Business & Business Environment Report

This report analyzes the business environment and its impact on Sainsbury's, a leading UK supermarket chain. It explores different types of organizations, their legal structures, and the relationship between various organizational functions. The report also examines the macro environment using PESTEL analysis, identifies Sainsbury's strengths and weaknesses through SWOT analysis, and analyzes the interrelation of these factors with external macro factors.

Business & Business
Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different types and purposes of organisations and their legal structure..........................1
P2. Explantation of the size and scope of different types of organisation.............................3
TASK 2............................................................................................................................................6
P3. The relationship between different organisational functions along with their organisational
objective and structure............................................................................................................6
TASK 3............................................................................................................................................8
P4. The positive and negative impacts of the macro environment has upon business operations
................................................................................................................................................8
TASK 4..........................................................................................................................................10
P5. Internal and external analysis of specific organisations in order to identify strengths and
weaknesses...........................................................................................................................10
P6. Interrelation of strengths and weaknesses with external macro factors.........................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment is the collection of all individuals, entities and other factors which
may or may not be under the control of the company but affect the performance and growth of
the organisation. It can be sum of all internal and external factors such as employees, supply and
demand, management, client, suppliers and others and these all influence the business and
business environment of a firm (Business Environment, 2019). Sainsbury is the second largest
chain of supermarket in the UK with 16.9% share of the supermarket sector. This company is
founded by John James Sainsbury in 1869 with a shop in Drury Lane, London. This company is
split in to three divisions such as Sainsbury's supermarkets Ltd, Sainsbury's Bank and
Sainsbury's Argos. This report includes different types, purposes, size and scope of organisations
along with their business objectives or products & services which are offered by them. The
relationship between different organisational functions and their impact upon the organisational
structure will be explained. Further will be discussed about the positive and negative impact of
macro environment upon business operations by using PESTEL analysis. To identification of the
strengths and weaknesses, SWOT analysis will be conducted and the interrelation of strengths
and weaknesses with macro factors will also define (Andersson, Forsgren and Holm, 2015).
TASK 1
P1. Different types and purposes of organisations and their legal structure
To run a business successfully, there are various types of organisation such as private
public and voluntary. These organisations are different in every aspects such as types, purpose,
size scope and in services which are offered by them. The different types of organisations are as
following:
Private organisation- These kind of enterprises are run or owned by individuals and companies
rather than the government. These firms are an important and essential part of a country's
economic system and the motive of these organisations to earn profit and achieve the
organisational goals in given period of time. Sainsbury is a private sector company which deals
in retail sector and it operate its business worldwide. This company is currently engaged in the
tertiary and secondary sector because it provides services such as bank services, sell food and
others (Ayios, 2018).
1

Purpose- The purpose of this company is to provide good quality products and services
according to the consumer's choice at a competitive cost (Botha, Kourie and Snyman, 2014).
Legal structure- For private sector organisation, the legal structure is as following:
Private limited company- It is type of enterprise which offer limited liability or legal
protection for its shareholders but there are some restriction its ownership. These restrictions are
are defined in the company as laws. Regulations and policies of the firm. It is good or flexible
structure for shareholder because there are limits the number of shareholders to 50 and they are
restricted for trading of the shares publicly.
Sole Trader- It is person or an individual who set up and owns their own business. The
business of sole traders are depend on their own resources so the business is generally on a small
scale basis. This an essential structure for those people who run their business by own or small
scale and also for entrepreneurs who start their business at small level.
Partnership- It refers to a form of business where two or more people share their
ownership or their responsibilities for managing the company and the profits and losses which
are generated by the businesses. It is a lawful agreement and this structure is beneficial for
middle and large companies.
Public organisation- It refers to those organisation which are owned, run or operate by
government to provide services to the citizens. National Audit Office is an independent
parliament body in the UK which is developed by UK government in 1983. This organisation
engaged with Tertiary sector because they provide auditing services.
Purpose- The main purpose of NAO is to audit central government departments,
government agencies and non-departmental public bodies and carries out value for money audits
in to administration of public policy.
Legal structure- It is lawful structure where companies are operate its business according to the
developed regulation. This structure is as following:
Central government- It is parliament authority which has power to make laws or
regulations for the entire nation in contrast with local government. They are responsible for
national environmental policy directed to contributing to sustainable economic development and
to the health or safety of citizens by improving and managing the quality of the environment
(Charter, 2017).
2

State government- It refers to the government of the company which shares political
power with the federal and national government. It is responsible to design or develop the laws
and legislations for the state and provide direct control of the federal government (Hillary, 2017).
Local government-It is an individual organisation which is responsible for controlling
and organising small areas such as town, cities and others or providing its services. It refers to a
law which is form for the public administration and it is not impacted operation management at
large level.
Voluntary Organisation- It refers to a union and group of a people or individuals who enter into
an agreement as volunteers to from a body and accomplish purpose. These firms are non-
governmental organisations which are doing for the welfare of the society. The Save the
Children is an international NGO that work fro promoting rights of children and provide relief or
help support children in developing countries. This NGO is founded in 1919 in order to improve
the lives of children. This NGO is engaged with Tertiary sector because it provide services to
protect the children.
Purpose- The main purpose of The Save the Children organisation to provide lifesaving
suppliers and emotional support for those children who are caught up in disasters like floods,
famine ad wars etc.
Legal structure- It is as following:
Trusts- It refers to a company which work as an agent who is responsible for the
organisational purpose and eventual transfer of assets to a beneficial party and management on
the behalf of administration and others. This types of organisation are not flexible in nature so
the changes are not occur easily within the company.
Unincorporated associations- It is an organisation which is set up through an agreement
between a group of individuals to earn profit. This profit is earn for the social welfare and the
members of this group re personally responsible for any debts or contractual obligations.
P2. Explantation of the size and scope of different types of organisation
There are different type of organisations according to their size, scope and organisational
structure, they are as following:
Saiansbury Plc
Background details- This company is the second largest chain of supermarket in the UK
and it is founded in 1869 by John James Sainsbury (Meiners, Ringleb and Edwards, 2014). This
3

company is operate its business in three division such as Sainsbury supermarket in which it
include convenience shops, another is Sainsbury Bank and Sainsbury Argos.
Size and Scope- There are 186,900 employees are working under its and it has total 1423
shops in which 608 is supermarket and 806 are convenience shops all over the world. The total
revenue of this firm is £28.456 billion, operating income is £518 million and net income is £309
million (Nair and Paulose, 2014).
Vision and Mission- The mission of the company is to provide good quality products and
great services at a competitive price through working faster, simple and together or according to
the customers choice. The vision of the organisation is to be the most trusted retailer where the
person love to work and shop.
Business objectives- the objective of the firm is to provide highest level of customer
services and high quality products such as food, clothing and electrical.
Product and services- This company is the largest retailer of groceries and provide
various products such as food products, clothing products and financial services.
Organisational structure- Sainsbury follow hierarchical organisational structure because
there is series of levels of individuals and level above controls each level. Each member of every
level is responsible for their duties. For example, senior mangers are responsible for the line
managers and the line mangers for sales assistants.
Stakeholder- Owners, employees, suppliers, owners and government are the stakeholder
of Sainsbury.
National Audit Committee
Background details- It is an independent Parliament body in the UK which is developed
by 1983. This firm is responsible for auditing central government departments, government
agencies and non departmental public bodies to carries out value for money audits into the
administration of public policy.
Size and Scope- There are 796 employees who are working under it and they annual
budget of this firm is £64.5 million.
Vision and Mission- The mission of this company is to provide high quality audit
services which help in improving public sector performance, accountability and transparency in
the management of public resources. The vision of this organisation is to be a highly regarded
institution and enterprise that excels in Public Sector Auditing (Hunter and et. al., 2016).
4

Product and services- The company offer audit services such as auditing of central
government departments, non- departmental public bodies and government agencies. This firm
also offer a service to carried out value for money audits in to administration of public policy
(Niemann-Struweg, 2014).
Business objectives- The main objective of the company is to provide overview of the
financial reporting and audit process of the company's system of internal control and compliance
so that it can work with laws and regulations.
Organisational structure- NAC follow divisional organisational structure because within
the company. The duties and responsibilities are divided by the management of the company
according to their role and division.
Stakeholder- Employees, government, chief executive, clients and others are the
stakeholder of NAC.
The Save the Children
Background details- The Save the Children is founded in 1919 and it is an international
non governmental organisation which work for promoting the children's rights and providing
help to support children in developing countries. This NGO also provide help to protect children
from the effects of war and violence.
Size and Scope- This non profit organisation supporting in more than 120 countries all
over the world and there are 583 employees who are working under it. The total revenue of this
firm is $15.1 million and this organisation has 2nd rank among its 10 competitor NGO.
Vision and Mission- The vision of this company is that a world where every child has the
right to survive, protection and participation. The mission is to encourage and inspire
breakthroughs in the way the world treats children and to achieve immediate and lasting change
in their lives.
Product and services- This firm provide lifesaving supplies and emotional support for
children who are caught up in disaster like floods, famine and wars. They organise campaign to
provide food and healthcare services and secure a good quality education for the children who
need it most.
Business objectives- The objective of this firm is to build a safe world where every child
is safe, protected and has the opportunity to learn (Pearson, 2017).
5

Organisational structure- This organisation follow hierarchical organisational structure
because this company divided every level in to department and they are responsible for their
work.
Stakeholder- Employees, future partners, future business leaders, consumers and
members of the communities are the stakeholder of the company (Picoto, Bélanger and Palma-
dos-Reis, 2014).
Small and Medium size enterprises-
A small enterprise is a business that employs a small number of workers not more than 50
and the annual turnover below €10 million.
A medium size enterprise are independent, non subsidiary firm and there are fewer than
250 employees and the annual turnover below €50 million or the balance sheet below €43
million.
TASK 2
P3. The relationship between different organisational functions along with their organisational
objective and structure
Organisational Structure
It defines that how activities such as task allocation, coordination and supervision are
directed toward the achievement of the organisational goals because the firms needs to be
efficient, flexible, innovative and caring in order to achieve a sustainable competitive advantage.
In simple words, it is system that is used by the management department of the company to
define a hierarchy within an organisation. There are various types of organisational structure
such as Hierarchical, Matrix, Horizontal or Flat, Network, Divisional, line and others. Sainsbury
follow Hierarchical organisational structure because there is a series of levels of people and the
level above controls each level (Quinlan and et. al., 2019).
6

Source: Organisational Structure of Sainsbury, (2019).
Interrelation between different functions at Sainsbury's
The relationship between various functions of this company is as following:
Marketing with Human resource- Marketing is organisational function which is
responsible to establish relationships between customers and the organisations to the market. In
Sainsbury, this function is interrelate with human resource because when they conduct hiring
process than they provide notification related to vacant position by using promotional channels
of marketing. But when there is need to hire a candidate to the marketing department, the HR
manager organise recruitment or selection process and chose a suitable or talented candidate for
it. These both functions are helped in achieving the business objective of the company.
Advantages- The advantage of it is that the HR department can easily find various
applicant fro the vacant position in less time.
Disadvantages- It is not sure that the person which is hire for the vacant position can be
talented and responsible or right for the position (Schaltegger and Wagner, 2017).
Finance with Purchasing department- Finance is the lifeblood of a business because
without its things would not be run operate smoothly. In Sainsbury, this department involves the
acquiring and utilization of funds which is necessary for efficient operations. This department
provide funds to purchase department so that they can purchase raw and needed things to
manufacture the products and services. Purchasing department provide proper detail and list of
7
Illustration: Organisational Structure of Sainsbury

all materials, equipments, and machinery which is needed to develop or manufacture products
and services. So that they can easily maintain their budget and provide proper fund for
purchasing the needed things.
Advantages- With the help of purchasing department, finance department can properly
mange or maintain its budget and balance sheet because they have proper information that where
the fund had been invested (Shchepakin and Krivosheyeva, 2015).
Disadvantages- it can be a disadvantage that the fund which is provide for purchasing
materials and things will be sufficient because in the market price of things are fluctuate.
Marketing with Distribution & logistics- Marketing is function which provide goods and
services in the hands of the customers by using their various channels and modes or strategies.
In Sainsbury, the marketing department design strategies and make plan for distribution of the
goods and services that where they should develop their distribution channels and warehouse.
The distribution department help the marking department in marketing research that which
product is in demand and maintaining the stock of the product in warehouse by providing
information related to it.
Advantages- With the help of distribution department the company can mange the
wastage and high production of goods and services or this help in managing the inventory of the
organisation.
Disadvantages- The disadvantage of it is that the strategies which are designed by the
marketing department will not be relevant for a long time so they will make innovation in them
according to the customers demands.
TASK 3
P4. The positive and negative impacts of the macro environment has upon business operations
To identify the impact of macro environment factors upon business operations, Sainsbury
can use PESTEL analysis model for this, it is as following:
Political- Brexit is one of the most important political factors that can create impact and
influence the competitive position of the company in British retail market. Sainsbury is a
multinational company which supplies food and other products in various countries. Cause of
Brexit, the EU has increased fresh food import duties which impacted the profit margin of the
company (Sodeyfi, 2016).
8

Positive- From the political aspects, the UK is a stable country so there are low level of
corruption and bureaucracy.
Negative- Cause of Brexit, there are additional pressure on the profit margins of
Sainsbury so it can affect negatively (Storey, 2016).
Economical- Cause of Brexit the pound sterling is affected to its lowest against the dollar so it
impacted the economic condition of Sainsbury inform of gain and country also. With food price
inflation and economic stagnation depressing wages growth in UK. In UK, the government
reduced the interest rate from 5% to 0.5% and it increased the buying behaviour of the customers
but the unemployment level has reduced from 8.5% to 4%.
Positive- Due to government decision, the purchasing power of customer are increased
cause of interest rate reduction.
Negative- Brexit is expected to identify in a drop in consumption from Brits and this
negatively impacted the financial performance of Sainsbury in form of its profit margins.
Social- This factor include culture, lifestyle and taste & preference of the customers. Due to
change in consumers needs, sales of organic food and drinks were increased by 6% and
amounted to £2.2 billion. This impact of Brexit positively affect the business of Sainsbury.
According to IGD, cause of impact of Brexit, the spending in superstores and hypermarkets will
fall from £73.7 billion to £70.8 billion over the next five years. This can affect the business
growth of the firm in negative terms (PESTEL Analysis, 2019).
Positive- Due to change in customers buying behaviour, it increased the online food
shopping 6% compared to the big supermarkets.
Negative- Due to Brexit and change in consumer demands, it affect the sales of big
supermarket and it dropped by nearly 2%.
Technological- Sainsbury has introduced to use various technology to operate its business but
due to Brexit, it has introduced digital services like online food shopping and click-and-control
services by which the consumer can place their order and shopping from their local supermarket.
Positive- Cause of impact of Brexit the online retail sales has increased by over 80% and
orders increased 20% which help the company to cover up the change behaviour of the
consumers (Tregear, 2015).
Negative- Sainsbury developed new technology SmartShop which is allow to scan their
shopping lists at home. “Smart Shop” technology create negative impact on the sales of the firm
9

because it did not provide proper satisfaction to its customers (Andersson, Forsgren and Holm,
2015).
Environmental- This factor include laws related to environment such as carbon emissions,
pollution act and other. In Sainsbury, cause of Brexit, the company has reduced carbon emission
by 26% and a new environmental trend facing by the food retail industry which is that the
customers demand for zero waste supermarkets as food wastage increasingly.
Positive- The company start use paper packaging and recycled materials cause of its
environmentally conscious consumers this positively impact the organisation and environment
also because these type of material it will invest low cost .
Negative- Tightening environmental regulations and laws and regulations can create
negative impact on the competitive position of the company.
Legal- This factor include various laws and legislations such as anti-discrimination law, equality
law, and various acts or regulations that are formed by the government. Cause of Brexit, there
are a new law “Sugar Tax” developed by UK government to minimize content in sugary drinks
by 20%. There are several new rules which are banning advertising of high fat, salt and sugar
food or drink products to children under 16.
Positive- By developing the law of Sugar Tax, the government can reduce the sugary
drinks and will influence supermarket own brand products in positive manners because now
these days people prefer low sugar food and drinks.
Negative- New laws banning advertising of high fat, salt and sugar to children under 16
because they create negative impact on children. So this will restrict marketing and promotional
efforts in negative way because it effect the promotional strategy of the company.
TASK 4
P5. Internal and external analysis of specific organisations in order to identify strengths and
weaknesses
SWOT Analysis of Sanisbury
SWOT analysis is the tool to analyse the internal environment of the business. It stands
for strength, weakness, opportunity and threat. UK's second largest supermarket store Sainsbury
also apply this tool in their company (Ayios, 2018).
10

Strength- Sainsbury have more than 15000 highly skilled employees in their company
and their marketing strategy is excellent which make them a tuff competition for others. Their
focus on automation has increased the quality of their product which is the strength for the
company. They know the good branding and advertising methods which directly hit their
customers (Botha, Kourie and Snyman, 2014).
Weakness- Major weakness of Sainsbury is that they are not focusing much on research
and development of their company and because of which they are lacking behind from their
competitors. In company the turnover rate of employees is high as compare to other supermarket
which is increasing attrition rate.
Opportunity- There are some great opportunities for Sainsbury is waiting, they can
expand their business by opening their branches in Africa & Asia and focusing on technological
expansion. Another opportunity for the company is to increase their customers through online
platform which they have achieved very well. Low inflation rate can also be the great
opportunity for the company as it will increase the purchasing power of the customers
Threat- Market getting globalised which is creating threat to the company like Sainsbury.
It is increasing their competition among the supermarkets. Other than this rising food prices are
also affecting the company because they have to sell their products at higher prices which their
customers not liking. By launching new & updated technology competitors are creating threat for
the company. Unskilled workforce is also a threat that company is facing and because of that
they have to spend more money on training & development of the employees.
P6. Interrelation of strengths and weaknesses with external macro factors
Ton improve the image and performance, Sainsbury can analyse strengths and
weaknesses of the macro environment factors for formulating strategies accordingly:
Political- This company operate its business globally so due to Brexit most of the country
increased the import duty on the fresh food which impacted the economic condition of the
company negatively. Cause of stability in the political elements there are less corruption and
bureaucracy which a strength.
Economical- The government reduced the interest rate which increased the purchasing
power of the customers and positively influence the economic condition of the company or a
strength of the firm. But some rules are negatively impact that are deified in economical factor of
PESTEL can be a weakness (Charter, 2017).
11

Social- The buying behaviour or purchasing power of organic food positively affect the
sales of the company but change in consumer demand and spending in superstores or
hypermarkets negatively impacted the company (Hillary, 2017).
Technological- The online shopping technology increase the sales of the company and be
a strength. But the SmartShop concept will not be accepted by the consumer and can be a
weakness of the organisation.
Environmental- By changing the packaging method and use recycling material such as
paper, the company maintain the loyalty of its consumers who are conscious for the environment
which influence its performance. Some tightening environmental laws of government negatively
impacted the competitive position of the firm in terms of weakness.
Legal- For the development of the law of “Sugar Tax”, company enhance its sales
because present time people prefer sugarless drinks and food items, it can be a strengths of the
firm. New laws of government banning the advertisement of high fat, salt and sugar which
negatively affect the promotion strategies of the company.
CONCLUSION
From the above report can be concluded about various types and purpose of organisations
such as public, private and voluntary along with their legal structure. The size, scope, business
objective, product & services and stakeholders are explained. The interrelationship between
various organisational functions and their impact upon organisational structure are defined. By
using PESTEL analysis the positive and negative impact of macro environmental factors are
described. SWOT analysis and the interrelation strengths & weaknesses with the external factors
are explained in the assignment.
12

REFERENCES
Books & Journals
Andersson, U., Forsgren, M. and Holm, U., 2015. Balancing subsidiary influence in the
federative MNC: A business network view. In Knowledge, Networks and Power (pp.
393-420). Palgrave Macmillan, London.
Ayios, A., 2018. Trust and Western-Russian business relationships. Routledge.
Botha, A., Kourie, D. and Snyman, R., 2014. Coping with continuous change in the business
environment: Knowledge management and knowledge management technology.
Elsevier.
Charter, M., 2017. Greener marketing: A responsible approach to business. Routledge.
Hillary, R. ed., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
Hunter, I. and et. Al ; 2016. Apr 29.
Meiners, R. E., Ringleb, A. H. and Edwards, F. L., 2014. The legal environment of business.
Cengage Learning.
Nair, S. and Paulose, H., 2014. Emergence of green business models: The case of algae biofuel
for aviation. Energy Policy. 65. pp.175-184.
Niemann-Struweg, I., 2014. An integrated communication implementation model for the post-
2000 business environment. Public Relations Review. 40(2). pp.184-192.
Pearson, R., 2017. Business ethics as communication ethics: Public relations practice and the
idea of dialogue. In Public relations theory (pp. 111-131). Routledge.
Picoto, W. N., Bélanger, F. and Palma-dos-Reis, A., 2014. A technology–organisation–
environment (TOE)-based m-business value instrument. International Journal of
Mobile Communications. 12(1). pp.78-101.
Quinlan, C. and et. al., 2019. Business research methods. South Western Cengage.
Schaltegger, S. and Wagner, M., 2017. Managing the business case for sustainability: The
integration of social, environmental and economic performance. Routledge.
Shchepakin, M. B. and Krivosheyeva, E. V., 2015. Management of increase of business
enterprise's competitiveness in the changing market environment. Международный
научно-исследовательский журнал, (9-1), pp.81-84.
Sodeyfi, S., 2016. Review of literature on the nexus of financial leverage, product quality, &
business conditions. Journal of Economic & Management Perspectives. 10(2). pp.146-
150.
Storey, D. J., 2016. Understanding the small business sector. Routledge.
Tregear, R., 2015. Business process standardization. In Handbook on Business Process
Management 2 (pp. 421-441). Springer, Berlin, Heidelberg.
Online
Organizational Structure. 2019. [Online]. Available Through:
<https://creately.com/blog/diagrams/types-of-organizational-charts/>.
PESTEL Analysis. 2019. [Online]. Available Through: <https://www.123writing.com/free-
sample/pestle-and-swot-analysis-of-sainsbury%E2%80%99s-2017>.
13