Business Environment | Assignment

BUSINESS & BUSINESS
ENVIRONMENT

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1. Overview of different type organisations and Growth of international business
environment............................................................................................................................1
2. Explanation of different business entities ..........................................................................3
3. Function of private organisation.........................................................................................5
TASK 2............................................................................................................................................7
1. PESTLE analysis of Arcadia Group...................................................................................7
2. SWOT for Arcadia Group................................................................................................10
3. Critical reflection of pestle and SWOT............................................................................12
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Business environment comprises the internal and external surrounding which can
influence business directly- indirectly. These factor separately impact the business as well as
affect each others too. Present study articulate the classification of business on the basis of
ownership and legal structure. Report will render understanding between different business
functional unit and their internation to achieve organisation goal. Lastly, PESTLE and SWOT
will be cover to know the way, internal and external factor affecting business decision. Report
will render brief of Arcadia Group, NHS England and Wellcome Trust as example of different
business types. Arcadia is famous fashion retail in UK, where NHS England is a public sector
healthcare organisation which works under UK government. Wellcome is charitable trust, which
is undertakes by some volunteers.
TASK 1
1. Overview of different type organisations and Growth of international business environment.
A business can be classify into different categories on the basis of objective, ownership,
size and legal structure. There are majorly three kind of business forms currently present in
market, namely private company, public sector and non- profit organisation. Public sector
organisations generally, establishes by state as department undertaking, Statutory corporation
and government companies. These public firms avail the fund and finance from government,
which is collected by tax, fines, duties imposed by government on public. These businesses are
set up with the multiple aims, like render basic and essential service and product to public and to
maintain balance in economy (Aithal, 2016). Public firms are fully controlled and operated by
the state to make major business decision. Public sector functional areas are development of
infrastructure like roads, railways, airways, electric grids, bridges and tunnels. They also provide
essential services in healthcare, public education, water supply and telecommunication.
Government sector companies are accountable to tax payers through ministers and politicians.
State also make partnership contract with private company, so that it can bring large technical
and operational improvement in essential service too.
Legal Structure
A sole trader is a one-person business, commonly found in trades where only small
amounts of finance are required to set up and where there are very few advantages to the
existence of larger organisations (e.g. hairdressing, newsagents, market traders).A sole trader
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faces unlimited liability for his/her debts and it is referred to as an unincorporated business -
this means that there is no legal difference between the business and the owner.
To overcome many of the problems of a sole trader, a partnership may be formed. A
partnership is an association of individuals and generally there will be between 2 and 20 partners.
Each partner is responsible for the debts of the partnership and therefore you would need to
choose your partners carefully and draw up an agreement on the responsibilities and rights of
each partner (known as a Deed of Partnership or The Articles of Partnership). The most
common examples of a partnership are doctor's surgeries, veterinarians, accountants, solicitors
and dentists.
Some Example of Public Organisations in UK are: Audit Commission, Atomic Weapons
Establishment (AWE), The Cabinet Office etc.
Private business are come into existence with the aim of profit earning, growth and
expansion. These entities are fully operated and controlled by owner and shareholders.
Entrepreneur arranges fund by personal resource or from UK stock market. Private companies
are governed by a well established and Independent management. Management has their full
concentration on enhance the capacity of human capital, increase the operational efficiency to
grow the business. Owner and manager have to present key financial report in front of
government and stakeholder as they is accountable to answer both (Chang,2016). Private
industries aimed to provide customer satisfaction, as produce luxury product and services for
them. They reinvest profit and retain earning in increase the competency of operation, people,
expansion and research and development. Sole trader, partnership, limited liability partnership,
corporation are the type of private sector firms.
Some example of Private organisation of UK are: John Lewis Partnership, Swire, Brake
Bros etc.
Voluntary sector works for social care to enrich society, with minimum profit objective.
They possess less or no government control. There are paid and free volunteers works as
employee. also, these organisations put their earning in back in organisation, community and
society. State supports voluntary firms because they help government to achieve social care
objective. Business get finance from government and volunteers. As per the estimation,
voluntary sector contributes almost 0.8% of total gross value added in UK economy, which is
about £11.7 billion. Charities, Community Groups, Social Welfare Organization, Foundations,
Faith-Based firms, Advocacy Groups and Recreational Sports are some example of voluntary
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sector company (Crane and Matten, 2016). State also give flexibility in maintaining and keeping
financial records, as they take little amount from each individual. But, these firm has to show
their basic financial reports to state and people who gives donation, whenever demanded.
Some examples of Voluntary organisation are: Oxfam, Cancer Research UK, British
Heart Foundation s etc.
International business environment is one of the modern business concept. All the
business activities perform outside the local geographical boundary of nation, is considered as
international business. An organisation's objective and capacity, directly impact its expansion
decision in global market. International market is growing with fast pace because development of
technology in various industry removes the geographical barrier very much.
2. Explanation of different business entities
Arcadia Group (private company)
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Illustration 1: International business environment
(Sources:business-environment/environment-of-
business-micro-and-macro, 2018)

This is one the largest fashion retailer with huge global presence (41 countries) having
2,750 stores globally. Group owned, several major high street brand, namely Topman and
Wallis, Dorothy Perkins , Miss Selfridge, Evans and Burton. Alone in UK, it has more than 2500
outlets and many franchise outside the country. Taveta Investments is owner of Arcadia Group,
whose owner is miss Tina green (wife of famous entrepreneur sir Philip green). Organisation
render lavish clothing, shoes and accessory to customers since 2002. It is ranked as fourth
biggest fashion retailer in UK, after marks & Spencer, Primark and next. Group earned £1.91
billion as revenue, where its cost of good sold was 1.7 billion. Company grow by 5% with gross
profit 155.7 million in the financial year 2017. Given data shows its financial capacity and
operational efficiency, which provide strength to company to grow more in international market.
It has 3.8% of total UK market. Firm's earns high profit (87.3%) from domestic country, 5.9%
from US and rest of by others. Arcadia Group has approximately 22,000, which lower than its
competitors. Its stakeholder are customer, government, suppliers, employee, shareholders and
environment. Fashion Foot print is Arcadia's distinguish program, in which firm look upon the
social and environment impact of its product. Arcadia Group is a private limited company by
shares, which means shareholders responsibility to pay their financial obligation is limited to
original investment. Company has great scope of product and market expansion as it has enough
financial sources, efficient human capital and money for research and development.
NHS England
NHS comes under Department of Health and Social Care, but is work as non
departmental public body. It is a statutory body which established under Health and Social Care
Act 2012. It leads and guide National Health Service, in setting up health priority and direction.
Firm also inform, encourage and arrange health debate nationally, so that people can know about
practices for physical and mental well being. This public sector company has £100 billion fund
in its pocket, for which it is responsible to tax payer and patient. Service offer by NHS England
are: make instructions for GP's dentist and pharmacists, render health care support to local
groups, that is guided by Clinical Commissioning Groups. Statgeic vision of company is given in
its Five Year Forward View statement. It is committed to identify and bring improvement in
health care services, restructuring NHS, so that it can meet patient's requirement, make sure
financial sustainability of NHS and ensure participation of public in whole improvement process.
It renders mental health care, primary, emergency, integrated, cancer care and assistance to battle
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with long term care service. Public sector organisation, generally aimed to provide service to
domestic territory only, also they have less competence human resource, so that they can conduct
sound R&D, market research and analysis. These firms have to take permission from
government for everything, which limits their autonomy for major business decision, which
eventually shrinks their scope too.
Wellcome Trust
Wellcome trust was established Sir Henry Wellcome, who was pharmaceutical
entrepreneur. It is a biomedical research charity organisation which vision is to provide funds for
research conducts for betterment of human and animal health. It wants to achieve remarkable
refinement in health care services by assist the brilliant minds. Currently firm provide financial
support to 14,000 people in 70+ countries. It aimed to spend £5 billion over curios and
passionate researchers in medical innovations. Company has £25.9 billion investment portfolio,
which is really very big and help company in its long term goals. It earns £14bn in each year for
last 14 years, because of its diversification beyond pharmaceutical researches. Organisation also
identifies the key areas where research has to be done on continuous and urgent basis. Its
stakeholder are committee members, volunteers, researchers, patients and government etc.
Wellcome is now regulated and convened by Constitution, it has England and Wales charity
registration number. It has one and only trustee, namely, The Wellcome Trust Limited.
Voluntary organisation scope to expand is depends upon charity they receive. If they have
money, to can go further and vice versa.
3. Function of private organisation
Private sector organisations have aim of profit maximization, so they have to perform
various business function like production, marketing, finance, human resources' management,
research and development and development of information technological infrastructure to
business activities. These function can be classified into three major categories namely, internal,
external and supportive business function (Deasy and et.al., 2016.). Internal activities are limited
to arranging, organisation and controlling different resource. On the other hand external function
are done, to acquire and give key information to stakeholder. Supportive services helps in
seamless performance of both quoted business function. Various functions in Arcadia group are
mentioned below:
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Production and distribution
Production function comprises all the activities which have to perform to transform the
raw material into finished good. Production manager responsible to planning production budget,
buy raw material, supervising the labour and process, quality and cost control, Scheduling the
Production, negotiating with suppliers, maintain optimum inventory etc (Hair And et.al., 2015).
Arcadia Group perform activities like spinning which contain sub activities like Carding,
Combing, Drawing and Roving as its manufacturing process. After spinning, it moves to
weaving, which also contain three function like Shedding, Picking and Beating. Company uses
direct and indirect distribution. And, it uses RFID in inventory management and logistics.
Human Resources
HR department is solely responsible to maintain enough human capital inventory, talent
management, motivates people and keep employee efficiency etc. major function of HR are
recruitment and selection, conflict management, design training & development, make
professional development plan, appraisal and incentive formulation and maintain the work
environment.
Marketing function
Promotion of product and service, customer research, Selling and distribution, ensure
7p's of marketing mix, make brand image, public relation management, tackle customer
complaint and quires are key activities executes by marketing function unit (Ji-fan Ren and et.al.,
2017). Arcadia Group now used social media, E- marketing tool like phone, email, chat-boots as
its direct marketing tools, it also conducts online- offline survey to the customer need.
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Finance function
As every business entity, Arcadia Group's finance manager, arranges working capital,
take capital budging decision, keep financial records, generate key financial reports, allot budget
to different department, ensure correct investment decision, cash inflow and outflow
management.
Information technology function
I.T department render technical support to all the functional units like install and repair
software, repair the hardware problem, provide training to personnel regarding new technical
updates, setting up computer and other digital tool in organisation, develop company website and
apps.
Interrelation between different department
All the functional units of business are interrelated and interdependent to each other
because they work together to achieve a common goal. Marketing people are responsible to
increase the sale of product and services by their promotion efforts. On the other hand, HR
manager ensure the skill, experience and knowledge which required in a marketing personnel.
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Illustration 2: Organization chart
(Sources : Organization charts, 2018)

Financial department keep financial record, budget allotment, make investment and capital
structuring decision for organisation (Kljucnikov and et.al., 2016).
Working capital arrangement also done by finance department. They give money to HR,
so that salary, benefit and incentive can be given. And same people, set sale targets, approve the
promotion budget and monitoring the performance of marketing department. This inter-relation
has both advantage and disadvantage for company. For instance if one functional unit is lacking
in quality and quantity of service, it will affect other function too. This will help in performance
management and set accountability. Contrary, if one department commit any mistake, it affects
the others with domino affect, which sometime become hard to control and cause frequent
interpersonal conflicts. Organisational structure can be defined as hierarchy in firm. In case there
is large number of functions has to perform by a company, then it has to follow more complex
structure than simple one. For instance matrix and divisional structure uses by company because
Arcadia Group has many country where it has its store.
TASK 2
1. PESTLE analysis of Arcadia Group
PESTLE is the framework, uses to scan the external business environment, which is
beyond the control of owner. This tool gives an idea to managers about future risks, so that they
can take precautionary measures in order to minimise impact.
Political factor
Government policy regarding import- export, trade agreements, employment, packaging,
recycling, material, environment and animal protection regulations, influences the clothing
industry with high intensity like government can impose higher import tax to save local
manufacturer's interest (Kolk,2016). Apart from it government's relation with other nations
decided the market expansion and pronouncement of resources. Like BRIXIT creates problem of
shortage of skilled labour in UK market.
State provide support to business in its expansion procedure like firm can easily enter and
get customer speedily, where government has good relationships. Also, bilateral and trilateral
agreements helps in export-export, easy entry and lower tax in host country.
Too much political intervention can the decision making autonomy and flexibility of
business. Political instability can lead to frequent policy changes, so business has to alter their
policy so quickly.
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Economy
Employment, disposable income, interest rate and tax rate affects the profit and sales of
fashion organisation. In rescission, people tend to have less disposable income. In such case they
hold on their decision to purchase cloth for a while, which can hurt the sale volume ( Laudon,
and Traver,2016). Also, increased income tax also shrink the income of consumer and profit of
producer. Higher interest rate impacts firm's market expansion decision.
In case of depressive economy, Arcadia Group tries to lower its unessential expenses so
that product can be offer to buyer at lower price. This practice would lead to operational and
functional improvement. Organisation get to know more about area of correction. For instance
Arcadia Group uses more digital marketing in place of print brochure, advertisement in
newspaper, in rescission. By using digital marketing, company become more aware about its
customer's opinion and response for its product.
Obsessively, negative economy put its side effect on cash inflow, profitability, retain
earning, wages to workers, increased raw material cost, share price and market expansion policy
Social factor:
Demographic blueprint influences production of certain clothing style. Like if a country
has more ageing population than Arcadia Group has to manufacture more comfort cloths, in
place of fashion cloths. One more social trend prevailing in UK society , as people have less
leisure time for shopping (Pearson,2017). So clothing organisation has to render convenient
shopping experience. People now become more health conscious, which turn their focus to
process, material of manufacturing as well. Buyer demands more transparency and environment
friendly process.
Social environment, gives opportunity to organisation to know more about people buying
behaviour and their need and requirements. These informations further uses by firm to formulate
suitable marketing mix. For instance Arcadia Group makes uses more technology in its store,
where people have less shopping time and high technology acceptance.
Culture difference and frequent change in social pattern, can slower the growth speed.
Technological:
Technical change impact both consumer and company both. Internet enhances the
competition as customer have all the fashion updates on internet. Arcadia Group's competitor
render option to people to make their order from different channel. If firm do not adopt these
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technical change, it would lose the battle (Schaltegger and Wagner, 2017). Internet, mobile, IOT
put impact on customer behaviour, marketing practice, production process. Fashion industry has
to respond quickly to its buyer, so they use technology In supply chain, logistic, packaging and
manufacturing.
Technological change improve efficiency of the production and distribution process,
which help in remain competitive in industry by open more option to reach and understand the
buyers and to penetrate in global market. Arcadia Group uses RFID, internet of things and
artificial intelligence in all its business function, which enable it performs everything with
effectiveness.
These technological changes have high installation and maintenance cost. Also, frequent
change put burden to arrange T&D again and again with changes.
Legal factor:
Employer can face issue like strike, boycott and irregularity in production by employees.
Workers are so sensitive to wages, medical benefits and their rights. In case they find,
unfavourable employment condition, they can picket their owner for it. Also, child labour
become serious issue for fashion industry (Wheelen and et.al., 2017). Many countries even
refuse to purchase cloths from an organisation, which appoint child labour.
Legal factor provide universal framework, assistance and guidance to conduct a business.
Like Arcadia Group, HR imply local legal compliance in firm, which enhances trust of employee
on organisation. Legal obligation also work as quality control of product.
Sometimes legal agreements enhance the cost, social responsibility of firm, and chances
of discrimination. For instance some organisation give less priority to a married woman because
of long maternity leaves.
Environment factor:
Presently, world is facing serious issues like global warming, resource depletion,
pollution, environmental degradation and climate change. Not only international environment
convention bodies, but consumer also demands sustainable business practices. Lack of natural
cotton and fabric force companies to move to non organic fibre, which emit chemicals, polluted
substance in air and water, pesticides. Also, textile manufacturing have high environment
footprint in its supply chain (Ferrell and Fraedrich, 2015). Even industry uses animal skin, hair
and other body organ as raw material like leather, fur, wool. Animals protection organization
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now takes serious take on in animal protection, which force manager to change process in more
Eco friendly way.
Environment friendly process of packing are expensive in nature which can increase cost
for consumer. On other side, if a firm follow all the environment responsibility, its image among
buyer, government and other stakeholder get improved.
2. SWOT for Arcadia Group
Swot is uses to identifies strength, weakness, treats and opportunities, so that firm's
competitive position can be evaluate. It gives an overview information about what an
organisation can do or cannot do (Twomey, Jennings and Greene,2016). Company can use its
strength to catch the opportunities and to eliminate the weaknesses and threats. Weakness can
lower the effectiveness of strength. Also, weakness can turn into threat in long run.
Arcadia Group SWOT
Strength
 Financial proficiency and Global
presence.
 Strong brand partners.
 Sound distribution and brand
positioning.
Weaknesses
 Less product for middle income group.
 Need more investment in technology.
 Dependency only on textile product.
 Poor demand forecasting.
Threat
 Frequent change in fashion.
 Strong competitors.
 Environment obligation.
 Shortage of skilled work force.
Opportunity
 New buyers from online channels.
 Market expansion opportunity in
ASIAN countries.
 Produce disposable clothing.
Interrelation with PESTLE
Arcadia Group has sound financial position which enable it to adopt new technology
comes in industry, acquire buyer from outside the geographical territory and Eco- friendly
manufacturing.
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Company may face problem in maintain sale in adverse economic conditions as firm has
less option to middle income group. Social factor analysis render more information to company
about product diversification opportunities. For instance Arcadia Group can provide different
product and price for different income, age and culture group. Also, it can move to product
which is high in demand in particular place (Cumming and Zahra, 2016). UK government still
have so many trade agreements with ASIA, Australia, middle east countries and USA. It will
help it, for market expansion objective. Company can charge a bit of higher amount if it follows
the environment protocol and standards. As people now concerned with health, organic and
disposable clothing will definitely render the competitor advantage and enhance market share
especially in environment sensitive countries. Social and economic analysis can support in
comparatively right demand forecasting. Like people will buy cloths in festive seasons.
Economic factor like high level of unemployment, clearly indicates that company should not
charge high price for products.
ASDA has strong innovative culture in which Acadia group is actually lacking. ASDA
earn effective online presence, which help it's to target customer with modern approach, on the
other side Acadia Group need to improve itself regarding it. Arcadia work with premium strong
brands like topman, Miss Selfridge and Evans and Burton, this association make firm's brand
image among customer. This image will help in gain more buyer in less time, if it renders
medium range clothing. ASDA has the biggest weakness that it does not have loyalty program,
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Illustration 3:
integration of PESTLE and SWOT
(Sources: SWOT Analysis and PEST Analysis,2019)

this can work as opportunity to grab customer. Also, ASDA render medium quality product, but
as earlier discussed, Arcadia sales high branded clothing. The only think can be conclude by
comparison is, Arcadia need to come up with more innovation in production, marketing and
distribution.
3. Critical reflection of pestle and SWOT
As introduced by Ji-fan Ren and et.al., 2017, internal and external analysis help in
steeping carefully in uncertain environment as they render crucial and information to manager.
This information helps in different decision at each level of business, also, it minimises the
chances of huge failures. Pestle stimulates analytical and rational thinking, also manager get to
hidden opportunities in analyse process. SWOT assist in planning and utilisation of resources.
On the other hand Wheelen, and et.al., 2017 argued that, these tools actually create problem of
'paralysis by analysis'. Manager actually can losses the concentration from main objective. Also,
data collect in these techniques are not subjective in nature.
CONCLUSION
From the above study it has been concluded that, there is direct relation between
organisation objective, size, nature and legal structure with functional units. A big size firm , has
to perform many business function thus, its has so many departments. International business
environment increase the importance of SWOT and PESTLE, as company should have clear idea
about environment, in which it has to do business. These frameworks will render the best result
only when firm is able to acquire right information on right time.
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