Business Environment Assignment : Asda

Business and the Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different types of organisations and purposes.......................................................................1
P2. Size and scope of the organisations.......................................................................................2
TASK 2............................................................................................................................................4
P3. Relationship between Organisation structures and functions................................................4
TASK 3............................................................................................................................................7
P4 Impacts of the macro environment........................................................................................7
TASK 4..........................................................................................................................................10
P5. Internal and external analysis..............................................................................................10
P6. Internal strengths and weaknesses their interrelationship with external macro factors ......13
CONCLUSION..............................................................................................................................15
REFERENCES .............................................................................................................................16

INTRODUCTION
Business is termed as enterprising entity which is engaged in professional, commercial,
trading as well as industrial activities with the aim to provide products to end customers (Becker,
2018). Activities are performed to facilitate trade and earn maximum revenues. Business
environment is a combination of various external along with internal forces which influences
ability of an organisation to build as well as maintain successful relationships with customers. To
understand the business and business environment, Asda is selected. It was established by Peter,
Sir Noel Stockdale along with Fred Asquith in the year 1949. It has its headquarters located at
West Yorkshire, England. Chosen entity performs its business operations in retail sector. The
report covers topics related to different types, size, scope, organisation structures and functions
related to overall organisation mission and objectives. It further includes PESTEL model, SWOT
analysis, Porter’s five forces analysis for determining the influence on decision making of retail
industry.
TASK 1
P1. Different types of organisations and purposes.
Organisation is a social unit which is constructed or established for the purpose of
performing operations to satisfy market requirements and earn maximum profits. All
organisations do not work to earn profits but there are some entities which focuses on social
welfare and charities (Charter, 2017). Different types of organisations includes public, private,
voluntary and legal structures.
Private organisation: A private organisation is one which performs various operations
with the motive to achieve more profits. these are those entities whose main reason for existence
is to earn maximum profits. The main purpose of existence of private organisation is to earn
maximum profits and expanding product line in international market. Greenergy, Stemcor,
Angilian etc. are examples of such organisations (What Is A For-Profit Organization? Definition
And Examples, 2019). These are also known as profit organisation and performs business
operations with the purpose of satisfying needs, demands and requirements of customers and
earn profits. Asda is a private company and its purpose is to supply goods and services such as
groceries, clothing, technological products, financial services and so on through retail outlets,
online and stores to customers. Legal structure of private organisation includes sole trader,
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partnership firms, public limited and private limited company. Asda follows private limited
business structure.
Public organisation: Public organisations are those enterprises which exists to make
money for social welfares and to serve public (Olszak, 2016). This organisations works with the
purpose of providing services for the welfare of general public (Côrte-Real, Oliveira and Ruivo,
2017). Examples of such types of organisation are Brighton & Hove City Council, Crown
Prosecution Service, British Army and so on. The another name is Not for profit organisations
and they exists with the business purpose of delivering services for the welfare of public. BBC is
a public organisation and its purpose is to provide relevant information for public welfare. Legal
structure of public sector includes general government and public corporations. From both of
them BBC follow public corporation structure.
Voluntary organisation: Voluntary organisations are also known as non governmental
organisation (Pearson 2017). which are associated with social welfare along with social
development. The main purpose of voluntary organisation is to raise funds in order to cater
essential services to public and society for development. Examples of such entities are
Community Interest company, Royal Charter etc. Also known as Non governmental organisation
performs business operations with the purpose of developing projects and to promote specific
causes. Oxfam is a voluntary organisation and its purpose is to empower community members to
tackle poverty with the help of providing social services. Legal structure of voluntary sector
includes trust, unincorporated association, company limited by guarantee, charitable incorporated
organisation. From all of them Oxfam is following trust legal structure.
P2. Size and scope of the organisations
Difference between micro, small, medium-size and large enterprises.
Illustration 1: Business size, 2018
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(Source: Business Size, 2018)
Basis Micro enterprise Small enterprise Medium sized
enterprise
Large enterprise
Definition The enterprise
which performs
business
operations on
very small scale
and employs only
9 members and
having turnover
of £2 million
(Falkner, 2017).
The enterprise
which employs
small number of
workforce and do
not have high
sales volume.
Such enterprise
employs less than
49 workers.
Turnover is
around £590
billion.
The entity which
employs less than
249 workers to
perform business
operations and
turnover is around
£595 billion.
The enterprise
which provides
employment to at
above 250 people
at work place and
their annual
turnover is around
£1868 billion
(Hillary, 2017).
Market share These enterprises
captures market
share 96%.
Market share of
small enterprises
is very small that
is 4%.
These enterprises
captures market
share of 1% only.
Such enterprises
captures larger
proportion of
market by
investing in
multiple areas and
fields.
Profit These enterprises
can no or very
minimum profits.
Profit earned by
such enterprises
are scare.
Enterprises which
falls under this
category earns
limited profits.
These enterprises
earns profits on
large scale.
Growth In micro
enterprises
growth is very
slow due to their
Growth of small
enterprises is
moderate because
government
Growth of
medium sized
organisations is
faster than small
Growth of large
enterprises is very
high in UK due to
their large size
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small size. There
are around 5.4
million micro
businesses in UK
(Growth of micro
enterprises,
2018).
provides support
to them. It
accounts for 52%
of revenues in
private sector
which shows that
this sector is
growing (Growth
of small
enterprises.
2018).
and micro
enterprises
because of its big
size as compare
to both of them.
The growth of
this sector in year
2018 was 99.9%
(Growth of
medium sized
enterprises,
2018).
and captured
market share.
There are more
than 800 million
large enterprises
in UK which
shows its huge
growth.
Sustainability Micro
organisations
such as EUREKA
Eurostars have
chances to sustain
in market as they
capture major
proportion of
market share.
Various measures
like promotional
strategies and
pricing strategies
are adopted to by
small enterprise
such as Talent
Plus in order to
increase the
sustainability of
these enterprises.
The growth
review of such
enterprises like
Captify and John
Good Shipping
shows that they
have chances to
increase
sustainability as
their own.
Large size
enterprises like
Asda competes
and builds
competitive
position to sustain
in the
international
market.
TASK 2
P3. Relationship between Organisation structures and functions
Organisation structures defines the manner organisational activities along with tasks
allocation is done for the purpose of attaining objectives. Depending upon the size, scope,
mission and objectives, structure of any firm is framed (Hitt and Xu, 2016). Different kinds of
structures relating to size and scope of operations are as defined:
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Bureaucratic structure: Such structure is a kind of pyramid command structure. Under
this, work is organised and formal procedures are followed. Decision making is in the hands of
top level management have they exercise tight control on daily operations. This structure is
applicable on small size organisations such as Airdri which accomplish complex tasks using
such structure.
Strategic business units structure: Also termed as SBU and are fully functioned units
which has their own objectives, mission, vision and directions. It operates its separate unit with
out considering others and at the same time an important function of a company. It focuses on
marketing plans, campaigning, profit making as well as analysing competition and reports its
operational status to headquarters. It is adopted by large size of enterprises such as Asda to
determine financial processes, marketing activities, size of production, research activities and
many more. Asda reports its operational status to headquarters which are located at Leeds,
United Kingdom.
Functional organisational structure: In such structure, activities are divided among
different departments or functions on the basis of skills, knowledge, interest of work force.
Various activities are performed in all enterprises to attain objectives and work is also divided
accordingly. It is generally followed in all types of organisations to perform work effectively.
Asda follows functional organisational structure where different functions performs their tasks in
difgferent manner (Asda Organisational Structure. 2016).
Matrix structure: Under this organisational structure, authority responsibility
relationships are set on the basis of matrix or grid where dual reporting system is applicable. It is
also adopted by all types of businesses for the purpose of faster decision making, using different
techniques, employee specialisation as well as resolving conflicts among different departments at
work place.
Complexities of transnational, international and global organisation structures
Transnational organisation: These organisations invests more in foreign operations,
catering substantial facilities and top perform activities of business in more than one country.
Such organisations adopts strategic business unit organisation structure to focus on complex
activities related to analysing competition, research activities, preparing market plan, human
resource management, campaigning and many more.
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International organisations: Business activities of international organisations are
performed within home country by importing along with exporting products or services in
international market place (Olszak, 2016). Matrix organisational structure is adopted by such
entities which the objective of faster decision making, functional arrangements, specialising
employees in different areas.. coordinating activities with distinct departments is a complex
activity as various independent groups with different behaviour of people are engaged in this
structure.
Global organisations: Such entities performs operations in multiple countries. The
managers of this type of organisation figure outs particular culture to perform tasks for
achieving profitable results. Global organisation adopts functional level structure for the purpose
of grouping activities into functions related to finance, human resource management, marketing
and operations. To group tasks as per the functions is a complex procedure within such
organisational structure.
Functions related to overall organisation mission and objectives
Organisational function involves set of activities which are executed with in different
areas of an organisation. Common functions are operations, human resource management,
marketing, customer services, finance and so on. All such functions are performed in efficient as
well as effective manner to attain objectives and mission of company. These are performed with
proper planning, coordination according to achieve overall organisational mission and objectives.
Role of each functions at Asda are as follows:
Operation function related with other functions: Operation involves production of
products or services by managing activities. It is concerned with designing, supervising and
redesigning management operations with the aim of smooth flow of production activities by
providing cost effective and efficient products to its customers and retain them for longer time
period. Managers manages planed operational strategies, performance improvements to perform
work smoothly to achieve overall organisation mission and objectives (Pearson, 2017).
Operation function of Asda coordinates its activities with marketing function by getting
information about demand and supply of products in the competitive market. It takes funds from
finance function in order to carry out day to day tasks in effective manner.
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Marketing function related with other functions: Marketing function is related to
promoting brand image of selected company. Activities are planned and implemented such as
coordination, exchanging relationships, maximising customer awareness for maximising profits.
It helps in building effective customer relationships as well as image by using digital technology
with the objective of taking decisions related to overall organisation mission and objectives.
Marketing function establishes its relationship with operation function as well as finance
function. They provide essential information to operation function of Asda and at the same time
takes statistics or performance report from finance function in order to analyse financial position
of the company.
Finance function related with other functions: To successfully manage monetary
transactions of chosen entity finance function is performed. Activities such as planning,
accounting, auditing, controlling capital are executed by this function. Decisions related to
investment decisions, dividend decisions along with financial decisions are taken to raise
borrowing sources and managing risks related to overall organisation mission and objectives.
Finance function provides funds to marketing as well as operation function and establishes
effective relationship with both functions in order to exchange opinions related to some decisions
or problems.
Thus, organisational functions needs to be performed in effective as well as efficient
manner in order to execute plans into actions in relation to overall organisation mission and
objectives.
TASK 3
P4 Impacts of the macro environment.
PESTEL model is a tool which is used by marketers for the purpose of analysing as well
as monitoring macro environment factors which impacts organisational profitability. PESTLE
analysis of UK retail sector is as follows:
Political factors: Political factors includes activities related to administrative practices as
well as government policies which leaves impacts on smooth working of any business. Factors
related to regulatory shifts, government policies, taxation systems impacts the retail sector.
Changing political government along with situations disrupts sales and supply chain of the
selected industry (Rezaee, 2016). For example, political instability and taxation policies leads to
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create trust issues between various organisations to perform operations and contribute towards
development of retail sector. Increased taxation by UK government impacts the Asda managers
to keep their prices low of various products which leads to decrease in profitability.
Positive impact: Herein, positive impact of political factor is that government are
providing various subsidiaries like cash subsidies as well as tax concessions and relaxation that
lead to create and trust with the government and economy so that it can work towards betterment
of an organisation.
Negative impact: If political parties makes sudden changes in their systems and
implement new provisions then managers of Asda also have to change their strategies which will
hamper operations of the entity and impacts in negative manner on the performance of Asda.
ASDA manger are suffering of high rate of income tax which is impacting the organisation to
lower down its price.
Economic factors: Economic factors includes government policies, labour costs,
taxation management, interest rates, economic laws, wages and so on which influences trade and
business in the prevailing sector. They do not have direct relation with organisational activities
but influences value of investments in the future time period. These factors influences consumer
spendings, monetary issues, unemployment situations which brings significant changes in the
majority of UK retail sector. Effects of financial crises leads to impact consumer demand
towards Asda products which increased consumer spendings in the selected business product
line. Entity has to perform its operations by taking account of various economic laws in order to
identify opportunities at right time with the objective of enhancing growth of chosen firm.
Positive impact: With the increase in demand of an Asda's product like food items and
clothing as well as services like providing items online then managers of Asda are able to create
employment facilities which is helpful for an organisation to improve economic factor.
Negative impact: Asda products like groceries as well as household items increases
consumer spendings in the selected business product line. Thus, it is creating negative impact on
organisation function and business operation.
Social factors: Social factor is another element which impacts on the smooth functioning
of business in competitive environment (Sodeyfi, 2016). Factors related to lifestyle, population
trends, demographics, culture, preferences of people influences retail sector along with its
profitability at great extent. Demographic changes with consumer preferences changes the way
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plans are executed. Asda needs to keep itself updated with current or future trends, consumer
perceptions for the purpose of enhancing popularity of organisational products in multinational
market.
Positive impact: Customer preferences along with changing attitude helps in
understanding customers perception towards Asda's product and impacts in improving wealth
distribution in developing market place as well as expansion of business along with generating
higher profits.
Negative impact: In the current time, Asda are not able to meet the current trends such as
providing products to consumer with the help of multi channels of distribution, providing
personalized shopping experience to customers, growing culture of immediacy and so on which
negatively impact performance of the company in competitive market place.
Technological factors: Technological factors are related to new advancements, changing
technological circumstances which changes the aspects of working in retail sector. Updated
technology can be used such as websites, receiving online orders to promote the products of
selected business. Technology has build special place in the prevailing sector. By using
technological aspects an organisation can provide relevant information to its clients on their
demand and can receive feedbacks to analyse perception of customers towards products. Usage
of new technological elements influences sales and impacts in positive manner to achieve results.
Positive impact: Herein, Asda is using advance tools and technology like EPOS system,
Net framework technology, HCL technology which provide relevant information to its clients on
their demand and can receive feedbacks to analyse perception of customers towards products.
Negative impact: Due to technological advancements Asda fails to adopt new and
advance technology such as Search engine optimisation as well as Artificial Intelligence then it
will lead to decrease in productivity and profitability in competitive marketplace.
Environmental factors: Environmental situations related to change in weather
conditions impacts on great extent in the performance of operations of retail industry. The sector
is affected by waste reduction, sustainability concerns, renewable energy and many more.
Retailers uses numerous forms of energy in order to become conscious towards changes in
environment. Products of Asda are grown in the environment which are affected by changing
environmental trends. Some products of selected business are banned which were sold in stores
in order to protect environment and consumer rights.
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Positive impact: Herein, Asda is having positive impact as they are using renewable
resources so that they can good influences over competitive marketplace.
Negative impact: Products of ASDA are grown in the environment which are affected by
changing environmental trends. In this manner it is creating negative image on competitive
marketplace.
Legal factors: Factors related to regulatory, law determinants as well as legislations are
part of legal factors and results in decision making along with actions in any particular country.
It is very important to consider all such elements by business entities for operating business
appropriately. These are related to legislations imposed by government authorities and they plays
crucial role in the influence of successful working of retail sector (Tukker and Tischner, 2017).
Positive impact: Asda managers follows all the related laws, rules as well as regulations
which assist the organisation in gaining recognition from government bodies for executing
business operations in appropriate manner.
Negative impact: If new legislations are governed and Asda is forced to adopt those
legislations then it will impact on changing strategies and will affect productivity of Asda.
TASK 4
P5. Internal and external analysis
Organisations applies SWOT analysis in order to analyse external along with internal
environment to take critical decisions for achieving profitable results. It is used by managers to
evaluate strengths, weaknesses, opportunities and threats for the purpose of formulating and
implementing strategies. By applying SWOT analysis at Asda, followings are evolved:
Strengths Weaknesses
 Asda managers have build a strong
supply management chain where
dealers promotes the products along
with providing training to sales
members for the purpose of achieving
maximum benefits.
 Technicians of Asda integrated updated
technology like EPOS system and HCL
 Selected organisational managers are
unable to tackle changes such as
changed perception of customers
towards Asda's products as well as
changes in technological advancements
which results in failures to merges with
another business of different work
culture.
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technology in its production procedure
and tools which streamline its
operations (Storey, 2016).
 The company has also invested huge
money to build strong product portfolio
which is helpful in expanding its
product line in diversified market.
 In comparison to other entities, attrition
rate of Asda is high which shows that
they have to invest more in recruitment,
selection, training and development
programmes for new employees.
 Due to high competition level in retail
sector, decision making is in the hands
of top level management which limits
innovative ideas of internal members at
work place (Asda Organisational
Structure. 2016 ).
Opportunities Threats
 Due to the increasing trend of e -
commerce, Asda can grab the
opportunity and can provide products
by opening online stores and making
huge sales.
 Asda is planning towards expanding the
product line in new areas such as
pharmacies, jewellery and photo
department for the purpose of increase
profitability
 Asda's supplier network base is limited
which can create obstacles related to
low productivity in future.
 There is a cut throat competition
between various companies in retail
industry which are planning to capture
market share of Asda.
Thus, SWOT analysis helps in sharpening strengths, overcoming weaknesses for the
purpose of lightning opportunities in the supermarket. The managers od Asda carefully analyses
all such elements in order to take decision which results in achievement of organisational vision
and objectives (Uhl and Gollenia, 2016.).
Porters five forces analysis: It is a technique which is applied for analysing competition
level in any organisation or industry (Porter's five force model, 2019). Such model is applied in
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Asda to understand the relationship between buyers, suppliers, potential competitors, rivalry
within industry and substitute products. Application of Porters five forces analysis in order to
understand relationship between various elements is as follows:
Illustration 2: Porter's five force model, 2019
(
Source: Porter's five force model, 2019)
Rivalry among existing competitors: Competitors rivalry for Asda is very high due to
availability of end competitors in the retain industry. Competitors focus on achieving maximum
market share by providing products or services to customers. Rivals of Asda are Tesco, Marks
and Spencers, Sainsbury. It is very crucial for selected business to formulate attractive strategies
to compete in the market place. With the increase in competition, Asda need to work hard in
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order to maintaining market position so that they can have proper command over competitive
marketplace.
Bargaining power of supplier: In the retail industry, bargaining power of supplier is
very low due to availability of many suppliers which provides raw materials like flour, icing
sugar and many more in order to produce finished products like baked cakes. If one supplier
charges high price then firm shifts to another supplier to buy materials on cheap prices. Being
Asda part of retain sector, supplier bargaining is also low. Asda is a diverse brand which require
huge raw material for its diverse range of products due to which the bargaining power of supplier
is low. This gives the opportunity to get the material at reasonable prices of optimum quality.
Bargaining power of buyers: There are various companies in retail industry which
performs similar operations. Bargaining power of buyers towards Asda is very high which leads
to build negative image in the mindset of customers (Vom Brocke, Zelt and Schmiedel, 2016).
To retain its customers, managers of selected business set reasonable prices to attract maximum
potential clients. With the presence of huge food and non food items, buyers are left with diverse
options due to which customer have high bargaining power towards Asda. Therefore, to increase
the usability of product company makes the strategy based on the preferences of customer to
gain wide customer base and huge market share.
Threat of new entrant: In the retail sector, it is not an easy task to enter in such industry
as it requires huge investments and promotions to build an image. Hence, threat of new entrant is
low as larger proportion of market being capture by Asda and its competitors.
Threat of substitute: As various organisations performs the operations in the retail
industry, so substitute products are easily available. Substitute products are those products which
have similar features and threat of substitute of Asda is low. For example, there are various firms
which offers grocery items which differentiates one another in terms of quality, brand, services
and prices.
P6. Internal strengths and weaknesses their interrelationship with external macro factors
Interrelation Strengths Weaknesses
Political factors As the UK is stable and its
political system is strong and
does not make frequent
Changes in policies by
political parties affects the
business to face various
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changes in its system. It acts as
a strength to careful analysis
and implementation various
policies in order to increasing
efficiency of Asda (Pearson,
2017).
challenges. This adds risk
factor as well as changing
certain organisational policies
for Asda and acts as a
weakness as political parties
dominance limits to expand in
other countries aggressively.
Economic factors In UK there are various
investors who are ready to
invest in huge amount. By
determining current as well as
expected investments, Asda
can attract various investors to
make investment in their
organisation. It benefits in
achieving brand image in
competitive environment by
considering various economic
factors.
Changes in inflation, saving,
interest, foreign currecny rates
in UK can act as hindrance for
Asda to achieve its objectives.
These factors impacts in
various manner which results
in borrowing significant
amounts and becoming
creditors (Hitt and Xu, 2016).
Social factors Marketers of Asda understands
its customers preferences and
accordingly provides products
or services. It acts as a strength
for company to attract and
retain its customers for longer
time period.
Changes in such perception as
well as competitors
interference results in
decrease in sales and services
along with decrease in
profitability to survive in
competition. It is a weaknesses
for Asda.
Technological factors Managers of Asda makes use
of new advancements,
innovations in technology
Machines and technology
becomes advanced and
efficient in small time period
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within machines for producing
beverages that help in
improving market image as
well as making communication
process convenient, smoother
and convenient to improve
relationships with multiple
countries.
and it requires huge
investments. This acts as a
weaknesses for Asda as it
misbalance their budgets
(Charter, 2017). It results in
decreasing profits and
increasing obsolete technology
which hampers operations to
be performed effectively.
CONCLUSION
This report concludes that business and business environment needs careful analysis in
order to set achieve objectives and profits. For all the business it is important to define different
types, size, scope, organisation structures and functions related to overall organisation mission
and objectives. PESTLE model is used for analysing external macro environment which impacts
whole industry. SWOT analysis is used to determine internal environment factors. Porters five
force model is applied for the purpose of identifying level of competition in particular industry.
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