Impact of Business Environment on Innovation

The assignment delves into the impact of various environmental factors, categorized under PESTLE (Political, Economic, Social, Technological, Legal, and Environmental), on a hypothetical company's innovation strategy. It requires students to analyze each factor's influence and propose specific actions the company can take to leverage these influences for successful innovation.

Business Environment

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1 Various types and purposes of Organisation.........................................................................1
P2 Size and Scope of Different kinds of companies...................................................................3
TASK 2............................................................................................................................................5
P3 Relationship between different organisation functions and its main objectives....................5
TASK 3............................................................................................................................................8
P4 Explain positive and negative impact of macro environment on business operations..........8
TASK 4..........................................................................................................................................11
P5 External and internal analysis of chosen organisation.........................................................11
P6 Relation of internal factors with external factors.................................................................12
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Business environment can be stated as process in which evaluation is being done by thy
external and internal environment which can directly impact the activities of business in better
mode. There are number of companies and its relations which are being evaluated along with
certain factors in order to obtain the functionalities and activities (Business and the environment.
2017). There are various essential factors which have the potential of affecting the productivity
and profitability of the company order to run the smooth operations. Company taken for this
report is Barclays Bank which is a multinational Bank and Financial Service Provider
headquartered in London. This company was established around 1690. Certain factors which will
be discussed in this report and they are size, scope and types of company. Along with it,
PESTLE and SWOT analysis will evaluate the targets and business in better manner. Moreover,
there are various macro and micro environmental factors along with the impacts on strength and
weaknesses of Barclays.
TASK 1
P1 Various types and purposes of Organisation
In the market place, there are number of companies who are running their operations and
other functions with certain aims and objectives of the firm. There are various kind of purposes
on which the company runs and thus conduct their operations like they are generating revenues
and serving the customers and providing them high level of satisfaction (Wheelen and Hunger,
2011). Below described are the kind of companies:
Basis of
Comparison
NGO NPO For Profit
Meaning This type of organisation
can be stated as non-
governmental which are
basically formulated for
delivering up the services
to the society for the
There are such
companies who obtain
the benefit and thus
share it among its
members which are
obtained from the
The main focus of the
company is on generating
more and more revenues
by merchandising their
products and services.
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better future. selling up of products
and services.
Area of
Operations
Big Restricted Restricted or big both
Objectives People welfare and social
evolution.
For the motives like
science, art and
commerce and many
others.
Earning the revenues by
dealing in products and
services.
There are three major organisational structure which are being mentioned below:
Private Sector: In general terms, this type of organisation is mainly owned and run by the
respective country's Govt. and its owner but the structure of the company is being formed under
the policies and rules regulated by the Govt. This type of companies generate their own revenue
and bear own losses and thus contribute within the social and economical factor of the country.
There are the some certain motives of this kind of companies like generate the revenue by selling
out their products and services within the marketplace and targeting up the customer (Bryman
and Bell, 2015). There are the number of private companies which are who totally depends on
the ownership, size and structure of the company like sole trader, public Ltd. And private Ltd.
Along with the partnership. Example can be taken of Barclays bank which is multinational bank
who mainly deals in providing financial services within the global market. This is one of the
most effective bank which provides best quality services and that too in reasonable cost and
interest rates.
Purpose: The main purpose of this kind of organisation is to retain the maximum amount of
profit from all the activities and operations by the company for the development within the
society. The main purpose of Barclays is to deliver the best quality products and that too at
minimum cost (Teece, 2012).
Public Sector: This kind of sector is all about the Govt. bodies which are generally owned by
the Govt. bodies within the country. It basically identifies the sections of the economy and thus
provide the platform of opportunities to the needy and unemployed people. Funds are being
collected by the firm by civilians in form of taxes. For instance: Hospitals, schools and
infrastructure and many others (Carlin and Schaffer, 2012). Public organisation can be taken here
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is M&S who mainly target the middle class people for the food products around the globe and
thus provide quality food products to them.
Purpose: The main motive of this kind of sector is to earn the profit along with contribution for
the people and thus lifting their standard of living. Along with that, they are highly responsible
for providing the employment to the people specially to the backward classes (Osterwalder and
Pigneur, 2010). Marks and Spencer motive is to deliver the products and services to the middle
class people and give their contribution within the economy of country.
Voluntary Sector: In this sector, companies are being formed out with the motive of helping out
those people who are in need and thus make the society a good place to live. There are number of
elements which are being which are being utilised for helping out human and animals. Sponsors
are the source through funding is being provided (Cavalcante, Kesting and Ulhøi, 2011).
Example can be taken of Oxfam which is one of the international charitable trust which have its
business in more the one nation.
Purpose: The main motive of the company is to uplift the living standard of the people and thus
provide help to the living beings who are in need.
Legal Structure of Organisation
Private Sector: There are two types of companies who are in private sector which can be
partnership or sole traders: Partnership: This kind of sector can be stated as legal entity in which two or more then
two people comes under mutual agreement for conducting some work. Sole Traders: In this, companies are generally owned by single person who is whole and
sole responsible for bearing profit and loss.
Public Sector: There are number of organisation who are being structured for the public sector
which are mentioned below:
 State Government: Their working structures is different from the central one due to the
rules and policies which are being formed within the marketplace (Schaltegger, Lüdeke-
Freund and Hansen, 2012).
 Local Government: These are the local state which mainly looks after the people's
welfare along with communities by rendering the provided by the Govt.
 Central Government: In this type of state management, after the local part central one
comes in and is the main power.
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P2 Size and Scope of Different kinds of companies
As per the size and scope of the organisation there are there are basically three types of
sector and they are being described below: Primary Sector: This kind of sector can be stated as extractive company. These types of
companies mainly produce or extract the raw materials. Best example can be taken up of
farmers who mainly work in primary sector workers along with the food items which are
also being collected as raw materials like wheat and milk which are being extracted or
produced within the farm and thus are being manufactured into other products like bread
and cheese (Onetti and et. al. 2012). There are various other industries which mainly
include the mining industries like coal, iron ore and oil which mainly extract the raw
materials from the ground which can be changed into other useful items. Secondary Sector: This kind of sector of the economy which is being comprised of the
manufacturing industries. These kind of industries mainly takes up the raw materials and
thus manufacture the products out of them. Best example can be taken up of the steel
which is being utilised by the cars manufacturers (Grimpe and Kaiser, 2010). Carpenters
who utilise the wood and thus make homes and other furniture within the house along
with the cabinetry. It is not necessary that the all the manufacturing companies
manufacture the entire product. There are various kind of companies who produce the
semi manufacturing parts which can be utilised within other kind of product which have
various kind of stages like production, such as auto mobiles.
 Tertiary Sector: This kind of sector can be stated as another service sector. There are no
physical goods which are being provided by the services companies like the primary and
secondary sectors do but value is still being provided. Example can be taken up of banks,
insurance and police who are the main example of service sector company (Hamilton,
and Webster, 2015). There are some of the companies including the primary and
secondary sectors which will have the employees who can provide tertiary services like
advertising, accountants and warehousing employees.
Scope of Different types of Organisations:
Micro Scale: There is not much high scope of this kind of business and for expansion time and
funds are being needed. This is because their motive is to gain the survival and have financial
security. Best suitable chance is to open up the branch within the same town or city.
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Small Scale: In this kind of business, scope is much more higher if compared to the micro scale.
Business can be shifted from the small scale to medium scale business and that can be done
through various tools and techniques and thus goodwill can be improved.
Medium Scale: This kind of business has much more high scope as they can have high chances
of making their business global in nature. This can be done through if the Govt. provides license
of making their operations global (Drucker, 2017).
Large Scale: They have the scope of having the economics in which they are not being
established due to various kind of reason like legal issues or the economical condition.
TASK 2
P3 Relationship between different organisation functions and its main objectives
Barclays bank is multinational bank who mainly provides financial services across the
globe. The mission of the company is to establish long term relationships with the customers and
thus make the company more better and developing. Along with this their main motive is to
uplift the economical condition and provide their contribution. There are various number of
services which are being provided by the bank to the customers. This bank is majorly known for
the USP of services which they provide in order to attract the customers in an effective manner.
They mainly focuses on providing the maximum level of satisfaction as per the desires and this
in turn will help in enhancing the productivity and profitability of the company (Elliot, 2011).
The main aim of the company is to avail more advantages by attracting number of functions and
market technique.
There are number of factors which are needed for creating and regulating the goodwill
within the competitive market along with the number of functions large organisation like
Barclays within the development of the objectives of business. Below mentioned are some
factors related to the business objectives:
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Illustration 1: Framework of Company
(Source: Structure of Company, 2017)
Finance: This can be stated as one of the main sector of the company like Barclays which can
avail the managing and controlling financial expenses by allocating the budget of company for
certain sectors. Entire functions are being played by the two individuals and they are accountant
and finance manager. The major duty of an accountant is that it looks after documentation and
have the actual and genuine report regarding the P&L, revenues, sales amount, purchase, income,
outgoings and many more (Grimpe and Kaiser, 2010). On the other side, main duty of the
finance manger is to assign and allocate they budget for certain motives and along with this
funds management, creditors, debtors and other which are linked with department.
This can be stated as the main sector of Barclays bank as it allows company to manage its
funds and helps out in trimming the extra cots which from the functions and operations. In this
way they can obtain the objectives of the firm.
Human resource management: This sector is considered as one of the most essential part of the
company which helps in company like Barclays Bank to attain the objectives in better and
effective manner. In this sector, entire activities are being managed along with the operations of
the company in better manner so that company can avail the major benefits (Drucker, 2017). The
main duty of the HR department is to look out after the salaries, employee relation and regular
activities of the employee. This is done with certain purposes like providing comfort to the
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employees so that they can be satisfied. This in turn can enhance the production and profit ratios
which can in turn leads to success and completion of objectives of the firm.
Production Department: It is highly needed to manage the products and services in which the
company has to deal within the market for exchange of monetary services. The main focus of the
customer is on the services for getting the quality at minimum cost (Hair, 2015). Relation of the
divisions are being handled along with the sector of production who undertakes the several
process such as research of consumer choice,work management, optimum utilisation of resources
along with the distribution and many more.
The main reason due to which the company attain the success and new heights is the
better quality of the products which are being provided by the Barclays Bank. Production
department mainly helps this kind of sector in managing the activities and manufacturing up the
best services for the clients (Bryman and Bell, 2015).
Management and IT: it is highly essential for managing the forms of clerks regarding the entire
data which is being undertaken by the company for getting the maximum number of operations.
There is interrelation between the management division with the data documentation, protection,
consumer satisfaction, suggestion by the consumer facility and many more (Craig and Campbell,
2012). Barclays bank and other large companies needs to adopt the methodologies of I.T for
managing the digital technology which in turn used for storing up of data and other vital things.
Mainly the Barclays bank focuses over the maximum satisfaction of the consumers by
which they can provide the best quality services at reasonable rates. Services are being delivered
by the company by the assistance of management and IT (Boons and Lüdeke-Freund, 2013).
Therefore, in turn it will help in availing the business objectives of the company.
Therefore, this kind of activities will help in getting the final outcome of the company in
much more significant manner (Kolios and Read, 2013). This is highly essential for the company
like Barclays for administrating the functions and division in effective manner which can in turn
maximise the results and revenues for creating out effective goodwill.
Marketing: It is highly needed for establish the effective communication funnel among the
company in order to enhance the competitive market so that competitive edge can be meet within
the company. The main duty of this kind of sector is on handling the marketing and promotional
sectors and they also focus on enhancing up the sales of services provided by the bank itself.
This can be done through adopting the various tools and techniques for meeting up the target
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audience (Miller, Yablonovitch and Kurtz, 2012). This mainly includes entire proportional
campaign, advertising, business spin around and many more.
This in turn will avail the various kind of activities by company for managing the success
of company by attaining the major activities and that is completing up the demands of the
consumer and thus take the company into the better position by using effective communication
channel and media tools (Elliot, 2011).
From the above factors, it can be concluded that each and every kind of department plays major
role in within the company in order to attain growth and success. Finance sector is the main
sector to which all the other ones are being connected. It can be made much more simpler like
operational department is linked to Human resource sector as it provides man-force to conduct
the operations. Along with this operational sector is also related to the financial sector as it
provides finance to conduct the operations. Besides this, marketing department is also linked to
the management and IT sector for regulating the operations and other activities. So it can be
clearly stated that every department is somehow is linked to another one and without which
company can not run its operations.
TASK 3
P4 Explain positive and negative impact of macro environment on business operations
Business environment can directly affect the major part of the company which can be
either small of large sector company. There are number of factors which are being faced by the
company for making the company's operations much more better and bring sustainability within
the company and marketplace. Barclays bank is a multinational bank but also they have main
competitors within the United Kingdom like HSBC, Morgan Stanley and many more. It is highly
needed by the company to adopt the analysation process so that company can avail the macro
environmental factors for understanding the choice. This in turn will help in influencing the
various number of activities and business operation (PESTLE ANALYSES: 6 Core Variables.
2017). By the help of PESTLE Analysis, positive and negative impacts can be examined over the
business which are being mentioned below:
Political Factors
There are various rules and legislations which are being discussed after the Crisis Period
within the United Kingdom which in turn can put an impact on the business of Barclays Bank.
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There are some policies which are being made within UK for providing the structure to the
company. Experts in Barclays bank is looking over the issues and thus company is seeking out
for the resolution of issues and thus company have planned to keep the products cost low in
nature which is being provided.
 Positive Impact: There are various laws and legislations which are being regulated on
both of the types of entities including the large and small company. Negative Impact: Amount of the revenue is being have been decreased due to this along
with the profit margin as well. There are some limitations which are being created along
with the boundaries which can directly affect the company in negative manner.
Economical Factor
So, it is necessary for the firm to be aware of modification or changes in policies, tax
rates and other factors that influence finance accessibility (Osterwalder and Pigneur, 2010). The
firm has shifted its emphasize towards its brand advertising instead of luxurious items because of
decline in household and disposable income levels.
 Positive Impact: The term of free trades induce the current business enterprise toward
organizations in the exercises of fare or import of organization. Likewise the joblessness
have lead state to lean of bigger undertaking at that point can bring about sponsorships in
tax assessment. Negative Impact: This is in turn can lead to the the process nature which is highly
complex for dealing with the products and services with the international countries due to
complication in rates of international prices.
Social Factor
As per the graph of ageing census it is directly taking the company towards the pension
amount which have been increased (Cai and Yang, 2014). The main target of the company is
towards the ethnic group which may be needed along with innovation within the period of time
for competing the competitive brands along with the evaluation of the consumer needs and
wants.
 Positive Impact: Latest technology is in trend along with the products in order to
manufacture the high quality services which can directly leads to the advantages and
revenues increments.
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 Negative Impact: Company is facing failure in deploying their business expansion into
global market which in turn can lead to the lack of financial resources. Also international
products have restrained the success of the organisation as clients are transforming the
capabilities.
Technological Factor
Best technology is being delivered by the Barclays within their other Branches which in
turn is helping out the company in development and thus formulating the unique recognition
within the competitive market (Schaltegger, Lüdeke-Freund and Hansen, 2012). There are some
of the methods which are being adopted through the marketing of digitalisation and online
media. This in turn as allowed the company to avail the new area of distributing the services
along with the satisfaction of the consumers and conveniences.
 Positive Impact: There is huge impact on the company after adopting the latest
technology as they have made most of the work online and that too on the phones with
single click. Loan granting, opening up o0f accounts and many other factors have become
easy and thus now consumer can easily access their account and can transfer the funds. Negative Impact: There is difficulty in retaining the worker within the company. Also
complications are being created with another procedures and in turn it can lead to
challenges which is not easy to solve.
Environmental Factor
These kind of factors have the potential to directly affect the environment along with the
surroundings of the company (Belás and et. al. 2014). In order to apply the developments and
bring sustainability, it is highly essential to bring out the elements of pollution and thus reduce
them.
 Positive Impact: Enhancing the assets by the help of raw material. Negative Impact: purpose of limited environment assets, impact can be seen on company
in negative manner.
Legal Factor
FRC suggested that a code of conduct must be introduced which will ban current
practices, like, demanding payments or changing prices etc.
By assessing these factors, the business of Barclays Bank is remain proactive in the present
competitive business environment (Zeng, and Duan, 2012).
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 Positive Impact: This will make the company avail the management of operations and its
functions.
 Negative Impact: performance of the company can be affected in negative manner.
TASK 4
P5 External and internal analysis of chosen organisation
In order to analyse the external factors it is highly essential to determine the strength and
weakness of the company and below mentioned is the SWOT analysis of the company:
SWOT Analysis of Barclays Bank
Strengths: There are various business units like wealth management, retail banking and many
others which are highly contributing. First ever bank to launch its site in 1995. More then
145,000 employees are working within this company. They are the sponsor of major sporting
events. They have around 47 million customers which are connected with this company.
Weakness: Goodwill of the company got affected by the controversies like funding in the
funding of Govt. in Zimbabwe. There is need of bailout In UK during the economical crisis.
Opportunities: Emerging economics can provide platform of opportunities to the company
(Zeng, and Duan, 2012). Earning the Urban Youth for options of investment.
Threat: There is high competition from the other banks which can affect the market share of
Barclays.
P6 Relation of internal factors with external factors
Below described are the key elements which states the relation with the macro and micro
factors: Political Factors: Position of the company is being determined through the competitive
market which is affected by the political factors and thus the company is making their
structure as per the policies for gaining competitive advantage (Teece, 2012). Example
can be taken up of buying behaviour of customers which can increase if the taxation is
being reduced. Economical Factors: Marketplace condition directly impacts the strength and weakness
of the company and thus when the it affects the graph of sales and in turn it can help in
attaining the objectives of company.
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 Social Factors: This type of factor can affect the level of performance of the company
due to the modifications in desires and taste as per the time .
 Technological Factors: latest technology can be adopted and thus development can take
place within the staff members along with the competitive advantage which can be
gained (Turban, Sharda and Delen, 2011).
SWOT Analysis:
SWOT Analysis of Barclays
Strengths Weaknesses
 Barclays has various business units
such as retail banking, wealth
management and many other contribute
to entire development.
 One of the main strength of the bank is
strong advertising and marketing has
boosted presence of brand's.
 Controversies like government funding
in Zimbabwe effected the goodwill and
brand of Barclays.
 Requirement of bailout in United
Kingdom modern economic crises.
Threats Opportunists
 Highly competitive situation form other
business can impact market share of
referred firm (Wheelen and Hunger,
2011).
 Stringent economic condition and
policies in all over the globe.
 Expansion and growth opportunity in
rising economics is a big chances for
Barclays bank.
 Venturing or undertaking into internet
banking is a big untapped place.
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CONCLUSION
As per the above mentioned report, it can be concluded that business environment is very
essential term of the company success and growth. Various kind of organisations and their
framework which is important for the enterprise to identify their situation in marketplace. In
order to identify business performance and profitability, company use different concepts such as
SWOT, PESTLE and many other tools. These are necessary for the business to analysis their
performance level and profitability ratio as compared to other companies. Different department
of the organisation mainly related with business goals and objectives in limited time period.
Negative and positive effect of macro environment highly impacts on business operations and
activities.
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