Types and Purposes of Organizations and Their Legal Structure

This report discusses the types and purposes of organizations, along with their legal structures. It also explores the size and scope of different enterprises. The relationship between organizational functions is described, and the positive and negative impacts of macro environmental factors on businesses are determined. Finally, an internal and external analysis is conducted to identify the strengths and weaknesses of organizations.

Business and Business
Environment

Introduction......................................................................................................................................3
LO1..................................................................................................................................................3
P1. Explaining several types and the purposes of an organizations along with their legal
structure.......................................................................................................................................3
P2. Explaining size and the scope of different range of an enterprise.........................................4
LO2..................................................................................................................................................5
P3. Describing relationship between different types of organizational functions.......................5
LO3..................................................................................................................................................7
P4. Determining negative and the positive impacts of macro environmental factor on business
.....................................................................................................................................................7
LO4..................................................................................................................................................9
P5. Conducting an internal or external analysis for identifying the weaknesses and strengths. .9
P6. Explaining interrelationship of external factor with that of strengths and weaknesses......10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

Introduction
Business environment refers to the sum of an internal and an external analysis that affects
an entity from several ways whether it is in positive or negative manner. An overall growth of
the business depends of both of these factors. The present report is based on Tesco, a leading
retailer and a supermarket chain in UK dealing in grocery products. Furthermore, the report
depicts type and purpose of different types of companies and the relationship between various
functions of organization. The study also presents an external and internal analysis by way of
Pestle and SWOT in order to assess the factors that impacts organization behavior.
LO1.
P1. Explaining several types and the purposes of an organizations along with their legal structure
TESCO
Company type- It operates as private organization in UK and also in other countries across the
world.
Purpose- The main purpose of this organization is to gain more and more profit, market share
and revenues by way of facilitating products and the services to customers in interest of their
shareholders and the owners distributed in dividend form.
Legal structure- In accordance to company law UK, private company are usually been owned
by the group of an investors or the small family owned business. In such organization
shareholders are not seems as legally liable for a business assets and debts. It is regarded as spate
legal entity which means that owners and company are distinct identity (DeConinck, Moss and
Deconinck, 2018). Such companies are not listed within the share market and must uses an
abbreviation relating to Ltd at an end of the name.
NHS
Company type- This firm functions its business as public organization within the UK around the
globe.
Purpose- The primary objective of this type of an entity is to make welfare of the people with a
motive to contribute towards society or community (Kasemsap, 2018). Along with this the firm
relies on their respective stakeholder’s contribution in terms of capital.
Legal structure- As per UK Company, it is the company that sold the proportion of their own
shares to general public by way of IPO in order to raise funds and its name ends with Plc. It is
the corporation that is operated and owned by government from the use of public funds.

Red Cross
Company type- This Corporation acts as the voluntary organization which does not make profits
and work for welfare of the people within entire UK and in other countries as well.
Purpose- The main motive of such corporation is to helps people and contributes to the
community as a whole without being paid for facilitating services. There major purpose is to
protect and safeguard the people suffering from any kind disease and is need of blood.
Legal structure- Voluntary organizations are considered as the group of the people, enterprises
that are linked together for contributing to society. It is usually operated by an individual who
does not get any payment in exchange of the services provided by them. The basic and main
feature of such firm is that it does not need any legal form and is solely dependent on their
capital contributions by stakeholders (Alsaad, Mohamad and Ismail, 2017). They can make
themselves register as the volunteers in reaching towards their objectives and goals.
P2. Explaining size and the scope of different range of an enterprise
Basis TESCO NHS Red Cross
Vision To create better life of
the people by offering
different range of the
products at low prices
so that people can afford
to buy.
Vision is to enable
people in living
healthier and more of
independent lives by
way of higher quality
care to all the people in
community.
Building a strong
network of the
volunteers, partners and
the donors for always
helping people at times
of the need.
Mission The mission statement
of this company is seen
as providing wide range
of the grocery and
supermarket goods at
affordable prices to the
people.
Company’s mission is
to facilitate services and
the care to families who
are in need of it across
the globe.
It is the company that
aspires for turning the
compassion into the
action so that all the
people are prevented
from being affected by
the disaster around the
country and world.
Objectives Offering different types
of the products under
different items of the
good design and the
function with excellent
durability and the
quality at the suitable
and lower prices so that
large people could be
attracted for buying it.
The main objective of
NHS is to help in
keeping the people
healthy and in reducing
health inequalities
(Likoko and Kini,
2017). NHS would
respect confidentiality
of an individual patient
and in facilitating open
access to information
The foremost objective
of Red Cross is to
safeguarding people
from suffering any kind
of disease and availing
blood in times of
emergency.

about the services,
performance and the
treatment.
Size It is stated as the large
size private organization
that grocery products
and is seen as largest
chain of supermarket
within UK along with
providing home services
goods.
It is largest publicly
funded organization of
United Kingdom. Each
and every service
provides comprehensive
range of the health care
services, for people in
UK.
It is an international
humanitarian company
with approx 97 million
of the volunteers, staff
and members at a global
level that was been
founded in protecting
health and the human
life for ensuring respect
to all the human beings
and in preventing
human sufferings.
Scope The scope of the
company is seen as wide
as it has a largest
distribution network
having presence at 433
locations with large
number of the
employees (Aithal,
2016). It has revenue of
around Euro 41.3 billion
with number of
employees around
211000 in the year
2019.
Scope of this entity is
very wide with greater
number of employees
665000.
It is the type of firm that
is having a wider scope
with approx 17 million
volunteers in
Switzerland and large
number of volunteers
around the world.
LO2.
P3. Describing relationship between different types of organizational functions
Functions of different organization is interrelated with one another that involves sales,
marketing, human resources, operations, research & development, administration and IT
department. Marketing department is counted as bridge of the relationship with market for
satisfying customers. It is the process that seems as beneficial for both suppliers and the
customers. Marketing enables an organization like TESCO for delivering information regarding
customer specification and demand for the purpose of developing new types of products that
would support in developing quality life of the customers (Yang and Gabrielsson, 2017). It has
been seen that TESCO created competitive environment in the business through its effective
pricing strategy. An organization has developed the distribution system that allows customers a
convenient way for accessing service and the product. High demand of TESCO furniture allows
company to expand and grow its profit and operations from UK market. It has also been noticed

that communicating the messages of an entity assist in improving social behavior in the positive
way.
Finance function relates with expenditure or a usage of an organizational resources for
the different operation. It provides a valuable report on the financial performance and the
position relating to business plan. Company allocated funds to several parts of an organization in
a line with budget and in measuring use of the financial resources against the performance
budget. For the purpose of managing cash flows, an organization needs to ensure that adequate
funds are available for meeting the business requirements. Financial performance of each and
every department reviewed and monitored by an internal auditors (Saleem, 2017). Finance of
larger organization was been involved in an investment of the surplus funds. It has been analyzed
that company has also created treasury fund in looking after a business of an organization. Thus,
an entity gets a better returns and in reducing risk from an investment.
LO3.
P4. Determining negative and the positive impacts of macro environmental factor on business
Pestle analysis is the model that helps in scanning external environment factors that
includes political, economic, social, legal, and technological and environmental factors. It is the
tool that enables in assessing socio-economic factors that is the macroeconomic influences under
which an entity operates. It is the useful factor that helps in an overall development and the
growth of the company whereas learning from the past mistakes and the future prospects.
Political factor- It is the major factor that includes the issues that are to be handled on
such as taxation policies, trade restrictions, rules & regulation etc. It acts as the major factor for
the firm to be dealt as it may affects going concern or smooth functioning of an organization.
Political stability is counted as essential for a working of an entity (Prajogo, 2016). For example-
Because of constant financial instability within the world, government encouraged retailers in
creating jobs for the domestic population. As Tesco had played an essential part in respect of
creating an employment opportunities, it in turn increases demand for their products and
diversifies their workforce.
Economic factor- It is the factor that relates to change in currency exchange, disposable
income etc. It mainly depends upon lending rates, inflation rate and wages rate of the specific
country and economy. There are several trends that affect global market which affect MNC’s on
the larger part such as global economic recession that in turn affected a major part of the world
economies. Therefore, company must be aware of any of the changes in the policies like taxation
or other factors that could impact an accessibility of the finance. It has seen that, business of
retail sector organization is reflected as growing internationally but the company is still
dependent on market share in UK around 30%. For instance- Tesco adopted two main strategies
that include diversification and internationalization over the years for gaining success. Moreover,

because of the decline in level of disposable and household income resulted, Tesco has opted for
shifting it’s emphasize towards advertising its own value brands instead of luxurious items.
Social factor- With evolving lifestyle, trends and preferences of the customer changes as
in UK people have moved towards bulk shopping rather than one-stop shopping. Thus, Tesco
increased sale of non-food items because the kind of products and the services that are denuded
by the consumers is mainly influenced by their attitudes and beliefs that in turn is induced by the
social conditioning (Pestle analysis of Tesco, 2017). As the customers now a day’s becoming
more and more aware of the health issues because of their approach regarding changing food
consistently, Tesco seeks for adapting to such changes by way of accommodating demand for an
organic goods.
Technological factor- Advancements in the technology bought up several new
opportunities for the Tesco. The two of distinct ones involves introduction and the development
of an online shopping with the facilities for the home delivery. The company has crested self
service check out points for the convenience and ease of the customers that in turn reduced the
labor costs. Moreover, Tesco invested significant amount in the projects that are energy efficient
in order to fulfill long term objectives for reducing carbon footprint.
Legal factor- Legislations and the government policies directly has an impact on the
performance of the firm. For instance- In the year 2004, FRC suggested the code of practice that
must be introduced which banned many of the current practices like changing prices without the
demand payments and notice from the suppliers. In order facilitate such policies, Tesco
facilitated customer price reduction on a fuel that they buy, as per the amount spend on grocery
stores. Moreover, there are various promotional offers where the prices resulted as lower.
Environmental factor- With an increase pressure on the companies for addressing
environmental issues and in adopting sustainable ways of conducting an operation that benefits
directly to the society, firm is deemed as clearly committed in reducing carbon footprint just by
50% till 2020. Also the company is looking for minimizing waste produce within their stores by
way of increasing the social conscience in the customers.
LO4.
P5. Conducting an internal or external analysis for identifying the weaknesses and strengths
SWOT analysis
Strengths- Tesco is found as the leading grocery store or retailer and a number one
supermarket in UK. It is having higher level of sales and revenue in comparison to the other
chain of supermarket in a Great Britain. It contains a larger market share as among the four
biggest supermarkets, company dominates grocery retail supermarket of the Great Britain with
around 27% of the market share. Recently, Tesco had become as most popular supermarket in an

Ireland. The company is diversified on a geographical basis and has a well known presence with
approx 6800 outlets in the 14 countries (Gorla, Chiravuri and Chinta, 2017). Apart from the
North America and Europe, it is having huge share in the Asian markets. The number of the
stores of Tesco is seen as growing as from 3751 outlets in the year 2008, now company operates
around 6966 grocery retail stores globally. The revenue of the company is increasing almost
every year due to the addition of the new stores in its respective operational chain. Tesco
launched several forms of the stores as its diversified division of the stores involves Tesco
Metro, Tesco Express, Tesco superstores etc. Diversification strategy of Tesco has proven as
quite successful for an enterprise. It comprises of the clothing range, mobile businesses, home
ware goods, music downloads, telecom services around the world. Because of good commercial
performance, an entity had achieved for several awards. These involves British favorite
supermarket, Grocers label food etc. Moreover, Tesco make use of technology in a best and
optimum way for enhancing a shopping experience of their customers. It introduced barcode
system for counting the products automatically. It has advanced facility in e-commerce and
mobile payment mode through app. In addition to this, with simplified model, reduced incurring
cost and effective policies framed regarding waste management policies created an efficient and
reliable network of supply chain. Tesco bears a profitable relationship along with the suppliers.
Weaknesses- Tesco resulted with the failed operations in Japan and United States in the
year 2012 in terms of its export operations that forced the company in closing down its stores.
The firm was been charged with the fines and penalties because of the false declaration and the
misrepresentation of the profits in 2017. In October 2018, share price of the Tesco falls more
than the 9% because of reduction in the operating profits. It proved as worst experience or
performance for a company due to Brexit Referendum. Due to high debts and the credit card
facility, financial profits of Tesco are affected profoundly (SWOT analysis of Tesco, 2018).
Although Tesco is counted as a price leader in UK market, its respective low-cost strategy could
result to reduced amount of the profit margins. Some of its stores are not been performing very
well in the certain countries and as in 2018, firm switched up club-card scheme without any prior
notice to the customers, it had faced massive backlash from customer side.
Opportunities- Recently, Tesco introduced Jacks, new type of discount stores that
showed a significant growth. Company is having opportunity for growing its business and
successfully competing as the low cost competitor with Lidl & Aldi. It could seek for developing
strategic partnerships with the reputed organizations that offers an excellent kind of opportunity
for Tesco. It enables Tesco in offering more and more products for attracting larger customers.
There exist a great opportunity for creating a joint venture in regions where the stores of Tesco
are underperforming. Local companies could facilitate a profound knowledge of the market that
could help in improving a performance in such type of regions (Lim, 2017). Tesco could avail an
opportunity by upgrading or growing its business of online shopping and home delivery services.
Though the company is having its stores in many of the developing countries, however,

expanding its operations in emerging countries such as South Korea, Indonesia and Turkey could
be a profitable opportunity for an enterprise.
Threats- Tesco faced a huge threat from Media at the time when it had launched its
Christmas ad in the year 2017. Due to Brexit, trade deals and the cost related matters posed a
huge threat for a Tesco. With rising performance and the growth, market position of the Tesco
could be threatened. With rising performance and the growth of its competitors, an overall
market share of the company is highly affected (Nilsson and Robinson, 2018). Government rules,
legal laws, credit crunches, economic upheavals and tax matters could impact an operational
performance and the efficiency of the Tesco stores in the critical regions.
P6. Explaining interrelationship of external factor with that of strengths and weaknesses
Pestle and SWOT analysis are seen as closely related techniques to the business as the
pestle is used for making external analysis and SWOT for both internal and an external analysis.
By reviewing factors through employing Pestle helps in assessing core competencies in terms of
strength and internal deficiencies against competitors with respect to weaknesses. Strengths and
the weaknesses are directly linked with the external influences in some of the cases where
organization might be impacted by that of outside factors (Cepel and et.al., 2018). An entity is
not been able in determining several factors which affects decision making of management in a
direct or an indirect manner. Therefore, such macro factors could be assessed with helps of
external factor analysis. Proper analysis of strengths and weaknesses provides a different type of
achievement to business and both inter-relates with each other and this might increase risk of an
external factor in the firm.
CONCLUSION
By summing up the above report, it has represented that current trend of the market and
several ways in determining internal and external influences is necessary for the firm to achieve
success in the market. It help the business in knowing its strengths and weaknesses so that it
could adopt and develop strategies accordingly which in turn helps in attaining goals effectively
and efficiently.

REFERENCES
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Online
Pestle analysis of Tesco. 2017. [Online]. Available through :< https://pestleanalysis.com/pestle-
analysis-tesco/>
SWOT analysis of Tesco. 2018. [Online]. Available through :< https://bstrategyhub.com/tesco-
swot-analysis-2019swot-analysis-of-tesco/>