Business Environment Analysis: A Case Study of Pizza Hut

This assignment delves into the complexities of the business environment by analyzing Pizza Hut, a leading international restaurant chain. It explores the organization's structure, functions, and objectives, highlighting the interrelationships between its departments. Furthermore, the assignment utilizes PESTLE analysis to identify and discuss the macro-environmental factors impacting Pizza Hut's operations, including political, economic, social, technological, legal, and environmental influences. A SWOT analysis is conducted to identify the organization's strengths, weaknesses, opportunities, and threats, revealing how these factors influence decision-making processes. The assignment concludes by examining the interrelationships between Pizza Hut's internal strengths and weaknesses with the external macro-environmental factors, emphasizing the importance of a comprehensive understanding of the business environment for strategic success.

Business
and
Business
Environ
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Table of Contents
1. Introduction.......................................................................................................................................3
2. An explanation of each of the chosen organisations, including background details of the
organisation, the products and services they supply, the size and scope of the organisations, their
vision, mission and business objectives, the organisational and legal structure and information of
stakeholders...........................................................................................................................................4
3. In detail, explain the functions for one of the chosen organisations, using an organisation chart to
show how the functions interrelate and an explanation of how they link to the organisational
objectives and structure.........................................................................................................................7
4. Using PESTLE analysis, identify and discuss the various macro environmental factors that impact
on the business operations, highlighting the positive and negative impacts with specific examples
relating to your chosen organisation......................................................................................................9
5. Conduct the internal and external analysis for the chosen organisation in order to identify the
strengths and weaknesses. Explain how they influence the decision-making process.........................11
6. Apply a SWOT or TOWS analysis to your organisation to identify their key strengths and
weaknesses. Explain the interrelationships these have with the external macro factors previously
discussed.............................................................................................................................................13
7. Conclusion.......................................................................................................................................14
8. References.......................................................................................................................................15
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1. Introduction
The business environment consists of micro as well as macro factors which impacts the
business operations. The impact of these factors on the functioning of the organisations is
positive as well as negative. Therefore, the following assignment is based on the various
types of organisations and the various purposes for which they exist and their business
environment. We have discussed the impact of the external factors on the functioning of the
Pizza Hut. Pizza Hut is the leading restaurant food chain of America and an international
franchise. The company operates its function with the aim of providing high quality food
items especially innovative Pizzas so as to provide customer satisfaction. The various
functions of Pizza Hut and their interrelationships will be discussed in the assignment.
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(Source: https://www.express.co.uk/life-style/food/817060/pizza-hut-menu-delivery-
vouchers)
2. An explanation of each of the chosen organisations, including background details of
the organisation, the products and services they supply, the size and scope of the
organisations, their vision, mission and business objectives, the organisational and legal
structure and information of stakeholders.
Profit Organisations: The private organisations carry out the business operations in order to
earn the maximum profit in exchange for the goods and services produced by them. The
profit obtained by the profit organisations gets equally distributed between the owners or is
utilized for the business itself. The policies are generated in the profit organisations with the
main objective of generating maximum revenue from the business operations. For example:
Google, Morrisons, Samsung, BMW all are profit organisations.
Not-for profit organisations: The main objective of the not-for profit organisation is the
promotion of the public welfare. The people interested in public welfare establish such
organisations. The profit generated by these organisations is used for the welfare of the
common public and to serve the public interests. Unites Nations Children Fund is a non-profit
organisation (Craig & Campbell, 2012).
Non-governmental Organisations: The non-governmental organisations commonly termed
a NGO’s are established by a group of people in order to serve the humanitarian purposes.
For example: British Red Cross is a non-governmental organisation that helps the people of
UK during crisis and other emergencies.
Public Sector organisations and their purpose, objectives and supply of goods and
services: The public sector organisations are run by the government of UK and their
ownership lies with the government. And therefore all business activities are regulated either
by the local or the central government. The public sector organisations generally provide
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services for the welfare of the public such as healthcare, education services etc. The main
purpose and objectives of these organisations is to fulfil the needs of the public from the
amount earned through taxes. For example: Police Services are the most common example of
public sector organisations (Sharma, et. al., 2012).
Private Organisations and their purpose, objectives and supply of goods and services:
The main purpose of the private organisations is to earn maximum profit from the business
operations. They carry out business operations with the objective of earning maximum
revenue from the customers by supplying goods and services. The various types of
organisations are included under private organisations like sole trader, partnership, private
limited as well as public limited companies. For example: Waitrose, Pizza Hut, Marks and
Spencer etc. are all private organisations.
Voluntary Sector Organisations and their purpose, objectives and supply of goods and
services: The main objective of the voluntary organisation is to keep the benefits earned from
the business operations within the business in order to provide public welfare to the citizens
of UK. The voluntary organisations are run by the board of directors. The services provided
by the voluntary organisations are for the welfare of the general public. For example: Cancer
Research UK, YWCA as well as American Red Cross are few examples of voluntary
organisations (Butler & Wilson, 2015).
Legal Structures
Sole Traders: Sole Traders are the businesses which are usually run by the single owners.
The company is registered on the name of the owner as self-employed company. The owner
of the company is liable for the debts of the company. For example: Plumbers, painters,
electricians are all sole traders.
Partnerships: Partnerships organisations are generally formed by a number of partners who
establish business with the purpose of generating profits. The number of partners may range
from 2 to 20 depending upon the requirement of the business operations. The responsibility
of the business as well as the liability of the business gets equally divided between all the
partners. For example: Law firms as well as accountancy firms are partnerships organisations.
Private Limited Companies: The private limited companies are owned by its shareholders
who operate business operations to earn profit by selling goods and services. The shares of
the private limited companies are not sold to the public and only shareholders have the right
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to sell them. The company can have shareholders ranging from 2 to 200. In case of debts, no
shareholder is personally liable as the whole company gets sued in case of business liability.
For example: Mac Queen Bros is a private limited company (Butler & Wilson, 2015).
Public Limited Company: The public limited companies operate with the main purpose of
making money and always end with the “PLC” at the end. Public Limited companies can
have minimum 7 shareholders and maximum to any limit depending upon the business
operations. The business is run and controlled by the board of directors who are chosen by
the shareholders through electing. No shareholder is personally liable for any debts and the
debts are cleared by suing the business. All the shareholders have limited liability as it
depends upon the amount of shares owned by the shareholder. Their shares are available for
public in the stock market. For example: Tesco Plc is a public limited company.
Size and Scope
Small Organisations: Small organisations mostly comprises of employees ranging from 1 to
49. They operate on a small scale. The small organisation has less resources and capability in
order to compete with the competitors entering the market. For example: Wannaburger
restaurant in UK.
Medium organisations: The number of employees employed by medium sized enterprises
ranges in between 50 to 250 employees. The medium sized organisations have comparatively
large market to serve.
Large Organisations: The business organisations operating with minimum 250 employees
or more are categorised as large business organisations. They generally create high revenue
and their annual turnover is the indicator of this. For example: Waitrose and Pizza Hut are
examples of large scale organisations (Hillary, 2017).
Micro Organisations: The micro organisations are generally run by one or two persons and
are generally called as family businesses where business operations are executed to earn
living for the family. They have less than 10 employees.
Pizza Hut is a large organisation as it employs more than 300,000 workers worldwide. The
total number of locations of Pizza Hut worldwide is 15600 restaurants operating in more than
97 countries across the globe.
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3. In detail, explain the functions for one of the chosen organisations, using an
organisation chart to show how the functions interrelate and an explanation of how they
link to the organisational objectives and structure.
In order to have proper control on the business and to operate more successfully, the
organisational structure of business is distributed over the various different functional areas.
Organisational structure is very important so as to have the proper coordination and
interrelation between the various functional units of an organisation. This helps in analysing
the various functional areas of the business in a more effective manner.
Organisational Structure of Pizza Hut: Pizza Hut is the leading restaurant chain in
America and an international franchise that offers different varieties of Pizzas and other food
items. The company follows a divisional organisational structure. The divisional hierarchy of
Pizza Hut have established chain of commands or path of commands which needs to be
followed in case of emergencies or issues. The divisional hierarchy of the Pizza Hut is one of
the best management hierarchies in the food chains all over the world. The divisional
hierarchy at the Pizza Hut helps the organisation in achieving its organisational objectives
more effectively by allocating different responsibilities to the specialised divisions.
Objectives of Pizza Hut: The main objective of the pizza hut is to become the all-time
favourite food restaurant of the people by making the perfect pizza and providing customers
the satisfaction and good services all round the clock. The mission statement of Pizza Hut is
to “Reach on the top of the peak to provide best taste and service”. The company is a
subsidiary of Yum Brands and wants to see that Yum on the face of its customers every time
they visit the restaurant or utilize its services. Therefore, pizza hut aims to become the best
restaurant in the world (Qadir, 2013).
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C

Role and interrelationship between the marketing, finance, operations and HR
department at Pizza Hut:
The operations department needs to have good relationship with the finance department as
the finances are required by the operations department in order to import the raw materials
from suppliers. All the operations department and finance department needs to work together
so as to train the employees in order to increase the efficiency and productivity of the
organisation. The finances required for the training are being provided by the finance
department. In order to motivate the employees of the Pizza Hut to perform better, motivation
through incentives is provided by the HR department and HR department is also responsible
for the formulation of the various policies as well as providing human resources for carrying
out various tasks. For attracting the customers towards the dishes and services of the
organisation, operations department needs the strategies developed by the marketing
department for the proper advertisements which in turn requires the finances from the finance
department. In order to supply raw materials to different warehouses in a quick manner, stock
management’s help is required. Thus, we can say that the success of the organisation is
dependent on the functioning of various departments of the organisation who are interlinked
with each other in order to increase the efficiency as well as the productivity of the
organisation (Feng, et. al., 2015).
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4. Using PESTLE analysis, identify and discuss the various macro environmental
factors that impact on the business operations, highlighting the positive and negative
impacts with specific examples relating to your chosen organisation.
The factors which have an impact on the decision making of the business are referred to as
the business environment. The business environment comprises of micro and macro factors
of which micro are internal factors. The macro environmental factors affecting the business
operations are the external factors which are beyond the control of the organisation. The
various macro factors affecting Pizza Hut can be discussed by conducting PESTLE analysis
of the Pizza Hut which is as below:
Political: The political stability as well as the rules and regulations and government policies of
the country have a great impact on the business operations of the organisation. Pizza Hut is an
international franchise and operates in various different countries. Therefore, the owner of the
pizza hut needs to keep in mind the political factors of that particular place in order to excel in
its business operations. The changed taxation policies in UK have made it easier for the pizza
hut to generate high revenues from the customers. However, if the government increases the tax,
it can result in low demands of the services of the company. The various policies made by the
government of UK have an impact on the business operations of the Pizza Hut. The friendly
regulation and other policies in UK made it easy for the Pizza Hut to operate in a successful
manner in UK (Haseeb, 2017).
Economic: The business operations of the Pizza Hut are also affected by the economic
conditions of the country in which it is operating. For example: UK is a developed country and
therefore the per capita income of the people of UK is relatively high. This means that the
people of UK spends more on purchasing the food items and hence add to the profits of the
Pizza Hut. In addition to this, the unemployment rates and inflammation rates also have a
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considerable impact on the business operations of the Pizza Hut. The business operations of the
Pizza Hut get affected by the sudden rise or reduction in inflammation in UK. Thus, the
economic stability of the country enhances the sales of the Pizza Hut while recession influences
the profit making of the company.
Social: The business operations of the Pizza Hut also get affected by the changing preferences
of the people of the country in which it is operating its business operations. Therefore, Pizza Hut
needs to analyse the needs and requirements of the people of the country on a regular basis.
Today people are becoming more health conscious because of the changing lifestyles which
have impacted their food habits. Therefore, people prefer to eat healthy food. The changing
lifestyles have made people more concerned about the quality of the food which is being served
to them. Also, the business of Pizza Hut is more prone to success in the areas where people
prefer fast food over other types of food. Also, Pizza Hut needs to take care of the feelings of
their customers while serving food so as to ensure that it does not hurt the feelings, religion or
culture of its customers in any way (Haseeb, 2017).
Technological: The business operations of the Pizza Hut also get affected by the sudden
changes in the technology. In order to remain competitive in the market, Pizza Hut needs to
regularly update its menu with new innovative items so as to remain existent in the market.
Technological advancements are very important for the business operations of the Pizza Hut. For
example: Pizza Hut must make use of advanced bakery ovens and other technical equipment in
order to ensure that it does not take more than 20 minutes to serve food in its restaurants and not
more than 30 minutes to make the home delivery. The online ordering has also increased the
sales of the Pizza Hut.
Legal: The rules and regulations of the food business of the country where Pizza Hut is
operating also have an impact upon its business operations. In order to function smoothly, the
food chains like Pizza Hut need to follow the quality standards that have been set by the
authorities of the country.
Environmental: The various environmental factors needs to be considered for the successful
operation by Pizza Hut. Hygiene is the most important factor that needs to be taken care by the
organisation like food chain. In addition to this, the recycling of the waste disposal should also
be considered by Pizza Hut in order to remain competitive and prestigious to its customers
(Lawrence, 2015).
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(Source: https://www.inloox.com/company/blog/articles/back-to-basics-part-9-project-
environment-analysis-with-pestle/)
5. Conduct the internal and external analysis for the chosen organisation in order to
identify the strengths and weaknesses. Explain how they influence the decision-making
process.
In order to be successful and competitive at the same time, Pizza Hut needs to conduct
internal as well as external analysis in order to determine the various strengths and
weaknesses of its business Operations. The SWOT analysis of Pizza Hut is as follows:
Strengths:
 The name and brand image of the Pizza Hut is its biggest strength. The Pizza Hut has
been existent in the market for more than 50 years now and therefore people have a great
perception of its brand image.
 The main specialization of Pizza Hut is the American Style Pizza and no company till
date has been able to compete with it.
 The market share of Pizza Hut in UK is very large and its network is very strong which
makes it a market leader in UK.
 The variety of food items and innovative pizzas are offered by the company.
 The strong media relations and media partners are also the strengths of the company.
 Despite strong competitors like Dominos etc., the company faces very low competition
because of its strong network and loyal customers (Haseeb, 2016).
Weaknesses:
 The internal conflicts within the organisation due to computerised processes is the biggest
weakness of the company as it is leading to high turnover and the demotivation of the
employees of the Pizza hut.
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 The loyal customers of the company are no more satisfied with the quality of the products
of the company and therefore their loyalty is declining (Bhasin, 2013).
Opportunities:
 New and more innovative flavours and sizes in Pizzas can be introduced by the Pizza Hut.
 The company can expand its business operations in more countries.
Threats:
 The high cost and rising prices are increases the competition as customers prefer
affordable products.
 Threat from other companies like McDonalds who introduced McPizza and Dominos is
increasing. Therefore Pizza Hut needs to focus more on quality and variety (Bhasin,
2013).
Thus, by doing the internal and external analysis, Pizza Hut will get a clear picture of the
environment in which they are operating its business operations and will have a better
understanding of their major strengths and weaknesses which will help it in making better
strategic decisions in future and have an idea about the direction where the company is heading
towards.
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(Source: https://www.questionpro.com/blog/a-swot-analysis-template-for-the-overwhelmed-
marketer/)
6. Apply a SWOT or TOWS analysis to your organisation to identify their key strengths
and weaknesses. Explain the interrelationships these have with the external macro
factors previously discussed.
The SWOT analysis of the Pizza Hut has been successfully conducted in the previous question.
The interrelationships of the strengths and weaknesses with the external macro factors can be
understood from the following:
The functions of the Pizza Hut and its success are influenced by the various strengths as well as
the weaknesses of the organisation. The strengths of the Pizza Hut helps the company in getting
future opportunities while the weaknesses increases threats for the organisation. The major
strength of the Pizza Hut is its loyal customers which helps the company in achieving its
objectives and aims. Therefore, it can be said that the strengths and weaknesses of Pizza Hut are
directly linked with its macro factors. Pizza Hut needs to identify its strengths and weaknesses
on a regular basis in order to deal properly with its macro environment (Yuan, 2013).
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7. Conclusion
Thus, we can conclude from the above assignment, that the external macro factors have a great
impact on the business operations of the Pizza Hut. Pizza Hut needs to analyse its internal as
well as external analysis in order to remain competitive in the market. This helps the company in
identifying its strengths as well as weaknesses. For this, we have conducted the PESTLE as well
as the SWOT analysis of the Pizza Hut in the above assignment. We have also discussed in the
above assignment the various types of organisations, their purposes and their size and scope.
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8. References
 Bhasin, H., 2013. SWOT Analysis of Pizza Hut. [Online] Marketing 91. Available at:
https://www.marketing91.com/swot-analysis-pizza-hut/ [Accessed: 31 May 2018]
 Butler, R., & Wilson, D.C., 2015. Managing voluntary and non-profit organisations:
Strategy and structure. Routledge.
 Craig, T., & Campbell, D., 2012. Organisations and the business environment. Routledge.
 Feng, H., Morgan, N.A., & Rego, L.L., 2015. Marketing department power and firm
performance. Journal of Marketing, vol. 79, Issue. 5, pp.1-20.
 Haseeb, 2016. The SWOT Analysis of Pizza Hut. [Online] Marketing Dawn. Available
at: http://marketingdawn.com/the-swot-analysis-of-pizza-hut/ [Accessed: 31 May 2018]
 Haseeb, 2017. PESTLE Analysis of Pizza Hut. [Online] Marketing Dawn. Available at:
http://marketingdawn.com/pestle-analysis-of-pizza-hut/ [Accessed: 31 May 2018]
 Hillary, R., 2017. Small and medium-sized enterprises and the environment: business
imperatives. Routledge.
 Lawrence, M., 2015. Reducing the environmental impact of construction by using
renewable materials. Journal of Renewable Materials, vol.3, Issue. 3, pp.163-174.
 Qadir, E., 2013. Pizza Hut. [Online] Slideshare. Available at:
https://www.slideshare.net/EhsanQadir/pizza-hut-24262027 [Accessed: 31 May 2018] Sharma, P., Chrisman, J.J., & Chua, J.H., 2012. A Review and Annotated Bibliography of
Family Business Studies. Springer US.
 Yuan, H., 2013. A SWOT analysis of successful construction waste management. Journal
of Cleaner Production, vol. 39, pp.1-8.
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