Business and the Business Environment

This document provides an overview of the business environment, including the different types and purposes of organizations, the size and scope of different companies, and the relationship between organizational functions and objectives. It also includes a PESTLE analysis and an analysis of internal and external factors affecting the business environment.

BUSINESS AND THE
BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION.......................................................................................................................3
Activity 1 ....................................................................................................................................3
A) Different type and purpose of organization...................................................................3
B) Size and scope of range of different type of organization.............................................4
2) Relationship between different organizational functions and how they link to
organizational objectives....................................................................................................7
Activity 2 ....................................................................................................................................8
1) PESTLE Analysis...........................................................................................................8
2) Porter's Five Force Analysis........................................................................................10
4) Internal and external analysis ......................................................................................11
5) Interrelation of strength and weakness with macro factors..........................................13
CONCLUSION..........................................................................................................................14
REFERENCES..........................................................................................................................14

INTRODUCTION
Business Environment is sum or collection of all internal and external factors such as
employees, customers’ needs and expectations, supply and demand, management, clients,
suppliers, owners, activities by government, innovation in technology, social trends, market
trends, economic changes, etc. Burberry Group is a British luxury fashion house
headquartered in London, England. Its main fashion house focuses on and distributes trench
coats, ready-to-wear outerwear, fashion accessories, fragrances, sunglasses, and cosmetics.
This report covers issues such as type and purpose of different type of organization, size and
scope of different companies, functions of different departments of companies, positive and
negative impact of external environment, internal and external analysis of the environment and
interrelationship of strength and weakness of the company with the external environment.
Activity 1
A) Different type and purpose of organization
Public Limited Company-
In order to serve as a public limited company in the market at least 7 members are
required with a legal motive which is known as public company (DeConinck, Moss and
Deconinck, 2018). These type of companies are allowed to list and trade under stock
exchange. People who hold the shares of these type of companies can easily transfer their
shares to anyone. These type of companies can take as many members they want as there is no
limit. Apart from these type of companies has many type of subsidiaries which is also listed as
a public limited company. Company raises money by selling a part of their capital to many
people who are known as shareholders of the company. Major decisions for the company can
only be taken by the people who are in the list of board members and other shareholders do
not have the right to sit at the table for general meetings. They will just have the details and
knowledge about the decisions taken by the company
Purpose-
NHS is a public limited company which serves in the sector of healthcare and is
publicly funded. The company is situated in England. Purpose of NHS is to provide healthcare
services at no cost for the people who cannot afford medical services and need emergency
treatment. Their motive is to keep the health of people better. They want to extend their

services to general public. Apart from this they are also looking to expand their operations in
different areas of the country.
Private limited company-
In order to make a company private 2 members are required so that the company can
be registered under the companies act. Not every private company lists their company under
the FTSE or stock exchange. Private companies do not have the power to raise money through
shares and debentures. Only the members of the company which are listed as owners can buy
it. Apart from this they also do not have the power to transfer their shares to other people.
Companies operating as private sector can not list more than 200 members. After receiving the
certificate of incorporation private companies can begin their operations. In comparison with
public limited companies there are less restrictions and rules on private companies.
Purpose-
Burberry wants to be the sole provider for their customers. The company is focusing
on improving their experience for their consumers by analyzing the needs and preferences and
make changes in their structure according to the current trends in the market (Veselovsky and
et.al., 2017).
Voluntary Company-
Companies whose motive is to serve for the welfare, benefit of public and not
considering motive of earning profit. They provide help to people who are underprivileged and
does not have enough resources to fulfil basic needs. These type of companies have different
pattern of working as they raise their capital by inviting those people who are ready to donate
a part of their income for the well being of others. Oxfam is one of the most famous and
popular company who is dealing in this sector. They commenced their operations in 1942 and
they have divided themselves into 20 companies according to particular section and hire the
team who were interested to serve in that particular area (Akhmetshin and et.al., 2017).
Purpose-
Purpose of the company is that they want to help those people who are suffering from
poverty and injustice. Aim of the company is to not earn profits and focus on the betterment of
society. Oxfam wants to bring peace in the environment.
B) Size and scope of range of different type of organization
Basis NHS Burberry Oxfam

Size NHS employs around
1,50,000 doctors in
the hospital with more
than 3 lac nurses.
Even after this the
company has more
space for employing
people and they have
made announcements
through
advertisements as
they require 40,000
more nurses and
20,000 clerks. In
order to expand their
operations company
also need to increase
ambulances and more
drivers to cope up
with the level of
expansion. This
makes NHS one of
the biggest
organizations dealing
in the sector of
healthcare.
Burberry serves in
498 locations.
Company has more
than 9,000 employees.
They have stores in
51 countries.
Company deals in
accessories, clothing,
cosmetics and
perfumes basically
they deal in fashion
industry (Tian,
Sigamani and
Malhotra, 2018).
Oxfam has
consolidated with 20
different companies.
They are working
together and serving
in 94 countries in
order to solve the
issue of poverty for
more people.
Scope NHS has the scope of
improvement and
make changes in their
structure so that they
can deliver their
Company has the
scope to reduce the
amount of emission
which is why they
have announced that
Oxfam has the scope
to use more
innovative and
effective methods and
ask or invite people

services locally. In
order to make their
team more efficient
they are increasing the
focus on supervising
them at the time of
training so that they
can work effectively.
they are going to
replace absolute scope
1 and 2 which will
help them to reduce it
up to 95 per cent and
absolute scope 3
which will help them
to reduce the
greenhouse effect up
to 30 per cent. Apart
from this they are also
trying to enter into
different markets so
that they can increase
their share in the
market.
for more donations so
that they can consider
serving more people.
The company works
on practical approach
so that they can easily
encourage people who
are suffering from
poverty.
Legal Structure NHS's structure is
under the chapter 5
part 2 of 2006 act and
the company serves in
limited liability.
Structure according to
the corporate
governance is
followed by the
company. Burberry
has all the legal
documents which are
required to serve in
the industry.
Oxfam deals in the
sector of welfare and
that sector has no
legal barriers instead
it is promoted by the
government as it is a
charitable
organization
(Kozubikova,
Homolka, and
Kristalas, 2017).
Products and Services They provide
healthcare services to
their patients.
Company deals in
accessories, clothing,
cosmetics and
They serve in social
activities rather than
the motive of earning

perfumes basically
they deal in fashion
industry.
profit.
Stakeholders Stakeholders of the
company are patients.
Consumers,
employees and
shareholders are the
stakeholders of the
company (Kasemsap,
2016).
Competitors and
suppliers are the
stakeholders of the
company.
2) Relationship between different organizational functions and how they link to organizational
objectives.
Each and every function of organization help to achieve goals and objectives of
business more easily and effectively. To produce more and increase sell of product help
to achieve goals easily and effectively. Each function need to work together so that
organization
is able to achieve goals. Burberry is a British luxury fashion house and their quality products
like trench coats, ready to wear outlet help them to attract customers more easily and
effectively towards their products and services. All organizational functions help them to
attract customers easily towards their product (Quinton and Wilson, 2016).
Marketing and Finance department
Marketing and finance department both are important for development of business.
Marketing department help company to develop overall presence of business in minds of
customers and help organization to achieve goals and objective of business more easily.
Whereas finance department provide adequate funds of marketing department of Burberry to
promote product without funds marketing department unable to fulfill their activities.
Marketing department help to attract customers towards business and increase sales which help
company to increase flow of funds for smooth working of business. Both department of

Burberry is important to work with each other to achieve goal of increasing sales and
profitability of business.
HR and Marketing
HR department is responsible to provide proper training to employees from marketing
department and responsible to hire effective marketing employees for smooth working of
business. Whereas marketing department help company to attract new employees by
promoting vacant positions. Strong relation between both marketing and HR department help
company to achieve goals and objectives easily. Burberry wants to expand business at a large
scale for that company need effective employees and develop overall presence of business in
market both HR and marketing help to gain effective marketers and employees and promote
products and services of business at a large scale (Whelan and Meaden, 2016).
Production and Marketing department
Marketing department help company to gather information from customers about their
preference and choices, and also help to conduct surveys on preference of people about quality
of products and services. Marketing department help production department of Burberry by
providing information about customers wants and needs and production department provide
information about product specification and features that help marketing department while
promoting products and services in market. Burberry wants to provide quality products to
customers for that they need to know customers preference and marketing department provide
information about customers choices to minimize efforts of production department.
Research & development and marketing department
R&D and marketing department both are unable to work without each and other and
need proper communication to achieve goals and objectives of business. Marketing department
provide information about buyers taste and preference, market trends and opportunities that
help Burberry to achieve goals easily. On the other hand, if the marketing department don’t
provide the respective level of information regarding current market trends then it will be
more costly for research and development department to analysis different market to have the
overcoming of different idea and market efficiency. Inputs from marketing department help
research and development department to innovate a product according to customer needs and
able to develop business of Burberry at a large scale. Marketing department depended on R&D

department to come up with new product and idea fort company to market it and increase
profitability of business.
Improving risk management
Companies such as Burberry is working on improving the conditions of climate by making the
required changes in their supply chain.
Improving financial performance
Burberry is working on improving their financial performance by increasing their
prices of products as they believe that it will help them to cope up with the performance
responsibility of corporate sector.
Activity 2
1) PESTLE Analysis
This analysis helps companies such as Burberry to know the details and condition of the
macro environment. With the help of that companies formulate strategies so that they can
survive and achieve growth in the market.
Political Factors of Burberry-
Burberry has stores in more than 50 countries which helps them to serve throughout
the world. This requires the company to follow the rules and operate under the section which
are imposed by the government of the country. Some of the rules may not be in favor of the
company but if they are not followed then strict actions will be taken against the company. If
the country is suffering from continuous political instability then it will create difficulties for
the company to maintain their supply chain and profits. Burberry is far from the only British
business to warn of the cost of a no-deal Brexit. With the Channel tunnel already congested
and a government-commissioned study finding that just 80-second customs checks would
cause permanent gridlock at Dover, the CBI business group has warned that a no-deal Brexit
could have a huge impact on the UK economy. Company also goes through many cases of
copied products because they offer products which are less in price but are prestigious in the
eyes of general public which increases the level of imitation of the products which are offered
by the dealers who operate on a small scale (Gregory, Ngo and Karavdic, 2019).
Economic Factors-

These factors are concerned with the rate of inflation, level of taxation and the
economic growth in the country. For instance, residents in UK and tourists who come to visit
the country buys the product of Burberry and if the economy is not good then the company
will be losing the sales which they get from tourists. Due to Brexit there was major fluctuation
in currency rates which more over impacted the export and import of Burberry as the growth
of the company depends on the stability of the economy. As the Brexit the bank of England
have higher interest rates are higher which is making high in cost to Burberry to makes the
further level of loans. Brexit has affected the economy of the country which is making it
difficult for the Burberry to maintain their operation and achieve their objectives.
Socio Cultural Products-
These factors are concerned with the culture, religion and beliefs of people which
company needs to respect if they want to survive in the market. For instance company deals in
fashion industry which states that they need to address the needs of different people according
to their taste and preferences. Burberry have the proper dealing of the continued focus on new
product initiatives, refreshed store concept, clean-up of wholesale distribution, focus on sales
productivity improvement, e-commerce and cost control, the jury's still out on the timing and
magnitude of brand turnaround. Different people have different style of wearing clothes such
as some of them prefers reserved style and some of them prefers clothes which are skimpy.
Company needs to consider this while manufacturing the goods. Apart from this company uses
various channels and platforms to interact with their consumers so that they can know about
their taste and preferences (Calabrese and et.al., 2018).
Technological Factors-
These factors help the company to bring technological advancement and new up to
date methods so that they can attract more people and simplify the work for their employees.
Company used a strategy of live streaming which helped them to attract people as many of
them made purchase through that method and got the delivery of the product. Apart from this
company delivers their product faster as compared to other competitors which helps the
company to gain competitive advantage. As the impact is that’s the disruption of the Brexits
have affected the supply chain would be even more significant because Burberry needed to
move materials, samples and finished goods quickly between Britain and mainland Europe.
Environmental Factors-

These factors are concerned with the measures that are need to be taken for the
improvement of environmental products. Burberry keeps these measures in mind and because
of this the clothes that they manufacture are mostly from cotton which does not cause any
damage to the environment. Burberry will face the major issues due to corona virus as there
trend is being focused have the major dependency proving distavorous. There is wide level of
dependency range of industries are dependent on China as both a manufacturing behemoth and
billion-plus-consumer market. Company has also taken measures to reduce the greenhouse
effect. Apart from this there are other factors which affects the profitability of the business
such as natural disasters or terrorist attacks which is why company does not invest in those
areas which are prone to these things (Gaganis, Pasiouras and Voulgari, 2019).
Legal Factors-
These factors are concerned with the laws and regulations imposed by the government
which the company needs to follow otherwise they won't be allowed to serve in the country.
These laws affect on the profitability of the company. Some of the major laws are related to
labour and employment. Company needs to patent their products so that they can reduce the
level of imitation of their products by small dealers. This will help the company to maintain
the originality of their products.
Positive impact of this method is that company gets to know which area they have scope for
improvement and where they can earn more by making the necessary changes according to
current trends in the market.
On the other hand negative impact of this method is that in order to get the information
company needs to analyze the market and its factors on a regular basis (Gölgeci, Karakas and
Tatoglu, 2019).
2) Porter's Five Force Analysis
Threat of new entrants-
This aspect states that how new players in the market comes as a risk for the company.
This industry requires a large amount of capital and investment to enter into this line. Burberry
will face less of threat as it is difficult to enter as new policies and framework needs to be
followed by them and with that huge amount of investment. The company maintains the level

of pricing to an affordable level then perception of consumer won't change towards the brand
which will reduce the level of threat.
Threat of Substitute products-
This aspect is concerned with entering of substitute products in the market. This
increases the risk for the company. In order to meet their needs consumers can choose other
products which will affect the profitability of the company. So, the Burberry have cost of
switching to the same quality of brand is low which will help to reduce. Burberry company
must work on increasing the cost of switching as this will also help them to increase the
loyalty among consumers along with value of money for their products (Flynn, Cavanagh and
Bilimoria, 2017).
Rivalry among existing products-
There are limited no. of companies which operate on the same scale as Burberry which
will help the company to maintain the threat from this aspect. Company can leave easily
because of the low barriers on exit policy. On the contrary if the consumers of the company
are not loyal then they will face high level of risk. Burberry adopt aggressive strategies then it
can affect the profitability of the company.
Bargaining power of suppliers-
Power of suppliers will be high if the cost of switching from one supplier to another is
high. In the case of few suppliers and high demand the suppliers have a dominant position
over the company. Burberry is not educated about the forces of the environment then it will be
a strength for the suppliers. On the other hand, if these factors are vice versa then the power of
suppliers will be less over company.
Bargaining power of buyers-
If the company targets the same amount of consumers then the bargaining power will
be more in the hand of consumers. If they are price sensitive and aware about the forces of the
market then it will also increase the level of bargaining power. In order to reduce the impact of
this aspect company needs to diversify their base of customers and work on building loyal
consumers so that company can have control over them (Chan and et.al., 2016).
VRIO Analysis
This analysis helps the company to look after the sources which are internal so that they can
have advantage over their competitors.

Valuable-
This aspect helps the company to understand the importance of financial resources as
they help the company to cope up with any opportunities and other than this it also helps the
company to reduce the level of threats for them.
Rare-
The resources of the company which are related to financial aspects are rare as it is not
easy for every company to make these resources as a strong factor for them.
Imitable-
The financial aspects of the company cannot be imitated as it is not easy to reach at
that stage where Burberry is standing. Companies who are entering new into the market will
take time to attain this position.
4) Internal and external analysis
SWOT analysis helps the company to know about their strengths, weakness opportunities and
threats in the market.
Strength-
Burberry has more than 500 stores in the market with presence in more than 50
countries. Company sells their products through both channels that is retail and wholesale.
Company has a strong brand presence in the market with high recall value. Company
advertises their product in websites and magazines instead of TV and billboards (Russo and
Confente, 2017).. They have endorsed many celebrities as their brand ambassador which has
helped them to gain their presence in the market.
Weakness-
Prices of the products of brand is not affordable by the young generation as the
company offers high quality products which limits them to set the price into a fixed bracket.
The line of products that the company deals in are limited to an extent such as apparels, beauty
and fashion. Many of their competitors had extended their dealings into the line of home
decor, furniture etc which has made them achieve more growth in the company. Most of the
sales that the company generates is through Asia and any changes in factors such as political,
economic or social etc can change the outcome of the company. Burberry has to depend on the

disposable income and the growth rate of the country in order to achieve growth (Park and
et.al., 2017).
Opportunities-
Company has the opportunity to increase the level of production as the lifestyle of
many people is changing which is beneficial for the company because more people prefer
branded goods rather than imitations (Russo and Confente, 2017). Also, Burberry has the
scope to expand their product line as it will help them to increase their share in market and
create new identity. They also have the scope to enter into new markets such as Egypt,
Thailand, Turkey and many other countries which are emerging.
Threats-
Burberry faces a lot of competition from their competitors such as Gucci, Louis
Vuitton, Prada as their presence in the market is creating difficulty for the company to position
themselves in the market. The major risk among this factor is changing trends and changes in
lifestyle of people as they industry they deal in do not have long life cycle of their products.
Also the company faces quality issues because of imitation of their products by small level
dealers which also affects the position and brand equity of time. In order to avoid this threat
they need to patent their products and trademark. This will help the company to counter the
damage they face on brand image (Gatignon and et.al., 2017).
5) Interrelation of strength and weakness with macro factors
Burberry has a strong brand image in the market which deals in the industry of fashion.
They have more than 500 shops in 51 countries. Company offers various types of products.
The strength and weakness of the company interrelated with external analysis are as follows
 Employees of Burberry are working them are around 10,000 and they are a part of their
team because of the culture of the company. They follow different strategy of
advertising such as magazines and social media. Company is investing a lot of money
in the department of learning and development so that their employees can keep up
with the current demand and the forces of the environment (Eling and Schaper, 2017).
 Political factors work as a strength for the company any kind of instability on the
factor will affect the smooth flow of operations and disrupt the profitability of the
company.

 Strength of the company relates with the pestle analysis because any kind of instability
in the external environment such as economical and political will convert the strength
into weakness of the company. The advertisement strategies that the company use is on
the basis of social factors so that they can not harm the beliefs of people. Apart from
this the company is following all the laws and regulations which is imposed by the
government which is the strength and it is related with the legal environment of the
company (Almalki, Al-fleit and Zafar, 2017)
 Competition in the fashion industry is very high and the strategies and techniques that
the company uses are not as effective as compared to their competitors which makes it
a weakness for the company. Growth rate of the company is decreasing in other
markets even if most of the revenue is generated from Asia. If the company tends to
rely on the factor of technological advancement then it will remove their focus from
the inefficiency of the workers and will reduce the productivity of the company. This
will also leave an impact on the factor of unemployment. It will increase as company
will rely more on machinery instead of manpower which will affect the growth of the
economic environment.
 Since last few years the issue of imitated products of Burberry is increasing which is
making them lose their consumers in the market.
 The biggest threat that the company faces is they have to depend on the disposable
income of people, rate of growth and political stability in Asia as it generates most of
their revenue from that.
 Global recession is the reason which is limiting the growth of the company analysis of
SWOT and Pestle will help the company to achieve growth in the market and improve
in those areas where they are lacking. Burberry needs to come up with effective
strategies and innovation so that they can differentiate their brand from other
competitors and reduce the level of imitation (Russo and Confente, 2017).
Tows Strength weakness
Opportunities Political factors
will affect the smooth flow
of operations and disrupt
the profitability
Technological
advancement then it will
remove their focus from
the inefficiency of the

workers and will reduce the
productivity of the
company
Threat the disposable income of
people, rate of growth and
political stability in Asia to
it generates most of their
revenue.
Global recession is the
reason which is limiting the
growth of the company.
CONCLUSION
From the above studies it has been concluded that Burberry needs to adapt new technologies
and strategies in order to cope up with current trends in the market so that they can give a
tough competition to their competitors and survive with achieving growth in the market.
Company has the scope to extend their line of products so that they can target new people and
diversify their portfolio. This will help them to increase their share in market. Apart from this
company needs to patent their products so that they can reduce the level of imitation and
restore the image of the brand in the eyes of general public. Company has to increase their
focus on UK because most of their income is generated from Asia and they have to stop
depending on that.

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