Understanding the Business Environment

This report discusses the legal and market structures of organizations, stakeholder analysis, PESTLE analysis, and Porter's five force model. It also highlights the impact of economic, cultural, technological, political, demographic, natural and international environments on businesses. The report is relevant for students studying business environment analysis in any college or university.

UNDERSTANDING THE
BUSINESS
ENVIRONMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...............................................................................................................................3
Task-1..............................................................................................................................................3
The legal and market structures of organisation..........................................................................3
Task-2..............................................................................................................................................4
Implementation of the stakeholder analysis.................................................................................4
TASK 3............................................................................................................................................6
Three reasons for business environment analysis for HSBC along with analysis over PESTLE
analysis and Porters five force model..........................................................................................6
TASK 4............................................................................................................................................9
Evaluation over the development of the business in context of short term and long term
performances................................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Business environment involves the sum total of all the organisations , people and other
factors that are external to the businesses control but still the business relies on them because
they create an influence on the complete performance and the sustainability of the organisation.
The other forces includes the competitors, suppliers, media, government, technologies, trends,
economic conditions, investors and other various kind of institutions. The British Broadcasting
corporation (BBC) is the oldest broadcaster in UK that employing over 22000 staff (Nashiruddin,
2018).
This report will discuss the type of the business organisations, its the market structure,
stakeholders and their analysis, the long term and the short term development of the business,
business environment analysis with the help of the suitable business tools and frameworks
MAIN BODY
Task-1
The legal and market structures of organisation
The BBC (British Broadcasting Corporation) is the service broadcaster among public in UK. The
primary responsibility of the organisation is to offer the public services broadcasting in British,
UK, Isle of Man and the channel of Islands. It generally functions in the culture, media, digital
and sport.
Legal Structure
The constitutional basis for the BBC is the Royal Charter which describes the objective,
mission and the public purpose of the organisation. This particular charter also highlight the
composition, role, regulatory arrangements and the governance of the corporation. According to
the agreement signed by BBC with the Secretary of State, the corporation is required to maintain
the type of service, brief description of the service and the type of the service. The agreement
also specifies the complete detail on multiple topics that are highlighted in the Charter that
consists of the funding of BBC and their regulatory responsibilities.
The broadcasting, postal regulatory body and the telecommunications of the UK is the
Office of Communications and also became the first ever external regulator in the year 2017. The
main functions of the Ofcom in relevance to BBC include preparation and publishing the
operating framework which includes the provisions to save the effective regulation of the BBC
activities. It also develops an operating licence for the public services of UK that includes some

regulatory conditions, it specifies the suitable measures to examine the performance of the public
services, it specifies the needs for the protection of the fair and effective competition in relevance
to the material alteration, it set the needs in relevance to the communications between the
commercial activities and BBC, it also monitors the content standards of the television, on
demand programmes and the radio of BBC according to the standards and the fairness codes of
Ofcom (Negro and Mesia, 2019).
Purpose/Objectives of BBC
The BBC offers the impartial information and news to assist the public to comprehend
and involve with the happenings around them, encourage the learning for people of all ages,
displays the content that is most creative, high in quality and unique output and the services. The
corporation also reflect, offer and represent multiple communities of all UK regions which
encourage the creative economy around UK. Moreover, it also represent the culture and values of
the United Kingdom to the world (Ryu).
Market structure of BBC
The BBC is financed by the direct payment of the customer along with the revenue
generated from the advertisement, this function does not operate in the general goods. The direct
and the indirect financial sources supports the company. Although, the dependence rate on these
kind of the financial sources keep on differing by particular type of the media. In BBC, it
emphasizes on the effect of the competition in the market that is mixed which involves the
advertising assisted by media and the subscription free kind of media. The market that the
advertisement assisted carrier and the subscription assisted carrier tends to compete in the market
that includes some principles which are that the number of the channels that are supplied by the
advertisement media rises while on the other hand those supplied by the subscription free
assisted career tends to decrease it has the relation in which the substitutability is greater. The
number of channels which are being supplied by the advertisement career is equal to the total
number of channels that are being supplied by the advertisement career (Qushtom, T.F.A.).
Task-2
Implementation of the stakeholder analysis
Stakeholder- It is a party that is interested in a particular company and it can also create an
influence on that company and get affected by that company also. These includes the customer,
suppliers, investors and the employees (Dilawo and Salimi, 2019).

Shareholder- It is known as a person, company or an organisation that has atleast one share in
the stock of the company which is particularly known as equity. Shareholder is also known as the
stockholder.
Stakeholder analysis- It is generally known as the process of recognizing, assessing and
according to that prioritizing the people who might get affected by a particular project or
business. It highlights the main or important stakeholders and their requirements for the project.
It is crucial for having a clarity in understanding each stakeholder and their expectations from the
project from the beginning (Ekonen and Forsström-Tuominen, 2018).
For applying the stakeholder analysis in the BBC, the following points need to be considered-
Identifying the stakeholder
A list of all the people who got affected by BBC and who have displayed interest in the success
and failure of BBC should be made. For this purpose, a deep insight into the multiple stakeholder
should be done. These people could be advisors, teammates, family or can be investors also.
Prioritizing the stakeholders
After the initial step, BBC must give priority to the particular stakeholders by examining or
assessing the level of impact and the interest that they create on the company. One of the most
pouplar and a leading tool which is used in examining the stakeholders is the stakeholder power
interest grid. Particular positions are required to be allocated on that grid in order to display the
actions that needed to be taken like
High power, highly interested people- Highest amount of importance and the efforts must be
given to them in order to satisfy and engage them.
High power, less interested people- The company should not bore these stakeholders but also at
the same time should be given enough importance to them.
Low power, highly interested people- These kind of the stakeholders must be informed regularly
and it must be made sure that no issues or problems arises with them. These category
stakeholders can be very assisting and helpful with the details and the information of the project
in the supportive function of BBC.
Low power, less interested people- These kind of stakeholders must be monitored but should not
be bored by any kind of extra information or communication (Adamseged and Grundmann,
2020).
Understanding the key stakeholders

After the identification and the prioritization of the important stakeholders, the BBC is required
to comprehend about how they feel about the project. For that purpose, some necessary questions
are needed to be asked such as do they have any emotional interest or financial interest in the
result of the project, on the basis of that it is asked whether it is positive or negative, them what
encourages them the most, which of the project information is relatable to them and the best
manner in which that information can be relied, the existing opinion of the work, the opinion
based on the appropriate information, what impacts their opinion and analysing whether these
influencers are also the stakeholders, what could be done to win their support if they are ot
willing to support it, what ways can be taken into consideration for the management of the
opposition if they so not support (Kumar, G.K., 2019).
TASK 3
Three reasons for business environment analysis for HSBC along with analysis over PESTLE
analysis and Porters five force model
The business environment analysis is a method to identify the potential influence of
specific aspects of the economic, cultural, technological, political, demographic, natural and
international environments. This also includes operating environment which includes company
suppliers, customers, competitors as well as public within the business (Yip and Bocken, 2018).
This has been done in two ways which includes external and internal environment analysis with
the help of specific framework such as PESTLE analysis and Porters five force evaluation. Three
major reasons for analysing business environment for HSBC are:
 It helps HSBC to provide contextual information about the business direction, growth
targets, brand positioning and risks towards the productivity.
 This provides appropriate assistance to determine the validity of existing goods and
services along with defining new products for further development.
 Due to the emergence of globalization as well as its influence, HSBC have to face varied
challenges and thus the decision makers of the company have to devote their time over
analysing the business from time to time in order to survive in their respective business
industry (Barik and Kumar, 2018).
Macro environment evaluation with PESTLE analysis

 Political: The HSBC banking has been sheltered by the rules and regulations along with
policies that made by diversified governments into the countries in which the company
are working. The company has been able to remain with the policies agreed with each
government in order to make sure about the firm that it has been able to accomplish
business operations in successful manner along with effectual ways. HSBC company also
formulates their own defence strategies besides any governmental restrictions as well as
limitations.
 Economic: HSBC is among the world's leading and completive businesses in condition
of banking and finance along with having secure and successful economic strength
(Onyusheva, 2018). Irrespective of various dangers that has been met by them at varied
locations of the world, the management of HSBC make what they required to go beyond
such struggles along with having better economic conditions that creates a shield against
unemployment.
 Social: HSBC is being affected by the fortune of society in which they are working. At
the ned of this company, it has been evaluated that HSBC is trying their maximum to
ensure that each society is given the similar chance to get benefits over resources given
by the establishment. The company correspond to having good name relation among the
society that belongs to secure that each and everything will be under control.
 Technological: The urgent situation of information technology, internet and basically the
improvement of the technology effects the ways in which the HSBC has been working in
the past few years. The company is in search of different ways and systems along with
used the internet settings in order to get and reach their customers all across the world
and also provide appropriate assistance to know and understand the latest trends into
global business economy (Smith and Perchthold, 2020). Apart from these, the company
also utilizes special facilities which help in order to advance their productions and
operations along with make them achieve their company goals. Technological
breakthroughs create new industries which might prove a danger to represent the
establishment.
 Legal: In various countries, the legal structures are not robust in nature and enough to
protect the intellectual property rights of the HSBC company. Thus, it requires HSBC to
evaluate in better ways before even entering into such market. HSBC holdings Plc can

face expensive lawsuits if it fails to comply with the host countries legislations. They
have to follow the employment laws, intellectual property laws, consumer protection
laws, etc.
Micro environmental analysis with Porter's five force
 Bargaining power of consumers: An establishment created a value which has affected
the occupation from one of the two significant forces that customers power. The role of
this force consists of customers to concentrate along with the size. On the other hand,
HSBC managed their customers as a result which allows them to gain consumers loyalty.
The strategy that has been utilized by the HSBC allows them to have a chance becoming
world leader into the banking industry (Djajadikerta and et.al., 2022).
 Potential entrants: HSBC have various competitors in the market space and thus having
large number of other markets consider entering into this banking industry as a result of
high profits that this specific kind of industry offers. Large super markets in UK seek to
enter without even considering that those threats sometimes breakdown establishment
such as HSBC. However, the company receives varied threats from market, they were
still able to create high standards for competition. Company uses strong branding images
so the company will not result into the loss of customers.
 Threat of substitution: It is the another significant threat that has been faced by the
HSBC as their competitors also provides various and similar kind of offerings and
products within the market space. This threat gives opportunity to the firm to work hard
as a result of being sustained its position. HSBC strategy is to focus over the four
consumers sections.
 Bargaining power of suppliers: Consumer power mirrors to supplier capacity. This
specific force focuses over two specific points which includes the first point of size and
concentration of suppliers and another is to differentiate into the material that are being
supplied. The company uses strategy of charging markets with different prices as per the
price of each buyer.
 Rivalry among current and recent competitors: There are various competitive firms
among the banking as well as financial sectors. HSBC use efficient strategies to make
sure their leadership position into the market space among their rivalries. Moreover, due

to specified capabilities of other rival companies HSBC develops strategic plans to ensure
that they are permanently being the primary choice of their users among the banking
industry.
TASK 4
Evaluation over the development of the business in context of short term and long term
performances
HSBC banking corporation is on the third position in the whole world with regard to
assets ownership. Approximately 24% of the HSBC's profit margins have been derived from the
Hong Kong. It is the well-known operational centre known as the World's local bank HSBC has
a history of helping millions of consumers internationally in order to achieve their financial
aspirations. Hence, it has been grown as a firm or banking institution that has deep level of
respect for different cultures and people in order to get them connected to these cultures (Azma
and et.al., 2018). Their primary motive is to look at their consumers as individuals and strive
towards providing them with a personalized service as well as credit card products.
After considering the annual report of HSBC, it has been stated that company is moving
and growing towards the correct direction as they are able to prepare and maintain a balance
among the financial and non financial measures of performances. As per the consideration of key
performance indicators, it has been evaluated for the reports that currently the company enhances
their reported profit margin after tax which has been increased to $14,693 m from past two years
as in year 2020 it was $6099 m and in 2019 it was reported as $8708 m. In context of cost
efficiency ratio, it has been evaluated that currently it has increased as 69.9% as previous year
i.e. in 2020 it was around 68.3% although in 2019 it was 75.5%. If the earning per share has been
considered then it illustrates that in 2021 it raises up to 0.62$ while in 2020 it was around 0.19
and 0.30 in 2019. Although, the dividend payout ratio decreases from past two years and reaches
40.3 in 2021 while it was around 78.9 in 2020 and 100 in 2019. The reason behind this might be
that the company wants to conserve their cash to reinvest within their own business or company
or buy back stock. Basically, it illustrates that company is in good condition and is retaining
more earnings towards developing the firm instead of paying it to stockholders.
After considering the balance sheet of the HSBC company it has been identified that the
total assets of the company reduces and shows a figure of $2,957,939 while it was around

$2,984,164 in 2020 and $2,715,152 in 2019 (Anjum and Ali, 2018). This might have happened
because of the enhancement into the cash outflow along with reduction into the loans and
borrowings of the company. It is all because of the fact that positive cash flow indicates that the
liquid assets are on increasing mode. This enables it to settle debts, reinvest into their business,
return money to shareholders, pay expenses and provide a buffer against future financial
challenges. The decreased amount of the loan states the mortgage which is an alternative to fore
closure on the property.
The mangers in the BBC can raise the engagement of the employees with the help of the
regular reviews. Along with this, the managers can also schedule regular as well as the
continuous meetings and them implement them accordingly, they should skip the speech and
move into the reviews ready to hear them, providing the staff the opportunity to define their own
goals and objectives, rather than giving the negative feedback, they should find ways in which
they can prevent the errors, by using the regular feedbacks for developing the stage for the
reviews on the yearly basis. The managers should also comprehend that the evaluations are not
only for the compliance of the human resource and the paperwork but it is also about offering
enough attention to the employees and investing ample amount of time in the development of
their career. The technique of the kick-start feedback must be done in order to indicate the good
evaluations of the existing days. Another recommended thing is to figure out the feedback that
each and every employee need.

CONCLUSION
From the above report, it has been concluded the type of the business organisations, its
the market structure, stakeholder and their analysis, the long term and the short term
development of the business, business environment analysis with the help of the suitable
business tools and frameworks. The Business environment leads to a great impact on the
functioning of the business activities which could affect the success and the failure of the
business depending upon the internal and the external environment of the business. These factors
need to be considered in order to avoid the future obstacles which can lead to any kind of loss or
resentment that is required to be prevented.

REFERENCES
Books and Journals
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factors for emerging bioeconomy enterprises through a comprehensive analytical
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Azma, N. and et.al., 2018. The development of Islamic banking and financial institution in
United Kingdom. Asian Journal of Business Environment, 8(2), pp.5-13.
Barik, B. and Kumar, S., 2018. Macro Environment of Indian Life Insurance Business: A
PESTLE Analysis. Bimaquest, 18(3).
Dilawo, R.S. and Salimi, Z., 2019. Understanding TQM implementation barriers involving
construction companies in a difficult environment. International Journal of Quality &
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Ekonen, M. and Forsström-Tuominen, H., 2018. A shared understanding of business purpose as
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Kumar, G.K., 2019. Understanding the need of implementation of lean techniques in
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Nashiruddin, M.I., 2018. Understanding the Turbulence of Business Environment in Telecom
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Negro, A.R. and Mesia, R., 2019. Organization and Society: Understanding Corporate Social
Responsibility and The Inclusive Business in The Peruvian Business Environment.
Journal of Applied Business & Economics.21(5).

Onyusheva, I.V., 2018. Socio-Cultural Environment of International Business: National and
Ethical Aspects. Вестник университета «Туран», (4), pp.62-68.
Qushtom, T.F.A., The Effect of Applying Analytical Procedures on Understanding Business
Environment in Light of Using Accounting Information Systems in Auditing.
Ryu, J.S., Retailing in the COVID-19 Pandemic: Understanding Omnichannel Shopping
Intentions and Behaviors.
Smith, R.R. and Perchthold, G.R., 2020. Building Global Organizations: Developing Cross-
Border Leaders. Leading Human Capital in the 2020s: Emerging Perspectives, p.34.
Yip, A.W. and Bocken, N.M., 2018. Sustainable business model archetypes for the banking
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