Positive and Negative Impact of Micro Environment on Business Operations

This article discusses the positive and negative impact of the micro environment on business operations. It explores the influence of political, economic, social, technological, and legal factors on businesses, supported by specific examples. Understanding these factors is crucial for businesses to adapt and thrive in their respective environments.

Business environment

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P.1. Explain different types and purpose of organisation...........................................................3
P.2. Explain the size and scope of a range of different type of organisation ? ..........................5
TASK 2............................................................................................................................................6
P.3. Explain the relationship between different organisational function and how they link to
organisational structure? ............................................................................................................6
TASK 3 ...........................................................................................................................................8
P.4. Identify the positive and negative impact the micro environment has upon business
operation, supported by specific example ?................................................................................8
TASK 4..........................................................................................................................................11
P.5. Conduct internal and external analysis of specific organisation in order to identify
strength and weakness? ............................................................................................................11
P.6. Explain how strength and weakness interrelate with external macro factor?....................12
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Business environment is developed through collection of entities, group of individuals, or
through other internal external forces (Cristofaro, 2020). For effective results in business it is
necessary to analyse macro or micro factors because all the important thing as well as
information which are relevant for business are cover under it. The organisation that was chosen
in this project is BBC. It deals in mass media industry. It has its headquarter in London, it serves
their great services Worldwide. It is totally public owned company. The topics that are discuss in
this project are different type, size and scope of company as it is describe along with examples.
Interrelationship of different functions in context to organisation and how they link to its
structure are also discuss in the respective assignment. With using contemporary examples,
demonstration of both positive & negative impact on operations of business are explain under the
report. Strength as well as weakness of particular business and interrelationship with external
macro factor are discuss in detail in the project.
TASK 1
P.1. Explain different types and purpose of organisation
There are various type of organisation that are exist in the market some are big and many
of them are small in size. In these group of individual are exist who are appointed to perform the
task and achieve the set objectives of the company. Mostly the main objective of organisation is
to earn high profit but some are engaged for social welfare. Examples of different type of
organisation are explain in details in the below mentioned paragraphs such as describe as
follows-
Public sector organisation: companies that are owned , controlled and financed by the
government are cover under this sector. These organisations are working on behalf of general
public. Profit earning is not the aim of these concern. They tends to be concentrate on social
welfare of society and public. The Public company which is selected in this project is BBC
which broadcast the news globally (Brennan, 2020).
Purpose: the main objective of such type of company is to offer services to audience
through optimum utilising the resources.
Legal structure: Different types of legal structure are involving in this sector like

State Government- It this the organisation are in full control of state government. It
attracts state laws, salaries, wages, compensation, perquisites are fixed as per the provisions of
state government. The organisation which are included under the schedule of SG attracts all state
laws and legally bind the employer, employee. In this laws are attracted which are applicable to
their state so different state has different law (Bhattacharyya, 2020).
Central Government- In such type of companies all the powers and control are in the
hand of central government. All benefits and salaries are fixed according to provisions and laws
of CG. Same laws are followed to every employer or employee whether they belong to any state.
In this same laws are followed in organisation in the whole country
Local Government – The government of specific local area constituting a subdivision of
a major political unit. It is also known as municipal government. It serve the services related to
fire, police, public transportation, housing services etc.
Private sector organisation: The sector cover those organisation where individual person or
group has control on it . In such type of company the word “ pvt ltd ” is written name ending. In
the salary and wages are set by employer not by government. AS according to rules and
regulations that are set by owner are applicable in private offices (Beynon-Davies, 2020).
Purpose: The main intention of such type of organisation is to earn maximise profit and
business expansion. To earn good brand image are also the purpose of such organisation because
goodwill tends to attract large customers which leads to increase sale and revenues and it
results as improve the chances of business survival in the competitive market (Cross, 2020)
Legal structure:
a. Partnership- In this business are run by two or more partners. For that partnership
deed is prepare as it reflects mutual understanding of both the parties. In this company is
registered under Partnership Act. The profit and liability sharing ratio are written in the deed so
that there is no confusion are exist. In this liability of partners are unlimited.
b. Sole proprietorship- These firms or concern are managed or controlled by single
person. The maximum number of owner is one. Therefore all the profits are taken by single
person only and if any liability arise than he/ she is liable to pay whole amount. For performing
various activities license is taken from local authority. Sole trader gain all the profit which is
earned by them.

c. Limited company- In the Limited Liability Partnership company is registered under
LLP Act. In this partners and designated partners are appointed. The document memorandum of
understanding are prepare in which liability of partners are fixed. It involves two type of
liabilities such as limited by guarantee and limited by shares. As it is a combination of both
partnership and company so it cover the features of both (Dovis, 2020).
Voluntary organisation: It include an association of person who willingly enter into an
agreement to form a organisation in order to accomplish a objective. For example Oxfam is a
global charitable organisation structure whose main objective is to works towards reducing the
poverty in the nation (Fuchong, 2020).
Purpose: The main purpose to develop such organisation is that through these company,
awareness are created for upliftment of society. As social welfare are not concerned to individual
only but it also focus to growth of society as a whole.
Legal structure
Trust- In this fiduciary relationship is developed where one party called trustor gives
other party known as trustee, the right to hold the title to property for the benefit of their party,
such as beneficiary. In this property or other important things are saved in the custody of trustee.
It is incorporated as per Trust Act that was set as per legal legislation. Charitable trust are one of
the example of it (Gao, 2020).
Society is an organised or systematic group of individual who are associated together for
various purpose such as cultural, scientific, political, patriotic etc. As minimum founder
members are three in society. It is formed for the promotion of science, art, literature, education
and for charity purpose.
NGO's- As these are not for profit making organisation. The objective of these firms is to
serve free services to people. It also improve the status of the society. It not involve any type of
fixed liability.
P.2. Explain the size and scope of a range of different type of organisation ?
Basis BBC Tesco Oxfam
Background Background It is UK
based public company
established in the year
It is famous
supermarket
specialised in
Oxfam is a type of
voluntary organisation
structure which is

1922. It offers nine TV
channels and radio
broadcasting services.
It has its headquarter
in Westminster,
London
groceries and other
retailing services. It
has its headquarter is
in Welwyn garden
city, England. It stands
in top position in terms
revenues. The chief
executive officer of
the company is Ken
Murphy.
global organisation
who works to end the
injustice to the
poverty. It is an non
profit group which
perform various
operations like poverty
alleviation, disaster
reliefs etc.
product It offer channels to
their audience few
examples of these are
BBC one, BBC news,
BBC is player etc
It serves all the
grocery items as well
as other electronic and
clothing product. It
provides both online
and offline facility to
their customers.
Oxfam works for fair
trade, education,
health, poverty, natural
disasters, livelihoods
etc.
size It engaged around
twenty thousand
workers/ employees in
their company.
There are around six
thousand eight
hundred stores all over
the world so it
employs around four
lakh employees
Oxfam works in 94
countries across the
world, with almost
thousands of local
partner organization.
They works towards
social welfare with
more than 50,000
volunteers worldwide
Scope Their scope is to
expand their business
Their scope is to make
improvement in their
As the population is
exploding, poverty is

in various countries
market like India,
China, Japan etc.,
where they concentrate
more on technology,
entertainment etc
delivery services and
adopts new advance
technology so that
they can easily target
large audience.
increasing and the
organisation has a
wide scope of uplifting
the conditions of
people.
Competitor Fox new, CNN are the
competitor of such
organisation
Their rivals are
Sainsbury, Morrison
etc.
IDEO are their
competitors.
TASK 2
P.3. Explain the relationship between different organisational function and how they link
to organisational structure?
Interrelationship between different organisational function.
Relationship between various functional areas
It is not possible in any organisation for functional areas to work in isolation. In small
company, interaction between person who perform functions are informal due to this query of
clients can be solved quickly through asking question from anyone who present in the corporate.
On the other hand, in big organisation separate department are present and staff of one unit meet
or come in contact to other to take information which is necessary to complete the task. Constant
communication between all the departments as well as their corporation towards each other
supports to achieve objectives (Ghauri, 2021).
Sales and Marketing- Marketing executives of marketing department with the help of
advertisement and promotion create brand awareness which indirectly make impact on sales by
attracting customers. As the process starts with marking and ends to sales. If marketing & sales
both are aligned than company retain large number of customers that leads to increase sales rate.
Human resource and finance- HR department are responsible to do all administrative
work as well as to decide and calculate salary after considering basic pay and all allowances.

And after preparing salary the information, data are sent to finance department here executives of
finance department make calculation and adjustment of TDS ( Tax deduction at source). Also
smart accountants for finance unit are hire by HR department after consulting with finance
manager regarding number of candidates require in their team. In this way work are interlinked
to each other.
Production and sales- Production department must inform to sales unit regarding issues
that are connected to manufacturing which will make impact on sales and as well as on
customers. Whereas it is the responsibility of sales executives to know production schedule and
also must be updated regarding delivery date of orders through doing communication with
production department so dates are not promised to clients which is difficult to met
Organisational structure of public and private sector company
Matrix organisational structure- It includes the features of two or more type of
organisational structures. The matrix organisation is the structure uniting these other
organisational structure to give them balance. In this there are two chains of command, where
project team member has two managers or bosses. It has one striking advantage – flexibility and
optimisation of resources. Work groups along with its resources, can be shifted from one project
to the other, depending upon the exigency. It also has demerit as it does not observe the
principles of one employee, one superior. In this responsibility and authority may be difficult to
define. It also violates the principle of unity of command as workforce get irritated and frustrated
to engage to work with two employers. For example: The organisation Syngenta adopt in their
matrix structure, where for specific projects there are different teams are involved. Every team
include members from various different department units. Through using expertise of different
persons, Syngenta bridges its operational and functional areas (Halbert, 2020).
Hierarchical organisational structure- It is company's chain of command, from top
management as well as executives to genera workforce. Generally, this type of structure is
applying to such organisation which has only single leader and flow of juniors are underneath
them. It is represented in the shape of pyramid. The advantage of this structure is that it clearly
defined authority as well as it also encourages specialization. As teamwork & department
loyalty, can have profound impact on company's success. It also clearly defines authority but its
disadvantage is that it is costly, there is increase chances of existence of department rivalry. As

BBC and Tesco both use hierarchical structure, in this maximum authority & responsibility are
in the hands of top management (Hess, 2020)
TASK 3
P.4. Identify the positive and negative impact the micro environment has upon business
operation, supported by specific example ?
Tesco-
Political factor- As organisation Tesco is exposed to various political influences as these
affects the business operation as it related to legislations, tax rates, political instability and so on.
Positive Impact: With the reason of political stability in London, the cost of making
alteration in in provisions, rules, policies are low in the organisation Tesco.
Negative Impact: due to rising import duty, large amount are paid to government as tax
which tends to reduce profit margin of Tesco which creates difficulty in business expansion
because organisation have less revenue.
Economic factor – Tesco make concentrate on various economic factor which directly
make impact on purchasing tendency of consumers.
Positive impact: with increasing GDP rate in UK the purchasing power of audience are increase
now they can afford quality items of Tesco which tends to increase their market base (Liguori,
2020)
Negative impact: Due to Brexit, inflation rate of country is increase as a result cost of
product become high and purchasing capability became low. Therefore, it negatively affects
sales of Tesco due to the reason of economic instability.
Social factor – Demographic change affects the profitability of the organisation Tesco.
Positive Impact: Tesco started to sale large number of groceries in different stores which
are located in different areas to increase their customer base through raising their sales.
Negative impact: The negative impact on Tesco is that due to changing customer
behaviour to healthy food products has lowered the sales of Tesco.
Technological factor – Through using advance and latest technology in their stores
Tesco improves customer satisfaction. To enhance cost efficiency, supply change management
must be developed by Tesco in their stores.
Positive impact: advance technology and online shopping facility tends to increase sales.

Negative impact: with other similar stores Tesco had direct competition because rivals
offer items to audience at low profits as they provide heavy discounts and provide good offers
which diversify audience towards their store. In this manner it affects sales and revenues of
Tesco.
Legal factor – Tesco influenced by those laws that are set for the benefit of consumer
like , consumer protection act as it tends to safeguard the interest of buyers.
Positive impact: Legal legislation supports or protect the interest of employees. Now
Tesco is liable to pay equal remuneration to their workforce which make positive affect on
business performance because due to equal pay satisfaction is developed in the minds of
employees which leads to improve their performance.
Negative impact: If any default is made by Tesco in terms to employment law that it
attracts high penal provisions, penalties and fines which impacts negatively on Tesco sales,
goodwill as well as on revenues.
Environmental factor- social responsibility can be understanding by Tesco which leads
to reduce unnecessary wastage of raw materials through optimum utilisation because natural
resources are limited in environment so there is need to save them.
Positive impact: By creating social awareness among audience, Tesco is reducing the
waste produced in their store.
negative impact: Due to strict environmental regulations and policies, competitive
position of Tesco is getting influenced.
BBC (British Broadcasting Corporation )
Political factor- It includes various factors such as corruption, political stability, labour
law, tax policy, trade restrictions which make impact on business operations as company
existence and growth are also depends on it. Organisation BBC attract laws that are related to
taxation and international trade (Moşteanu, 2020)
Positive Affect: As the organisation BBC can enter into such type of market where the
taxation rate is low. It make positive impact because less part of income is invest by BBC on tax
payment which leads to increase profit margin of the company as it helps organisation to spent in
research & development activity.

Negative Affect: Corruption & bureaucracy make negative impact on business.
Operating activities in those countries which have high level of corruption and weak law
enforcement make the business situation unpredictable for BBC.
Economic factor – Variation in exchange rate, disposable income, rate of interest,
unemployment rate, economic growth are cover in this factor. These elements affect the
business.
Positive Affect: High rate of interest encourage investors to deploy their money in those
projects which involve high return as it tends provide growth opportunity to BBC.
Negative Affect: Due to high inflation rate purchasing power of customers tends to be
reduce which affects business negatively because it reduces the customer base of BBC which
results to increase chances of business failure.
Social factor – As these are related to population growth rate, career attitudes, health
consciousness, cultural barrier, lifestyle attitudes, safety emphasis, age distribution, etc.
Positive Affect: In UK audience are more advanced and highly educated that provides
competitive advantage to BBC as it not only restricted to politics but to move towards science &
technology also for business growth.
Negative Affect: people of different languages, culture, religions tends to raise the cost
of broadcasting news due to the reason of dealing various different languages BBC leads to
increase expenses.
Technological factor – It comprises of level of innovation, technological awareness,
research & development technology, automation, technology incentive etc.
Positive Affect: favourable change in technological Research and development make
positive impact on business operations of BBC because with the help of it company can easily
maximise their profit level and can think about business expansion.
Negative Affect: Due to rapid change in technology in short duration make unfavourable
impact on BBC business because it is difficult to adapt new advance technology every time as it
needs heavy investment.
Environmental factor- Topics related to climate change, weather, environmental
policies are discussing under this factor.

Positive Affect: the trend are growing towards use of those product which are eco-
friendly. Therefore, BBC grasp it as an opportunity and adopt green business practices to win the
trust of stakeholders in this way it affects in favourable manner.
Negative Affect: Climate and change in weather also influence efficiency of business.
As extreme weather condition raises the operational cost of BBC. These variation influence
audience spending pattern causing to revise strategies which are related to marketing.
Legal factor – In this focus is made on various laws such as employment law, copyright
and patent laws, discrimination laws, Antitrust laws and so on.
Positive Affect: It is not possible for competitors to get licence from government that
provide competitive advantage to BBC
Negative Affect: As Board of Governance are responsible to fix licence fees so the
organisation BBC is totally depending on regulatory body.
TASK 4
P.5. Conduct internal and external analysis of specific organisation in order to identify
strength and weakness?
SWOT analysis of Tesco
STRENGTH: Their market share is their biggest strength as it captures 26.9% grocery market
share in UK.
WEAKNESS : Strong performance even at the time of pandemic make them different from
others (NGUYEN, 2020) Non availability of adequate stock is their weakness . Food and product
safety issues are also the biggest problem for Tesco (Rao, 2021).
OPPORTUNITIES:Its best opportunity is to bolster their presence in the online space. As most
of the audience buying items through online. It has great chance to amalgamate with those
brands that are most reputed and having good brand image. Economic recession are great threat
to business because it decrease the buying power of consumers.
THREAT: Due to pandemic , non-availability of sufficient staff are biggest threat faced by
Tesco.

SWOT analysis of BBC
Strength: Great Goodwill , this tends to ensure that people have great trust in the news which is ,
Broadcast by BBC .
Weakness:Largest Broadcaster all over the world is their great strength. High operating cost is
one of its weaknesses.
Opportunity:High controversies as BBC is blaming that it touches the sensitive issues (Smits,
2020). It has great opportunities to expand their business in the entertainment sector, cartoon
channels, fashion. It has chance to increase their revenues through targeting south American and
Asian market. Every time it faces the threat of new entry of local domestic channel.
Threat:Threat of business failure or low revenues are faced by BBC most of the time because
strong competitor are there for example CNN.
P.6. Explain how strength and weakness interrelate with external macro factor?
Political factor: In this all the factors are regarding government intervenes in the
economy. It involves policy related to foreign trade, corruption, government various taxation
policies related to income tax, custom, GST, Excise etc.
STRENGTH: High formalities or restriction on foreign trade are strength to BBC as it is not easy
for competitor to take licence or start business in other foreign countries as it restricted the entry
to new arrivals which tends to reduce competition to BBC.
WEAKNESS: High income tax rates in domestic country are major weakness BBC face because
it makes negative impact on profit and revenues.
Environmental factor: These are determinants of certain economy's performance as these
are related to disposable income, exchange rate, unemployment rate etc. All those factors affect
business for long term as reduce purchasing power of public. Demand & supply also effect due
to these factors.
STRENGTH: High exchange rate is strength to BBC because they serve their services globally
so it increases their currency values.

WEAKNESS: Non- availability of skilled workforce are their major weakness. Due to low
unemployment rate because talented employees are already engaged in some other companies.
Social factor: As these are related to customs, norms, values of population in terms to
age distribution, health consciousness, distribution of income, cultural barrier etc. These factors
play important role when marketers do marketing to target specific type of customers.
STRENGTH: Their behaviour of health consciousness are strength.
WEAKNESS: BBC provide their employees all the facilities related to health & safety As it not
offer services to kids , BBC are restricted to news channels only.
Technological factor: these are pertain towards technological innovation which make
impact on industry's operations. It refers to various factors such as technological change,
automation, research and development .
STRENGTH: Automation and R&D are great strength to BBC
WEAKNESS: It involves heavy cost to come up with the news fastest in various different
languages which contributes towards expansion of BBC as a strong brand name globally.
Legal factor: These aspects are connect to law, legislations. Under this various acts are
framed by government to safeguard the interest of society, employer, employees.
STRENGTHWEAKNESSBBC has license of broadcasting services which permit them to
provide services all over the world are their strength because fees of license are high so it is not
easy take permit from government as it attracts high documentation and formalities also. BBC
dependence on government for funds as it makes negative impact on their goodwill.
Environmental factor: It include environmental as well as ecological aspects for
example climate change , weather as these factors make impact on agriculture, tourism,
insurance etc.
STRENGTH: The bottleneck in the shipment of news are BBC strength.

WEAKNESS: If BBC not follow act or provisions that are set under this factor it attracts high
penalties.
CONCLUSION
From deep discussion it has been concluded that all the types of organisation have to
follow all the legal compliances prevailing in the operating country.. The external factors make
favourable and unfavourable impact on their functioning. Tesco PLC follows in the organisation
hierarchical organisation structure that tends to ensures smooth operations which supports to gain
probability and larger market share.

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