Business and the Business Environment

This document discusses the different types, purposes, and legal structures of organizations, as well as the interrelationship between different functional units. It also explores the positive and negative impacts of the macro environment on business operations. The subject is Business and the Business Environment, and the document type is an essay.

Business and the
business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK 1 ...........................................................................................................................................4
P1 : Different , purpose, types & legal structure...................................................................4
P2 : Size and Scope of organisations......................................................................................7
TASK 2............................................................................................................................................8
P3 Interrelationship between functions of different organizations.......................................8
TASK 3..........................................................................................................................................11
P4 : Positive and Negative impact of macro environment on operations of a business ......11
TASK 4 .........................................................................................................................................12
P5 : Internal Analysis of organisation to identify strengths and weaknesses.......................12
P6 interrelation in strength & weakness of external macro factor.......................................14
Conclusion.....................................................................................................................................16
REFERENCE.................................................................................................................................17

INTRODUCTION
Business environment consist of macro and micro environment factors that are affecting
the overall organisation functioning. According to objectives of organisation there are some main
categories that consist of public enterprises, private and not for profit organisations. The major
objective of these organisations is to work towards enhancing profitability of organisations.
Presently there is discussion of TESCO that is a private retail organisation that was founded in
1934 (Jang and Kim, 2018). The functions and operations of every organisation are divided in
private, public and voluntary sectors. Further there is discussion of interrelationship among
different functional units of organisation to achieve laid organisation's objectives.
TASK 1
P1 : Different , purpose, types & legal structure
Organisation are divided in different categories according to motive of social objective, earning
profitability and other features.
A) Profit making:
There are business who are having preferences of earning of higher profits and revenue. These
organisations belong to different industries and catering to different market segments.
Meaning: Private limited organisation are independent and they are working for achievement of
their laid mission and vision.
Objectives: Core objective of TESCO is to provide a easy way of living and a quality lifestyle to
its customers.
Legal structure: TESCO is having a hierarchical structure that consist of 10 members in their
board. John Allan is chairman, Dave Lewis is the CEO, Alan Steward is chief financial officer.
Size: TESCO is third largest retail store according to its gross revenue (Ali and et.al 2019).
They are having outlets in Asia, Europe and UK with 28.4 percent market share.
Scope: TESCO has successfully diversified in areas such as electronic, books, clothing,
furniture, telecom, software etc.

B) Not for profit:
some organisations are not build up with a profit motive but posses different objectives apart
from maximisation of monetary profits. Their major objective is to work towards society and
social objective. Examples are world food program, British heart foundation, Oxfam.
It consist of public sector organisations that are controlled by government.
Meaning: Not for profit organisation ate those that can be owned or controlled by government or
be a part of public sector business that are traded on stock exchange.
Features: These organisations are controlled by government institutions, trustees or local
authorities.
Objectives: The main objectives of NHS is to provide medical services to poor segment of
society and working towards improving living standards of people (Nurettin Oner, 2016). They
are following principles of respect, dignity composition through innovation.
Purpose:
legal structure: Legal structure of NHS includes secretary governing health education England,
further there are education and NHS training boards.
Size:NHS has 106,430 doctors, 285,893 nurses with 207 clinical commission groups, 35
community providers & 10 ambulance trusts.
Scope: NHS is based on some founding principles that consist of providing comprehensive and
free of cost services.
Non governmental organisation:
Voluntary organisation:
Meaning: Voluntary organisations are not guide and controlled by government. Their functions
are performed by volunteers who are working towards improving social conditions of society.
Features: Voluntary organisations are working towards achievement of vision to increase living
standards of people in society.
Objectives: The main objective is to work towards society welfare.
Purpose: Mission of OXFAM is to develop solutions for people in society to deal with poverty
conditions. There is emphasis towards global change movement. People are empowered to create
a world free of poverty.

legal structure: Legal structure of Oxfam is as a hierarchy organisational structure that consist of
board of directors at top and further duties are flowing from top to lower level of management.
There are trustees who are governing association body of Oxfam. Governance is one by
executive board chaired by Oxfam and board of supervisors (Ronto, and 2017).
Size: there are 300 staff members in Oxfam that are present globally, 50,000 volunteers and
interns that are present in 90 countries that leads to a highly diverse workforce.
Scope: Oxfam has a large scope as their objectives consist of alleviate suffering, relieving
poverty and developing possible solutions for people. There is confederation of 20 charitable
organisations that are independently working towards poverty alleviation.
Sole trader
Sole trader: Sole trader are business that are controlled by a single individual.
Goal: These organisations are controlled by a single individual and their objectives are set
according by sole traders it can be maximisation of profits or any other related set of objectives
(Yahia, Essid and Rebai, 2018).
legal structure: The legal structure of Sole traders is formed in such a way that sole trader is
personally liable for all types of losses and debts in case of winding up and regular functioning
of organisation.
Example: Columbus photographer is example of business that are controlled by single owner.
Partnership:
Partnership organizations are defined as those organisations that are owned and controlled by
two or more persons with a objective of maximisation of profits.
Goal: Maximisation of profitability is major goal
legal structure: The legal structure of partnership organisation are governed under partnership
act 2002.
Example: Solicitor business is a partnership business of UK.

P2 : Size and Scope of organisations
Small Medium Large
Meaning Organisations are
employing employees
ranging from 10-49
and are classified as
small enterprises
(Kengne Talla,
Gagnon and Dawson, ,
2016).
These organisation
consist of less than
250 employees.
There are more than
250 employees in
number.
Goal These organisations
are focussed on
achievement of
specified objectives.
For example Bright
star is a small
organisation that is
performing the
function of residential
mortgages and life
lodging.
Smith brothers is a
medium sized
organisation and main
focus is towards their
contracting business.
TESCO is a large
private organisation
that is having a goal of
maximisation of
market share and
achievement of higher
profitability.
Market share Small organisation
posses very limited
share of market and
they are focussing on
small range if
products.
Medium sized
organisation are
involved in
Continuous new
launches such as
Smith brothers have
expanded their market
share by making some
new launches in Irish
TESCO is having a
large market share as
they are presence in
large parts of Europe
and Asia with higher
share in countries such
as Thailand, UK,
Hungary and Ireland.

division.
Profit share Profitability ratio is at
71%.
According to quarter
enduing September
2020 there have been
profits of 15000
dollars.
TESCO had a profit
amounting to 300
million for year ending
2019.
Stakeholder size Internal stakeholders
constitute a size total
of 100.
Stakeholder size is of
200 that includes
owners, employees
and directors.
Stakeholder size of
TESCO is ranging to
4,50,0000 associated
individuals directly or
indirectly.
Difference between franchising, joint ventures and licensing
Franchising Joint ventures Licensing
Franchising is a type of
agreement that is used as a
license for operating a business
by use of franchised name,
standardised processes and
operating methods.
Joint venture is a agreement
between tow organisations to
provide each other with
necessary resources. Tow
organisations are working
towards a common objective.
Licensing. is a option
adopted in manufacturing
industries. It consist of
providing a license to create a
product in a different location
for a specified fee.
TASK 2
P3 Interrelationship between functions of different organizations
Different functional units:
In each business organization there are different activities that have to be perform,ed by
organizations. In this all activities have to be aligned together for achievement of higher
efficiency in overall organization (Abu Amuna, Al Shobaki. and Abu-Naser,, 2017). The
interrelations among different functional departments of TESCO are mentioned below:
Role of marketing & finance:

Marketing department has to perform the unction of promotion opf products and services ion the
target market of Tesco. Finance department works for allocation of available financial resources
to different functional units. Both marketing and finance department posses interrelationship
where finance department provides necessary budget requirement of marketing department so
that there can be execution of functions.
Role of HRM and operations: HR department is dealing with managing of present workforce.
All functions such as recruitment, selection, training, orientation of employees are performed by
HR department. Operations department have to inform about the requirement of staff, necessary
skills, qualification required according to which HR planning is based.
Organization structure:
Strategic business units:
When size of corporations become large they are restructuring as revitalization means of
organization. Positions are crated for development of opportunities and needs. Strategic business
units are generally set up like separate organizations with profit & loss invested in top
management of unit.
Bureaucratic structure: It is a stricture that is adopted by large organizations with complex
operations. There are standard process and procedures.
Post Bureaucratic structure: such organizations consist of a central command that comprises of
some board members and decision making is by a democratic process. It encourages trusts,
employee participation and responsibility.
International:
The perturbations of such organizations are part of one home country as base center. Offices are
present only in one home country as there is no foreign direct investment.
Transnational:
These organizations are operating in many countries, posses foreign direct investment. There is
use of a flexible approach, adapting to local culture and understanding.
Global organization:
Global organizations are having a foothold in large number of countries. There is no change
being made in information and branding of a global organization even if there can be some
operational changes.

There has to be focus on adoption of most appropriate global business strategy that is
attempting to achieve a optimum situation between maximization of large scale efficiency and
economies of scale. International & global organization lay emphasis on economies of scale and
multinational strategies emphasize on economies of scope. Transnational organization are
willing to achieve both. TESCO is a supermarket chain that is a transnational retail brand is
ranked at 50th position.
TESCO has diversified in new markets like clothing, electrical, home products,
telecommunications and financial services.
Matrix structure: It is used for depicting the relationship between subordinates and superiors
according to grids and matrix. There are some specific projects that are reporting variations
because of such grids.
Functional structure: It is a structure that is used in TESCO where there is division of
organization accrediting to various functions (Yang, 2017) Each functional head has to perform
all the functions that includes general manager, finance manager, production manager. At store
level it consist of managers such as non food trading manager, food trading manager and
personnel manager.
In TESCO there is BOD that consist of 10 member's where John Allan is the board
chairman, Dave Lewis is CEO and Alan steward is the chief financial officer. The governance
structure in TESCO include five committees who are liable to TESCO PLC board. It consist of
11 members as a part of executive committee that is lead by Dave Lewis who is the chief
executive. The overall organizational structure that is functional structure is adopted where there
is division according to specific organization functions that leads to establishment of close link
between the organizational structure and functions.
(Source: Tesco Organizational Structure, 2016)

TASK 3
P4 : Positive and Negative impact of macro environment on operations of a business
For the purpose of understand the specific organisational factors that are affecting the
organisation functioning there is use of PESTLE analysis as a tool to analyse the positive and
negative impact of these factors on functioning of organisation:
Political factors: TESCO is present in 12 countries of Europe and Asia. They are expose to
many political factors that are affecting their function as mentioned below:
Positive: There was introduction of “TESCO tax” on large supermarkets by local council but
government of UK refused this taxation policy. It lead to prevention of price hike of TESCO
products (Amasawa, Shibata, Sugiyama and Hirao, 2020).
Negative: EU referendum is affecting the investors because of increase in governing factors and
fast changing policies.
Economic factors: There are certain factors that are related to economy of countries where
TESCO is functioning. It consist of several factors such as:
Positive: Increasing presence in international markets and diversification are two strategies that
have lead to success of TESCO.
Negative: labour cost is a economic factors that is affecting TESCO such as annual bill
amounting to GBP 4.5 billion. In year 2018 the minimum wage rate enhanced by 4.4 percent for
people of age group 25 years and above. It lead to high cost of millions of pounds for TESCO.
Social factors: Social factors consist of the changing needs of society and customers impact on
functioning of business.
Positive: TESCO has been able to successful respond to change of their target segment of
customers. There is more emphasis of customers towards healthy eating so TESCO has
Launched complete new range of vegan products.
Negative: TESCO have to work according to fast changing customer choices that requires high
amount of flexibility in organisation functioning.

Technological factors: TESCO has been facing issues related to technological factors. Some of
such factors are:
Positive: Self checkout system of payment and RFID technology has enabled customers of
TESCO to enhance the in store experience of their customers. There has been a new online
payment system of TESCO known as Payqwid (Zhang and Walton, 2017).
Negative: frequent changes in technologies like scan as you shop, RFID technology across 524
stores of TESCO is resulting in high financial burden.
Legal factors: It is related to legal and regulatory frameworks that have been developed by
concerned authorities in a country and have to be followed by organisations.
Positive: TESCO has adopted all legal practises for their employees such as equality act 2010
that leads to high satisfaction for their overall workforce.
Negative: in year 2016 TESCO suffered from legal actions by their employees because of low
pay rates for weekend, night & bank holiday shits. They had to pay GBP 12 million to to settle
the legal action.
Environment factors: With changing governmental policies and environmental requirements
organisation are moving towards adoption of certain sustainable practises that is not posing harm
to external environment.
Positive: TESCO is adopting fuel saving routes for using a sustainable technology (Rezaee,
2016). They are also allocating unwanted plastic bags from their customers and then recycling
them. They are committed to use renewable energy sources that can lead to 100 percent
electricity generation by year 2030.
Negative: TESCO is facing immense pressure from many government bodies to address all the
environmental issues as they are liable to respond to such issues that can benefit the society.
TASK 4
P5 : Internal Analysis of organisation to identify strengths and weaknesses
SWOT analysis:
For the purpose of understand the internal functioning of organisation there is use of SWOT
analysis as mentioned below:

Strength Weakness
 TESCO is one of biggest grocery
chains according to their annual
revenue of 63,900 million pounds in
UK & Ireland.
 TESCO Has a efficient suppliers
network they are also reducing cost buy
having a waste management system.
 TESCO is a leading supermarket chain
that is dominating markets of UK by
having a 27 percent share.
 TESCO has been able to create 743 K
job opportunities worldwide in year
2018-19 and they are largest private
employer in Europe.

 TESCO expansion ion Japanese and US
markets was a comet failure in year
2012.
 TESCO has been involved in
accounting frauds scandal in year 2017.
 Brexit referendum is affecting
organisation performance has lead to 9
percent fall in market share prices.
 TESCOP operation performance is
weak in some countries because of
lower productivity of their marketing
departments.
Opportunities Threats
 TESCO has launched a new jacks store
that can further be expanded by higher
investment and survive with other low
cost rivals such as Aldi and Lidl.
 South Korea, Indonesia and turkey are
merging markets for TESCO future
investment.
 In case of stores that are not performing
well TESCO can partner with local
business.
 Home delivery services should be
expanded in remote areas especially in
 TESCO has been involved many past
instances that ahas impacted their brand
image such as their Christmas
advertisement in 2017 where there was
a direct attract on Christian faith.
 TESCO marketeers are using
advertising techniques by name
“Wood-side farms” but there has been
no farm in their assets lists.
 There is huge competition faced from
brands such as Aldi, Walmart and
careefour.

situation of COVID-19 impact where
people are preferring stores who are
providing free home delivery services.
P6 interrelation in strength & weakness of external macro factor.
There is decision making that is affected by macro & micro factors of business environment by
using of tools like SWOT analysis and PESTLE analysis. These techniques are helping in the
process of decision making. In TESCO the interrelationship between strength & weakness with
external factors are mentioned below:
Basis Political Economical Social
Strength TESCO has been able
to get benefits from
promotion of free
trading blocs of
government
(Centobelli, Cerchione
and Esposito, 2017).
TESCO is affected by
economic factors such
as percentage of
overall customer
spending on food
products has increased
over years that is
leading to higher
revenue for TESCO.
TESCO has used their
existing brand image
for the purpose of
expanding across
different parts of
world. There have won
awards such as
“British favourite
supermarket”. They
have been awarded
with drinks wards and
also won best grocer
awards 2018.
Weakness EU referendum is a
great risk factor that is
affecting British
economy. High import
duty has affected
TESCO as they are
There has been
increasing borrowing
cost in UK that is
leading to high cost
and decreasing of
profits that is affecting
TESCO has to
continuously monitor
the fats changing
customer requirements
that requires high
amount of flexibility in

importing some
invention from outside
Asia and china.
the Cost leadership
position and brand
reputation of TESCO.
organisation which is
difficult to establish
for a organisation that
is non-functioning on
such a large scale.
Basis Technological Environmental Legal
strength TESCO has been fast
in adopting of new
technologies to
increase customer
convenience such as
they have adopted
RFID technology,
PayQwid, “Scan as
you shop” Check
points that has lead to
higher efficiency in
terms of saving of
labour and cost.
TESCO has a
workforce with high
level of commitment
towards fuel saving
vehicles and avoiding
use of plastic bags.
They have made
claims of minimization
of carbon footprint up
to 50 percent by year
2020.
TESCO has adopted
all legal laws and
regulations such as
they are conducting
their operations
according to strict
code of practises of
Food retailing
commission (FRC).
Weakness TESCO has faced
several issues that has
drastically affected
their brand image such
as horse-meat scandal.
TESCO is facing high
governmental pressure
to properly adopt all
the measures for
sustainable
development.
TESCO has been
facing legal actions
because of misleading
of investors and fraud
that is leading to
payment of huge fines.

Conclusion
From above mentioned aspects it is concluded that organisations have to conduct external
and internal environmental analysis to understand its impact on overall organisation functioning.
There are tools such as SWOT analysis and PESTLE for getting insights of external & internal
factors that are leading to development of strength and weakness for organisation. Size and scope
is determined according to structure and the type of organisation that assist in strategy
formulation for achievement of laid vision and mission.

REFERENCE
Books & Journal
Abu Amuna, Y.M., Al Shobaki, M.J. and Abu-Naser, S.S., 2017. Strategic environmental
scanning: an approach for crises management.
Ali, M.H., Zailani, S., Iranmanesh, M. and Foroughi, B., 2019. Impacts of environmental factors
on waste, energy, and resource management and sustainable
performance. Sustainability, 11(8), p.2443.
Amasawa, E., Shibata, T., Sugiyama, H. and Hirao, M., 2020. Environmental potential of
reusing, renting, and sharing consumer products: Systematic analysis approach. Journal of
Cleaner Production, 242, p.118487.
Centobelli, P., Cerchione, R. and Esposito, E., 2017. Environmental sustainability in the service
industry of transportation and logistics service providers: Systematic literature review and
research directions. Transportation Research Part D: Transport and Environment, 53,
pp.454-470.
Jang, S.M. and Kim, K.I., 2018. The Effects of the Environmental Factors for ICT adoption on
Globalization capabilities and business performance of SMEs. Journal of Convergence for
Information Technology, 8(4), pp.219-224.
Kengne Talla, P., Gagnon, M.P. and Dawson, A., 2016. Environmental factors influencing
adoption of Canadian guidelines on smoking cessation in dental healthcare settings in
Quebec: a qualitative study of dentists’ perspectives. Dentistry journal, 4(4), p.40.
Nurettin Oner, M.S., 2016. Organizational and environmental factors associated with hospital
financial performance: A systematic review. Journal of Health Care Finance, 43(2).
Rezaee, Z., 2016. Business sustainability research: A theoretical and integrated
perspective. Journal of Accounting literature, 36, pp.48-64.
Ronto, R., Ball, L., Pendergast, D. and Harris, N., 2017. Environmental factors of food literacy
in Australian high schools: Views of home economics teachers. International Journal of
Consumer Studies, 41(1), pp.19-27.
Yahia, F.B., Essid, H. and Rebai, S., 2018. Do dropout and environmental factors matter? A
directional distance function assessment of tunisian education efficiency. International
Journal of Educational Development, 60, pp.120-127.
Yang, J., 2017. Environmental monitoring. In Environmental Management in Mega Construction
Projects (pp. 65-69). Springer, Singapore.
Zhang, J.A. and Walton, S., 2017. Eco‐innovation and business performance: the moderating
effects of environmental orientation and resource commitment in green‐oriented SME
s. R&D Management, 47(5), pp.E26-E39.

Online:
Tesco Organizational Structure, 2016[online], Available through<https://research-
methodology.net/tesco-organizational-structure/>
PESTLE analysis of TESCO, 2018 [online], Available
through<https://www.marketingtutor.net/tesco-pestle-analysis/>

Source: Tesco organization structure, 2016