Types of Organization and their Interrelationship in Business Environment

This report discusses the types of organizations (public, private, and voluntary) and their interrelationship in the business environment. It also analyzes the impact of macro environment factors on business operations and the relationship between different functions within an organization. The report focuses on Tesco as a private organization in the UK.

Business and Business
Environment

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
Part1.................................................................................................................................................3
Types of Organization.................................................................................................................3
Scope and Size of Micro, Small and large Organization:............................................................4
Relationship between different function in the organization.......................................................6
Part 2................................................................................................................................................7
Impact of Macro Environment on Business Operation...............................................................7
Internal and external analysis of organisations to identify strengths and weaknesses..............10
Strength and weakness with external factors: -.........................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business plays significant role in the growth of economy of the country. Growth of the
industry depends on business environment. Report discuss about business and business
environment in various organisation such as private organization Tesco in UK. The report
highlights various types of organization and functions interrelationship. Report also describes
size and scope of various types of organisation. It also analysis different macro environment
factors that influence growth of the organization. Analysis of internal strength and weakness and
connection with external environment helps to understand business environment.
Part 1
Types of Organization
There are three types of organization, namely public, private and voluntary. Public
organization is run and owned by the government and shares are available for public purchase.
Private organizations run by the individual or group of people and they frame policy and
procedure for future growth of the organization (Niemi and Pekkola, 2016). Voluntary
organization consist group of people and this group comes together to serve the society.
Public organization:
Purpose:
Public organization run and own by the government but share also available for public
purchase in share market. Motive of this organization is to provide best quality services in
minimum price to all customers within the country. Profit of the organization is help in
increasing economy of the country. Most of the workers are government servants and hence
focus on country’s growth rather than individual.
Example:
Bank of England is public organization and policies are framed by government for
example interest rate, repo rate, loan qualification etc. It provide loan with low interest and
support country’s citizens for personal growth.
Legal structure
Bank of England started business with limited liability but after few years government
changes process and it will ultimately responsible to parliament for its function and accounts.
3

Monetary policies, loans interest cannot be increase without permission of government.
Formation of bank requires large formalities and can only be possible by ministry approval.
Private Organization:
Purpose:
Private organization run and own by the individual and most of profit is of owner. This
type of organization has to follow many policy and procedure before starting the business.
Management remain in the hand of owner but in decision making include management for better
run of the organization (Davis, 2018).
Example:
Tesco is private organization and most of profit is taken by the owner. Majority of
decision in organization is taken by the owner in framing policy and procedure.
Legal Structure
It is public limited company and hence responsible to stakeholders in setting decision and
polices. Organisation start business by taking permission from government but it did not take
much time.
Voluntary Organization:
Purpose:
Voluntary Organization is own and run by the group of people and motive of the
organization is to serve the society. This organization is non profitable and raise funds from
different donator in the country.
Example:
Save the children is voluntary organization (Atkins, 2016). This organization runs for
protecting children’s from illiteracy, health issue etc. Most of the funds come from different
organization, individual and also supported by the government.
Legal Structure
Company is responsible to government for its work and has to submit report yearly. It is
formed when group of people comes together to serve community and hence formation require
various government formalities. It is supported by government as well as various funders in
dfferent countries
4

Scope and Size of Micro, Small and large Organization:
Bank of England Tesco Save the children
Background Bank of England is
one of the onldest
financial institution in
Britain and have
multiple branches all
around the country. It
was setup in the year
1694 to providing
financial service to
English people of UK
and present
headquarter of the
organisation is
situated in
Threadneedle Street,
London, England.
Tesco is one of the
rising retail company
in United Kingdom
and its headquarter
situated in Welwyn
Garden City,
Hertfordshire,
England. Company
started in the year
1956 with the aim to
supply retail product
to british customers
Save the children is
started in the year
1919 to improve life
of the children with
the help of education
and health care
facilities. Company
headquarter is situated
in London, WC2
United Kingdom.
Legal structure Policies and
procedure has
government inclusion
and hence to provide
best services with low
prices. Less
formalities and
documentation require
for opening the
company as
government support
for growth of such
Company has to
follow government
laws and policy for
example
Unemployment act.
Many of formalities
and stages have to
follow before opening
the business and
hence time
consuming. Owner is
responsible in framing
This organization has
to follow all norms
and laws by the
government. Decision
of group is important
in framing policy and
procedure for society
development and
growth. The rules for
running the
organization are
available in the
5

organization. the policy and
procedure at
workplace and for
workforce.
constitution and time
to time amend by the
government. Yearly
audit has to submit to
the government.
Size and scope Company has market
all around the world
and its subsidiaries
name are Tsco Stores
Ltd, Tesco Bank,
Tesco Mobile, Tesco
Ireland, Tesco Family
Dining Ltd,
Dunnhumby, Spenhill
, Booker Group and
Jack's.
Company has multiple
brances in the country
as well as outside it.
Company provides
different kinds of loan
to customer’s such as
business loan,
entrepreneur loan etc.
Save the children is
providing services
worldwide. It support
poor and disable
children in education
and health care sector.
Organisational
structure
Organisation has
functional structure.
Financial institution
structure is decided by
government.
Organisation has
umbrella structure
Presence of firm National International International
Size Organisation large in
size and gives jobs to
3,983.
Employed 420,000 all
around the world and
hence large in size.
Firm has 25,000
workers which makes
its size large.
There are three sectors, namely public, private and voluntary. Size and scope of this sector
varies. Public sector has large number of employees and hence its size is large. Government is
directly linked with this sector and hence not flexible in terms of policy and procedure. Bank of
England is in public sector and large in size but government decide interest rate, repo rate etc.
Private sector can be macro, small and large in size and scope of the organisation varies
with size as discussed above. Tesco is private organisation and large in size. Company is not
6

flexible in policy and procedure as it can effect on the growth and customer of organization. For
example company provide services related to retail industry but if it started new business in other
sector such as infrastructure effect on brand of the company.
Voluntary organizations are in all sizes and hence scope differs with size. Save the
children is large in size and its policy related to support children’s can only by complete group
decision and hence limited scope in terms of expansion.
Relationship between different function in the organization
There are various functions in Tesco, namely finance function, marketing function,
human resource function and research and development functions. Inter relationship of each
function plays a significant role in the growth of the organization. Strong connection between
different function within the organization increase quality, efficiency and productivity of
workforce as well as work.
Finance Department:
Finance department distribute funds among different department within the Tesco.
Maintaining funds allocation helps in extra expenditure and on the other it increase financial
capacity to meet future needs of other departments. Financial team analysis request of budget of
different department and as per need and instruction by the hierarchy it provides funds. For
example marketing team always need money for expansion and market gain and financial team
support marketing plans. On the contrary marketers develop market for increase revenue and
which helps in increase financial capacity of the financial department in the organization.
Marketing Department:
Marketing team is backbone for the organization and support different department in
providing details regarding different company, product, completion, customer demand and
satisfaction level etc. This kind of information helps different department in framing policy and
procedure for future growth. Marketing team is directly connected with customer and market and
hence by giving suggestion for innovation in product, increase large number of customer and
hence increase revenue of the Tesco. For example it Provide Research and Development team
regarding taste and trend of the customer which helps R&D in innovation and creativity in
product to satisfy customer demand (Aydın, 2018).
Human Resource Development:
7

Human Resource Development frames policy and procedure for employees. It also
provides time to time various training and development programs for employee to increase
quality and skilled workers in different department. Marketing team provides details regarding
marketing trend and taste and what kind of development and training program has to implement
in Tesco to HRD and on the other hand it implement this program with systematic structure.
Research and Development:
Research and development team focus on innovation and development in the product.
However, it is not directly connect with customer and hence marketers provide information
regarding customer demand and satisfaction level for particular product. By analysing details
from product, it implement in product development program to satisfy customer needs.
Above all department inter connection help in the growth of Tesco and also create
competitive advantage (Mejalli, 2020). This functions inter connection decrease extra
expenditure and increase quality, efficiency and productivity in the organization. Customer
satisfaction level also increases by different department’s strong relation and hence support in
growth and development of the organization.
Impact on Organisation structure:
Function structure divide each department with specified skills and hence decrease
complexity of work. For example marketing department focus on marketing functions and on the
other hand quality department concentrate on providing better quality. Disadvantage possible if
each department not co operate with each other.
Division structure divide work of the organization many branches. For example R&D
function helps innovation and development of the product and Finance focuses on allocation of
funds. It increase carried work more autonomous and hence increase growth of the organization.
Interrelationship of employee’s effect in division structure, for example redundancy and
inefficiency because of lack of support and understanding of other division.
Advantages:
Tesco achieve higher goals on time with the team work of every function. Every
department analyse various types of changes and linked to other so that proper implementation
can be done in all which impact on growth of firm for example: Marketer analyse changes taste
and trend of customer and share it R&D which use it and prepare product as well as services
8

accordingly. Strong interrelationship and coordination between function positively impact on
organisation matrix structure.
Disadvantage
It takes longer time and sometimes delays in process become competitive advantage for
other firm. Biased information passed by any department can affect whole business. Some
department conflicts arises which negatively impact on firm’s structure
Matrix Structure Provides flexibility, in this workforce is divided according function
based department. Matrix is again divided department into sub department. For example
marketing department divided into customer relation and social media marketing. Sub division
increase work performance as different project manager focus on particular problem or work.
But it only applicable for large organization and need lot of money to support and satisfy sub
division. Inter relationship is strong in Matrix structure as each function support the other.
Highly hierarchical structure emphasizes on decision that comes from senior and which
has to follow by everyone in firm. Tesco follow this structure CEO coordinate with senior
management which contact team leaders and so on chain of common goes in country. All
Function of organisation have senior authority but remain closely linked for various types of
operation such as Marketing team connected to R&D in terms of providing marketing details.
Function connection and structure make unity of command with support of each other and hence
Tesco able to accomplish targeted objectives on time in changing business atmosphere.
Part 2
Impact of Macro Environment on Business Operation
Political factors:
UK is political stable country and hence stability of country helps in growth of economy
through various industries. After BREXIT, it is assuming that local organization in the country
will get more chances to expand the business (López López, 2017). Government determined to
frame policies for supporting growth of entrepreneur.
Pros:
As the government is stable, it helps in marketing gain for the organization with same
policies and laws and hence Tesco and Sainsbury remains focused on long term goal. Both the
9

organization has a long reputation of serving UK customers and political stability helps
organization for focusing long term plan without new government fear.
Cons:
Government decided to give more opportunity and funds for new entrepreneurs and
hence create competition for the Tesco. Sainsbury also effected from increasing competition by
new entrants.
Economical factors:
UK is one of the economical strong countries in the world and hence economical strength
creates opportunity for various organizations. Government is decided to decrease corporate tax.
Positive:
Decreasing unemployment and inflation rate increasing purchasing capacity of the
customers and hence Tesco and hence it can attract large number of customers by its variety of
products. Decrease in corporate tax increase the profit of Sainsbury and hence organization will
be more financially strong.
Negative:
British government give equal opportunity to all organization. Decreasing inflation and
unemployment rate can become competitive advantage of the Tesco competitors which
extensively use digital and other media platform to attract large number of customers. Sainsbury
effected from cut prices of product by competitors as less tax on new entrants by government.
Social Factors:
UK customer welcomes new market and product which helps diversification of the
company. Increase in health consciousness among Britain customers, attracting them for organic
product. One stop shopping is one of habit of England’s customer.
Positive:
Tesco provides variety of organic product to attract large number of UK customers.
Sainsbury has a range of products which favour one stop shopping habit of British customers and
hence increase its revenue.
Negative:
England’s customer welcomes new product and new market and hence Tesco competitor
takes it as advantage for attracting its loyal customers and hence decreases its market share.
10

Sainsbury’s revenue you also decrease because of UK customer’s support to new product and
market.
Technological Factors:
UK is one of technological advance country which helps in industrial development of the
country. It continuously develops technology to increase quality, efficiency and productivity for
various industries.
Positive
Advancement in technology at Tesco’s production and development department decrease
its time and cost hence increase quality, efficiency and productivity of the organization.
Sainsbury gain competitive advantage in continuous advancement of technology at workplace
and stores.
Negative:
Continuous advancement in technology needs training and development of employees
and hence Tesco is not able to provide skilled workforce at workplace and hence reduce quality,
efficiency and productivity of work and workforce. Sainsbury profit reduce because of lack of
skilled human resource for technological changes in the organization.
Environmental Factors:
UK government has frame various policy to protect the environment from various
industry and hence organizations has to adopt laws of government at the workplace (Perera,
2017).
Positive:
Company strictly follow government laws and support in environment conservation for
example ban of plastic bags and introduction of paper bags in the organization and hence
improve its good-will. It provides funds for various CSR activities and hence increases its
reputation among UK customers.
Negative;
Ban plastic bags and other over budget CSR funds decreasing profit of the organization.
Legal Factors:
11

British government support various kinds of workers in different organization by framing
laws and Policies. Unemployment and discrimination act help in personal growth of employees
and protect from depression and isolation.
Positive:
Adopting policies related to personal growth of employees by the government in
organization, increase loyalty of workforce and improves the image of Tesco. Government
policy adoption in Sainsbury increase working capacity of the employees and hence increases
growth of the organization.
Negative:
Following laws such as equal wages, paternal, maternal leave etc. increase financial
burden on the organization and hence become barrier in the expansion of the business.
Internal and external analysis of organisations to identify strengths and weaknesses.
A detailed SWOT analysis of Tesco and highlights of its competitor Sainsbury’s is
described as follows:
SWOT OF TESCO
Tesco’s Strengths
 Largest grocery retailer: Tesco is a leading supermarket for groceries and other items in
the UK. The sales and revenue are higher in comparison to other supermarkets operating
in England. It is also leading the industry with a market share of 27% and has become
popular in Ireland as well.
 Geographically diversified: The global presence of the company is across Europe, North
America and Asian markets. It has more than 6800 stores in across 14 countries. The
revenue is growing due to the additional stores every year in its chains (Ejlerskov and
et.al., 2018).
 Diversified stores and products: The stores have been diversified as Tesco extra, Tesco
home plus, One stop, Tesco express, Tesco metro and Tesco superstores. The product
range includes clothes and apparels, mobile phones and electronics, utensils and home
ware items, telecommunication services, financial services, cotton fair trading etc.
 Efficient supply chain and technology: Tesco has strong and profitable relations with its
suppliers as it follows an efficient waste management policy, has reduced costs with a
12

simplified model of business operations and thereby established a reliable supply chain
network. The company enhances shopping experience by RFID- enabled barcode system,
M-commerce facility and mobile payment services.
Tesco’s weaknesses
 Failed operations in countries like Japan and US: Tesco exited from the markets of Japan
and America in 2012 after its failed export operations.
 Accounting scandal and Financial errors: Tesco was charged heftily in 2017 due to
misrepresentation of the company’s profits and a false accounting declaration. Because of
high credit and debit card liabilities, profits are affected (Heese, Srinivasan and Kelley,
2019).
 A plunge in the operating profits: The share prices of Tesco plc dropped to more than 9%
as on October 2018 due to a decrease in operating profits and is labelled as the worst
performance of the organisation after Brexit.
Tesco’s opportunities
 Expanding the newly introduced Jacks store which offers discounted products and can
compete with Aldi and Lidl in future.
 Tesco can do strategic alliances and partnerships with other reputed companies and
brands to attract a high customer base and offer more products.
 Joint ventures in the regional markets and local companies where the company is
underperforming.
 Upgrading online business by improving website interface and including home delivery
services.
Tesco’s threats
 Tesco faced a huge backlash because of its Christmas ad controversy by social media and
people started boycotting the supermarket as they claimed Tesco being disrespectful
towards Christian faith (Fatricia, 2017).
 Economic crisis, government regulations, credit crunches, taxation and legalities along
with economic instability can affect the operations of the company.
 Intense competition with the supermarket giants or big four like Walmart (Asda
acquisition), Aldi, Sainsbury’s, Carrefour etc.
13

Sainsbury’s S WOT highlights:
Strengths: Sainsbury deals with day to day needs of customers and has followed right
expansion moves. It follows a low-cost pricing strategy for all product segments and
attracts customer from various income levels. It uses innovation promotional strategies
and coupons and has gained customer loyalty (Mizdrak and et.al., 2017).
Weaknesses: Growing costs along with procurement like technologies, spacious aisles,
well informed sales persons, multilevel parking etc. Low margins due to increase online
and offline competition.
Opportunities: Expansion to sub urban and rural areas by inducing a supermarket culture
in the villages as now all people have started preferring branded products.
Threats: Competitors like Tesco, Aldi, Lidl, Asda. Impact of Brexit referendum
(FATRICIA, 2016).
Strength and weakness with external factors: -
Political: - Tesco gets strength from the politic factor as having the diversified stores and the
product which are keep on increasing and the influence of politics factor in the retail sector
helping the company in getting strength in the company. Political influence in the retail market
invites new entrepreneurs and it increase the competition in the market to Tesco and give a weak
point in this. The strength in the political factor of the Tesco is Diversified stores and the
products which are keep on increasing and the expanding of business is going on a large scale,
the political support in expansion of business. Weakness is the completion in the market will
increase with the political opportunities to new entrepreneur.
Economical: - Economic factor of Tesco in strength by the economic stability and the
unemployment rates in the market help in the profit of Tesco and making business, But on other
hand it is also affecting as British government have allowed new policies on unemployment rate
and increase the competition in market to Tesco (Nguyen,2019). Economic factor gives strength
to the company, the stability in the economy and the unemployment rates also helps the company
in getting the business goals. But according to the new policies of the government in the
economic factor is creating more competition and weakening the company strength.
Social: - Tesco is giving the social factor an importance as it is a dealer in organic sector and it is
helping the company in stabling the social factor but on other hand the competition to new
14

market in England is keep on rising and the company’s financial error on such market can effect
a lot to the Tesco. Social factor includes the awareness of the society and Tesco is putting new
strategies to make the best in the society, even they are producing eco-friendly products and
organic products to maintain the social factor. But the Competition in the market is keep on
rising and making the effect in the company with the competition.
Technological: - The one strength is that the technologies Tesco use are so advance and
innovated that they help the company in getting the work done in easier ways and effective. It
also helps in expanding the work with different approach. Weakness is to regular train the
employee because of the new technologies so not do the mistake the company did it in 2017
errors. Tesco is performing so well in the market and the credit goes to the technologies which
give such strength to the company from other competition are the advance technologies and
innovations of the company. The weakness of the company in the terms of technologies are the
errors they made in 2017 should not be repeated.
Environment: - Environment policies of the company toward the environment sector give
strength to the company in its geographical sector and attract more of the customer to the
company and the working give strength to the environment. It gives a bit of weakness to the
Tesco as to promote the environment factor need to spend a lot of money and decrease the profit
margin.
Legal: - Legal factor gives strength to the employment as British government give laws and
policies for the employment, increase in loyalty and it helps in getting a good image in the
market but on other hand it become barriers for the company in the financial point of view
(Kanetani,2018).
CONCLUSION
To be concluded growth of the industry depends on size, scope and business environment
of it. In the given report explain three types of sector, namely public, private and voluntary and
legal structure of it. This helps in understanding laws and governing bodies within Tesco. Inter
relationship of different function helps in the growth of organization for example marketing
development needs support of finance department. PESTEL and Swot analysis in the report helps
to understand macro environment effect on the growth of organization for example politically
stability support for growth and expansion of the Tesco.
15

REFERENCES
Books and Journals
Atkins, L., 2016. The Voluntary Sector and Government: Perspectives from the UK. In NGOs in
China and Europe (.pp.187-200). Routledge.
Aydın, B., 2018. The role of organizational culture on leadership styles. MANAS Sosyal
Araştırmalar Dergisi.7.(1).pp.267-280.
Davis, A.E., 2018. Global Production Networks and the Private Organization of World Trade.
Journal of Economic Issues.52.(2).pp.358-367.
Ejlerskov, K.T., and et.al., 2018. The nature of UK supermarkets’ policies on checkout food and
associations with healthfulness and type of food displayed: cross-
sectional study. International Journal of Behavioral Nutrition and
Physical Activity. 15(1).p.52.
16

Ejlerskov, K.T., and et.al., 2018. The nature of UK supermarkets’ policies on checkout food and
associations with healthfulness and type of food displayed: cross-
sectional study. International Journal of Behavioral Nutrition and
Physical Activity. 15(1).p.52.
FATRICIA, R.S., 2016. SWOT ANALYSIS OF SAINSBURY’S SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan. 5(1).
Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal
Manajemen Terapan dan Keuangan, 6(02). pp.69-86.
Heese, J., Srinivasan, S. and Kelley, J., 2019. Accounting Fraud at Tesco Stores (A).
Kanetani and et.al., 2018, May. Optimization of maintenance by failure prediction considering
instantaneous and cumulative effects of external environments.
In 2018 International Power Electronics Conference (IPEC-Niigata
2018-ECCE Asia) (pp. 207-212). IEEE.
Khajeheian, D., Friedrichsen, M. and Mödinger, W., 2018. An introduction to competitiveness in
fast changing business environment. In Competitiveness in emerging
markets (.pp.3-11). Springer, Cham.
López López, N., 2017. Different ways to assure the continuity of the business.
Mejalli, R., 2020. Organizational Climate and Employee Engagement (Doctoral dissertation,
Walden University).
Mizdrak, A., and et.al., 2017. Using a UK Virtual Supermarket to Examine Purchasing Behavior
Across Different Income Groups in the United Kingdom:
Development and Feasibility Study. Journal of medical Internet
research, 19(10), p.e343.BASED COMPANIES. Journal of Services
Research.8(1).
Nguyen, H.L., Larimo, J. and Wang, Y., 2019. Control, innovation and international joint
venture performance: The moderating role of internal and external
environments. International Business Review. 28(6). pp.1-1.
Niemi, E.I. and Pekkola, S., 2016. Enterprise architecture benefit realization: Review of the
models and a case study of a public organization. ACM SIGMIS
Database: the DATABASE for Advances in Information Systems.47.
(3).pp.55-80.
Perera, R., 2017. The PESTLE analysis. Nerdynaut.
17