Impact of Business Environment on Organizations

This assignment delves into the profound influence of the business environment on organizations. It examines various aspects of the business environment, such as political, economic, social, technological, legal, and environmental factors (PESTLE), and analyzes how these factors shape organizational structures, strategies, and overall performance. The assignment likely includes case studies or examples to illustrate these concepts and encourage critical thinking about the dynamic interplay between businesses and their surrounding context.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Different types and purposes of organisations......................................................................1
P2 Size and Scope of various types of organisations .................................................................3
P3 Relationship between different organisational functions.......................................................5
P4 Positive and negative impact of macro environment upon business organisation.................8
P5 Studying on Internal and External Analysis..........................................................................9
P6 Ways in which Strengths and Weaknesses interrelate with macro factors..........................10
RECOMMENDATIONS .............................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment is a set of internal and external factors which affects the operations
of business directly or indirectly. Environment can be made much more effective by analysing
the actual needs and wants of customers and then satisfying them at maximum level. For making
the firm grow and obtain success, it is highly required that both the factors will work together
towards the achievement of tasks and objectives (Aula, 2010). In this report, company chosen is
Coca Cola which is a multinational firm whose main products are carbonated soft drinks and
they have been dealing since 1886 across the globe. In this report, different types of
organisations will be discussed with their purposes, size, scope and legal structures. Further,
relation between all organisational functions and their link with objectives of business will be
explained. Apart from that, positive and negative impacts macro environment has on the business
organisation will be studies as well.
TASK 1
P1. Different types and purposes of organisations
In market, there are different types of organisations working in various sectors in order to
earn profit and fulfil their desires. It can be explained with an example like NGO that works in
sector where they do not earn profit and run association for social welfare. They focus on
uplifting the standard of living of people. Moreover, there are other organisations who work for
earning higher profit and generating revenue. These kinds of organisations basically work in two
sectors i.e. private and public which will be briefed as below:
Basis of
Comparison
NGO NPO For Profit
Meaning NGO is basically a non-
governance organisation
which is made with an
aim of providing welfare
to the society and it is
formed by independent
citizens (Belás, J and et.
al., 2015).
This kind of
organisation sells their
products and services to
the people and for their
development but the
profit which is gained is
not shared among its
members.
This kind of organisation
is formed with the motive
of generating profits and
revenue by selling their
products and services in
the market place.
1

Area of
Operations
Big Restricted Can be big as well as
restricted
Objectives For the development of
society and providing
welfare to the people in
need.
For the useful motives,
it promotes art, science
and commerce.
Generating profits and
revenues by acquiring
number of customers
through selling of products
and services.
Economy contains of three major sector and they are explained below:
Public Sector: This kind of sector is generally made by bodies of government and thus,
its profit and revenue is shared among members of the organisation. Its essential part is finance
and it is formed by citizens of country in form of tax and other payments. Policies and other
rules are regulated and maintained by the government of respective country. For example: Marks
and Spencer is one of the public limited companies which target the middle class people for
selling their products (Bill Pasmore PhD, and C M C, 2010).
Purpose: There are several motives of public sector and the most essential is providing
development to economy of UK along with the welfare and development of backward classes.
Providing employability and developing the standard of living of people is one of the major
motives of this sector and this in turn provides confidence to the people for doing something
valuable for long term benefits.
Private Sector: This sector is not basically owned and run by the government of
respective country but there are policies and set of rules which are made by the government.
Still, there is much freedom enjoyed by private companies like expandation of their process
without any barriers. The main motive of this kind of sector is to generate revenue by attracting a
large number of customers by selling their products and services to them. For example: Waitrose
is a multinational company that sells their products and services in England and thus, generates
revenues (Blanchard, Tolbert and Mencken, 2011).
Purpose: The motive of this kind of sector is to analyse actual needs and wants of
customers and provide them satisfactory services so that large number of customers can be
acquired which in turn help to generate revenues. Their focus also includes manufacturing of
product with high quality raw material and appropriate prices for gaining profits.
2

Voluntary Sector: This kind of sector is basically run with the motive of providing social
welfare to the people who are living in a society and other people who are in need (Cantwell,
Dunning and Lundan, 2010). Oxfam can be said as an example in voluntary sector which
provides development and welfare to the society.
Purpose: The motive of this kind of sector is to provide development and enhance the
standard of society. It also helps people who are in need including nature and its factors.
Legal Structure of the sectors:
Private Sector: In this kind of sector, private firms can be sole traders and partnerships: Sole Proprietorship: In sole traders, basically business is being owned and run by single
body and complete profits and losses are beard by himself\herself. Partnership: It is a legal deed which is done by mutual agreement between two or more
than two members. Person coming under legal deed runs the operations of business with
achievement of common goal (Chow and et. al., 2012).
Public Sector: Several kinds of government bodies are being included and they are described as
below:
 State government: This is considered under separate company which works on the
principles of government and thus, provides services and products in market place for the
development of an economy.
 Local government: Main purpose of local government is to look out for the essential
points of local communities and provide welfare to the economy. Central government: In this kind of government administration comes under the central
part and thus the main powers of the state and locals are provided in this.
P2 Size and Scope of various types of organisations
There are several kind of organisation which are determined on the basis of their size .
This includes various sizes like micro, small, medium and large which are described below: Micro Scale: This kind of scale generally tells that business organisation is very small in
nature and includes very few number of staff members (Commander and Svejnar, 2011).
This is generally single body operated business like shops, garage etc. . This also states
that their generated revenue is not much high and it is done with the motive of survival
3

and providing financial security to the family members. Example can be fast food mobile
shop, departmental stores and many others. Small Scale: In small scale business, staff members involved are less than 50 members
and there revenue generation is less than 5 million dollars. This kind of scale and
industries are large in number and thus have acquired large share of market. They also
contribute in providing employment to the people as they have acquired 90% of the
market place. For example: Grocery stores and small supermarket are the one who are
considered under small scale business as they have around 10-20 employees. Apart from
that, industries who manufacture any product which is common can also be considered as
small scale industry (Cordes, Richerson and Schwesinger, 2010). These kind of business
mainly focus on expanding themselves in marketplace. Medium Scale: In this type of scale, organisation generally consist of 50 to 250 staff
members and they generate revenue between 5 to 23 million dollars. These type of
indicators provide the idea of medium scale business. For example: A digital industry like
Exponential-E which is a small-business company which consist of 150 staff members
working under one roof and common goal attainment. Large Scale: Large scale business is a business which consist of more then 250
employees and their revenue graph is around 250 million dollars. There are various
number of companies and manufacturing Industries which are working on large scale.
For example: TESCO is big company who is working around globe and consist of 1000
employees working under the organisation.
Objectives differentiation:
Micro Small Medium Large
The purpose of micro
scale business is to
provide financial
security to the family
members and earn
respectful livelihood
among the society.
Main focus of this
kind of organisation is
to maintain healthy
livelihood and also
grab opportunities for
expanding their
business by various
tools and techniques.
In this kind of business
, their main aim is to
expand their business
into the international
market and make
themselves as global
leader company
through various ways
Their main focus is on
constructing economy
as sustainable in
nature and also acquire
customers globally and
development to the
economy of country.
4

like launching joint
ventures, franchisee
and many others.
Scope of Different types of Organisations:
Micro Scale: they do not have high scope of expanding their business operations as their process
is limited in nature and their motive is to survive. They have few chance of expanding like they
can open another branch of their business but that can be done in same city or town.
Small Scale: Their scale of scope is much higher as compared to micro level business. They have
high level of scope and they can shift their business to medium scale by applying various tools
and techniques (Cronan, and et. al., 2011). Those tools and techniques can be opening joint
ventures and allocating their franchisee to other business person so that their goodwill can be
expanded along with the business process.
Medium Scale: They have high level of scope due to high chances of going global through
various ways and operate their business in other countries. This can be done then only when the
license of operating globally is approved by the respective Govt. of country.
Large Scale: They got scope of acquiring the economics in which they have not established their
foot due to economical condition and other various legal issues.
Transnational Company:
Transnational company is a huge company which have their business operations in other
countries and even their revenue is much more high then some economy of the country. From the
above statement it can be said that transnational company has direct effect on the economical
condition of a country (De Jonge, 2011). For example: Company chosen for this assessment is
Coca Cola which is a transnational company and they deal in carbonated soft drink and their
revenue as per year 2016 was 41.683 billion dollars. This kind of revenue can easily affect the
economy and can provide development to a country who is in developing stage.
P3 Relationship between different organisational functions
There are various sections within an organisation which direct or indirectly affects the
operations and profitability and those sections are described below:
5

 Marketing: Marketing is considered as an essential element of an enterprise which aids
them to achieve the goals and objectives of the company and thus bring prosperity. In
context of Coca Cola, marketing strategies helps in enhancing the products and services
so that it can attract more and more customers (Erving and et. al., 2011). This can be
considered as the front side of a company which faces customers and thus modify
products in order to attract large number of customers and make a long lasting impact on
the products and services. Through implementation of various strategies of marketing,
aims and objectives can be obtained including high revenue graph. This is related to the
financial department because before applying any strategy, funds are being required for
making plan successful. Human Resource Management: The major role of human resource department is to look
out for the vacant positions and fulfil them by recruiting new one. The main purpose of
HR department is to provide comfort level to the staff members so that ethical
environment can take place. It is important for a HR managers to look out fro the desires
of employees so that work allocated to them can be completed in the expected level. They
are linked with the operational department as operational sector needs human force to
achieve the task and that can be done with the help of HR sector. Operations and Production: The main role of the business is to earn revenue and that can
be done by providing satisfactory services and products to the customers. Turning raw
materials into final goods is known as production process. This kind of sector mainly
focuses on actual needs and wants of the customer and thus fulfilling them in effective
manner. This department is majorly linked with every sector working under organisation
like HR department will provide workforce and finance department will provide
sufficient funds to complete the operations (Fernando, 2011).
 Accounting and Finance: This can be said as most important part of an organisation or in
simple words it can be said as root of a plant because without it company will not be able
to survive in the market place. For every operation and task it is required to have fund so
that it can be carried out successfully and in smooth manner. Thus it can be stated as each
and every part of the organisation is interrelated with finance sector of an enterprise.
6

Illustration 1: Structure of an Organisation
(Source: Structural Behaviour of Enterprise, 2017)
Four main organisational structure are described below: Function-Based: It can be said as a common sector for every company but it differs from
process to process. The major advantage of this kind of process is that expert divides the
functions and therefore they are ready to face any kind of challenge in any kind of
situation. Product-Based: Common structure of product is required to be structured by certain
products kind. Every product falls under the structure of an executive and that is being
oversees by the people so that it can be related to product line (Gebauer, Paiola and
Edvardsson, 2010). The main advantage of this kind of category is that it helps in
categorising products into effective manner. Customer-Based: The main purpose of this kind of structure is to meet the satisfactory
level of the customers which are being provide through products and services. There are
many advantages which can be provided but among them the main advantage is that it
helps in providing satisfaction to the customers for a certain group not to every one.
 Geographic-Based: It is for the organisation who is operating its business process in the
global market and they need to cover up the specific geographic region so that customers
7

can be acquired in efficient manner. This structure basically works on the large scale
industries who manufacture their own products due to their big area of operations.
P4 Positive and negative impact of macro environment upon business organisation
Due to the presence of various factors in the operations of organisation, tasks and
strategies are being affected in direct or indirect manner but there are two main factors which
affects the business process and they are macro and micro elements (Guglielmetti, 2011). Micro
factors can be stated as internal factors while macro factors are related to external factors which
are utilised to attain competitive advantage. This can be explained in detail manner by
implementation of PESTLE analysis and it is described below: Political Factors: It is required to enforce some laws and regulations so that growth and
success can be attained in effective manner. This also helps in maintaining the decorum
of country's Govt. . Coca cola which is a multinational company provides high quality
carbonated soft drinks so that political criteria can be fulfilled. The major positive impact
of this kind of factor will be that it will minimise the chances of error and also will avoid
the illegal activities while the negative impact can be the policies changing due to the
change of Govt. Economic Factors: it is highly essential for an organisation to regulate and maintain the
economical factors so that productivity and profitability can be effective. More
advantages will a firm get if there will be high satisfaction level. The positive impact of
this factor is that it helps to gain the sustainability in market and also helps to grow and
obtain success whereas negative impact is that increment in taxation can affect the
productivity of the company in negative manner (Robbins, Judge and Campbell, 2010). Social Factors: This kind of factor majorly affect certain sector of business like clothing,
retailing and food industry due to the change in taste and demands of the customers. This
sector majorly include various elements which directly affects like age, income level,
population, attitudes and occupation. The positive impact of this factor is that it aids
company to gain the actual needs and wants of the customers and also helps them to
forecast the future trends in market whereas negative impact can be like changing of
market and its dynamical features can sometime hamper the production sector of an
organisation.
8

 Legal Factors: There are various laws and policies which are made by UK Govt. so that
they can regulate on illegal activities regarding illegal trading or retail products. One of
the most important act is Food Safety Act which was launched in 1990 so that safety can
be given to the food we consume. In year 2000, many organisation and agencies were
made to keep those act and up in effective manner. Coca Cola being as company dealing
in soft drink has to maintain those standards so that it can be consumable in market place
by the customers (Siewiorek and et. al., 2012). Positive impact of this factor is that the
company will follow the policies made by the Govt. and this in result will minimise the
chances of falling under the risk of illegal activities and negative impact can be like there
are certain flavours which have some kind of drug included into them so that can not be
added to the products as they are illegal in nature. Environmental Factors: In order to save the environment and health status of people, it I
required to enhance the production of ecological and economical products. Positive
impact of this factors is that it provides domestic development in business process.
P5 Studying on Internal and External Analysis
SWOT analysis of Coca Cola: this kind of tool is highly essential for the company due to
its determining nature of business in internal and external basis. Strength and weakness are
linked with each other and they are described below:
Strengths Weakness
 Regarding carbonated soft drinks it is
the leading brand in the world.
 Marvellous branding and marketing of
products.
 In order to promote their goods and
services, channel distribution is
effective in nature.
 Celebrity and sponsors plump for
events in world.
 There are various products of coca cola
which are very less popular in market
place.
 Negative Publicity
 Failures of different products and
various other brands with
inconsiderable sales graph.
 Due to acquisitions, debt level has gone
high.
9

 Another major strength can be loyalty
of customers.
 Strong advertisement and marketing
concepts.
 Product portfolio and UN-
diversification.
 Absence in all health beverages.
 There is low diversification regarding
products.
Threats Opportunities
 High competition level given by Pepsi.
 Due to other utilities threat can be
present like from fruit juices.
 Boycott of their products by a health
conscious person (Teece, 2010).
 Raw materials sourcing.
 There are number of companies which
are indirect challenge to the coca cola
like Starbucks, Costa Coffee and Cafe
Coffee day.
 Dependence or regime on vessel the
partners.
 Slow growth and developing
carbonated soft drinks.
 Promotion of other products can be
done in effective manner.
 Others segment of health drinks like
minute mail flavours.
 Developing the packaging of bottled
drinks in market place.
 Packaging of beverages and drinking
water.
 Got enough capital to expand their
business activities.
 Dull execution and effectiveness in
North America.
P6 Ways in which Strengths and Weaknesses interrelate with macro factors
Macro environmental factors can directly affects the weakness and strength so that
analysation can be done on the basis of PESTLE analysis which is explained below: Political Factors: Place of the firm totally depends on the competitive market and thus it
is affected by the political factors and if the company is following the policies made by
the Govt. then it becomes easy to attain the competitive advantage. For example:
purchasing power of the customers will improve if the Govt. of respective country reduce
the taxation.
10

 Economical Factors: The condition of market affects the strength and weakness of the
company and thus when the company economic condition affects the graph of sales and
revenue and it helps them to attain goals and objectives. Social Factors: this kind of factor has direct impact on the performance level of the
company as the demand and taste changes according to the time (SWOT analysis of BBC.
2015).
 Technological Factors: by adaption of latest technology and innovating various ways,
development within employees can be seen and thus competitive advantage can be
gained. As per the changing demands and policies, latest technology can be obtained by
the firm in order to achieve the goals and objectives of the firm.
RECOMMENDATIONS
While framing the above report, it has been analysed that coca cola has maintained well
graded position in marketplace and now it is easy for them to analyse the new opportunities and
grab them and make good use of them regarding expanding of business in the international
market.
CONCLUSION
From the above report, it can be concluded that effectiveness should be present in
business so that growth and success can be attained in effectual manner. There are two major
factors on which the Coca Cola works and they are micro and macro and both are highly
essential to achieve the desired market and customers. Every element of the business is
interlinked with each other and thus they are helpful in attainment of aims and objectives of the
firm.
11

REFERENCES
Books and Journals
Aula, P., 2010. Social media, reputation risk and ambient publicity management. Strategy &
Leadership. 38(6). pp.43-49.
Belás, J and et. al., 2015. The business environment of small and medium-sized enterprises in
selected regions of the Czech Republic and Slovakia. E+ M Ekonomie a Management.
(1). p.95.
Bill Pasmore PhD, S.V.P and C M C, T. O. S., 2010. Leadership agility: A business imperative
for a VUCA world. People and Strategy. 33(4). p.32.
Blanchard, T.C., Tolbert, C and Mencken, C., 2011. The health and wealth of US counties: how
the small business environment impacts alternative measures of development.
Cambridge Journal of Regions, Economy and Society. 5(1). pp.149-162.
Cantwell, J., Dunning, J. H and Lundan, S. M., 2010. An evolutionary approach to understanding
Cronan, T.P and et. al., 2011. Decision making in an integrated business process
context: Learning using an ERP simulation game. Decision Sciences Journal of
Innovative Education. 9(2). pp.227-234.
Chow, A.T and et. al., 2012. Computer readable medium with embedded instructions for
providing communication services between a broadband network and an enterprise
wireless communication platform within a residential or business environment. U.S.
Patent 8.155.155.
Commander, S and Svejnar, J., 2011. Business environment, exports, ownership, and firm
performance. The Review of Economics and Statistics. 93(1). pp.309-337.
Cordes, C., Richerson, P.J and Schwesinger, G., 2010. How corporate cultures coevolve with the
business environment: The case of firm growth crises and industry evolution. Journal of
Economic Behavior & Organization. 76(3). pp.465-480.
Cronan, T. P and et. al., 2011. Decision making in an integrated business process context:
Learning using an ERP simulation game. Decision Sciences Journal of Innovative
Education. 9(2). pp.227-234.
De Jonge, A., 2011. Transnational corporations and international law: accountability in the
global business environment. Edward Elgar Publishing.
Erving, R. H and et. al., 2011. Broadband network with enterprise wireless communication
system for residential and business environment. U.S. Patent 7.944.948.
Fernando, A. C., 2011. Business environment. Pearson Education India.
Gebauer, H., Paiola, M and Edvardsson, B., 2010. Service business development in small and
medium capital goods manufacturing companies. Managing Service Quality: An
International Journal. 20(2). pp.123-139.
Guglielmetti, C., 2011. Measuring the business environment for entrepreneurship in fragile
states. In Entrepreneurship and Economic Development (pp. 124-143). Palgrave
Macmillan UK.
Robbins, S. P., Judge, T and Campbell, T. T., 2010. Organizational behaviour. Financial Times
Prentice Hall.
Siewiorek, A and et. al., 2012. Learning leadership skills in a simulated business environment.
Computers & Education. 58(1). pp.121-135.
12

Teece, D. J., 2010. Business models, business strategy and innovation. Long range planning,
43(2). pp.172-194.
Online
SWOT analysis of BBC. 2015. [Online]. Available through:
<http://www.freeswotanalysis.com/media/681-swot-analysis-of-bbc.html>.
13