Business Environment Analysis

This report analyzes the business environment of Sainsbury's, a leading UK-based multinational grocery retailer. It examines different types and purposes of organizations, explores the size and scope of various organizations, and analyzes the relationship between organizational functions and structure. The report also identifies the positive and negative impacts of the macro environment on business, conducts internal and external analysis using SWOT and Porter's Five Forces, and explains the interrelationship between strengths and weaknesses with the external macro environment. Desklib provides past papers and solved assignments for students.

Business environment analysis
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Table Of Content
INTRODUCTION...........................................................................................................................................3
LO1..............................................................................................................................................................3
P 2. Different types and purposes of organizations.................................................................................3
P 2. Explain the size and scope of a range of different types of organization..........................................4
P 3. Explain the relationship between organizational functions and link their structure. .......................4
P 4. Identify the positive and negative impact of macro environment on business................................5
P 5. Conduct internal & external analysis................................................................................................6
P 6. Explain interrelationship between strengths and weaknesses with external macro environment. .7
CONCLUSION...............................................................................................................................................8
REFERENCES................................................................................................................................................9
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INTRODUCTION
For the business to be successful it needs assets and resources such as finance for which it
has to rely on institutions that provide funds. Further there are natural resources & raw material
for which organization depends on nature. Apart from this, it also requires legal support from
government, hence, all these factors are considered as different elements of single concept i.e.
business environment.
As a business analyst of Sainsbury’s multinational company, this report is made to
demonstrate different types of organizations in the business environment and their description.
Sainsbury’s is a UK based public company that deals in groceries and this report will be
presented to its CEO.
LO1
P 2. Different types and purposes of organizations.
Private sector companies, refers to those companies in which products and services are
manufactured and distributed by individuals organization and also they are not considered as part
of government. It has been determined that, there are various legal structures for private
organization or it becomes independent legal structure when it incorporates. For example,
Iceland supermarket is a privately owned retail brand and provides all types of food and services.
Moreover, delivering outstanding services to its customers so that they cannot switch to another
brand is the purpose of organization (Kim, Pettit and Beresford, 2016).
Public company refers to a business that is operated by shareholders and listed as
publically. It is managed by top management whose real owners are shareholders. For example,
Kingfisher plc is a British retailing company with home improvement products and their purpose
is to make home improvements accessible to everyone. This is because they want everyone to
feel good about their homes.
A voluntary organization refers to an individual group who enter in an agreement
voluntarily to create an entity. For example, Cancer Research UK is a voluntary charity
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organization in the UK. The main purpose is to care for patients suffering from cancer. It raises
funds through donation, events, partnership and the public fund raising.
P 2. Explain the size and scope of a range of different types of organization.
There are three types of public limited companies such as micro-small, medium and large
enterprises. Small and medium sized organizations have very few numbers of employees. It has
been determined that in both developed and developing countries such organizations account for
two third of total employment. SMEs are enterprises that contain between 10 to 250 workers and
firms with 10 persons refer to micro firms (Heino, Melo and Bini, 2015). They are considered as
non-subsidiary independent firms, also it has been determined that medium sized businesses
have much better position than small size organization. Moreover, they provide a larger market
& can modify their strategy once or twice a year. Even expansion can be done by them of their
business in new market with existing products. They have more assets to keep themselves
protected from new entries to the market. However, it has been noticed that the medium size
organizations experience risk due to the rivalry with very large organization. The large
businesses have more resources; therefore, the risks may be also high to maintain protection.
The scope of different types of organizations relies on the type of product they sell. The
scope for Coca cola organization is to create & provide soft drinks such as tea, sports energy
drinks, fruit juice, ready to sip coffee & bottled water. It has been seen that Cancer research is a
charity organization has a wider target that supports more resources to protect themselves from
new entries to the market; though it is difficult for them to protect themselves from large
organization with more resources.
P 3. Explain the relationship between organizational functions and link their structure.
Sainsbury’s multinational company's functions are production, sales, research, financing
and marketing departments. Further, the structure refers to the relationship between the different
parts of business. Also, it demonstrates that how the chain of command operates at various
levels.
Functional structure :- there are many organizations who have functional organizational structure
with a chain of control. Also, it has the benefit of clear lines of command, with crucial decision-
makers in each department who place the overall mission & tasks. For example, an organization
might have an assembly working in information technology section, one in marketing & another in
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finance. Each of them contains a manager who answers to an executive i.e. a level up in the chain of
command (Nie, Chua and Chan, 2015).
 Divisional structure :- A divisional structure operates across different branches. Any
company has diverse product lines, the separation for each product line has its own
functional groups such as marketing, R&D, sales & accounting.
 Matrix structure :- every worker works in a function-based unit in this organizational
structure, , such as marketing or finance. Matrix structure uses organizational function
due to changing organizational needs (Zahari and Romli, 2018).
P 4. Identify the positive and negative impact of macro environment on business.
Macro environment is consists those external factors which are out of control & also has
an impact on decision making, objectives & strategies of the firm. These outside factors include
economic, legal, cultural and social factors, technological changes & natural forces. Further, it
has been determined that, the steady economic situation also have the strong impact on the
operations of the Sainsbury’s by way of the better opportunity to expand the business in the
market. Also, with the development of the new technological usage by different companies is
accepted by customers.
Negative impact:-
 The political & the legal restrictions can also be identified as the negative impacts on
business operations in a harmful way.
 These factors are determined to create an obstruction for the opening of the new
organizations at different locations in the UK.
 Additionally, price rises, unemployment rates, & taxes under macro environment factors
also influence businesses & consumers on a day-to-day basis (Zalengera, Blanchard and
Gondwe, 2014).
P 5. Conduct internal & external analysis.
Sainsbury is a multinational brand in UK that deals in groceries and also retail banking.
Apart from this it also operates in services like, financing, & property investment. Additionally,
it also has 15 private label products that it sells on its own at around 770 stores.
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Strengths  Sainsbury’s is considered as one of the
biggest supermarket chains in UK (Bull,
Jobstvogt and Carter-Silk, 2016).
 It has a worker force of over 150,000
people.
 Also, it has an extremely
knowledgeable leadership team.
 Moreover, it does branding & publicity
across the UK through print ads, online
campaign etc.
 Sainsbury's has more than 600
supermarkets and over 800 convenience
stores across UK.
 Several events are also been sponsored
by Sainsbury’s like Paralympics.
Weaknesses  Increasing food prices over the world
has influences Sainsbury’s selling its
products at higher prices.
 Inflexible competition within every part
of the retail sector (Regnier, 2017).
Opportunities  The company can go into the markets of
rising companies through the way of
joint ventures or partnerships to
discover these new markets.
 Moreover, self checkout machines
could assist in stores for hours which
might help increase sales.
Threats  Growing globalization might be a
challenge to Sainsbury's.
 Additionally, the company has to
always supply the best quality products
from world over its rivalries.
Porter's five forces
 Threats to new entrance :- the Sainsbury by innovating new products and services tackle
problems of threats to new entries. New product not only brings new consumers but also
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provide old consumers a reason to buy Sainsbury's commodities. Where as Tesco builds
economies of scale so that company can lower the fixed cost per unit.
 Bargaining power of suppliers :- this force of porter's model is tacked by the company by
creating effective chain with multiple suppliers. On the other hand, Tesco devlop
dedicated suppliers.
 Bargaining power of customers :- in this the company builds a large base of customers
which is helpful in two ways, first decreases power of buyer and provides an opportunity
to the firm to streamline its sales. Whereas, Tesco provides discounts and offers on
various commodities in order to reduce the power of buyer.
 Threats of substitute products :- this threat is tackled by Sainsbury by being service
oriented instead just product oriented. On the other hand, Tesco increases the switching
cost for the consumers.
P 6. Explain interrelationship between strengths and weaknesses with external macro
environment.
The strength & the weakness factors are considered as the results of the macro
environment analysis. Also, the threats and the affecting internal and external forces have an
adverse affect on functions of the business in an effective way. Thus, these influencing factors
are such that raise the positive and the negative impacts. The political, legal, social, economic,
and the environment factors & the influence of these factors enhance the business operations to
manage with the demand and the changing trends of the market. Further, in this way operation
implementation, the strength and weakness have the great power to manage the workings. Thus,
it can be acknowledged that these factors are linked with the macro environment analysis is a
broader manner (Wynarczyk, Watson and Keasey,2016).
SWOT analysis provide better understanding into the internal and external business
environment. Further, one of the better way to make use of SWOT is to consider customer's
perspective as related to poter's five forces which also includes buyer's power, while making
plans and decision. PESTLE is the technique for understanding the various external impacts on a
business and five forces framework for looking at the strengths of those five crucial factors that
affect decision making include; new entrance, existing competitors, customers, suppliers and
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alternative products. The company's strength is interrelated with its macro factors for example, if
company make use of highly advanced technologies for promoting its products then it will affect
the them positively.
CONCLUSION
From the overall report it has been concluded that, business environment is consists of
various factors that are uncontrollable for organizations. Also, there are different types, sizes and
scope of organizations such as; private, public and voluntary sectors; small, medium and large
scale enterprises. Apart from this it concluded that, the structure of a company refers to the
relationship between the different parts of business. Lastly, it demonstrated both positive and
negative impact of macro environment on business operation and its relationship with SWOT
analysis.
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REFERENCES
Books & Journals
Kim, J., Pettit, S. J. and Beresford, A. K.C., 2016. An exploration of Humanitarian and Disaster
Relief Supply Chain Integration (HDR-SCI) for different types of aid organisation.
Heino, J., Melo, A. S.and Bini, L. M., 2015. Metacommunity organisation, spatial extent and
dispersal in aquatic systems: patterns, processes and prospects. Freshwater Biology. 60(5).
pp.845-869.
Nie, Y., Chua, B.L. and Chan, W. Y., 2015. The importance of autonomy support and the
mediating role of work motivation for well‐being: Testing self‐determination theory in a Chinese
work organisation. International Journal of Psychology. 50(4). pp.245-255.
Wynarczyk, P., Watson, R. and Keasey, K., 2016. Managerial labour markets in small and
medium-sized enterprises. Routledge.
Regnier, P., 2017. Small and Medium Enterprises in Distress: Thailand, the East Asian Crisis
and Beyond: Thailand, the East Asian Crisis and Beyond. Routledge.
Zalengera, C., Blanchard, R. E. and Gondwe, K. T., 2014. Overview of the Malawi energy
situation and A PESTLE analysis for sustainable development of renewable energy. Renewable
and Sustainable Energy Reviews. 38. pp.335-347.
Zahari, A. R. and Romli, F. I., 2018. Analysis of suborbital flight operation using PESTLE.
Journal of Atmospheric and Solar-Terrestrial Physics.
Bull, J.W., Jobstvogt, N.and Carter-Silk, E., 2016. Strengths, Weaknesses, Opportunities and
Threats: A SWOT analysis of the ecosystem services framework. Ecosystem Services. 17. pp.99-
111.
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