Business and Business Environment: Types, Functions, and Impact

This report discusses the different types and purposes of organizations, such as public, private, and voluntary. It also explores the relationship between different organizational functions and their link to structure and objectives. Additionally, it identifies the positive and negative impacts of the macro environment on business operations, using the PESTEL analysis. The report concludes with a critical analysis of the challenges faced by different business structures and relationships.

Business and business
environment
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Table of Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P1 Different types and purpose of organization public, private and voluntary...........................3
P2 Size and scope of range of different types of organization....................................................5
M1 structure, scope and size........................................................................................................6
LO 2.................................................................................................................................................6
P3 Relationship between different organizational functions link to structure and objective......6
M2 Advantages and disadvantages of interrelationship between organizational functions and
impact on structure......................................................................................................................7
D1 Critical analysis of challenges with different business structure and relationship................7
LO 3.................................................................................................................................................8
P4 Identify negative and positive impact of macro environment upon business operations.......8
M3 PESTEL analysis of macro environment............................................................................10
LO 4...............................................................................................................................................10
P5 Internal and external analysis by using SWOT analysis......................................................10
P6 Strength and weakness interrelate with external macro factor.............................................11
M4 Justification of SWOT analysis influences decision making process.................................11
D2 Impact of macro and micro environment on business objectives and decision making
process.......................................................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13
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INTRODUCTION
Business and business environment is the best and effective approach which is the
collection and sum of all internal and external factors. Those factors are employees, customer’s
expectation, supply and demand, management, client, owner and suppliers, activities by
government and innovation as well as social trends. The present report is based on arcadia group
which is British multinational retail company. Company deals in various product and services
like clothes, accessories and shoes. Report will explain different types and purpose of
organizations like public, private and voluntary with size and scope range of organization. This
will explain relationship between different organizational functions and linking with objectives
and organizational structure. The report will identify impact of external factors by using PESTEL
analysis. At the end of report will also highlighted internal and external analysis of organization
with its strength and weaknesses and interrelations with external factors.
LO 1
P1 Different types and purpose of organization public, private and voluntary.
There are different types and purpose of organization which are establishing for achieving
goals and objectives that are sets by owner. There are two types of business which are explained
below:
 Profits making business: this type of organization has one main goal to make effective
and best money like to make the higher profit (Bocken, Boons and Baldassarre, 2019).
 Non profit making organization: this type of organization has focused on a keeping it for
going in an effective manner at market place.
Different types of organizations are as follows:
Private organization:
Private organization is the type of organization which is run by companies and individual
for earning profits. The Private company has main purpose is to earn profits for growth of the
economy. There are different types of private companies are explained below:
 Sole traders: This type of business is owned by an individual person. Example: real
beauty salon is a sole trader firm that is formed for earn money. Key features of sole
trader business are simple to form, individual owner, less legal formalities (Bosilj Vukšić,
Brkić and Tomičić-Pupek, 2018). The main goal of sole trader is to retain higher margin
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of profit and purpose to keep costs lower. The main objectives of company are to make
money for fulfil ultimate goals. The legal feature of company is minimum government,
unlimited liability.
 Partnership firm: is organized with two or more people. John Lewis is the best example
of a partnership firm. The main feature of business is two or more persons, lawful
business and sharing profit and loss equally. The Goal and purpose of this business is to
share the loss and profit equally at market place (Buehler and et.al., 2019). Objective of
business is to bring together their skills and resources for getting effective success at
market place. The legal feature of company is come with legal agreement and contract at
the market place.
 Public limited firm: This type of company is held small business entity in which owner
liable is limited for sharing their share. Example of private limited company is TESCO is
private limited company. Goal of TESCO is to make shopping cheaper for the average
households. Purpose for opening is attracting customers and objective of business is to
introduce more healthy eating products at wide range of supply.
 Private limited firm: private limited company is held small business entity, in which
owner liability limited to their share. The best example of private limited company is
arcadia group. Main features of private limited company are owning, legal compliances
and minimum share capital. The main goal and purpose of company is to earn money.
Public sector:
This type of organization is owned by the government for providing services to public.
This sector is makes goods and services for people (Comin and et.al., 2019). The example of
Public Sector Company is NHS, this provides free medical services to people who are not able to
afford medical services. Feature of NHS is to provide comprehensive services to people.
Objective of company is to keep safer all the people.
Voluntary sector:
This sector has a duty to perform social activities which are undertaken with organization
for non profit organization. OXFAM is the best example of this sector. The main purpose of this
is emphasizing the relationship in society, provide benefits. The organization structure is
contributing greatly to working.
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P2 Size and scope of range of different types of organization.
There is a different range of organization as per size and scope which is defined are as
follows:
 Small and micro: this type of business sales products and services to local market area
and employee less the 10 employees.
 Medium: this type of organization owned individually and has a small number of
employees. Investment in machinery is also lower (Farazzmanesh and Hosseini, 2017.).
 Large: this type of business includes multinational business. That have aim to increase
market share.
Micro and small Medium Large
Goals Main goal of
company to create a
new customer services
process.
To increase effective
stability at market
place.
To increase shopping
experience by
providing cheaper
price of product.
Objectives To sustain business
and excellent
customer services.
To make higher profit
margin by offering
various product and
services at market
place.
To increase higher
profit margin by
attracting more
customers.
Market share Is kind of business not
having market share
(Jepson and Schepers,
2016).
John Lewis company
have 30% market
share.
TESCO have 51% at
market place.
No of product and
services
Two or more As per required Ample number of
product and services.
Legal structure Not have any legal
structure
Company have legal
formalities with board
of director. Corporate
agreement is also
include in this
company.
Company is follow
state statute legal
structure. As well as
follow MOA for
business.
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Employee number Less than 10 people 250 employees approx 500 employees
Internal expansion Company have
needed to expand
their product and
services.
Company have
needed to expand
more functions as
well as providing
better training to their
staff.
Company have
needed to invest on
training session for
employees (Rajala,
Westerlund and
Lampikoski, 2016).
External expansion For real beauty need
to think about
expanding business.
Company can take
over other business.
Company can merge
another business.
M1 structure, scope and size.
Product and services are different as per different type of businesses as that have effective
objectives as well different. Like the micro business is provide customer day to day product and
large company have aim to develop economy by providing employment to people.
LO 2
P3 Relationship between different organizational functions link to structure and objective.
In the business have various functions like marketing, finance, production and human
resources which change as the structure required within the organization.
Human resource with production:
The Human resource department is the most important department within the
organization. With the help of this department, the company is able utilize all the resources in an
effective manner. Management of arcadia group is responsible to bring recruitment process and
hiring the right employee for increase productivity. Trained and skilled employees are able to
perform its role for making extra profit for the company (Reddy and et.al., 2020). On the other
side, production department has the responsibility to produce better quality of product. That
production department is taking help of HR department for hiring eligible candidates for team as
well as organizing training session for existing employees. As per that both departments linked
with each other. Change in business structure affects HR department for aligning resource in
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better manner. This helps to marinating perfect organization culture. Business structure impact to
employee’s ability, engagement and ability to retain business for long duration.
Finance and marketing department:
Finance is the one of the most important departments in the business which controls
expenditure and formulate a budget. This department follows all legal frameworks and invest
within activities for maximizing profits. On the other side, the marketing department is
responsible for promoting product and services at market place in order to attract more customer
and increase sales or profit margin through marketing activities. Marketing department gathered
money from market and handover to finance department. Through that finance department have
the proper funds to allocate each and every department within the organization. the main
objective of business to earn profits for that finance department introduce budget within the
arcadia group in that company have need to perform tasks and earn profits (Rudnicka, 2016).
However, arcadia group follow hierarchical structure, this is beneficial for company in order to
take better decision in faster manner as other departments are not involved in decision making
process.
M2 Advantages and disadvantages of interrelationship between organizational functions and
impact on structure.
Within the organization have various kinds of organizational human resources function,
marketing, finance and other. That had impact to business and its structure as a company arcadia
group is follow hierarchical structure then all the departments are performing their own role and
responsibility with proper coordination within the departments. This creates an effective
advantage for company is work will be done in effective and proper manner. Along with this,
disadvantage is each department is not familiar with each other and work that is create biggest
challenges in difficult times.
D1 Critical analysis of challenges with different business structure and relationship.
Business performs by following different structure and relationship with others, through
businesses face various complexity because various people involved in completing a job in
effective manner etc. that is make complex business operations that is lead changes in business
and its environment (Sato, 2017). Problems in business impact to the organizational functions
because these change policies and formulate different strategies to complete in global business.
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Organization has larger structure which are more complex for that and face different types of
difficulty for competing within the market place.
LO 3
P4 Identify negative and positive impact of macro environment upon business operations.
There are various external factors which are affecting to business in negative and positive
side. In order to analysis those external factors here are select PESTEL analysis model and leads
to changes are as follows:
Political factor:
Political factors consist with political situation is a country which is affect to business in
a negative and positive manner. This refers to tax rate like corporate tax, trade tax, etc. for
example: tax rate of the product is increased then its effect in the arcadia group because through
that price of product are increased and customers are not purchased (Tsalis and Nikolaou, 2017).
On the other side, political stability in the country is good then it is more beneficial for business
to growing in market and gain market share. However, if the country is face political instability
through the change in the policies then it will affect to arcadia group in negative manner.
Economical factors:
The Economic factor is consisting with the inflation rate, fiscal policy, exchange rate and
interest rate. For growing businesses at the global level, here is important to analysis, economic
conditions and then decide to enter into the new market. For example: economic condition of the
country is good, then it give positive impact in arcadia group because through that purchasing
power of customers can be identified and creating higher profit margin for the business. On the
other side, this can give negative impact by decreasing inflation rate is decreasing purchasing
power of customers. Through that profitability of business is affected by uncertainty in economic
environment of country.
Social factor:
Social factor is consisting with attitude, behaviour and culture aspects of people and
customers those are completely different person to person which can affect to the business
(Velenturf and Jopson, 2019). For example: customers’ needs are same as per lifestyle in order to
change their business operations and make strategies to complete and for sustaining at market
place. Through that arcadia group is highly benefited from completing market research about the
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changes and make changes in their operations. On the other side, negative impact of this growth
of company if the product is not matches with the needs and importance power of customers.
Technological factor:
Technology plays an important role in the business of growing and reducing cost of
business operations. Present day technology is continually growing and can affect to business in
the negative and positive manner because new technology create various difficulty for companies
to adjusting and adopting those at work place in an effective manner. For example: adopting new
technology by arcadia group in that requires complete market analysis, finance and capability for
using at workplace (PESTEL analysis, 2018). Replacing this with current technology is more
beneficial for arcadia group for working in an effective manner is help to increasing productivity
of business. In that company need to understand the trends and benefits business can gain in
effective manner. On the other, if company is not able to use this then its affect to business in
negative manner.
Environmental factor:
Each and every country has their environmental and its protection standard. For the
growth of the company at the new market need to maintain an effective standard and produce eco
friendly products. This factor consisting with changes in climate conditions, weather and
locations. For example: environment is the most important and effective factor to analysis in
proper manner. In that case, arcadia group need to ensure about those factors and aspects which
can affect to the business like in negative and positive manner. In that government is taking
various steps in order to protect environment. In that if arcadia group is not able to maintain
standard then company have need to close their business.
Legal factor:
The legal factor is consisting with various rules and legislation which are formulated by
government. This refers consumer protection act, employment law etc. those have impact on the
business environment in negative and positive manner. For example: if company arcadia group is
not taking considers demand of customers then it effective affect to business in negative and
positive manner (Yuen And et.al., 2019). As well as employee compensation is also important
for each and every business. In that arcadia group have to provide compensation to employees in
their injuries if company is not provide compensation in case then it affect in negative manner.
on the other side, if company is provide compensation then it gives positive impact on business.
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M3 PESTEL analysis of macro environment.
Political, economic, social, technological, environmental and legal factor affect to
business. In that company need to change their business operation and strategies help to sustain
at market place. In that, changes in taxation polices, exchanges rate, inflation, technological
change and political related to legal. This can affect to arcadia business in both positive and
negative way.
LO 4
P5 Internal and external analysis by using SWOT analysis.
In order to identify strength and weakness of company SWOT analysis will suitable, it will
be effective and beneficial for doing internal analysis the company.
Strength Weakness
 Arcadia group has a powerful and
effective team who gives hard
contribution at the workplace which is
beneficial for business. That is the main
strength company.
 Company has larger size range plus size
of clothing (Arcadia group analysis,
2017).
 Brand name is effective and well
known by the many people.
 Company provide best and effective
customers services.
 The main weakness of the company is
that company have not smaller sizes in
clothes.
 Lower capital investment.
 Company is not using new technology
at workplace.
Opportunities Threats
 The company have effective
opportunity to set their business on
online websites.
 The company can hire 3rd party
suppliers.
 Company can make celebrity
 The main threat of company is
increasing number of plus size retailers.
 Another threat of company global
economy (Bocken, Boons and
Baldassarre, 2019).
 Global presence increases day to day.
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endorsement for promoting business at
market place.
P6 Strength and weakness interrelate with external macro factor.
The Company has an effective management system with strong workforce, which is help to
business in creating effective business environment. The arcadia group is multinational
supermarket which is recruiting talented employees for handling effective work at workplace.
The company has one of the best strengths which is build and maintain their effective strong
relations with staff members and customers by providing best services (Bosilj Vukšić, Brkić and
Tomičić-Pupek, 2018). Through that arcadia group is able to take best advantage which is
political stability. With the strong brand image company ready to provide employment and
decrease unemployment rate at market place.
On the other side company have weakness which is lower investment on technology uses is
creates a negative impact on business. In that business need to make focus on technological
factors.
The company has various opportunities in which one best is, set their business on online
sites is helping reach out to various customers through online sites (Buehler and et.al., 2019).
This helps to increase their business at the global level as well as profit margin. As maintaining
strong relations with customers remain loyal and being with company for the longer period of
time. Some of the changes within the government policies as well as in economic conditions
have the major threat for the arcadia group. Like the highest unemployment rate through that
company has hard pressures for recruiting large number of employees.
Another threat of company is increasing plus sizes in clothes and company have not plus
sizes clothes (Comin and et.al., 2019). This creates negative impact in that company need to
consist with social factor like taste and size of customers by analysis of market in proper and
effective manner.
M4 Justification of SWOT analysis influences decision making process.
SWOT analysis is present strength, weakness, opportunity and threat of company which
can affect to the business and its decision making. This helps to done internal analysis of arcadia
group is consulting will the changes in the business operations, decision and strategies through
that productivity are improved in an effective manner (Farazzmanesh and Hosseini, 2017). With
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the help of this, Weakness Company has need for make effective and best strategies for
overcome those weakness. In that company can use various opportunities will be helpful for
make effective success at market place.
D2 Impact of macro and micro environment on business objectives and decision making process.
Both factors affect to business objectives and decision making process of making some
changes in the economic conditions as well as political environment. Through that company
faces various challenges for achieving their business objectives (Jepson and Schepers, 2016). As
per that company make changes in their business objectives and decision making process for
meeting goals successfully.
CONCLUSION
From the above study, it had been concluded that the business environment has affected by
the different internal and external factors. In that company required to change business
operations and strategies for complete market place. The Report highlighted different types of
organizations with different purpose and structure. Companies had needed to make changes
functions and strategies as per setting business structured. Further, In that study on external and
internal analysis done by suing different models like PESTEL and SWOT analysis. It had been
concluded that the factor has affect decision making process of company as that company has
required making new and effective strategies in order to sustain in market.
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REFERENCES
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enviornment.
Rajala, R., Westerlund, M. and Lampikoski, T., 2016. Environmental sustainability in industrial
manufacturing: re-examining the greening of Interface's business model. Journal of
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Reddy, M. C. and et.al., 2020. Block-4 Towards Lifelong Learning: Creating a Literate
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Rudnicka, A., 2016. Business models based on sustainability. Practical examples. Mod. Menag.
Rev. 21. pp.193-203.
Sato, L., 2017. Sustainability Curriculum in the Science and Business Schools.
Tsalis, T. A. and Nikolaou, I. E., 2017. Assessing the effects of climate change regulations on the
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Velenturf, A. P. and Jopson, J. S., 2019. Making the business case for resource recovery. Science
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ONLINE
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Arcadia group analysis. 2017. [online]. Available through:
<https://www.ukessays.com/essays/business/arcadia-group.php>
PESTEL analysis. 2018. [online]. Available through:
<https://www.professionalacademy.com/blogs-and-advice/marketing-theories---pestel-
analysis>
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