Business and the Business Environment

Business and the
Business Environment

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
Task 1...............................................................................................................................................1
P1 Different types and purposes of business organisation..........................................................1
P2 Size and scope of different types of organisations.................................................................3
M1 Structure size and scope of organisation...............................................................................5
Task 2...............................................................................................................................................5
P3 Relationship between different organisational functions and their link.................................5
M2 Advantages and disadvantages of interrelationship..............................................................6
Task 3...............................................................................................................................................7
P4 Positive and negative impacts on the macro environment that has upon business................7
M3 Uses of PESTLE model appropriately by detailed analysis..................................................9
Task 4...............................................................................................................................................9
P5 Internal and external analysis of specific organisations.........................................................9
P6 Explanation of strength and weakness interrelated with macro environment......................11
M4 Application of SWOT.........................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business Environment is also known as marketing environment that refers as many factors
such as political economical social environmental and technological which are used to maintain
the business. It is important for any business to focus on such factors and influence their business
which helps to give higher productivity and profitability (Gaganis, Pasiouras and Voulgari,
2019). In environment there are different types of organisation which are running their business
accordingly. To understand about business environment Sainsbury has been taken that is larger
size private organisation running its business at different places and maintaining their business.
This report covers different topics such as types of organisation, interrelationship between
functions, positive and negative impacts of macro environment and strength and weakness of
specific business which are related to macro environment.
Task 1
P1 Different types and purposes of business organisation
In business environment organisation is said to a group of people who assemble
collectively in order to work and complete task. All organisations are not same who are running
their business by following different guidelines that helps to run and taking competitive
advantages. The types of organisation are as defined:
Public – Businesses which are established and formulated by following the government
guidelines and controlled by political system is illustrated as public organisation. These types of
organisation are controlled by government and its authority which help to think about people.
These companies provide diverse choices of goods and services which make happy to customers.
The examples of public organisation are NHS, Network Rail, BBC and Cabinet offices which are
provide variety of products and services. From the all companies Network Rail is selected
organisation that managing network of rails in UK with government system. This organisation is
following all regulations which are made by office of railway and governing body and it
provides guidance to operate their business successfully (Nedum-Ogbede, 2018).
Purposes – The public organisation have a purpose of developing infrastructure,
providing different sources and ideas to generate capital, redistributing income and welfare of
public. By considering Rail Network has purpose to offer valuable and reasonable railway
services s people can obtain this and feel good.
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Legal structure- In Public sector, organisations mainly focuses on legal structure that
involves local government, central, state and Public Corporation which help to run a business.
From the all, Network Rail is proceeding operations via central government legal structure.
Private – Those organisation which are operated by individuals and others in order to
make profits by following companies regulation is consider as private companies. They are
getting funds from themselves whether personal, friends and relatives. This types of companies
do not follows any government regulation because they follows their own laws and regulations to
run a business. They understand the requirement of people and provide that kind of products and
services by setting prices and making profits. Some private organisations are Tesco, Sainsbury,
Mark and Spencer, Morrison, Bentley, BMW etc. From the all, Sainsbury is selected
organisation to discuss more and understand their purposes and legal structure which helps to
establish a business effectively. Sainsbury is larger size supermarket that is owned and controlled
by private authorities in order to fill customer demand and running business effectively.
Purpose – The purposes of all private sectors is generating higher profits by increasing
their business activities and conquering sustainable intensification with high revenues by mass
production. The main purpose of Sainsbury is increase mass production of its products and
services and earns maximum profits by winning competition (Kopnina and Blewitt, 2018).
Legal structure – At private organisation the legal structure involves sole proprietorship,
corporate structure, partnership, public limited company and unincorporated structure which
helps to run a business effectively. Sainsbury is larger size organisation that is following
corporate structure and operating business by offering its shares general public (Nedum-Ogbede,
2018).
Voluntary – This is described as group of people who have created an agreement with
volunteers so a business can be run and completing task. This is also known as non-
governmental business which is non-profit making company running their business effectively.
These organisations are running their business by composition the functions in which it assist
volunteers to provide services in relation to social welfare. The different types of voluntary
organisation such as social welfare, National trust, National council for voluntary organisation
(NCVO), Onxfam, save the children and British heart foundation which works for people
welfare. These are following the regulation which is related to charities protection and social
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investment act 2016. This involves NVCO that is voluntary organisation and providing different
types of services to people (Kopnina and Blewitt, 2018).
Purposes – The main purpose of voluntary sector is provide and deliver suitable services
to people which should be welfare of people and social development. The purposes of NVCO is
to increase the society, connecting people and enhancing volunteers which helps to work for
social people.
Legal structure – The legal structure of Voluntary sector involves trust structure, limited
by guarantee, incorporation, unincorporated association, charity and membership organisations
that are running their business for providing safety of people. NVCO is charity and membership
legal structure which helps to run a business (Trisakhon, Onputtha and Peamchai, 2018).
P2 Size and scope of different types of organisations
The size and Scope of different types of organisation such as public private and voluntary
are as defined:
Public organisation (Network Rail):
Background of organisation – Network Rail is an organisation which dedicates
individuals who are committed to build a better railway. It refers as public body of transport
which is classified in to public sector. This is operating business in infrastructure in tunnels,
track, roads etc.
Size and scope: This is internationalisation organisation that is increasing urbanisation
and income for urban as well as rural areas by providing them travelling services. It is getting
support from government that is increasing its scope by maintaining and funding properly.
Products and services: Network Railway is providing transport services at reasonable
prices to people with best quality. They build a good and well developed infrastructure by
diminishing barriers in travelling.
Vision and mission – To provides better quality of transport and travelling services to
people who relied on public transportation. Moreover, vision is to provide safe and reliable
transportation services (Trisakhon, Onputtha and Peamchai, 2018)..
Objectives: The main objective of Sainsbury is providing better services to people in
relation to transport.
Shareholders – The shareholder involves national founder, local funding bodies,
passengers, local government agencies.
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Private organisation (Sainsbury):
Background – Sainsbury is retail Sector Company which is operating business by
providing better quality of products and services to people. It mainly established to offer variety
of products in wider range and getting higher profits (Trad and Kalpić, 2019).
Size and scope: Sainsbury is employing more than 100000 employees as it is larger size
which offers variety of products and getting higher profits in competitive market. The scope is
big as it runs its business at different nations and areas which helps to deliver kind of products
and services.
Products and services: Sainsbury if offering variety of products and services which
related to daily life and fulfil needs. It also deals in food and home ware products.
Vision and mission: To deliver best quality and producible products so people get
attracted more and encourages to buy such products and services.
Shareholders: These are also called business holders who have participated in business
activities that are employees, shareholders, market holders, owners and others.
Objectives – Win the competitive challenges and get high profits than others by
becoming leading organisation.
Voluntary organisation (NVCO):
Background – NVCO is a community sector in England which is established for
supporting people and creating good life for people. It has sister organisation such as Wales
Council for Voluntary action in wales is providing services to social people.
Size and Scope: In UK, approximately 1,66,854 voluntary organisations are available
who are running their business. NVCO has expansion size and scope as it is connected with
many members who are providing good services to people and executing operations for civil
society.
Products and services: It provides guidance to people how to start charity, provides
funds to poor people, managing them and conducting events for increasing their understanding
which helps to increase their livings.
Vision and mission: Vision of NVCO is to make a better world and social people who
get ready to help others. Mission of such organisation is to fulfil primary needs of poor people
and spread awareness between people.
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Shareholders: In such types of organisation members are consider as shareholders who
are funders, charity commission, local community members, trustees, local voluntary people etc.
Objectives - Their aim is to get connect with more people and organisations. They want
to grow, enhance and be a socially responsible organisation.
M1 Structure size and scope of organisation
In environment types of organisations are public private and voluntary which are having
different size and scope and also providing products and services that helps to run a business
effectively. Network Rail is public organisation that offers services in transportation sector,
Sainsbury is private organisation providing different types of products and services at
international level that means it has wide scope. Moreover, NVCO is voluntary organisation
that provides service to poor people and others who needs this helps to maintaining good
business.
Task 2
P3 Relationship between different organisational functions and their link
Organisational structure is refers as process in which management decided that how
activities or task should be allocated and coordinated in order to attain the business goals and
objectives. It affects organisational action and provides a foundation to operate a business
successfully. The different types of organisational structure are as discussed:
Functional structure: Each portion of organisation is grouped according to its purpose
and help to run business activities accordingly. This mainly depends on talent and knowledge of
workers and each department.
Divisional structure: This is mainly used in larger size companies that are operating
business in wider geographical area and having smaller group where it provides variety of
products and services.
Sainsbury is following divisional organisational structure as it is longer company
providing variety of products and services to people at different locations. This structure helps to
allocate the roles and responsibilities of each department such as HR, Finance, marketing, sales,
research and development efficiently which helps to attain the business goals and objectives by
sharing information and reporting timely basis.
The relationships between different functions in relation to Sainsbury are as defined:
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Department of HR and finance – HR department is related to all organisations which
formulates policies and regulations to run a business. Finance is another department which helps
to fulfil needs of all activities by providing finance. Both functions are interrelated such as in
Sainsbury organisation HR manager is getting finance from finance department for the purpose
of giving vacancy information and recruiting best candidates for their organisations which helps
to run a business effectively and maintain the profitability. Moreover, finance department also
helps to maintaining all activities and functions in completed form with the help of finance
functions.
Department of marketing and sales: Department of Market Meanour Market Analysis
Activities to pull together a range of data styles, including preferences, needs, preferences and
demand from targeted populations. In the sense of the Sales Department of Sainsbury to deliver
the products to the clientele as well as to set up a range of promotional techniques, methods and
schemes to improve their promotional Both the department works with others by operating
within the hierarchical framework of the functional system in addition to the goals of amplifying
earnings, revenues and the image of the company. Therefore, both functions are interrelated
which helps to run a business effectively.
R&D and IT – Research department of any organisation is playing vital role as it
conduct the market research which helps to know what is going on in market and current trend
and share with IT department which helps to bring technology accordingly. Both functions are
working collectively in Sainsbury as manager of R&D get information about people trend and
help It department to bring new technology so new products and services can be provides
accordingly and maintain higher profits.
M2 Advantages and disadvantages of interrelationship
In organisation there are different department exists which are interrelated with each other
and maintain a business effectively. In Sainsbury, there are different department such as
HRM, sales, marketing, research and IT which are link to divisional structure and help to
attain the business goals effectively.
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Task 3
P4 Positive and negative impacts on the macro environment that has upon business
Macro environment – This environment is related to various factors that are exists outside
of business premises. It is important for organisation to focus on factors and operate a
business successfully by considering this factor. For gaining knowledge about macro
environment, PESTLE analysis is suitable framework which is used to run a business and
maintaining good performance. The PESTLE analysis in context to Sainsbury that is
defined below:
Political – This factor involves tax rates, political system, government regulations and
stability which has impacted on business. In UK, the political system is stable which helps to
operate a business successfully. Sainsbury is obeying regulations and policies which are
governed by government and impacting on business (Lam and Wong, 2018).
Positive impacts: Government has formulated some free trade practices and policies
which has impacted positively on Sainsbury as company is running businesses by reducing cost
due to free trade practices.
Negative impacts: Due to Brexit, government is changing a taxation policy and
government regulation which is impacting negatively on Sainsbury as low sale and high
investment (Klepac and Berg, 2019).
Economic factor – As UK,s economy is highly developed and contributing country
which involves inflation rates, interest rates, GDP rates, population growth etc. which has
affected the business of Sainsbury that is retail sector company.
Positive impacts – This factor has impacted on business positively such as the
population of UK is growing day by day whose needs and wants are also increasing, so due to
increasing population and needs of people selling activities of Sainsbury organisation is
increasing which helps to operate a business successfully (Lam and Wong, 2018)..
Negative impacts – In UK, interest rate is fluctuates, where management spend high
money to paying loan amount and interest sue to which business can face challenges.
Social factor – It has defined that social segment of UK is highly educated and
developed where business owners need to focus on emerging trend and wants of people then
should provide products and services. The impacts of such factor are as defined:
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A positive impact – The manager of Sainsbury are increasing their business activities by
focusing on people demand and wants which helps to improve business productivity and
profitability.
Negative impacts – In case of not following people needs and wants, the business
activities of Sainsbury can be reduced because people can switch to other brand and products.
Technological factor – This factor is related to innovation and technology which helps
to run a business and make higher profits. This is important for organisation to update their
products and services by using latest techniques that can helps to get competitive advantages
(Klepac and Berg, 2019).
Positive impacts: By using new technology Sainsbury is adopting a new trend in which
it is providing online shopping and payment method which helps to run a business in competitive
environment.
Negative impacts: It may impacts negatively on Sainsbury’s business such as low
profitability due to investing money on research and adopting new technology in their business.
Legal factor – This factor is somehow related to political authorities where it bounds
organisations to follow rules and regulations that can helps to execute plans and businesses
effectively. This involves different legislations such as labelling act, minimum wages act, fair
packaging, consumer protection, right to informed, minimum wages and others which are
important to continue a business. The impacts of such business are as defined:
Positive impacts - Sainsbury is following consumer protection act, fair packaging,
labelling and minimum wages act which helps to run a business effectively. Moreover, manager
of Sainsbury are providing all important information to people regarding their products and uses
which make them happy and encourages them to buy products and services (Klepac and Berg,
2019).
Negative impacts – In case of not following minimum wages act and anti-discrimination
act employees of Sainsbury do not be stable and make decision to switch the organisation that
can reduce the productivity and selling activities.
Environmental factor – People who are living in UK are more concerned about
environment and they need to follow all related legislation in relation to environmental
protection, changing climates etc.
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Positive impacts – Sainsbury is taking imitative of greenery, save energy and optimum
utilisation of natural resources which helps to maintain good relations and increasing business
activities.
Negative impacts – Not focusing on environmental practices and increasing carbon
emission is impacting negatively on Sainsbury as it can reduce the selling activities (Klepac and
Berg, 2019).
M3 Uses of PESTLE model appropriately by detailed analysis
PESTLE analysis is required to analysis the external environment that states which factor
can impacts on business positively and negatively. Sainsbury is larger size organisation that is
using PESTLE analysis which helps to know how political, social, economic, environmental and
technological factors that has impacted on business. Having stable political system and reducing
inflation rates has impacted on business in good ways which helps to run a business effectively
and maintaining good business activities (Ward and et. al., 1995).
Task 4
P5 Internal and external analysis of specific organisations
Internal analysis – This is related internal environment which is conducted by
organisation in order to run their business and getting profits effectively. The internal and
external analysis in context to Sainsbury is defined below:
Strengths Weakness
 Sainsbury is leading organisation that is
operating business by providing variety
of products and services.
 It is expanding business in international
level.
 Conducting programmes and events in
order to aware people and running their
business effectively.
 Brand has high position in UK market.
 The prices of its products and services
are high than other super market which
can reduce the productivity.
 Organisation is not able to accept the
new entrants challenges
 It fails to penetrate in international
market.
Opportunities Threats
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 Organisation is having strong brand
position that is creating an opportunity
for company to establish their business.
 It is taking government support as it is
following the green initiatives.
 Using financial resources and natural
resources optimally.
 Filling the needs and wants of
customers which helps to improve the
organisational productivity.
 Rising cost of suppliers which is
decreasing the profitability of company
and productivity.
 Increasing emerging trend of
isolationism is also a threat for
Sainsbury.
 Changes in rules and regulation which
are related to political system and
environment.
Porters five forces:
This is a tool which uses by organisation for running their business and taking
competitive advantages efficiently. In other words, it is a strategic management method that uses
to analysis the industry in particular nation and maintain a business by running a business. The
five forces in context to Sainsbury and its strategies are as defined:
Threat of new entrants – In super market there are many organisation which are
operating business by entering in to new market. In UK, there is low entrants for new entrants
that create a situation of running a business by accepting challenges. The management of
Sainsbury can get opportunity by providing innovating and reasonable cost products which can
help to increase sale and limits the new entrants to enter in market.
Competitive rivalry – In UK, there are fierce competition in retail sector which is
creating problems and challenges for organisation sale their products more as compare to others.
The threat of rivals is high such as many competitors are having in market like Asda, Morrison,
Topshop, Tesco etc. For addressing the competition Sainsbury need modify its structure and set
prices of their products lower than competitors which can help to take competitive advantages
effectively (Trad and Kalpić, 2019)..
Threat of substitutes – As there is no substitution of basic needs such as foods and
clothes which states the threat of substitutes is low which is creating opportunity for Sainsbury to
run its business and increasing sales which helps to make profits (Trad and Kalpić, 2019).
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Bargaining power of buyers – In business market, the bargaining power of buyers is
moderate because Sainsbury is providing better quality of products and services to customers at
reasonable cost which is creating trust and product value. Therefore, it is an opportunity for
chosen organisation to take the competitive advantages by selling the products and services in
wide range (Ward and et. al., 1995).
Bargaining power of suppliers – In UK, there are less number of suppliers who are
providing better quality of products and services so they are charging more from organisation.
The threat of bargaining power of suppliers is high which is reducing the profitability of
Sainsbury Company. To take competitive advantages management needs to maintain the good
relations and contracts with regular suppliers which can help to get products at fixed cost
(Kennerley, and Neely, 2003).
P6 Explanation of strength and weakness interrelated with macro environment
Interrelation between strength and weakness with macro environment
Basis Strength Weakness
Political Sainsbury is operating business
in stable political system which
helps to run a business in UK
efficiently that is increasing
strength of business and sector.
Continuously a change in government
regulations is weakness for Sainsbury
as it is challenging selling activities in
other nation.
Economical Due to reducing interest rates
and inflation of UK and
Sainsbury is operating business
by making higher profits.
Changes in interest rates of a nation
create challenges for organisation to
sale their products at higher prices.
Social The management of Sainsbury
are focusing on needs and wants
of people and offering products
which strength and business
profitability and maintaining
good relations with customers.
If local consumers turn to another
brand due to their shifting tastes, they
behave as poor because Marks and
Spencer struggle to fulfil acceptable
tastes for a short period of time
(Kennerley, and Neely, 2003).
Technological Concerning environmental Activities in developing countries in
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initiatives in relation to the
protection of raw materials and
contributing to social
responsibility, the organization
aims to gain attention in the
industry that acts as a force.
which technology is evolving rapidly
impair Sainsbury's capacity, which
limits sales resulting in weaknesses
(Trisakhon, Onputtha and Peamchai,
2018)..
M4 Application of SWOT
Sainsbury is applying SWOT analysis which helps to know the strength and weakness of
a business and maintaining higher profits. This is increasing business activities by maintaining a
strong position in competitive market and maintaining higher profits. Moreover, management of
such organisation give efforts to change the weakness in to strength and maintaining a business
on continuously basis (Kennerley, and Neely, 2003).
CONCLUSION
The above discussion summarized that analysing the market climate helps businesses
execute practical strategies and ensures successful execution. As a result, all opportunities and
challenges are adequately defined from which a effective path is established to achieve goals in a
clear and seamless manner. There are different forms of organization with broad reach and
important objectives. Organizational tasks are interdependent and interlinked with non-structured
goals. Use PESTLE research, the organization continues to deal with external variables by
evaluating major changes and opting for an appropriate approach. SWOT analysis helps
company to boost its competitiveness and recognizes essential risk effectively.
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