important because for it there is a requirement of efficient workers who can
handle the task of promoting goods and services of the company. Therefore the management of
Asda is required to ensure that its HR department provides good employees to the Marketing
department which will help them to achieve the goals and objectives effectively and efficiently.
For the achievement of organizational objectives good employees are needed which are provided
by the HR department. Also in an organizational structure the presence of cooperation and
coordination between these two functions is desired.
Production with Marketing- Production department needs to coordinate and cooperate
with Marketing because the produced goods are required to be marketed and it has to be ensured
that they can reach the customers in an effective manner (Kozubikova, Homolka and Kristalas,
2017). Thus in Asda, the requirement is to make sure that the production department is able to
cooperate and coordinate effectively with the marketing department allowing the goods and
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services to reach the customers. For the purpose of achievement of organizational goals this is
required. Also in an organizational structure this is needed so that the desired structure can be
maintained in an effective manner without problems and issues.
TASK 3
P4: Impact of macro environment
Macro environment consists of various types of factors which can create an overall
impact on the operations of the organization (Kozubikova and et.al., 2019). For analysing it there
is a requirement to use PESTEL analysis. The analysis in the context of Asda is as follows-
Political factors- For an organization, the political situations which are prevailing within
the business environment create quite an impact. Thus the firms are required to do adjustments
according to them for ensuring that they are able to sustain in the market. In the context of Asda,
these factors are important because the political climate in U.K. Is highly uncertain and can
change anytime and thus this can create an influence on its profits.
 Positive impact- If the government policy is in favour of company then it can lead
towards creation of a positive impact on the operations of the company.
 Negative impact- Fluctuating political stability in a country can lead to creation of an
impact on firm because it can lead to a reduction in its profits.
Economic factors- These factors are quite important for an organization because the
economic conditions can change anytime (Niemimaa and et.al., 2019). Thus in Asda there is a
requirement that they are considered so that adjustment can be made to the dynamic situations in
the business environment. U.K. is a developed country and thus there is a good economic growth
there which can result in impact on the overall profits.
 Positive impact- Strong economic growth can help the firm to be able to achieve higher
profitability in an effective manner.
 Negative impact- Increase in inflation rates can create an impact on the operations of the
organization and can reduce its profits.
Social factors- Here, there is an influence of those factors which are important in the
society. In the context of Asda, they are important because the company is required to make sure
that it manages its operations according to them in order to sustain in the market.
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 Positive impact- Lifestyle attitudes of the customers can positively impact the firm as it
can provide products to them by meeting their requirements.
 Negative impact- Cultural barriers in a country can negatively impact the company
because it may affect the sales of some of its products.
Technological factors- A company has to consider the technology which is prevalent in
the market because there are dynamic changes in it in the market. Thus the requirement from the
managers of Asda is to make sure that they stay up-to-date with the technology which will allow
them to be able to achieve their goals and objectives.
 Positive impact- If the organization is able to bring innovation in its products and
services then it will allow it to be able to bring the required effectiveness in its
profitability level by enhancing it.
 Negative impact- If the firm is not able to adjust according to the technological change
then it can create issues for it because it will impact the level of profits which it is earning
in the profits by reducing it.
Environmental factors- Nowadays the customers are quite conscious about the
environment. Thus it is required from the management of Asda that they provide products which
are environment-friendly in nature.
 Positive impact- If the environmental policies of the government are in the favour of
company then it will lead towards a positive impact on its profitability level.
 Negative impact- Strict environmental laws made by the government can create an
impact on the operations of organization because it can reduce its level of profits.
Legal factors- A company needs to respect the legal rules and regulations of the country
in which it is operating. Thus it is required from Asda that it is able to consider the laws of the
different countries in which it manages its operations.
 Positive impact- If the organization is able to adjust according to the rules and
regulations of the countries then it will have a positive impact on the overall operations.
 Negative impact- If the firm is not able to adjust itself according to the laws of different
countries then it can create a negative impact on the operations.
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TASK 4
P5: Internal and External analysis
Internal Analysis
It is an examines of any organisation internal environment in order to assess its
resources, competencies and competitive advantages (Rialp-Criado and Komochkova, 2017).
This is a review of an company's strength and weaknesses that focuses on those factors within its
domain. In the context of Asda, while compare to other competitors inbound logistics,
organisation is among the cheapest retailers in the UK because company is able to sell products
at low prices and be able to make profits. In additional, incentives in form of financial rewards or
gift items provide motivation to workers.
External Analysis
This is the examination by a company of the factors outside the company, such as
competition, economy, political factor and social factors (Singh and Agrawal, 2017). In the
context ASDA, Political factor in the European Union has presented good opportunity for
company to expand into European market. Along with this Economical factor are concerned
because these factors played a grate role in success of Asda since in UK economy was
experiencing difficulties as like the case in 2008 when the economy was under recession,
majority of peoples lost their jobs which means they had less spending power, at that time Asda
as the company experienced increased revenues because customers who normally did their
shopping from expensive stores that time products with cheaper rate were sold by Asda.
SWOT Analysis of Asda-
Strengths Weaknesses
 Asda is the third largest retailer in UK.
As of December 2019, organisation has
14.8% market share and has over 630
stores. Company serves more than 19
million customers each week and 98%
of the UK homes are served by its
online platform. It is famous for its
strong management.
 The organisation has few global
presence as compared to its
competitors. This is a major weakness
for company Business.
 The company's marketing strategies
leave a lot to be desired as it is behind
its competitors in adjusting quickly to
the new trends which keep emerging in
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 The organization provides various
brands and services for the customers.
Various services are Asda Smart Price,
Chose By you, George Clothings, Asda
Mobile and Asda Money.
a dynamic environment.
Opportunity Threats
 The company has an opportunity to
expand to other countries in the world
and thus in this way can achieve
higher-level of profits.
 For the company, innovation offers an
opportunity through which it can
maximize its level of profits. This is so
because through it the organization can
identify the new needs and
requirements of customers and fulfil
them to enhance profitability.
 Rising competition level creates a
threat for the organization as it can lead
towards decrease in the level of profits.
 Increase in the tax rates by the
government can impact the firm as it
can increase the overall expenses
incurred thereby decreasing the profits.
P6: Interrelation of strengths and weaknesses with macro factors
In an organization, the strengths and weaknesses can interrelate with the macro factors
present in the business environment (Virglerova, Dobeš and Vojtovič, 2016). The analysis in the
context of Asda is as follows-
Strengths Weaknesses Interrelationship with macro
factors
 Asda has a
wide presence
in the market
of U.K. and
various other
countries. This
 In terms of global presence,
the company is still behind
its competitors because it
needs to expand to other
countries.
 Due to the dynamic
political conditions which
prevail in the market the
marketing strategies of the
organization are not as
effective and therefore this
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is a strength for
it as it allows
the
organization to
be able to
target more
customers.
 There is a wide
range of
products as
well as services
which are
provided by the
company to the
customers.
 The marketing strategies of
the organization are not as
effective as compared to
the competitors in the
market.
creates an impact on the
operations of the firm.
 The economic conditions in
U.K. favour the
organization and thus due
to it is able to offer
different types of goods
and services to the various
customers which are
present in the market.
 By making use of the
advanced technology which
is available within the
market the company is able
to ensure its wide presence
in the market of U.K.
 Due to stringent entry
requirements which are
prevalent in certain
countries the company has
not been able to expand its
footprint in some countries
in the world.
CONCLUSION
From the above report, it can be concluded that business includes different activities
which are carried out by firms. Business environment includes factors which create an influence
on the overall operations. Various types of organizations have different purposes. These firms
are present in different sizes and have different scope. In a company, there can be an
interrelationship between the various functions. Through PESTEL analysis, the impact of macro
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environment on the operations and profitability of the firm can be assessed. Internal and external
analysis can be conducted for assessing the situation of the company. The strengths and
weaknesses have a relation with the different macro factors which are present in the business
environment.
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REFERENCES
Books and Journals:
Abbas, M. W. and Ul Hassan, M., 2017. Moderating impact of environmental turbulence on
business innovation and business performance. Pakistan Journal of Commerce and
Social Sciences (PJCSS). 11(2). pp.576-596.
Akhtar, M. and Sushil, S., 2018. Strategic performance management system in uncertain
business environment. Business Process Management Journal.
Alaloul, W. S., Liew, M. S. and Zawawi, N. A. W., 2017, December. Communication,
coordination and cooperation in construction projects: business environment and human
behaviours. In IOP Conference Series: Materials Science and Engineering (Vol. 291,
No. 1, p. 012003). IOP Publishing.
Calabrese, M. and et.al., 2018. From mechanical to cognitive view: The changes of decision
making in business environment. In Social Dynamics in a Systems Perspective (pp. 223-
240). Springer, Cham.
Daniluk, A., 2016. Conditions of cooperation between enterprises and business environment
institutions using the Podlasie region as an example. Engineering Management in
Production and Services. 8(4). pp.18-27.
Fabuš, M., 2017. Current development of business environment in Slovakia and Czech Republic.
Gaganis, C., Pasiouras, F. and Voulgari, F., 2019. Culture, business environment and SMEs'
profitability: Evidence from European Countries. Economic Modelling. 78. pp.275-292.
Gavurova, B. and et.al., 2017. Predictive potential and risks of selected bankruptcy prediction
models in the Slovak business environment. Journal of Business Economics and
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Kim, J., 2016. The platform business model and business ecosystem: Quality management and
revenue structures. European Planning Studies. 24(12). pp.2113-2132.
Kozubikova, L., Homolka, L. and Kristalas, D., 2017. The effect of business environment and
entrepreneurs’ gender on perception of financial risk in the smes sector. Journal of
Competitiveness.
Kozubikova, L. and et.al., 2019. The impact of political factors' perception on suitability of
international business environment: the case of startups. Economics & Sociology.
Niemimaa, M. and et.al., 2019. Business continuity of business models: Evaluating the resilience
of business models for contingencies. International Journal of Information
Management. 49. pp.208-216.
Rialp-Criado, A. and Komochkova, K., 2017. Innovation strategy and export intensity of
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Business & Management. 16(3). pp.158-186.
Singh, V. and Agrawal, A., 2017. Impact of business environment on balancing innovation
process in Indian SMEs. International Journal of Business Innovation and Research.
12(2). pp.224-239.
Virglerova, Z., Dobeš, K. and Vojtovič, S., 2016. The perception of the state’s influence on its
business environment in the SMEs from Czech Republic. Administratie si Management
Public.
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